Monday, October 31, 2005

U.S. Chamber of Commerce Issues Report Claiming "Securities Class Action System Out of Kilter"

The U.S. Chamber of Commerce has issued a press release reporting on a study they have just released that is critical of the "securities class action litigation system." Here's an excerpt:

A U.S. Chamber Institute for Legal Reform (ILR) study of the securities class action litigation system shows that there is a substantial disconnect between what the system is supposed to do in terms of compensating investors and what it actually does. The report was released today as part of ILR’s 6th Annual Legal Reform Summit.

“The average American investor gets the short end of the stick in the securities class action system as compared to large institutional investors,” said ILR President Lisa Rickard. “The stock holdings of individual investors are generally too few in number to offset losses in stock value that follow allegations of securities fraud.”

For the full press release, click here. A complete copy of the securities study is available online at

Sixth Circuit Adopts More Permissive Interpretation of Rule 24(c)

The Sixth Circuit, in Providence Baptist Church v. Hillandale Committee, Ltd., 425 F.3d 309 (6th Cir. Oct. 05, 2005) has taken a position with respect to an issue that currently divides the circuits: the impact of procedural defects under Rule 24(c) on an intervenor's attempt to intervene in an action. The precise issue at stake here was whether the district court abused its discretion in denying intervention based on the intervenor's failure to include a pleading along with their motion to intervene. The court concluded that such a ruling was an abuse of discretion. Here's an excerpt from the case:

The circuits appear to be split in their approach to enforcement of Rule 24(c), with a majority favoring a permissive interpretation of the rule. With the exception of a 1951 case involving quite different circumstances from those of this case, this Court apparently has not considered whether failure to file a pleading as required by Rule 24(c) should be grounds for denying the motion.

At least four circuits have taken a lenient approach to the requirements of Rule 24(c). The D.C. Circuit has explained that " 'procedural defects in connection with intervention motions should generally be excused by a court,' " particularly where there is no claim that the parties do not have notice of the intervenor's appeal. Mass. v. Microsoft Corp., 373 F.3d 1199, n. 19 (D.C.Cir.2004) (quoting McCarthy v. Kleindienst, 741 F.2d 1406, 1416 (D.C.Cir.1984)). The Eleventh Circuit has similarly suggested that "inconsequential" procedural noncompliance with the requirements of Rule 24 should be excused. Piambino v. Bailey, 757 F.2d 1112, 1121 (11th Cir.1985). The Fourth Circuit has held "the proper approach [to Rule 24(c) ] is to disregard non-prejudicial technical defects." Spring Constr. Co. v. Harris, 614 F.2d 374, 377 (4th Cir.1980). The Fifth Circuit has permitted intervention even in the absence of a motion to intervene, citing Federal Rule of Civil Procedure 8(e)(1) ("[n]o technical forms of pleadings or motions are required") and Rule 8(f) ("[a]ll pleadings shall be so construed as to do substantial justice"). Farina v. Mission Inv. Trust, 615 F.2d 1068, 1074 (5th Cir.1980).

The First, Second, and Seventh Circuits have taken a stricter approach to Rule 24(c). See Public Service Co. of New Hampshire v. Patch, 136 F.3d 197, 205, n. 6 (1st Cir.1998) (failure to accompany motion to intervene with a pleading setting forth a claim or defense "ordinarily would warrant dismissal" of the motion); Abramson v. Pennwood Inv. Corp., 392 F.2d 759, 761 (2nd Cir.1968) ("appellant's reference in his motion papers to the allegations of the original complaint was insufficient to comply with the requirements of Rule 24(c)"); Shevlin v. Schewe, 809 F.2d 447, 450 (7th Cir.1987) ( "Federal Rule of Civil Procedure 24(c) is unambiguous in defining the procedure for an intervenor," and requires a pleading to accompany the motion to intervene). However, the Seventh Circuit in Shevlin emphasized that a court may excuse a non-prejudicial failure to comply with the requirements of Rule 24(c), but saw no reason to do so in that case, where the attempted intervenor not only did not timely file a pleading, but in fact did not at any time offer the requisite pleading. Id.

We conclude that the district court abused its discretion in rejecting Hillandale Committee's motion to intervene on the basis that it failed to attach a pleading. . . . The district court's exacting application of Rule 24(c) is not in accord with the jurisprudence of a majority of the Circuits, which favor a permissive approach, or with the rationale applied by other circuits to approve strict enforcement of Rule 24(c) in some circumstances (e.g., where the parties are not on notice as to the grounds asserted for intervention, or there is some other prejudice to the parties).

Eighth Circuit Decertifies Products Liability Class Based on Insufficient Choice-of-Law Analysis

The Eighth Circuit in In re St. Jude Medical, Inc., --- F.3d ----, 2005 WL 2509282 (8th Cir. Oct. 12, 2005) has held that where class members hail from numerous states, a choice-of-law analysis for the claims of each cannot be avoided simply because the law of the forum state permits "any person" to bring suit under its consumer protection statutes. Because the district court failed to engage in the required choice-of-law analysis, the Eighth Circuit decertified the class and remanded the case for further proceedings.

Saturday, October 29, 2005

Ninth Circuit Holds that an Action Is "Commenced" under CAFA When State Law Considers it Commenced, Not Upon Removal

The Ninth Circuit in Bush v. Cheaptickets, Inc., 425 F.3d 683 (9th Cir. Oct. 06, 2005) has held that an action is "commenced" under the Class Action Fairness Act whenever the law of the state where the action is filed considers the action commenced as opposed to when the case is removed. Because California law deems an action to be commenced upon filing of the complaint, the court held that an action filed on February 17, 2005--one day before the enactment date of CAFA--commenced on that day and thus was non-removable under the terms of the statute.

