Petition for Writ of Certiorari — Daryl K. Washington, et al., Petitioners v. Kellwood Company

Supreme Court briefMar 16, 2018

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NO.

In the Supreme Court of the United States

DARYL K. WASHINGTON, SUNDAY PLAYERS, INC.,

Petitioners,

KELLWOOD COMPANY,

Respondent.

On Petition for Writ of Certiorari to the

United States Court of Appeals for the Second Circuit

PETITION FOR WRIT OF CERTIORARI

Aubrey “Nick” Pittman

Counsel of Record

THE PITTMAN LAW FIRM, P.C.

100 Crescent Court, Suite 700

Dallas, Texas 75201-2112

214-459-3454

pittman@thepittmanlawfirm.com

Counsel for Petitioners

Becker Gallagher · Cincinnati, OH · Washington, D.C. · 800.890.5001

QUESTIONS PRESENTED

This case asks the Court to consider questions

left open in several previous cases: whether it is

unconstitutional to permit U.S. judge magistrates

to issue final judgments, unchecked by Article III

district courts, that create legal precedent not

unlike that of article III judges; whether consent

is valid under 28 U.S.C. § 636 when obtained

through coercive trial delays; whether 28 U.S.C.

§ 636 requires that a magistrate overseeing a

trial possess a trial skill level comparable to that

of an article III judge.

In addition, this case presents equally

important—but distinct—factual and legal

questions whether a magistrate’s vacatur of a

jury verdict, despite the presence of undisputed

industry evidence; and blanket exclusion of all

expert and business owner testimony is

erroneous when the rulings conflict with

decisions in virtually every other circuit.

This case involves the second circuit’s dramatic

expansion of the powers of a non-article III magistrate

judge, with little or no trial experience in a judicial

capacity, to vacate a valid jury verdict by a wholesale

exclusion of a previously vetted expert and categories of

evidence that are admissible in virtually every other

circuit. It also involves a scenario where the alleged

consent by the parties was less than ideally obtained

and the magistrate did not allow the article III district

court to decide a motion to vacate her assignment or to

review the final judgment.

Although this Court has

referred to consent authority on occasions, it has not

addressed directly the questions of (i) the

constitutionality of a magistrate assignment where the

district judge maintains no reviewing authority over the

magistrate’s dispositive rulings; (ii) the constitutionality

of apparent coerced consent; (iii) the constitutionality of

allowing a magistrate judge’s rulings to create legal

precedent for the respective circuit, merely upon the

consent of private parties; and (iv) the right of parties to

have a magistrate judge with trial experience in a

judicial capacity equivalent to that of the Article III

judges who direct parties to agree that a magistrate

should try a case.

Thus, this case presents the following formal

questions:

1. Whether it is constitutional under 28 U.S.C. § 636

for a district court to assign, with or without consent, a

dispositive function to a magistrate judge where the

district court retains no authority to review the

magistrate’s final decision or to vacate the assignment.

2. Whether 28 U.S.C. § 636 permits a magistrate

judge to conduct a trial where the parties were

pressured to litigate involuntarily before a non-Article

III magistrate.

3. Whether 28 U.S.C. § 636 permits a case to be

reassigned, with or without objection, from a magistrate

judge with substantial trial experience to a magistrate

judge with little or no trial experience in a judicial

capacity.

4. Whether the second Magistrate Judge’s vacatur

of the jury verdict and blanket exclusion of any expert or

business owner testimony conflicts with the decisions of

other United States courts of appeals departs from the

accepted and usual course of judicial proceedings.

iii

LIST OF PARTIES

Petitioners, who were Plaintiffs-Appellants-CrossAppellees below, are Daryl K. Washington and Sunday

Players, Inc.

Respondent, who was Defendant-Appellee-CrossAppellee below, is Kellwood Company.

CORPORATE DISCLOSURE STATEMENT

Pursuant to Rule 29 of this Court’s Rules,

Petitioners certify that Sunday Players, Inc. is a

privately held corporation organized under the laws of

Texas and does not have a parent company, nor does a

publicly traded company hold more than 10% of its

stock.

TABLE OF CONTENTS

QUESTIONS PRESENTED . . . . . . . . . . . . . . . . . . . i

LIST OF PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . iii

CORPORATE DISCLOSURE STATEMENT . . . . iv

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . ix

PETITION FOR CERTIORARI . . . . . . . . . . . . . . . . 1

OPINIONS AND ORDERS BELOW . . . . . . . . . . . . 2

BASIS FOR JURISDICTION . . . . . . . . . . . . . . . . . . 2

STATUTORY PROVISIONS INVOLVED . . . . . . . . 2

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . 5

A. The Sunday Players Brand and

Compression-wear Market . . . . . . . . . . . . 5

B. The Initiation and Termination of the

Exclusive License Agreement . . . . . . . . . . 6

C. The District Court Delays in Advancing

the Case to a Jury Trial . . . . . . . . . . . . . . 7

D. The Courtroom Deputy Contacts the

Parties and Originates Discussion

Regarding Trial by Magistrate . . . . . . . . . 8

E. Judge Batts Assigns the Case to

Magistrate Judge Michael Dolinger . . . . . 8

F. The Case is Reassigned, Without Notice

to the Parties, to Magistrate Judge Sarah

Netburn . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

G. Based on The Evidence Presented, the

Jury Ruled in Petitioners’ Favor . . . . . . . 9

H. Magistrate Netburn Vacates the Jury

Verdict; Grants, then Denies, a New

Trial; and Excludes all Testimony by

Experts and Business Owners . . . . . . . . 10

I. The Second Circuit Validates the

Reassigned Magistrate Judge’s Rulings 11

REASONS FOR GRANTING THE PETITION . . . 12

THE DECISION AFFIRMING THE

MAGISTRATE JUDGE’S RULINGS IS

CONTRARY TO THE PLAIN TEXT OF

SECTION 636 AND CONGRESS’

PURPOSES IN ESTABLISHING THE

MAGISTRATES ACT . . . . . . . . . . . . . . . . . . 17

A. The Consent Was Clearly Not

Voluntary . . . . . . . . . . . . . . . . . . . . . . . . . 20

B. Magistrate Michael Dolinger Determined

a Trial Was Proper . . . . . . . . . . . . . . . . . 24

II.

THE REASSIGNMENT OF THE CASE,

WITHOUT NOTICE, TO MAGISTRATE

NETBURN VIOLATES SECTION 636 . . . . 25

A. The Magistrates Act is Violated if an

Assigned Magistrate Does Not Possess

the Minimum Trial Proficiency of an

Article III Judge . . . . . . . . . . . . . . . . . . . 25

vii

B. The Magistrates Act Was Violated When

the Parties Were Not Advised They Could

Withhold Consent from Allowing

Magistrate Netburn to Try the Case . . . 28

C. Magistrate Judge Netburn’s Ruling

on the Motion to Vacate Violated Section

636 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

III.

DISTRICT

COURT’S

CASE

ASSIGNMENTS TO MAGISTRATES FOR

TRIAL, WITHOUT MAINTAINING THE

RIGHT TO REVIEW IT, VIOLATES

SECTION 636 . . . . . . . . . . . . . . . . . . . . . . . . 30

IV.