Friday, October 28, 2005

House Cracks Down on "Frivolous" Lawsuits

AP is reporting on the House's passage of legislation that would toughen the sanctions regime for lawyers in an effort to reduce the number of "frivolous" lawsuits:

"The House on Thursday passed a bill that would take away lawyers' licenses if they repeatedly file frivolous lawsuits, the latest in a Republican drive to crack down on what they consider costly abuses of the legal system." For the rest of this story from yesterday, click here. For today's AP story on the bill, click here.

This measure harkens back to the Lawsuit Abuse Reduction Act, which failed to gain approval during the last Congress.

Information on the bill, H.R. 420, can be found at

S.D. W.Va. Holds that "Commencement" under CAFA Is Time of Filing not Removal

A judge in the Southern District of West Virginia (Zuleski v. Hartford Acc. and Indem. Co.Slip Copy, 2005 WL 2739076 (S.C. W. Va. Oct. 24, 2005)) has joined the growing consensus among the federal courts holding that "commencement" under CAFA does not refer to the time of removal, but rather to the time the case is originally filed in state court. The court so held in the absence of any Fourth Circuit guidance on the matter, looking to the Seventh Circuit and others for persuasive authority.

Site Allowing Users to Contract for Services, Check Account Status, Supported Jurisdiction

Reproduced with permission from BNA's Electronic Commerce & Law Report, Vol. 10,
No. 41, pp. 1027-1028 (Oct. 26, 2005). Copyright 2005 byThe Bureau of National Affairs, Inc.
(800-372-1033) <>.

A credit repair Web site that permitted customers to contract for services online and check the status of their accounts was sufficiently interactive to support personal jurisdiction over the site operators, the U.S. District Court for the Eastern District of Michigan ruled Oct. 11 (Asmar v. Benchmark Literacy Group, E.D. Mich., No. 04-70711, 10/11/05).

The plaintiffs alleged that the defendants, two credit repair firms, violated the federal Credit Repair Organizations Act, 15 U.S.C. §1679 et seq, by pre-charging for services not yet performed.

One defendant, the owner of American Financial Access Inc., was based in California. AFA's Web site marketed services to customers nationwide by including buttons on its Web site that read, "Enroll Now!" and "Enroll Online." However, customers could not pay online through the Web site. AFA also employed a group of sales representatives in around the country, including the Detroit area.

A second defendant, Benchmark Literacy Group, was also a California-based credit repair program that solicited customers online via a Web site. At the time this lawsuit was filed, customers could enroll online, submit several pieces of personal information, including credit card numbers, and purchase the advertised services.

Subscribers can access the full story by clicking here.

Thursday, October 27, 2005

Sixth Circuit Upholds Rule 11 Sanctions Against Retired Racer Mario Andretti

The Sixth Circuit in Andretti v. Borla Performance Industries, Inc., 426 F.3d 824 (6th Cir. Oct. 21, 2005) has upheld Rule 11 sanctions imposed against Mario Andretti for persisting in the assertion of a frivolous claim under Michigan's trademark infringement statute. Michigan Compiled Laws §§ 429.42-- 429.43. To assert a claim under the statute, one must have a registered trademark, which Andretti did not have. Thus, he was not in a position to assert such a claim; however, Andretti did not voluntarily dismiss the claim once this was made clear but rather forced the defendant to move for summary judgment:

"The district court did not abuse its discretion by imposing Rule 11 sanctions against Andretti. In addition to failing to properly research Count VIII before filing his complaint, which would have revealed that the statute required a registered mark and that his client did not have one, Andretti's attorney prolonged the inevitable at a cost to Borla by refusing to voluntarily dismiss the count and forcing Borla to pursue a dispositive motion in order to have the claim dismissed. Furthermore, Andretti has not explained before the district court or on appeal why he did not move to amend the claim once Borla brought the original claim's deficiency to Andretti's counsel's attention."

Sixth Circuit Says Relegating Argument to a Footnote Waives the Argument on Appeal

The Sixth Circuit in U.S. v. Dairy Farmers of America, Inc., 426 F.3d 850 (6th Cir. Oct. 25, 2005) has held that an argument that is only presented in a footnote in the brief opposing a summary judgment motion is not preserved for appeal. This holding was notable because the court reached this conclusion with respect to an argument raised by the United States in its brief, preventing the government from arguing its point on appeal. Here's an excerpt:

We will briefly address the government's case against Southern Belle before turning to the heart of this dispute. The district court granted Southern Belle's motion for summary judgment on the ground that Section 7 of the Clayton Act is directed solely against the acquirer in a transaction, in this case, DFA. See 15 U.S.C. § 18 ("No person ... shall acquire ...") (emphasis added); Dailey v. Quality School Plan, Inc. 380 F.2d 484, 488 (5th Cir.1967) (" § 7 by its terms proscribes only the acquiring corporation").The government argued in the alternative that Southern Belle's presence in the case was required for complete relief. The district court rejected this contention because it found that DFA was also entitled to summary judgment on all claims. Although we disagree with this conclusion, for reasons that will be explained below, we will not consider the government's alternative argument with respect to Southern Belle because it was waived.