THE DECISION BELOW, IF NOT

REVERSED, PRESENTS A SERIOUS AND

WIDESPREAD THREAT TO ALL LAWFUL

VERDICT WINNERS AT THE HANDS OF

UNTRIED ARBITERS WHOSE OPINIONS

ARE NOT SUBJECT TO REVIEW BY AN

ARTICLE-III DISTRICT JUDGE . . . . . . . . 33

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

APPENDIX

Appendix A Summary Order in the United States

Court of Appeals for the Second

Circuit

(November 2, 2017) . . . . . . . . . . . App. 1

Appendix B Opinion and Order in the United

States District Court for the Southern

District of New York

(September 6, 2016) . . . . . . . . . . App. 14

viii

Appendix C Order Denying Petition for Rehearing

and Petition for Rehearing En Banc in

the United States Court of Appeals

for the Second Circuit

(December 20, 2017) . . . . . . . . . App. 32

Appendix D Opinion and Order in the United

States District Court for the Southern

District of New York

(December 4, 2015) . . . . . . . . . . App. 34

Appendix E Comparison of Yardstick

Companies . . . . . . . . . . . . . . . . . App. 41

Appendix F 28 U.S.C. § 636 . . . . . . . . . . . . . . App. 42

TABLE OF AUTHORITIES

CASES

Allen v. Wine,

297 Fed. Appx. 524 (7th Cir. 2008) . . . . . . . . . . 30

Calderon v. Waco Lighthouse for the Blind,

630 F.2d 352 (5th Cir. 1980) . . . . . . . . . . . . . . . 21

Collins v. Foreman,

729 F.2d 108 (2d Cir.1984) . . . . . . . . . . . . . 31, 32

Commodity Futures Trading Comm’n v. Schor,

478 U.S. 833 (1986) . . . . . . . . . . . . . 13, 17, 18, 19

Cooper Indus., Inc. v. Leatherman Tool Grp., Inc.,

532 U.S. 424 (2001) . . . . . . . . . . . . . . . . . . . . . . 33

Cooper v. Pacific Life Ins. Co.,

2007 WL 430693 (S.D.Ga. Feb. 6, 2007) . . . . . . 35

Dowell v. Blackburn,

932 F.2d 963 (4th Cir. 1991) . . . . . . . . . . . . . . . 29

Fellman v. Fireman’s Fund Ins. Co.,

735 F.2d 55 (2d Cir. 1984) . . . . . . . . . . . . . . . . . 29

Franceschi v. Hosp. Gen. San Carlos, Inc.,

420 F.3d 1 (1st Cir.2005) . . . . . . . . . . . . . . . . . . 35

Frank Sullivan Co. v. Midwest Sheet Metal Workers,

335 F.2d 33 (8th Cir.1964) . . . . . . . . . . . . . . . . . 36

Frazer v. Miller-Stout,

2006 WL 3842152 (E.D. Wash. Dec. 28, 2006) . . 29

G.M. Brod & Co., Inc. v. U.S. Home Corp.,

759 F.2d 1526 (11th Cir.1985) . . . . . . . . . . . . . . 35

Geras v. Lafayette Display Fixtures, Inc.,

742 F.2d 1037 (7th Cir.1984) . . . . . . . . . . . . . . . 23

Glover v. Alabama Board of Corrections, et al.,

660 F.2d 120 (5th Cir. 1981) . . . . . . . . . . . . . . . 21

Gomez v. United States,

490 U.S. 858 (1989) . . . . . . . . . . . . . . . . . . . 13, 17

Gonzalez v. United States,

553 U.S. 242 (2008) . . . . . . . . . . . . . . . . . . . 25, 26

Heatransfer Corp. v. Volkswagenerk, A.G.,

553 F.2d 964 (5th Cir.1977) . . . . . . . . . . . . . . . . 35

Hopkins v. Steele,

2010 WL 4340257 (E.D. Mo. Oct. 27, 2010) . . . 29

Interactive Pictures Corp. v. Infinite Pictures, Inc.,

274 F.3d 1371 (Fed.Cir.2001) . . . . . . . . . . . . . . 36

Knapp v. Cate,

2012 WL 5354928 (E.D. Cal. Oct. 29, 2012) . . . 29

Lehrman v. Gulf Oil Corp.,

500 F.2d 659 (5th Cir.1974) . . . . . . . . . . . . . . . . 35

Lightning Lube, Inc. v. Witco Corp.,

4 F.3d 1153 (3d Cir.1993) . . . . . . . . . . . . . . . . . 36

Mathews v. Weber,

423 U.S. 261 (1976) . . . . . . . . . . . . . . . . . . . . . . 13

Mechanical Wholesale, Inc. v. Universal-Rundle

Corp., 432 F.2d 228 (5th Cir.1970) . . . . . . . . . . 35

Milhous v. Metro Govt.,

221 F.3d 1335 (6th Cir. 2000) . . . . . . . . . . . . . . 29

MindGames, Inc. v. W. Publ’g Co. Inc.,

218 F.3d 652 (7th Cir. 2000) . . . . . . . . . . . . . . . 35

Northern Pipeline Construction Co. v. Marathon Pipe

Line Co., 458 U.S. 50 (1982) . . . . . . . . . . . . 13, 30

Pacemaker Diagnostic Clinic, Inc. v.

Instromedix, Inc.,

725 F.2d 537 (9th Cir. 1984) . . . . . . . . . 23, 30, 31

Peretz v. United States,

501 U.S. 923 (1991) . . . . . . . . . . . . . . . . . . . . . . 12

Plaut v. Spendthrift Farm, Inc.,

514 U.S. 211 (1995) . . . . . . . . . . . . . . . . . . . . . . 18

Sockwell v. Phelps,

906 F.2d 1096 (5th Cir. 1990) . . . . . . . . . . . . . . 30

Station Enter., Inc. v. Ganz, Inc.,

2009 WL 3059148 (E.D.Mich. Sept. 24, 2009) . . 36

Story Parchment Co. v. Paterson Parchment

Paper Co., 282 U.S. 555 (1931) . . . . . . . . . . . . . 34

Syufy Enters. v. Am. Multicinema, Inc.,

793 F.2d 990 (9th Cir.1986) . . . . . . . . . . . . . . . . 35

Tampa Bay Shipbuilding & Repair Co. v. Cedar

Shipping Co., 320 F.3d 1213 (11th Cir.2003) . . 36

United States v. Johnston,

258 F.3d 361 (5th Cir. 2001) . . . . . . . . . . . . . . . 23

United States v. Raddatz,

447 U.S. 667 (1980) . . . . . . . . . . . . . . . . . . . 13, 31

Wellness Int’l Network, Ltd. v. Sharif,

— U.S. ----, 135 S. Ct. 1932 (2015) . . . . . . . . . . 32

xii

Wharton-Thomas v. United States,

721 F.2d 922 (3d Cir. 1983) . . . . . . . . . . . . . . . . 24

CONSTITUTION AND STATUTES

U.S. Const. Art. III . . . . . . . . . . . . . . . . . . . . . passim

U.S. Const. amend. VII . . . . . . . . . . . . . . . . . . . . 3, 33

28 U.S.C. § 631(a) . . . . . . . . . . . . . . . . . . . . . . . . . . 32

28 U.S.C. § 631(i) . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

28 U.S.C. § 636 . . . . . . . . . . . . . . . . . . . . . . 17, 28, 30

28 U.S.C. § 636(b)(1)(A) . . . . . . . . . . . . . . . . . . . . 3, 4

28 U.S.C. § 636(c) . . . . . . . . . . . . . . . . . . . . 14, 20, 31

28 U.S.C. § 636(c)(1) . . . . . . . . . . . . . . 4, 5, 13, 20, 31

28 U.S.C. § 636(c)(2) . . . . . . . . . . . . . . . . . . . . passim

28 U.S.C. § 636(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . 32

28 U.S.C. § 636(c)(4) . . . . . . . . . . . . . . . . . . . . . . . . 28

28 U.S.C. § 1254 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

RULE

Fed. R. Civ. P. 73 . . . . . . . . . . . . . . . . . . . . . 14, 27, 29

OTHER AUTHORITIES

1977 Annual Report of the Director of the

Administrative Office of the United States

Courts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23, 24

2016 Report, http://www.uscourts.gov/sites/default/

files/data_tables/jff_1.1_0930.2016.pdf . . . . . . . 24

xiii

TIMOTHY A. BAKER, The Expanding Role of

Magistrate Judges in the Federal Courts, 39 Val.

U. L. Rev. 661 (2005) . . . . . . . . . . . . . . . . . . . . . 14

Cong. Rec. H5056 (daily ed. June 25, 1979)

(statement of Mr. Danielson) . . . . . . . . . . . . . . 21

Cong. Rec. H8725 (daily ed. Sept. 28, 1979)

(statement of Mr. Kastenmeier) . . . . . . . . . . . . 21

H.R.Rep. No. 94-1609 (1976) . . . . . . . . . . . . . . . . . 19

H.R.Rep. No. 96-287 (1979) . . . . . . . . . . . . . . . . . . 26

H.Rep. No. 1364, 95th Cong., 2d Sess. 12 (1978) . . . 20

http://www.uscourts.gov./statistics-reports/usmagistrate-judges-judicial-business-2016 . . . . 15

Reinier H. Kraakman, Note, Article III Constraints

and the Expanding Civil Jurisdiction of Federal

Magistrates: A Dissenting View, 88 YALE L.J.

1023 (1979) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Litigation Services Handbook: The Role of the

Financial Expert(4th ed. 2007) . . . . . . . . . . . . . 36

Moore’s § 59.13[2] [g][iii] . . . . . . . . . . . . . . . . . . . . . 35

Restatement (Second) of Contracts § 352 . . . . . . . . 35

S.Rep. 94-625 (1976) . . . . . . . . . . . . . . . . . . . . . . . . 19

S.Rep. No. 96-74 (1979) . . . . . . . . . . . . . . . . . . . . . . 18

Carroll Seron, The Roles of Magistrates: Nine Case

Studies 84 (Federal Judicial Center 1985) . . . . 22

U.S.Code Cong. & Admin.News 1979 . . . . . . . . . . . 18

PETITION FOR CERTIORARI

In 2003, the parties entered into a three-year, with

optional renewal, exclusive license agreement for the

manufacture, marketing, promotion, and sales of

Petitioners’ compression athletic wear, a rapidly

expanding market niche of apparel. Respondent

terminated the agreement prematurely and Petitioners

filed Complaint in the Southern District of New York

on November 29, 2005. After several years, the district

court ruled on a partial motion to dismiss and

Petitioners filed an Amended Complaint on June 25,

2009. Over the next few years, hearings were canceled,

the case languished with inactivity, and it was shuttled

back and forth between district judges.

Finally, nine years later, in 2014, after Petitioners

continually asked for a trial date, the parties were

contacted by the courtroom deputy and informed that

they needed to consent to a magistrate judge to avoid

further delays. Realizing they had no option, the

parties signed the form. Initially, an experienced

magistrate was assigned and made rulings in

Petitioners’ favor on summary judgment and Daubert

motions. After these rulings, the case was reassigned,

over an objection, to one of the newer magistrates, who,

as Petitioners discovered much later, had little or no

trial experience in a judicial capacity. Although

Respondent asked to vacate the assignment of the new

magistrate, the magistrate took up the motion herself

and denied it. Eventually, after a jury trial, the new

magistrate proceeded to, inter alia, (i) vacate the entire

jury verdict; (ii) preclude all testimony from an expert

who had previously been thoroughly vetted by the

experienced Magistrate during robust Daubert

proceedings; (iii) grant, then vacate the ruling on, the

motion for new trial; (iv) preclude Petitioners from

utilizing any expert in a new trial and (v) preclude all

testimony from business owners as to damages.

Review by this Court is necessary to address the

unconstitutionality of the trial court’s rulings, the

undeniable conflict among the courts of appeal

regarding the categories of evidence and witnesses the

magistrate excluded, and to prevent the decision below

by a non-Article III judge from eviscerating the

protections of Article III in direct contravention of

Congress’ and the Framers’ mandates.

OPINIONS AND ORDERS BELOW

The Second Circuit’s panel decision is reported at

2017 WL 4994467 and reproduced at App.1. The

Second Circuit’s order denying rehearing en banc is

reproduced at App.32. The district court’s decision

vacating the jury’s verdict is reported at 2016 WL

4619207 and reproduced at App.14.

BASIS FOR JURISDICTION

The Second Circuit entered its decision on

November 2, 2017 and denied the petition for rehearing

on December 20, 2017. This Court has jurisdiction

under 28 U.S.C. § 1254.

STATUTORY PROVISIONS INVOLVED

Article III, section 1, of the U.S. Constitution

provides:

The judicial power of the United States, shall be

vested in one Supreme Court, and in such

inferior courts as the Congress may from time to

time ordain and establish. The judges, both of

the supreme and inferior courts, shall hold their

offices during good behavior, and shall, at stated

times, receive for their services, a compensation,

which shall not be diminished during their

continuance in office.

U.S. Constitution - Amendment VII provides:

In Suits at common law, where the value in

controversy shall exceed twenty dollars, the

right of trial by jury shall be preserved, and no

fact tried by a jury, shall be otherwise reexamined in any Court of the United States,

than according to the rules of the common law.

The Federal Magistrates Act (the “Magistrates Act”)

provides in relevant part:

Magistrates Act - 28 U.S.C. § 636(b)(1)(A)

[A] judge may designate a magistrate judge to

hear and determine any pretrial matter pending

before the court, except a motion for injunctive

relief, for judgment on the pleadings, for

summary judgment, to dismiss or quash an

indictment or information made by the

defendant, to suppress evidence in a criminal

case, to dismiss or to permit maintenance of a

class action, to dismiss for failure to state a

claim upon which relief can be granted, and to

involuntarily dismiss an action. A judge of the

court may reconsider any pretrial matter under

this subparagraph (A) where it has been shown

that the magistrate judge’s order is clearly

erroneous or contrary to law.

28 U.S.C. § 636(b)(1)(A). The Act also prescribes the

circumstances under which consent can be provided,

Magistrates Act - 28 U.S.C. § 636(c)(1), (2)

(1) Upon the consent of the parties, a full-time

United States magistrate judge or a part-time

United States magistrate judge who serves as a

full-time judicial officer may conduct any or all

proceedings in a jury or nonjury civil matter and

order the entry of judgment in the case, when

specially designated to exercise such jurisdiction

by the district court or courts he serves. Upon

the consent of the parties, pursuant to their

specific written request, any other part-time

magistrate judge may exercise such jurisdiction,

if such magistrate judge meets the bar

membership requirements set forth in section

631(b)(1) and the chief judge of the district court

certifies that a full-time magistrate judge is not

reasonably available in accordance with

guidelines established by the judicial council of

the circuit. When there is more than one judge of

a district court, designation under this

paragraph shall be by the concurrence of a

majority of all the judges of such district court,

and when there is no such concurrence, then by

the chief judge.

(2) If a magistrate judge is designated to

exercise civil jurisdiction under paragraph (1) of

this subsection, the clerk of court shall, at the

time the action is filed, notify the parties of the

availability of a magistrate judge to exercise

such jurisdiction. The decision of the parties

shall be communicated to the clerk of court.

Thereafter, either the district court judge or the

magistrate judge may again advise the parties of

the availability of the magistrate judge, but in so

doing, shall also advise the parties that they are

free to withhold consent without adverse

substantive consequences. Rules of court for the

reference of civil matters to magistrate judges

shall include procedures to protect the

voluntariness of the parties’ consent.

28 U.S.C. § 636(c)(1), (2). The Magistrates Act is

reproduced at App.42-51.

STATEMENT OF THE CASE

A. The Sunday Players Brand

Compression-wear Market

and

The origins of this suit date back to 2003, when

Daryl Washington (“Washington”), an attorney, sports

agent, and former accountant started Sunday Players

(“SP”), a compression athletic-wear brand. Washington

owns the trademarks “Sunday Players” and a logo of a

stylized running person with an elliptical design and

branded his apparel with this logo and name. Initially,

Washington and his partners marketed the SP brand

themselves by attending major trade shows, publishing

product catalogs, visiting teams and colleges and

making other personal sales calls. One SP principal,

Izell Reese, is a former high-profile NFL defensive back

who introduced the brand to customers and developed

interest in the products among professional football

players in NFL locker rooms. Another SP principal,

Curley Kelly, a football, basketball, baseball, and

volleyball coach, was head of team sales and developed

relationships with coaches and teams throughout the

country. Through these efforts, SP made relatively

substantial sales to high schools, colleges, and retail

stores. Christopher Plumlee served as SP’s Vice

President of Sales. Plumlee had 25 years of sales and

marketing experience and helped develop the brand’s

marketing strategy it wanted Kellwood to help

implement. SP believed that it should base its strategy,

in part, on a proven marketing strategy like that of

Under Armour (“UA”). UA was a new leader in the

compression market and was founded by a college

football player. During the relevant time, UA’s

revenues grew from $5.3 million in 2000 to $242.2

million in 2005. SP’s principals testified they studied

the compression market for years, had actual market

experience, and felt SP could compete in the market.

Before Kellwood Company took over SP’s operation,

the SP brand was gaining nationwide recognition and

was seen worn by well-known athletes such as NFL

Hall of Fame quarterback and NASCAR car owner

Roger Staubach, NBA Hall of Famer Earvin “Magic”

Johnson, and former No. 1 ranked female pool player

in the world, Jeanette “Black Widow” Lee.

B. The Initiation and Termination of the

Exclusive License Agreement

In November 2003, SP entered into an exclusive

license agreement (the “Agreement”) with Kellwood,

whereby Kellwood agreed to manufacture, market and

promote the SP brand and products as exclusive

licensee. No one disputes that Kellwood’s financial

strength, high quality compression-wear

manufacturing, demonstrated record of brand

development, and relationships with national

retailers—as well as experience turning new brands

into extremely profitable brands—enticed SP to enter

into the Agreement. And SP was an attractive partner

for Kellwood, who was seeking licensing agreements to

increase sales and ensure future success.

The

Agreement’s term was three years (until 2007) with an

electable option to renew for three additional years.

Kellwood terminated the Agreement prematurely in

March 2005.

C. The District Court Delays in Advancing

the Case to a Jury Trial

SP filed its Complaint in the Southern District of

New York on November 29, 2005. In February 2006,

Kellwood filed a partial motion to dismiss, but the

district court did not rule on it until March 24, 2009,

and in response to that Order, SP filed a Second

Amended Complaint on June 25, 2009. The first

scheduling order issued on October 30, 2009, but no

trial date was scheduled. The second scheduling order

issued on October 8, 2010, but, again, no trial date was

scheduled. On April 21, 2011, an Order issued

scheduling dates for Daubert expert-related motions.

Consistent with District Judge Deborah A. Batts’s

Order, both parties filed their Daubert motions on May

20, 2011, and briefing was complete by June 24, 2011.