The only argument against the grant of summary judgment to Southern Belle in the government's brief is contained in a footnote on page thirty-seven, stating that the grant of summary judgment in favor of Southern Belle must be reversed if this Court reverses the judgment in favor of DFA, because non-acquiring parties may be joined in a Section 7 case if they are necessary for relief. An argument contained only in a footnote does not preserve an issue for our review. Rather, an appellant's brief must include a statement of the issues presented for our review, and an argument with respect to each issue. FED. R. APP. P. 28(a); Becherer v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 43 F.3d 1054, 1058-1059 (6th Cir.1995) (an issue only "drop[ped]" in a footnote and not raised in the statement of issues or argument section of a brief is not properly raised before the Court); see also Marks v. Newcourt Credit Group, Inc., 342 F.3d 444, 462 (6th Cir.2003) (issue waived when mentioned only in the final sentence of a brief). Furthermore, the government's attempt to save the issue by inclusion in its reply brief is unavailing. See United States v. Perkins, 994 F.2d 1184, 1191 (6th Cir.1993). The government has not preserved, and we will not entertain, any argument with respect to the grant of summary judgment to Southern Belle.

Wednesday, October 26, 2005

D. Puerto Rico Uses Inherent Power to Impose Sanctions on Attorneys Who Nonsuited and Refiled to Get a More Favorable Judge

A judge in the District of Puerto Rico has imposed sanctions on plaintiffs' counsel for improper judge-shopping. After plaintiffs' counsel lost in their effort to obtain a preliminary injunction from one judge, they voluntarily dismissed their case under Rule 41(a) and refiled the same suit with a different judge to seek the same relief. Defendants moved to transfer the case back to the original judge, which was done; the original judge then imposed $1,000 sanctions against each of plaintiffs' attorneys for improper judge-shopping:

[T]the Court understands that Rule 41(a) serves as a lawful vehicle for voluntarily dismissing suits and refiling the same at a later occasion. The Court is not blind to that. However, Rule 41 cannot serve the purposes for which the attorneys in this case used it. Simply put, to ignore the probability that the attorneys' actions in voluntarily withdrawing the case and instantly refiling were directed at obtaining a different judge, "after the judge decide[d] a major point against [ ] [them,] would be to blink reality." In re Cargill, Inc., 66 F.3d at 1262. As adamantly stated by the First Circuit in In re Cargill: [C]ourts cannot afford to spawn a public perception that lawyers and litigants will benefit by undertaking such machinations. .... We simply cannot afford to nourish the impression that the courts, as an institution, will bend over backward, overlook the obvious, and countenance sharp tactics merely because they are directed at a judge. Id. at 1263-64 (citing In re United Shoe Mach. Corp., 276 F.2d 77, 79 (1st Cir.1960)("We cannot permit a litigant to test the mind of the trial judge like a boy testing the temperature of the water in the pool with his toe, and if found to his liking, decides to take a plunge."); Reilly v. United States, 863 F.2d 149, 160 (1st Cir.1988)(expressing that "when a trial judge announces a proposed course of action which litigants believe to be erroneous, the parties detrimentally affected must act expeditiously to call the error to the judge's attention or to cure the defect, not lurk in the bushes waiting to ask for another trial when their litigatory milk curdles")).

By sanctioning the appearing attorneys, the Court is not carving out any exceptions to Rule 41(a). At no time was the attorneys' ability to voluntarily withdraw the first action affected. It is the attorneys' attempt to utilize the undersigned and the otherwise unremarkable procedures to side step an adverse ruling and the time consuming appellate process that calls for the imposition of sanctions.

Tuesday, October 25, 2005

Lawsuit Abuse Reduction Act opposed by ABA

The ABA has issued a letter to members of the House of Representatives urging them to oppose the Lawsuit Abuse Reduction Act:

In a letter (PDF) to members of the House of Representatives, the ABA urges representatives to vote “no” when the “Lawsuit Abuse Reduction Act” is brought to a vote.

The ABA objects that the bill circumvents the Rules Enabling Act, and that with no demonstrated problem with the enforcement or operation of Rule 11 of the Federal Rules of Civil Procedure it would impose mandatory sanctions for any violation of Rule 11, removing current safe harbor provisions; enforce a mandatory suspension from practicing law if a lawyer has violated Rule 11 three times; impose federal mandatory Rule 11 sanctions upon any civil state court claim that materially affects interstate commerce; and impose specific venue designation rules upon personal injury claims filed in any state or federal court.

The ABA notes that the process under the Rules Enabling Act is driven by recognition that rules of evidence and procedure are inherently matters of concern to the judiciary, which must apply them; that each rule is part of an intricate, interlocking whole requiring deliberation and public comment to avoid unintended consequences; and that the United States Judicial Conference is in a unique position to draft rules with care in a setting isolated from pressures that may interfere with painstaking consideration and due deliberation.

“We do not question Congressional power to regulate the practice and procedure of federal courts,” the letter says. But “[t]he fact that the proposed changes to the Rules are flawed should give pause to those who are asked to support the circumvention of the process of the Rules Enabling Act. Not following the processes set forth in the Rules Enabling Act would frustrate the purpose of the act and potentially harm the effective functioning of the judicial system.”
The ABA also questioned the bill’s attempt to impose federal sanctions on the individual state courts, which it says would “violate our time-honored principles of federalism.”