A Motion Hearing on the Daubert Motions was set for

July 12, 2011 before Judge Batts, but the hearing was

later cancelled.

On October 5, 2011, the case was reassigned to

District Judge J. Paul Oetken. On October 18, 2011,

the case was reassigned to Judge Batts. For the next

three years, no substantive court activity was held on

the case.

D. The Courtroom Deputy Contacts the

Parties and Originates Discussion

Regarding Trial by Magistrate.

During 2011-2014, Petitioners’ counsel occasionally

contacted the courtroom deputy to ask for a trial

setting, to no avail. In addition to telephone calls, both

parties sent correspondence to the district court in July

2011 and July 2013 seeking a setting for motions and

trial. Each time contact was made with the court, the

delays would continue. Then, in September 2014,

district Judge Batts’s courtroom deputy contacted the

parties to discuss the parties “agreeing” to a trial by a

magistrate. It was represented that allowing a

magistrate to try the case was the only way to “avoid

further delay.” Because of the already substantial

delays, and the implication from the courtroom deputy

that non-consent would result in further delays, the

parties agreed (clearly under pressure) to allow a

magistrate to handle the case. According to

Respondent’s recollection, it agreed only to allow

Magistrate Judge Dolinger to hear the case since,

based on Kellwood’s research of Magistrate Dolinger, it

believed Magistrate Dolinger had the requisite trial

experience to hear a case of this significance.

E. Judge Batts Assigns the Case to

Magistrate Judge Michael Dolinger

On October 6, 2014, the case was assigned to

Magistrate Dolinger. On April 21, 2015, Magistrate

Dolinger made rulings on the Daubert motions that had

been pending for years and ruled that most of SP’s

expert testimony was admissible under Daubert. On

October 14, 2015, Magistrate Dolinger denied

Kellwood’s summary judgment motion and granted

SP’s summary judgment motion in part, holding that

Kellwood breached the Agreement in two ways.

Magistrate Dolinger held, “a trial is warranted to put

a dollar value on this infraction.”

F. The Case is Reassigned, Without Notice to

the Parties, to Magistrate Judge Sarah

Netburn

On October 14, 2015, without notice, the case was

reassigned to Magistrate Judge Sarah Netburn, who

scheduled a status conference for October 28, 2015.

During the status conference, Respondent’s counsel

indicated that it would file a motion to vacate

Magistrate Netburn’s assignment, which it did.

However, instead of the Article III district judge ruling

on the Motion to Vacate, Magistrate Netburn herself

entered an order denying the Motion. Magistrate

Netburn set trial for February 3, 2016.

G. Based on The Evidence Presented, the

Jury Ruled in Petitioners’ Favor

On the eve of trial, Kellwood filed a motion in limine

to restrict the testimony of SP’s expert Scott Barnes

(“Barnes”), and Magistrate Netburn excluded parts of

Barnes’s testimony. Nevertheless, the jury returned a

verdict that Kellwood breached the Agreement and

awarded SP $4.35 million in lost profits damages and

$500,000 in lost market value damages. During trial,

seven industry-knowledgeable witnesses agreed that

advertising, athletic-sponsorships, and direct consumer

marketing were necessary to sell SP’s products. The

witnesses also effectively agreed that had Kellwood

used its corporate strength, financial resources, sales

and marketing expertise, and retailer contacts to

market/promote the brand, Kellwood/SP, exercising

reasonable efforts, would have achieved substantially

more sales, in the figures provided at trial.

The jury also heard that SP spent years comparing

competitors’ products; visiting stores to see points of

sale; observing consumer behavior; studying how

compression products were marketed; talking to

consumers about brand name and philosophy;

obtaining feedback from coaches, team equipment

managers and athletes about what they liked and

would buy; attending seminars regarding the market;

and speaking with representatives at trade shows and

store owners. Thus, SP’s principals routinely conducted

research to determine whether Kellwood/SP could

compete in the rapidly expanding compression apparel

market. Kellwood presented no experts or lay witnesses

refuting testimony that those who researched, helped

develop, and participated in the market considered

Kellwood/SP sufficiently comparable to early-UA. See

Yardstick Comparison at App.41. Moreover, Kellwood’s

expert performed no Yardstick analysis and offered no

alternative Yardstick company.

Further, the Magistrate Judge did not demonstrate

during the trial that she had any independent expertise

in the compression-wear market with which to evaluate

evidence differently from the jury.

H. Magistrate Netburn Vacates the Jury

Verdict; Grants, then Denies, a New

Trial; and Excludes all Testimony by

Experts and Business Owners

Nonetheless, after trial, Magistrate Netburn

vacated the jury’s verdict and granted Kellwood’s

conditional request for a new trial on damages but held

that that SP would not be permitted to offer any expert

testimony at a new trial. SP then prepared to make its

case without an expert, indicating that it would use

competent and admissible lay witness testimony to

establish SP’s damages from Kellwood’s breaches. After

SP had prepared for trial once again, and again on the

eve of trial, Magistrate Netburn reversed course. She

granted Kellwood’s omnibus motion in limine to

exclude all of SP’s damages evidence, precluded SP’s

lay witness testimony on damages, cancelled the new

damages trial, and retroactively granted Kellwood’s

post-trial judgment as a matter of law. SP moved for

reconsideration, making detailed offers of evidence

demonstrating what it would have established at the

damages trial, but Magistrate Netburn refused to

consider any of the evidence, or allow SP to use expert

testimony, before entering an order of final judgment

awarding nominal damages of $1.

I. The Second Circuit Validates the

Reassigned Magistrate Judge’s Rulings.

Peitioners appealed to the Second Circuit, notifying

it that the parties were effectively required to consent

to a magistrate to get a trial date and that Magistrate

Netburn made the decision herself [improperly] to deny

Respondent’s Motion to Vacate her assignment. See

Plaintiffs-Appellants-Cross Appellees’ Br. (docketed by

2nd Cir. January 13, 2017); p. 2. Petitioners also

explained that Magistrate Netburn erred when she

(i) vacated the jury verdict after making credibility

determinations and improperly weighing the evidence;

(ii) reversed the Order of a new damages trial,

prohibiting Petitioners from introducing any evidence

to support damages; (iii) excluded Petitioners’ expert,

who had already been throroughly vetted during

Daubert proceedings conducted by the previous

Magistrate; and (iv) precluded admissible evidence

supporting damages. See Plaintiffs-Appellants-Cross

Appellees’ Br.; Plaintiffs-Appellants-Cross Appellees’

Response and Reply Br. (docketed by 2nd Cir. July 15,

2017).

The Second Circuit rejected, without thorough

explanation, the evidence from SP, Kellwood and MTV

and retailer statements that established lost profits

and lost business value based, in part, on

Kellwood/SP’s statuts as a yardstick to early-UA,

including because of their: almost exclusive focus on

compression; manufacturing prowess and capabilities;

proposed advertising partners (e.g., similarities

between a 2003 agreement between UA and ESPN and

the 2003 MTV proposal); range, design and quality of

products; ability to meet customer demand; market

entry and expertise; retail capability; and financial

resources. See Yardstick Comparison at App.41.

Petitioners’ petition for rehearing or rehearing en

banc was denied. App.32.

REASONS FOR GRANTING THE PETITION

The Federal Magistrates Act (the “Magistrates Act”)

was designed to “relieve the district courts of certain

subordinate duties that often distract [them] from more

important matters.” Peretz v. United States, 501 U.S.

923, 934 (1991). In keeping with the distinct role that

Article III district court judges play in the judicial

system, Congress cautiously structured the

Magistrates Act to avoid “improperly delegat[ing]” their

core duties to magistrates, Mathews v. Weber, 423 U.S.

261, 269 (1976), “in the interests of policy as well as

constitutional constraints,” Gomez v. United States, 490

U.S. 858, 872 (1989). This is consistent with this

Court’s view that a “magistrate acts subsidiary to and

only in aid of the district court” and “the entire process

takes place under the district court’s total control and

jurisdiction.” United States v. Raddatz, 447 U.S. 667,

681 (1980). In fact, in Raddatz, the Court upheld

decision-making by magistrate judges only because

“the ultimate decision is made by the district court.” Id.

at 683; see also Northern Pipeline Construction Co. v.

Marathon Pipe Line Co., 458 U.S. 50, 83 (1982)

(“Critical to the Court’s decision to uphold the

Magistrates Act was the fact that the ultimate decision

was made by the district court.”).

In limited instances, the Magistrates Act allows

parties to “consent” to trial by a non-Article III judge.

One of the initial cases discussing adjudication of

disputes by non-Article III judges with the parties’

consent is Commodity Futures Trading Comm’n v.