Eighth Circuit Decertifies Two Subclasses in Leaky Prosthetic Heart Valve Litigation

U.S. Law Week is reporting today on an Eighth Circucit decision, In re St. Jude Medical, Inc., --- F.3d ----, 2005 WL 2509282 (8th Cir. Oct. 12, 2005), which held (in BNA's words) that "differences in state consumer protection laws preclude certification of consumer subclass seeking damages under Minnesota consumer protection statutes in nationwide class action concerning defective heart valve product, and numerous individual legal and factual issues preclude certification of subclass seeking injunctive relief in form of medical monitoring."

See U.S. Law Week, Volume 74 Number 15 Tuesday, October 25, 2005, Page 1231, ISSN 1522-4317.

BNA subscribers can view the full story by clicking here.

Ninth Circuit Reverses Entry of Injunction against State Court Judgment Based on Anti-Injunction Act

Yesterday in Sandpiper Village Condominium Ass'n., Inc. v. Louisiana-Pacific Corp., --- F.3d ----, 2005 WL 2714525 (9th Cir. Oct. 24, 2005) the Ninth Circuit reversed the district court's order enjoining entry of judgment on a portion of a jury verdict rendered in Minnesota state court on the ground that the injunction violated the Anti-Injunction Act. There was a prior settlement reached in a nationwide class action and the district court with jurisdiction over the settlement enjoined the state court judgment because it felt that the state court award was inconsistent with the prior settlement reached in the class action. The Ninth Circuit reversed the court's order issuing the injunction because it did not find any of the three exceptions to the Anti-Injunction Act to be applicable [the first exception, that the injunction was authorized by Act of Congress did not apply]:

The second exception to the Anti-Injunction Act authorizes injunctive relief "to prevent a state court from so interfering with a federal court's consideration or disposition of a case as to seriously impair the federal court's flexibility and authority to decide that case." Atlantic Coast Line R.R. Co. v. Bhd. of Locomotive Eng'rs, 398 U.S. 281, 295 (1970). . . . Although the second exception has since been expanded to include some in personam actions, it remains that an injunction is justified only where a parallel state action "threatens to 'render the exercise of the federal court's jurisdiction nugatory.' . . . The necessary in aid of jurisdiction exception is inapplicable here because the state court action did not threaten the district court's jurisdiction over the Inner-Seal Siding litigation. By the time that the court issued the injunction, the Inner-Seal Siding class action had long since been resolved. Indeed, the district court had several years earlier approved the settlement and entered final judgment. Because the litigation was over, the state court action could not have interfered with the district court's consideration or disposition of the class claims.

. . .

The third exception to the Anti-Injunction Act, the socalled relitigation exception, permits a federal court to enjoin state proceedings when necessary "to protect or effectuate its judgments." 28 U.S.C. § 2283. This power "allows federal courts to ... protect the res judicata effect of their judgments and prevent the harassment of ... federal litigants through repetitious state litigation." Amwest Mortgage Corp. v. Grady, 925 F.2d 1162, 1164 (9th Cir.1991). . . . The relitigation exception is inapplicable here because the Minnesota lawsuit did not challenge the res judicata effect of the class settlement. Significantly, Lester was not named as a party to the class action and was not a member of the nationwide class. Nor were Lester's interests sufficiently parallel to the class members' interests such that privity could be implied. As a general rule, "one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process." For that reason, "[a] judgment or decree among parties to a lawsuit resolves issues as among them, but it does not conclude the rights of strangers to those proceedings." As a stranger to the class proceedings and settlement and lacking privity with class members, Lester was entitled to sue L-P in state court for its own injuries.

Judge Reinhardt dissented, writing:

At a time when Congress is expanding the jurisdiction of the federal courts over national class-action lawsuits, see 28 U.S.C. § 1332(d), the majority's decision severely limits the authority of district courts to protect that jurisdiction and to preserve the settlement agreements they have authorized. It renders federal court orders and judgments vulnerable to further litigation in state courts on a state-by-state basis, litigation that can reopen what are intended to be final damage awards and undermine the orderly implementation of complex national settlement agreements. Further, it allows parties and third parties alike to circumvent federal class-action orders by relying on state law claims that contravene the specific provisions of such orders.

Second Circuit Adopts New Local Rules Requiring Digital Briefs In Counseled Cases

Click here to read the Court order announcing the new rules.

Monday, October 24, 2005

FLSA Defendants Not Entitled to Discover Info Re Plaintiffs' Immigration Status

In Galaviz-Zamora v. Brady Farms, Inc., 230 F.R.D. 499 (W.D. Mich. Sep. 23, 2005), a case brought under the Fair Labor Standards Act and Migrant and Seasonal Agricultural Worker Protection Act, the Defendants requested various documents via discovery (social security numbers, addresses, tax returns, passports, voter registration cards, and birth certificates) that the court concluded were aimed at determining the plaintiffs' immigration status. On the plaintiffs' motion for a protective order, the court held that the defendants were not entitled to discover information regarding Plaintiffs' immigration status in a case where the workers are seeking back pay for work already performed because the information is not relevant to such claims. The Defendant had argued that Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (2002) supported the relevance of the plaintiffs' immigration status but that case involved a request for backpay to illegal aliens for work never performed, a different situation than presented by the case at bar.