Schor, 478 U.S. 833 (1986). There, this Court held that

the right to adjudication before an Article III court is

“personal.” Id., at 848. In Commodity Futures, this

Court recognized that if Article III’s structural

interests as “‘an inseparable element of the

constitutional system of checks and balances’” are

implicated, “the parties cannot by consent cure the

constitutional difficulty.” Id., at 850–851.

Further, informed consent is required. See 28

U.S.C. § 636(c)(1) (“Upon the consent of the parties, a

full-time United States magistrate judge ... may

conduct any or all proceedings in a jury or nonjury civil

matter and order the entry of judgment in the

case ....”). Due to the importance of obtaining valid

consent, Section 636(c) and Federal Rule of Civil

Procedure 73 mandate the requirements and processes

for adjudication of disputes by non-Article III judges

with the parties’ consent. It is surely common

knowledge that although some courts use magistrate

judges expansively in civil cases, other individual

district judges delegate only limited civil pretrial duties

to magistrates because, apparently, they do not see a

need to do so or perhaps prefer to handle trials

themselves, rather than delegate them to a judicial

quasi-alter ego. Indeed, there have been many

opinions discussing whether a case should have been

handled by the magistrate judge as a dispositive or

non-dispositive matter, whether the parties’ consent

was needed, whether consent could be implied from a

party’s conduct, and whether assignment was

consistent with the Constitution and laws of the United

States. The answers to many of these questions vary

from circuit to circuit.1

During the December 2016 statistical year,

magistrate judges disposed of 1,087,249 cases and

proceedings nationally, including 16,656 civil cases in

which magistrate judges were the presiding judges for

all proceedings on consent of the parties. Compared to

2012, magistrate judges concluded 11 percent more

For a summary of the wide range of duties assigned to

magistrates, see TIMOTHY A. BAKER, The Expanding Role of

Magistrate Judges in the Federal Courts, 39 Val. U. L. Rev. 661,

677-680 (2005).

civil cases by consent.2 Recognizing the growing use of

magistrates and to avoid the likelihood of consent by

coercion it is important that this Court consider this

case. This case also emphasizes the need for article III

district courts faithfully to guard the powers invested

in article III judges and the rights of parties to have

skilled judicial officers. Review will allow reversal of

those important questions of federal law that the

underlying case has effectively decided that have not

been, but should be, settled by this Court.

First, this case provides the Court with the vehicle

with which to find that it is unconstitutional to allow a

Magistrate Judge’s rulings, unchecked by an Article III

judge, to create legal precedent. Second, this case can

decide that a district court must not use fears of

litigation delays to explicitly or implicitly force litigants

to litigate before a non-Article III court. Third, even

where consent is voluntarily provided, the Article III

district court must establish mechanisms to ensure

that trial magistrates possess sufficient trial-related

competence with which to provide the same fair and

impartial trial that the article III district judge could

have provided. Fourth, that even where consent is

legitimately provided, the article III court must ensure

that article III values are protected by maintaining

both administrative controls and direct supervision

over each case. Indeed, the absence of direct article III

scrutiny by a district judge over a less-experienced

magistrate’s rulings raises serious individual rights’

violations, institutional concerns, and constitutional

violations. In cases such as this, the individual litigant

See, http://www.uscourts.gov./statistics-reports/us-magistratejudges-judicial-business-2016 (last visited Feb. 28, 2018)

and residents of the respective circuits are

inappropriately and permanently subjected to the

unreviewed rulings of a non-article III court. Fifth, this

case allows the Court to settle the circuit conflict and

find that motions to vacate a magistrate assignment

must be decided by the article III district judge.

Finally, with or without consent, Magistrate

Netburn’s decision to overturn a valid jury verdict is

wrong. And the second circuit effectively affirmed the

Magistrate’s decisions to vacate the jury verdict; grant,

then vacate, a new trial; and preclude, wholesale, the

testimony of experts and business owners. In doing so,

the second circuit indicates that a party has no right to

challenge in the Article III district court whether a

magistrate has the requisite skill and trial experience

with which to determine whether to vacate a jury

verdict that is based on substantial and undisputed

evidence and to decide whether to exclude expert and

business owner testimony across-the-board.

Review is necessary to affirm the obligations the

article III district court has to ensure that consent is

voluntary; only magistrates with the requisite trial

experience in a judicial capacity can try cases; and

valid jury verdicts are not inappropriately vacated.

Thus, review will restore certainty and predictability to

article III and Seventh Amendment protections

consistent with Congress’ and the Framers’ manifest

intents.

THE DECISION AFFIRMING THE

MAGISTRATE JUDGE’S RULINGS IS

CONTRARY TO THE PLAIN TEXT OF

SECTION 636 AND CONGRESS’

PURPOSES IN ESTABLISHING THE

MAGISTRATES ACT.

Relying on precedent and legislative history, in

Gomez v. United States, 490 U.S. 858 (1989), this Court

cited its opinion in Commodity Futures Trading

Comm’n v. Schor, 478 U.S. 833 (1986), which

emphasized the importance of the personal right to an

Article III adjudicator:

“Article III, § 1, serves both to protect ‘the role of

the independent judiciary within the

constitutional scheme of tripartite government.’

Thomas [v. Union Carbide Agricultural Products

Co., 473 U.S. 568, 583, 105 S.Ct. 3325, 3334, 87

L.Ed.2d 409 (1985)], and to safeguard litigants’

‘right to have claims decided before judges who

are free from potential domination by other

branches of government.’ United States v. Will,

449 U.S. 200, 218 [101 S.Ct. 471, 482, 66

L.Ed.2d 392] (1980). See also Thomas, supra,

[473 U.S.,] at 582–583 [105 S.Ct., at 3333–3334];

Northern Pipeline [Construction Co. v.

Marathon Pipe Line Co.], 458 U.S. [50], at 58

[102 S.Ct. 2858, at 2864, 73 L.Ed.2d 598 (1982)].

Although our cases have provided us with little

occasion to discuss the nature or significance of

this latter safeguard, our prior discussions of

Article III, § 1’s guarantee of an independent

and impartial adjudication by the federal

judiciary of matters within the judicial power of

the United States intimated that this guarantee

serves to protect primarily personal, rather than

structural, interests. See, e.g., id., at 90 [102

S.Ct., at 2881] (Rehnquist, J., concurring in

judgment) (noting lack of consent to non-Article

III jurisdiction); id., at 95 [102 S.Ct., at 2884]

(WHITE, J., dissenting) (same).

Commodity Futures, 478 U.S. at 848. The Court

discussed that the right to adjudication before an

Article III court is “personal” and “subject to waiver.”

Id., at 848. But the Court also recognized that if Article

III’s structural interests as “‘an inseparable element of

the constitutional system of checks and balances’” are

implicated, “the parties cannot by consent cure the

constitutional difficulty.” Id., at 850–851. Indeed, the

Framers crafted this charter of the judicial department

with an expressed understanding that it gives the

Federal Judiciary (e.g. article III judges) the power, not

merely to rule on cases, but to decide them “render

dispositive judgments.” Plaut v. Spendthrift Farm, Inc.,

514 U.S. 211, 219 (1995). There is no such provision in

the Constitution bestowing the same authority upon

magistrate judges.

It is undeniable that the Magistrates Act was never

intended to provide magistrates with the constitutional

authority to try cases and issue final judgments, only

to assist district judges, so that the article III judges

could be freed up to preside at trials. This theme

pervades the Magistrates Act’s legislative history. See,

e.g., S.Rep. No. 96–74, p. 3 (1979), U.S.Code Cong. &

Admin.News 1979, pp. 1469, 1471 (1979 amendments

to Federal Magistrates Act) (“In enacting the Federal

Magistrates Act in 1968, the Congress clearly intended

that the magistrate should be a judicial officer whose

purpose was to assist the district judge to the end that

the judge could have more time to preside at the trial

of cases”); H.R.Rep. No. 94–1609, p. 6 (1976) (same);

S.Rep. 94–625, p. 6 (1976) (1976 amendments to

Federal Magistrates Act) (“Without the assistance

furnished by magistrates ... the judges of the district

courts would have to devote a substantial portion of

their available time to various procedural steps rather

than to the trial itself”); see also S.Rep. No. 371, 90th

Cong., 1st Sess., 9 (1967) (Federal Magistrates Act is

intended “to cull from the ever-growing workload of the

U.S. district courts matters that are more desirably

performed by a lower tier of judicial officers”). Again,

it was never intended that magistrates would be given

constitutional authority to issue final judgments.

Further, Commodity Futures listed three factors to

consider in judging whether a statute authorizing

adjudication of an Article III claim in a non-Article III

tribunal “threatens the institutional integrity of the

Judicial Branch:” (1) the extent to which the essential

attributes of judicial power are reserved to Article III

courts; (2) the origins and importance of the right to be

adjudicated; and (3) the concerns that drove Congress

to depart from the requirements of Article III.

Moreover, the House Report reflects a belief that only

those cases not requiring sophisticated legal knowledge

should be given to magistrates, rather than to Article

III judges.

[A]t their choice, parties can utilize the

particular advantages of magistrates and judges.

There are cases which do not require those

special attributes of Article III judges, but

nonetheless do require an impartial generalist to

resolve issues of importance to the parties.

H.Rep. No. 1364, 95th Cong., 2d Sess. 12 (1978). In

other words, the Magistrates Act’s purpose was not to

enable more non-Article III magistrates to create legal

precedence that would be binding on all persons within

the circuits to the same extent as the precedent

established by Article III judges who have been

properly vetted, appointed, and approved as provided

in the Constitution.

A. The Consent Was Clearly Not Voluntary

The Article III personal rights are protected by the

statutory language of 28 U.S.C. § 636(c), which

requires the parties’ consent for a magistrate judge to

exercise jurisdiction over “all proceedings” in a civil

matter. See 28 U.S.C. § 636(c)(1) (“Upon the consent of

the parties, a full-time United States magistrate

judge ... may conduct any or all proceedings in a jury or

nonjury civil matter and order the entry of judgment in

the case ....”) (emphasis added).

However, the

Magistrates Act makes clear that consent to a trial by

magistrate is the exception: “Upon the consent of the

parties ...” (phrase is repeated twice). Notwithstanding

any provision of law (or rule) to the contrary,

subsection 636(c)(2) clearly mandates the consent of all

the parties: “[P]arties ... are free to withhold consent

without adverse substantive consequences.” “Rules of

court ... shall include procedures to protect the

voluntariness of the parties’ consent.” [emphasis added]

Further, the emphasis on the consent requirement

in Congressional debates evinces a desire for a clear

expression of consent by the parties before allowing a

magistrate authority under subsection (c). In the civil

context, ‘[t]he applicable legislative history indicates

that consent to reference was considered to be a vital

element . . . to ensure that referral would not violate

constitutional rights. See, e.g., Cong. Rec. H5056 (daily

ed. June 25, 1979) (statement of Mr. Danielson); id. at

H8725 (daily ed. Sept. 28, 1979) (statement of Mr.

Kastenmeier).” Calderon v. Waco Lighthouse for the

Blind, 630 F.2d 352, 353–54 n.1 (5th Cir. 1980). A

decision without consent by a magistrate, a non-Article

III judge, undermines the Constitution’s objective and

might violate the rights of the parties. Glover v.

Alabama Board of Corrections, et al. 660 F.2d 120 (5th

Cir. 1981).

To ensure that a litigant’s right to an Article III

arbitrator is protected, without undesirable

consequences, the Act provides, in part,

Thereafter, either the district court judge or the

magistrate judge may again advise the parties of

the availability of the magistrate judge, but in so

doing, shall also advise the parties that they

are free to withhold consent without

adverse substantive consequences. Rules of

court for the reference of civil matters to

magistrate judges shall include procedures

to protect the voluntariness of the parties’

consent.

28 U.S.C. § 636(c)(2). Here, the parties wanted the

case tried by the Article III judge. Indeed, during the

years the case lay dormant in the district court (20052014) none of the parties broached the subject of trial

by a magistrate. It was only at the district court’s

behest that the subject of trial by a magistrate ever

surfaced. With the “advice” to consent coming directly

from the district judge’s chambers, it can hardly be

thought to have been voluntary. See Carroll Seron, The

Roles of Magistrates: Nine Case Studies 84 (Federal

Judicial Center 1985) at 61-62 (observing that consent

may be illusory, because “when a judge raises the

question of consent to a magistrate-for whatever

reason-lawyers feel that they have little choice but to

go along with the suggestion”); see also Reinier H.

Kraakman, Note, Article III Constraints and the

Expanding Civil Jurisdiction of Federal Magistrates: A

Dissenting View, 88 YALE L.J. 1023, 1049 (1979).

Indeed, violations of the Magistrates Act occur even

without personal coercion. See Kraakman at 1051

(“Even without judicial coercion, however, routinization

and expansion of consensual reference must eventually

come to violate Article III constraints.”)

The Magistrates Act also states that “neither the

district judge nor the magistrate shall attempt to

persuade or induce any party to consent to reference of

any civil matter to a magistrate.” 28 U.S.C. § 636(c)(2).

Yet it should come as no surprise that the parties here

did not openly challenge the district court’s urging the

assignment to the designated magistrate. That this

case never advanced towards trial when the parties

continually asked to schedule hearings and trial, and

that the courtroom deputy advised the parties that

consent to a magistrate was the only way to advance

the case, certainly channels coercion. Indeed, the

parties’ pleadings indicate they felt that they had to

sign the consent form or would ‘”face further delay’ [in

a case] that had ‘been pending for over three years at

that time”’ and would allow the case to “proceed to a

jury trial sooner.” Thus, the adverse consequences of

not agreeing to a magistrate trial was that the case

would face further delays at the district courts’ hands.

In United States v. Johnston, 258 F.3d 361 (5th Cir.

2001), the Fifth Circuit noted that waiver may not be

conclusive with respect to the personal protections

guaranteed by Article III “if the alternative to the

waiver were the imposition of serious burdens and

costs on the litigant.” Id. at 367, n.3 (citing Pacemaker

Diagnostic Clinic, Inc. v. Instromedix, Inc., 725 F.2d

537, 543 (9th Cir. 1984)). “If it were shown that the

choice is between trial to a magistrate or the endurance

of delay or other measurable hardships not clearly

justified by the needs of judicial administration, we

would be required to consider whether the right to an

Article III forum had been voluntarily relinquished.

Pacemaker, 725 F.2d at 543; see also Geras v. Lafayette

Display Fixtures, Inc., 742 F.2d 1037, 1042 (7th

Cir.1984) (requiring availability of trial before an

Article III judge as a realistic and viable alternative to

sustain constitutional challenge against reference of

civil matters to magistrate judges).

In other words, here, consent was less than

voluntary and not the product of free choice. To even

assume there was free choice ignores the practical

realities behind the Magistrates Act’s passage and the

very real pressures on district judges to channel more

and more cases to magistrates. As mentioned earlier,

the rapid growth in the use of magistrates has been

well documented. From 159 full-time magistrate

positions authorized for 1978, the number rose to 537

in 2016. See 1977 Annual Report of the Director of the

Administrative Office of the United States Courts at 28

(Report); 2016 Report at 28.3 And, as discussed above,

there has been a substantial increase in the use of

magistrate judges in civil matters according to

information included in the December 2016 statistical

report. And courts recognize that pressure to submit

cases to magistrates increases in direct proportion to

the number of magistrate positions, thus leading to

coercion. Wharton-Thomas v. United States, 721 F.2d

922, 931-31 (3d Cir. 1983).

Where it is unclear whether consent was proper,

this Court has remanded cases to the district court.

See, e.g. Wellness Int’l Network, Ltd. v. Sharif, ––– U.S.

––––, 135 S.Ct. 1932, 1939, (2015) (the Seventh Circuit

[should] decide on remand whether Sharif’s actions

evinced the requisite knowing and voluntary consent).

Here, however, the Court can rule as a matter of law

that consent to Magistrate Netburn was not voluntary.

B. M a g i s t r a t e

Michael

Dolinger

Determined a Trial Was Proper

Soon after the lawsuit was filed, on November 29,

2005, Magistrate Dolinger was designated by the

district court as the magistrate to assist with properly

delegable matters. Then, on October 6, 2014, based on

what the court considered to be consent, Judge Batts

referred the case to Magistrate Dolinger “to conduct all

proceedings and order the entry of a final judgment….”

On April 21, 2015, Judge Dolinger ordered that most,

but not all, of SP’s expert witness testimony was

admissible under Daubert standards. (reported at 105

See, http://www.uscourts.gov/sites/default/files/data_tables/jff_1.1

_0930.2016.pdf (last visited February 26, 2018)

F. Supp. 3d 293 (S.D.N.Y. 2015)). On October 14, 2015,

Magistrate Dolinger granted SP’s summary judgment

motion in part, holding that Kellwood breached the

Agreement. (reported at 2015 WL 6437456 (S.D.N.Y.

Oct. 14, 2015). Magistrate Dolinger also held that “a

trial is warranted to put a dollar value on this

infraction.”

II.

THE REASSIGNMENT OF THE CASE,

WITHOUT NOTICE, TO MAGISTRATE

NETBURN VIOLATES SECTION 636.

On October 14, 2015, the parties were informed that

the case was reassigned to Magistrate Judge Sarah

Netburn to conduct the trial. No other details were

provided.