Agenda Items for Upcoming Advisory Committee on Civil Rules Meeting

Tom Rowe of Duke Law school is reporting that although there are no action items on the agenda for the upcoming Advisory Committee on Civil Rules meeting in Santa Rosa, the Committee will be considering whether to move forward on any of several possible projects, including:

--modernizing the list of affirmative defenses in Rule 8(c), and more broadly the possibility of changes to the notice-pleading approach of Rule 8 generally;

--cleaning up Rule 15 on amending pleadings (again);

--clarifying whether employees designated as testifying experts must provide an expert report under Rule 26(a)(2)(B), as to which the cases are split;

--improving Rule 30(b)(6) on designated corporate deposition witnesses;

--adding a provision to Rule 48 about polling juries;

--revising Rule 56 on summary judgments; and

--clarifying district-court authority to provide indicative rulings on motions, such as those for relief from a judgment under Rule 60(b), made while an appeal is pending.

Thanks to Professor Rowe for this information.

D. Kan. Holds that "Locking" of Spreadsheet Cells Produced in Discovery to Prevent Alteration of Data Not Permissible; Urges Use of "Hash Marks"

Also in Williams v. Sprint/United Management Co., 230 F.R.D. 640 (D. Kan. Sep. 29, 2005) the court had the opportunity to speak on the issue of whether producing parties may lock spreadsheet cells when they produce them electronically in discovery in order to prevent the requesting party from intentionally or inadvertantly changing the data. The Court held that such unilateral action was not appropriate, given the difficulties in analysis it presented to the requesting party and given the existence of alternate means of achieving the same goals:

The Court finds that Defendant has failed to show sufficient cause for its unannounced and unilateral actions in locking certain data and cells on the Excel spreadsheets the Court ordered it to produce to Plaintiffs in the manner in which they were maintained. None of the reasons asserted by Defendant justifies its decision to lock the spreadsheet cells and data prior to producing them to Plaintiffs. While the Court's Order did not expressly state that the spreadsheets should be produced "unlocked," Defendant should have been reasonably aware that locking the spreadsheets' cells and data was not complying with the spirit of the Court's directive that the spreadsheets be produced as they are kept in the ordinary course of business. Moreover, at the June 2, 2005 discovery conference, Plaintiffs specifically detailed their difficulties with the hard copy versions of the spreadsheets produced by Defendant, including their complaints that the hard copy versions cut off the information contained in the spreadsheet columns and cells.

Defendant's concerns regarding maintaining the integrity of the spreadsheet's values and data could have been addressed by the less intrusive and more efficient use of "hash marks." For example, Defendant could have run the data through a mathematical process to generate a shorter symbolic reference to the original file, called a "hash mark" or "hash value," that is unique to that particular file. This "digital fingerprint" akin to a tamper-evident seal on a software package would have shown if the electronic spreadsheets were altered. When an electronic file is sent with a hash mark, others can read it, but the file cannot be altered without a change also occurring in the hash mark. The producing party can be certain that the file was not altered by running the creator's hash mark algorithm to verify that the original hash mark is generated. This method allows a large amount of data to be self-authenticating with a rather small hash mark, efficiently assuring that the original image has not been manipulated.

D. Kan. Looks to Sedona Principles and Proposed Amendment to Hold that Metadata Presumptively Must Be Produced

The district court in Williams v. Sprint/United Management Co., 230 F.R.D. 640 (D. Kan. Sep. 29, 2005) has held that there is a presumption that producing parties should present electronic data with their metadata in tact. Looking to the Sedona Principles and the Proposed Amendment to FRCP Rule 34, the court added that parties could object to the production of metadata, presumably on relevance, confidentiality or privilege grounds:

The narrow issue currently before the Court is whether, under emerging standards of electronic discovery, the Court's Order directing Defendant to produce electronic spreadsheets as they are kept in the ordinary course of business requires Defendant to produce those documents with the metadata intact. As noted above, the Court finds insufficient guidance in either the federal rules or case law, and thus relies primarily on the Sedona Conference Principles and comments for guidance on the emerging standards of electronic document production, specifically with regard to metadata. While recognizing that the Sedona Principles and comments are only persuasive authority and are not binding, the Court finds the Sedona Principles and comments particularly instructive in how the Court should address the electronic discovery issue currently before it.

Comment 9.a. to the Sedona Principles for Electronic Document Production approaches discoverability based on what constitutes a "document" under Rule 34. This comment uses viewability as the determining factor in whether something should be presumptively treated as a part of a "document." Using viewability as the standard, all metadata ordinarily visible to the user of the Excel spreadsheet application should presumptively be treated as part of the "document" and should thus be discoverable. For spreadsheet applications, the user ordinarily would be able to view the contents of the cells on the spreadsheets, and thus the contents of those cells would be discoverable.

In light of the proposed amendment to Rule 34, which adds "electronically stored information" as its own separate category, it is no longer necessary to focus on what constitutes a "document." With regard to metadata in general, the Court looks to Principle 12 and Comment 12.a. to the Sedona Principles. Based upon this Principle and Comment, emerging standards of electronic discovery appear to articulate a general presumption against the production of metadata, but provide a clear caveat when the producing party is aware or should be reasonably aware that particular metadata is relevant to the dispute. Based on these emerging standards, the Court holds that when a party is ordered to produce electronic documents as they are maintained in the ordinary course of business, the producing party should produce the electronic documents with their metadata intact, unless that party timely objects to production of metadata, the parties agree that the metadata should not be produced, or the producing party requests a protective order.

Court Vacates Entry of Default for Defendant Whose Attorney "Forgot" to File an Answer

In Tesillo v. Emergency Physician Associates, Inc., 230 F.R.D. 287 (W.D.N.Y. Sep. 30, 2005) the court granted a motion to vacate entry of default on the grounds that the defendant's failure to file an answer was innocent and inadvertent and was non-prejudicial to the plaintiff. The case also provides a good example of a court evaluating a defendant's motion to vacate an entry of default. The court noted that in considering motions to vacate entries of default, courts must consider "(1) whether the default was willful; (2) whether setting aside the default judgment would prejudice the adversary; and (3) whether a meritorious defense is presented." The court then found that the default was not willful because defense counsel "inadvertently and innocently forgot" to file an answer after the court denied the defendant's motion to dismiss. Because plaintiff could show no prejudice and because factual disputes remained for resolution, the Court granted the defendant's motion to vacate the entry of default and denied plaintiff's motion for a default judgment.

Amici Are Non-Parties Not Subject to Compelled Discovery of Documents Relating to Bias

The court in North Carolina Right to Life, Inc. v. Leake, 231 F.R.D. 49 (D.D.C. Oct. 06, 2005) recently held that a plaintiff could not compel the production of documents from entities filing an amicus brief in an effort to demonstrate amici's bias because they were unrelated non-parties whose bias was not relevant:

The relevance of the documents requested in the instant case is asserted to be their ability to reveal bias. Bias, Plaintiff asserts, is always relevant. The bias that is relevant, however, is that of a witness or party in the case, not of an unrelated non-party. The mere filing of an amicus brief . . . does not open oneself to broad discovery demands, nor does it make one's bias, if any, relevant to the underlying action. Credibility of amici is a determination to be made by the trial judge, not a question that the parties should pursue in discovery.

Friday, October 21, 2005

E.D. Mich. Holds that Nonsuiting and Refiling Post-CAFA Sufficient to Deem the Action "Commenced" after CAFA's Enactment Date

In Price v. Berkeley Premium Nutraceuticals, Inc., Slip Copy, 2005 WL 2649205 (E.D. Mich. Oct. 17, 2005) the court held that although plaintiff originally filed their suit in state court prior to the enactment date of CAFA, a suit that was removed to federal court, once the plaintiff voluntarily dismissed the case and refiled it in state court after CAFA's enactment date the case was a new action "commenced" upon refiling. This determination meant that the plaintiff's case qualified for federal jurisdiciton under CAFA, notwithstanding the defendant's argument that the refiled case should relate back to the time of the original pre-CAFA state court filing.

ABA Journal eReport Article on E-Discovery Rules

An article in today's ABA Journal eReport entitled "Working Through A Thicket of E-Discovery Rules" provides a good discussion of the difficult compliance issues that lay ahead for litigants. The article highlights the troubles Morgan Stanley has had navigating this thicket thus far, serving as a cautionary tale for everyone else.

See the article by visiting

S.D. Ga. Holds That Second Amended Complaint Filed Post-CAFA Constitutes "Commencement" of the Action under CAFA

The court in Senterfitt v. SunTrust Mortg., Inc., 385 F.Supp.2d 1377 (S.D. Ga. Aug. 31, 2005) has held that although the named plaintiff originally filed the case in state court prior to the Feb. 18, 2005 enactment date of the Class Action Fairness Act (CAFA), once he filed his Second Amended Complaint after that date the action could be deemed "commenced" at that later time, rendering the case removable to federal court. The court reached this conclusion by determining that the Second Amended Complaint did not relate back to the time of the original filing under FRCP Rule 15(c) because the amended complaint expanded the membership of the class.

First Circuit Holds that "Commenced" in CAFA Means Date of Filing, Not Removal

The First Circuit has added its voice to the growing chorus of courts holding that the term "commenced" in the Class Action Fairness Act means the time the case was originally filed in state court rather than the date on which the case was removed to federal court. In Natale v. Pfizer, Inc., 424 F.3d 43 (1st Cir. Sep. 16, 2005) the court, via a brief per curiam opinion, the court wrote:

Pfizer contends that the actions were commenced on the date they were removed. The two circuits to have addressed the issue have rejected this contention, having held that "commenced" means "filed" rather than "removed." Knudsen v. Liberty Mut. Ins. Co., 411 F.3d 805, 806 (7th Cir.2005), following Pritchett v. Office Depot, Inc., 420 F.3d 1090 (10th Cir.2005), amending and superceding 404 F.3d 1232 (10th Cir.2005). Pfizer argues that these actions are different in that removal occurred within the statutory thirty-day period from service of the complaint, rather than after the action had been pending for some years. But that argument runs squarely into the statutory provision that the Act is to apply only to actions commenced on or after the date of enactment. We agree with the Seventh Circuit's decision in Pfizer, Inc. v. Lott, 417 F.3d 725 (7th Cir.2005), rejecting this argument. To accept it would have us rewrite the statute by carving out a class of late-filed actions.

Ninth Circuit Upholds Tribal Immunity for Intra-Tribal Membership Disputes

In Lewis v. Norton, 424 F.3d 959 (9th Cir. Sep. 13, 2005) the Ninth Circuit affirmed the immunity of Indian tribes with respect to challenges to their determinations regarding tribal membership. The court also held that tribes could not be deemed to have waived their immunity with respect to such issues simply because the tribe has gone to court seeking federal recognition. Finally, the court held that the waiver of tribal immunity contained within the Indian Gaming Regulatory Act was not broad enough to apply to disputes regarding tribal membership. The court indicated that plaintiffs' recourse would have to be to tribal courts.