A. The Magistrates Act is Violated if an

Assigned Magistrate Does Not Possess

the Minimum Trial Proficiency of an

Article III Judge.

Magistrate Netburn’s reassignment was without

notice to the parties and without an opportunity to

consider the appointment. Thus, constitutional

questions here are: (i) whether involuntary consent

legitimated Magistrate Netburn’s exercise of authority

where the parties “consented” only because they were

informed that consent was the only way to not

encounter additional trial delays; and (ii) even if the

parties consented to trial by magistrate, does an initial

consent allow reassignment to another magistrate with

little or no trial experience in a judicial capacity. A

view expressed in Gonzalez v. United States, 553 U.S.

242 (2008) demonstrates that a magistrate’s expertise

is paramount to a fair trial and that a magistrate

should not be considered the equivalent of an article III

judge:

There is no apparent reason, for example, why

the right to an Article III judge should be

deemed any less fundamental, or its exercise any

more “‘tactical,’” ante, at 1770 (opinion of the

Court) (quoting Taylor, supra, at 418, 108 S.Ct.

646), than the right to a jury trial. The Framers

viewed independent judges, no less than the

right to a jury of one’s peers, as indispensable to

a fair trial.

Magistrate judges do not enjoy the structural

protections of Article III: They serve 8–year

terms and may be removed for cause, 28 U.S.C.

§§ 631(e), (i), and they are subject to diminution

of their salaries and outright abolition of their

offices by Congress. Accordingly, whatever their

virtues, magistrate judges are no substitute

for Article III judges in the eyes of the

Constitution.

Gonzalez 553 U.S. at 249 (Thomas, J., dissenting).

Indeed, the legislative history reiterates that

magistrates must have the requisite expertise to be

able to act in their respective roles. See H.R.Rep. No.

96–287, p. 20 (1979) (“Because of the consent

requirement, magistrates will be used only as the

bench, bar, and litigants desire, only in cases where

they are felt by all participants to be competent”).

Even recommendations from the Magistrate Judges

Committee of the Judicial Conference make clear that

the parties should be fully informed of the Magistrates’

experience and abilities.4

This case was reassigned to Magistrate Netburn on

October 14, 2015, without notice to the parties and

without an opportunity to consider the reappointment.

In other words, even if it were determined that the

initial consent was not coerced, the reassignment to

Magistrate Netburn, after substantive motions had

been decided by another magistrate, should have

required that the district court provide the parties with

information about the new magistrate’s trial experience

and an opportunity to object based on full disclosure.

Federal Rule of Civil Procedure 73 fortifies this

reading. The Rule mirrors § 636(c)(2) for informing

parties of their option to proceed before a magistrate

judge and of their obligation to file a consent form if

they chose to do so. Fed. Rule Civ. Proc. 73(b) (“When

a magistrate judge has been designated to exercise civil

trial jurisdiction, the clerk shall give written notice to

the parties of their opportunity to consent,” and if the

parties agree, “they shall execute and file a joint form

of consent or separate forms of consent ...” (emphasis

added)).

Suggestions for Utilization of Magistrate Judges, No. 4. The

Committee suggests that courts take steps to educate the bar

about the quality, abilities, and experience of their Magistrate

Judges and the availability and advantages of the consent option.

Judges can disseminate this and other information about the

consent option in pretrial conference notices, referral orders, and

articles written for local legal publications, and it can highlight the

consent option on its website (emphasis supplied).

Respondent’s counsel, who had the area resources5 with

which to investigate Magistrate Netburn’s lack of trial

experience in a judicial capacity, moved to vacate the

assignement.

B. The Magistrates Act Was Violated When

the Parties Were Not Advised They

Could Withhold Consent from Allowing

Magistrate Netburn to Try the Case

Congress provided in § 636(c)(2) that “[t]he decision

of the parties shall be communicated to the clerk of

court,” and, if the parties do not consent, the district

judge may not raise the matter again without

“advis[ing] the parties that they are free to withhold

consent without adverse substantive consequences.”

After Magistrate Dolinger decided various motions and

prepared the case for trial, the case was reassigned to

Magistrate Netburn. However, the district court did

not provide the parties with the right to withhold

consent from allowing the new magistrate to hear the

case. This was plain error.

C. Magistrate Judge Netburn’s Ruling on

the Motion to Vacate Violated Section

636

Section 636(c)(4) provides that “[t]he court may, for

good cause shown on its own motion, or under

extraordinary circumstances shown by any party,

vacate a reference of a civil matter to a magistrate

Petitioners’ counsels, however, were from outside of the Second

Circuit and had no knowledge of Magistrate Netburn’s lack of trial

experience in a judicial capacity and received nothing from the

district court regarding such.

judge under this subsection.” The immediate question

is whether Magistrate Netburn should have ruled on

the motion to vacate reference. Rule 73(b)(3) makes

clear that district judge Batts should have decided the

motion to vacate, where it states that “[on its own for

good cause—or when a party shows extraordinary

circumstances—the district judge may vacate a referral

to a magistrate judge under this rule.” (emphasis

added); see also Fellman v. Fireman’s Fund Ins. Co.,

735 F.2d 55, 58 (2d Cir. 1984) (“Once a case is referred

to a magistrate under section 636(c), the reference can

be withdrawn only by the district court, and only ‘for

good cause shown on its own motion, or under

extraordinary circumstances shown by any party.’”).

The Fourth and Sixth Circuits have also indicated that

only a district judge, not a magistrate judge, has the

power to withdraw a consent reference. See Milhous v.

Metro Govt., 221 F.3d 1335, 2000 WL 876396, at *1 (6th

Cir. Jan. 21, 2000) (“It is clear that once a case has

been referred to a magistrate judge under § 636(c), the

district judge is the only one who can withdraw the

reference.”); Dowell v. Blackburn, 932 F.2d 963 (4th

Cir. 1991) (concluding that only the district judge has

jurisdiction to rule on a motion to withdraw consent).

Some courts treat the magistrate’s order on motions

to vacate as a recommendation to be accepted or

rejected by the district court. Knapp v. Cate, 2012 WL

5354928, at *2 (E.D. Cal. Oct. 29, 2012) (treating

magistrate judge’s order denying motion to withdraw

consent as recommendation); Hopkins v. Steele, 2010

WL 4340257, at *1 (E.D. Mo. Oct. 27, 2010); Frazer v.

Miller-Stout, 2006 WL 3842152, at *1 (E.D. Wash. Dec.

28, 2006). Whereas some circuits assume, without

explanation, that magistrates are permitted to rule on

motions to vacate. See, e.g., Sockwell v. Phelps, 906

F.2d 1096, 1097 n.1 (5th Cir. 1990); Allen v. Wine, 297

Fed. Appx. 524, 529 (7th Cir. 2008). Therefore, review

is necessary to remedy Magistrate Netburn’s

constitutional violation or, alternatively, to resolve the

circuit split and restore the Framers’ intent.

III.

DISTRICT

COURT’S

CASE

ASSIGNMENTS TO MAGISTRATES FOR

TRIAL, WITHOUT MAINTAINING THE

RIGHT TO REVIEW IT, VIOLATES

SECTION 636.

The second Magistrate’s decision to vacate both the

jury verdict and the new trial order, as well as her

wholesale exclusions of evidence and witnesses

highlight the need for review by the Article III district

court. As discussed above, the Magistrates Act reflects

Congress’s efforts to distinguish those tasks properly

delegated to magistrates from those best suited for

resolution by the district court. The underlying case

highlights that permitting a magistrate to create legal

precedent, unreviewable by a district court, raises

serious individual rights and constitutional violations.

In permitting it, the statute would allow magistrates,

through private parties’ consent, to create binding legal

precedent that must be followed by litigants in other

cases. In Pacemaker, the court stated that “[i]f the

essential, constitutional role of the judiciary is to be

maintained, there must be both the appearance and the

reality of control by article III judges over the

interpretation, declaration, and application of federal

law.” 725 F.2d at 544. See also Northern Pipeline

Construction Co. v. Marathon Pipe Line Co., 458 U.S.

50, 86 n. 39 (1982). Here there is neither the

appearance nor the reality of article III control. In

other words, in instances where neither of the parties

in a case decided by a magistrate takes an appeal to

the circuit court, legal precedent, binding on the public,

and all Article III judges, is created by the

unreviewable decisions of a non-article III magistrate.

Indeed, in both Raddatz6 and Pacemaker, for

example, article III values were protected by

administrative controls and direct supervision of

individual cases. But in the absence of direct article III

supervision of a referred case, when an incorrect

decision is made, and no appeal is taken, there is no

mechanism for correcting the magistrate’s clearly

erroneous decisions and maintaining article III values.