Second Circuit Holds that No Preemption of State Claims Possible If Federal Court Lacks Original Jurisdiction over Such Claims

The Second Circuit in Sullivan v. American Airlines, Inc., 424 F.3d 267 (2d Cir. Sep. 13, 2005) has held that there is a lack of complete preemption under the Railway Labor Act ("RLA") because certain disputes under the RLA do not qualify for original federal jurisdiciton and thus would be non-removable from state court:

Once we recognize that a state-law-based RLA minor dispute cannot be brought within the original jurisdiction of the federal courts and is thus not removable under § 1441, it becomes clear that the RLA does not completely preempt state-law claims that come within its scope. By its terms, § 1441 allows removal only of suits "of which the district courts of the United States have original jurisdiction ...." 28 U.S.C. § 1441(a); see also id. § 1441(b). Put another way, "[o]nly state-court actions that originally could have been filed in federal court may be removed to federal court by the defendant." Caterpillar, 482 U.S. at 392, 107 S.Ct. 2425 (emphasis added).

Minor disputes under the RLA cannot be filed in the first instance in federal court; they are therefore not removable to federal court. Instead, primary jurisdiction over minor disputes under the RLA--the type of claim American asserts that Sullivan has raised--exists solely in the adjustment boards established pursuant to 45 U.S.C. § 153 (for railroads) or § 184 (for airlines). [citations omitted] Indeed, American removed Sullivan's defamation claim to federal district court for the sole purpose of asking that court to dismiss Sullivan's claim on the basis that the federal court could not hear it.

As this case illustrates, allowing removal to federal court on complete-preemption grounds of state-law claims that also qualify as minor disputes under the RLA is internally inconsistent: the district court must have jurisdiction for removal to be proper, but the court must then dismiss the removed case because only adjustment boards, not federal courts, have primary jurisdiction over claims arising under the RLA. The latter negates the former.

Thursday, October 20, 2005

First Circuit Opines on Finality and Claim Preclusion

The First Circuit per Judge Boudin recently issued an opinion discussing the finality requirements necessary to permit a prior dismissal to bar a subsequent claim under the principles of res judicata. In AVX Corp. v. Cabot Corp., 424 F.3d 28 (1st Cir. Sep. 13, 2005) the court held that the finality test for appealability of federal judgment also controls the finality determination for claim preclusion purposes. Because the earlier claim was dismissed without prejudice, the court concluded that the prior dismissal could not bar litigation of the same claim in a subsequent action.

Eighth Circuit Holds that Direct Contact with Defendant Needed to Establish Standing under "Futile Gesture" Theory in Civil Rights Context

The Eighth Circuit in McClain v. American Economy Ins. Co., 424 F.3d 728 (8th Cir. Sep. 07, 2005) determined that a plaintiff seeking to establish standing based on a "futile gesture" theory must present evidence of direct contact with the defendant in order to establish a direct injury. The futile gesture theory permits plaintiffs alleging discrimination to claim that although they did not approach the defendant and suffer direct discrimination, they were "reliably informed" of the defendant's discriminatory policies and that knowledge deterred them from seeking employment or services from the defendant. See Teamsters v. United States, 431 U.S. 324, 364, 97 S.Ct. 1843, 52 L.Ed.2d 396 (1977).

Here, the Eighth Circuit determined, "Given the many intangible factors that impact an insurer's decision to issue a homeowners policy, we are inclined to agree with the district court that direct contact with the insurer, or at least with its authorized agent, is a prerequisite to showing that an allegedly deterred plaintiff was 'reliably informed' of the discriminatory policies." [Apparently, no such direct contact with the defendant had been required by other courts in other contexts]. Thus the court concluded that this plaintiff could not establish the injury in fact needed to support Article III standing.

Sixth Circuit Grants Mandamus Relief to Habeas Petitioner to Protect A/C Privilege

The Sixth Circuit in In re Lott, 424 F.3d 446 (6th Cir. Sep. 09, 2005) recently granted mandamus relief to a habeas petitioner seeking to overturn the district court's determination that his claim of actual innocence implicitly waived his attorney-client privilege:

"The District Court's order constitutes a departure from existing law for which we find no precedent. It undermines the historically strong protections of the attorney-client privilege. As the order places the privileged relationship between a client and his attorney in jeopardy, this Court will issue the writ."

The opinion provides a good discussion both of the attorney-client privilege and of the standards for granting a writ of mandamus.

Federal Circuit Holds that No Personal Knowledge of Documents Needed to Invoke the State Secrets Privilege

The Federal Circuit in Crater Corp. v. Lucent Technologies, Inc., 423 F.3d 1260 (Fed. Cir. Sep. 07, 2005) has held that in order for the government to properly invoke the state secrets privilege to block discovery, the department head invoking the privilege is not required to have personal knowledge of the contents of every document to be covered by the privilege:

We agree with the government that Secretary Danzig and Acting Secretary Johnson were not required to personally review each and every one of the 26,000 documents at issue in order for the government to properly invoke the state secrets privilege. Although [U.S. v.] Reynolds [345 U.S. 1 (1953)] requires that there be "actual personal consideration" by the head of the pertinent government department, 345 U.S. at 8, 73 S.Ct. 528, we think it sufficient that the Secretary of the Navy and later the Acting Secretary were informed of the nature and scope of the documents sought in discovery, and that each then made the ultimate policy determination, based on his personal knowledge, that disclosure of the material sought would jeopardize a legitimate state secret and would pose a threat to national security.