In analyzing § 636(c), the second circuit stated that the

relevant question was whether the statutory scheme

“impermissibly allows district judges to place

magistrate[] [judges] under the control of the executive

or legislative branches.” Collins v. Foreman, 729 F.2d

108, 114 (2d Cir.1984). There are three facets of the

statutory scheme on which the Collins court relied to

answer this question. First, magistrate judges may

conduct all proceedings in a civil matter, including

entry of judgment, only “when specially designated to

exercise such jurisdiction by the district court or courts

he [or she] serves.” 28 U.S.C. § 636(c)(1). Second, the

district court judges are entrusted with the exclusive

responsibility to appoint and remove magistrate judges.

“Congress has vested in Art. III judges the discretionary power

to delegate certain functions to competent and impartial

assistants, while ensuring that the judges retain complete

supervisory control over the assistants’ activities.” 447 U.S. at

685–686.

28 U.S.C. § 631(a), (i). Third, the district court retains

the power to withdraw the order of reference. 28 U.S.C.

§ 636(c)(4). Id. The Collins court also believed that

article III control was demonstrated by the provision,

“an aggrieved party may appeal directly to the

appropriate United States court of appeals,” that is, an

Article III court, “from the judgment of the magistrate

judge in the same manner as an appeal from any other

judgment of a district court,” 28 U.S.C. § 636(c)(3); Id.

But of course this provision would never come into play

for those magistrate decisions that are not appealed to

the circuit court. In that instance, no Article III court

would have a means of correcting a magistrate’s

erroneous findings.

Here it is integrally important that this Court

enforce the Constitution’s and Congress’s intention

that Article III courts maintain the power and

obligation to review all decisions by magistrates. The

concept of assignments to magistrate judges obviously

contemplated that a district judge—insulated by life

tenure and irreducible salary—would be waiting in the

periphery, fully able to correct the magistrate’s errors.

For instance, in Wellness Int’l, this Court held that

“allowing Article I adjudicators to decide claims

submitted to them by consent does not offend the

separation of powers ‘so long as Article III courts

retain supervisory authority over the process.’”

Id. at 1943. (emphasis supplied). Here, it is a violation

of the Constitution and the Magistrates Act to provide

magistrates with unchecked authority.

IV.

THE DECISION BELOW, IF NOT

REVERSED, PRESENTS A SERIOUS AND

WIDESPREAD THREAT TO ALL LAWFUL

VERDICT WINNERS AT THE HANDS OF

UNTRIED ARBITERS WHOSE OPINIONS

ARE NOT SUBJECT TO REVIEW BY AN

ARTICLE-III DISTRICT JUDGE

Where an exclusive licensee does nothing to market

and sell branded items to consumers and wrongfully

terminates the agreement, and where judges and jury

determine the licensor has been meaningfully

damaged, there should never be a finding of $1 in

nominal damages, especially where, pre-breach,

everyone projected profits.

The Seventh Amendment provides:

In Suits at common law, where the value in

controversy shall exceed twenty dollars, the

right of trial by jury shall be preserved, and no

fact tried by a jury, shall be otherwise reexamined in any Court of the United States than

according to the rules of the common law.

U.S. Const. amend. VII. Thus interpreted, the

Seventh Amendment guarantees that suitors in actions

at law shall have the benefits of trial of issues of fact by

a jury. Cooper Indus., Inc. v. Leatherman Tool Grp.,

Inc., 532 U.S. 424, 437 n. 11 (2001) (the Seventh

Amendment constrains the trial court to defer to the

fact-finding function of the jury). This Court has held

that one of the most sacrosanct values is the rule that,

with the rarest of exceptions, a court may not usurp the

jury’s finding of damages, unless all reasonable men,

exercising an unprejudiced judgment, would draw an

opposite conclusion from the facts. Story Parchment Co.

v. Paterson Parchment Paper Co., 282 U.S. 555, 566

(1931) (noting that where a “conclusion rested upon

inferences from facts within the exclusive province of

the jury,” such a conclusion may “not be drawn by the

court ... without usurping the functions of that factfinding body”). There, this Court held, regarding the

degree of proof required to prove the amount of

damages, that:

The rule which precludes the recovery of

uncertain damages applies to such as are not the

certain result of the wrong, not to those damages

which are definitely attributable to the wrong

and only uncertain in respect of their amount.

Id. at 563. Here, the Jury found lost profits

damages of $4.35 million. The magistrate

acknowledged that SP proved it had value before

Kellwood’s breaches and that Kellwood’s breaches

“destroyed” SP. SP made pre-breach sales, even

considering the limited customers Kellwood permitted

SP to contact. Undisputed evidence from seven

industry witnesses (e.g. those from SP, Kellwood,

sporting goods stores, and MTV) established that

Kellwood/SP was a yardstick to early-UA. There was

also testimony that had Kellwood used its corporate

strength, financial resources and retailer contacts to

market/promote the brand, Kellwood/SP would have

achieved substantially more sales. In addition, if other

evidence had been needed, each party, and an

independent party, MTV, projected significant profits

from the Agreement had Kellwood not breached it.

Magistrate Netburn clearly erred when she ignored

this undisputed testimony.

Further, the additional Magistrate’s rulings,

affirmed by the court of appeals, conflict with decisions

of other United States courts of appeal and so far

departs from the accepted and usual course of judicial

proceedings that they must be reversed:

1. the establishment of a new rule that would not

require the option of a remittitur or new trial if

a magistrate believes the amount of damages

awarded is excessive, creating a conflict among

the circuits;7

2. the inconsistency of the Magistrate’s opinions

with the longstanding rule that “the wrongdoer

must shoulder the burden of the uncertainty

regarding the amount of damages,” creating a

conflict among the circuits;8

3. the establishment of a new method of evaluating

Yardstick companies as a matter of law in the

district court, creating a conflict among the

circuits;9 and

See 12 Moore’s § 59.13[2] [g][iii] at 59–83; Franceschi v. Hosp.

Gen. San Carlos, Inc., 420 F.3d 1, 5 (1st Cir.2005).

MindGames, Inc. v. W. Publ’g Co. Inc., 218 F.3d 652, 658 (7th Cir.

2000); Lehrman v. Gulf Oil Corp., 500 F.2d 659, 669 n.47 (5th

Cir.1974) See also Restatement (Second) of Contracts § 352, cmt.

a (“Doubts are generally resolved against the party in breach.”)).

See Cooper v. Pacific Life Ins. Co., 2007 WL 430693, at *1 (S.D.Ga.

Feb. 6, 2007); G.M. Brod & Co., Inc. v. U.S. Home Corp., 759 F.2d

1526, 1538 (11th Cir.1985); Heatransfer Corp. v. Volkswagenerk, A.G.,

553 F.2d 964, 983 (5th Cir.1977); Mechanical Wholesale, Inc. v.

Universal-Rundle Corp., 432 F.2d 228 (5th Cir.1970); Syufy Enters.

v. Am. Multicinema, Inc., 793 F.2d 990, 1003 (9th Cir.1986)

4. the creation of new precedent disallowing

projections’ evidence and allowing damages

testimony from business principals, if at all, and

experts solely in cases involving undefined

“established companies,” creating a conflict

among the circuits.10

Review of the Magistrate’s ruling vacating the

verdict will ensure that defendants do not benefit from

uncertainty in damages engendered by their own

breaches. The Magistrate’s rulings, if allowed to stand,

would lead to the creation of a per se rule denying

damages in all cases involving arguably new ventures

or difficult-to-prove damages, and encourage contract

breaches in such situations. The rulings also eliminate

any use of the Yardstick method, unless comparator

companies have equal sales volumes. Finally, the

Magistrate who tried the case had no independent

knowledge of the compression-wear market with which

to discount the testimony of the industry witnesses or

deprive the jury of its verdict. Therefore, Magistrate

Netburn’s rulings must be reversed.

Lightning Lube, Inc. v. Witco Corp., 4 F.3d 1153 (3d Cir.1993);

Tampa Bay Shipbuilding & Repair Co. v. Cedar Shipping Co., 320

F.3d 1213, 1222 (11th Cir.2003); Station Enter., Inc. v. Ganz, Inc.,

2009 WL 3059148 (E.D.Mich. Sept. 24, 2009) (allowing the owners

of a business who ran the day-to-day business to testify as to

projected profits and/or resulting damages, basing the decision on

FRE 701 and Advisory Committee Notes.); Frank Sullivan Co. v.

Midwest Sheet Metal Workers, 335 F.2d 33, 41–42 (8th

Cir.1964)(projections testimony admissible); Interactive Pictures

Corp. v. Infinite Pictures, Inc., 274 F.3d 1371, 1385

(Fed.Cir.2001)(same) See also Litigation Services Handbook: The

Role of the Financial Expert 24:13 (4th ed. 2007)

CONCLUSION

For the reasons set forth above, Petitioners pray

that the Court grant this petition.

Respectfully submitted,