Wednesday, October 19, 2005

Fourth Circuit Reasserts Unwillingness to Review Denial of Summary Judgment after Full Trial and Judgment on the Merits

The Fourth Circuit in Varghese v. Honeywell Intern., Inc. 424 F.3d 411 (4th Cir. Sep. 14, 2005) has reaffirmed its position that it will not review a district court's pretrial denial of summary judgment after a full trial and final judgment on the merits. This position is at odds with the view of courts in other circuits. Here's an excerpt:

Here, Honeywell seeks appellate review of a district court's denial of summary judgment after a full trial and final judgment. However, under binding circuit precedent, this is exactly the type of situation in which appellate review is not available. Recognizing this problem, Honeywell attempts to extricate itself from underneath the Chesapeake [Paper Products Co. v. Stone & Webster Engineering Corp., 51 F.3d 1229 (4th Cir.1995)] umbrella. Specifically, Honeywell argues that the ERISA preemption issue was not raised in its JMOL motion because such motions challenge the sufficiency of the evidence presented by an opposing party at trial. As such, Honeywell contends a JMOL motion was not the appropriate avenue for its legal challenge and that appellate review of the pretrial denial of summary judgment is therefore proper.

However, these arguments were addressed in Chesapeake. Again, we expressly rejected "the contention that our review should depend on whether the party claims an error of law or an error of fact." Chesapeake, 51 F.3d at 1235. In fact, we stated that although a dichotomy between reviewing denials of summary judgment based on an erroneous legal conclusion and those based on an erroneous *423 factual determination "is supported by the reasoning in Holley [Holley v. Northrop Worldwide Aircraft Serv., 835 F.2d 1375, 1378 (11th Cir.1988) ] ... we decline to follow Holley and therefore need not describe specific circumstances in which this Court would review the denial of summary judgment after trial." Id. at 1235 n. 8. In other words, the Chesapeake Court did not need to discuss "specific circumstances" because there are none. The express rejection of Holley, a case that supported such a dichotomy, makes that point clear. At no point does the opinion suggest otherwise.

We recognize that several other circuits have taken a different approach on this issue, allowing appeals from a denial of summary judgment after a trial where the summary judgment motion raised a legal issue and did not question the sufficiency of the evidence. See, e.g., Pavon v. Swift Transp. Co., 192 F.3d 902 (9th Cir.1999); Rekhi v. Wildwood Industries, Inc., 61 F.3d 1313 (7th Cir.1995). However, as the Seventh Circuit noted in Chemetall GMBH v. ZR Energy, Inc., 320 F.3d 714, 721 (7th Cir.2003), their approach simply conflicts with our own. There, the Seventh Circuit expressly noted the disagreement stating: "[t]he Fourth Circuit, however, has rejected any distinctions between factual and legal issues like the one we drew in Rekhi, holding that in either case, review of the district court's denial of summary judgment is barred after trial." Id.

In Chesapeake, we concluded that we would not review a district court's pretrial denial of summary judgment after a full trial and final judgment on the merits. [citations omitted] After the denial of Honeywell's summary judgment motion, there was a full trial and final judgment on the merits. Honeywell had the option to move for judgment as a matter of law (the denial of which we will review), arguing that ERISA preempted Dr. Varghese's state law separation pay claims. As we noted in Chesapeake, "a party may appropriately move for judgment as a matter of law on discrete legal issues." Id. at 1236 (emphasis added). Although Honeywell moved for judgment as a matter of law, they did not so move on this issue and therefore failed to preserve it for appeal. Therefore, binding circuit precedent mandates that the appeal be dismissed.

Third Circuit Articulates Its Definition of Fraud upon the Court

The Third Circuit in Herring v. U.S., 424 F.3d 384 (3d Cir. Sep. 22, 2005) for the first time announed its standards for assessing fraud upon the court claims:

Actions for fraud upon the court are so rare that this Court has not previously had the occasion to articulate a legal definition of the concept. The concept of fraud upon the court challenges the very principle upon which our judicial system is based: the finality of a judgment. The presumption against the reopening of a case that has gone through the appellate process all the way to the United States Supreme Court and reached final judgment must be not just a high hurdle to climb but a steep cliff-face to scale.

In order to meet the necessarily demanding standard for proof of fraud upon the court we conclude that there must be: (1) an intentional fraud; (2) by an officer of the court; (3) which is directed at the court itself; and (4) in fact deceives the court. We further conclude that a determination of fraud on the court may be justified only by "the most egregious misconduct directed to the court itself," and that it "must be supported by clear, unequivocal and convincing evidence." In re Coordinated Pretrial Proceedings in Antibiotic Antitrust Actions, 538 F.2d 180, 195 (8th Cir.1976) (citations omitted).

Website Disclaimer Succeeds in Staving off Personal Jurisdiciton

The Tenth Circuit in Tomlinson v. H & R Block Inc., No. 04-7070 (10th Cir. Oct. 12, 2005) has held that defendant H&R Block's website disclaimer was sufficient to undermine an inference that the defendant's contacts with the forum (Oklahoma) were sufficiently systematic and continuous to support general jurisdiction there. The disclaimer read as follows:

"H & R Block Inc. is a holding company which has no employees" and that "[a]ny goods or services that may be offered for sale through this Web site or a link hereto are offered by the operating subsidiaries of H &amp; R Block, Inc., ... and not by H & R Block Inc."

In light of the disclaimer, the court affirmed the district court's dismissal for lack of jurisdiction.

Tuesday, October 18, 2005

Notice of Removability Determined through Examination of the Four Corners of the Complaint, Not through Subjective Knowledge or Further Inquiry

The Ninth Circuit in Harris v. Bankers Life and Cas. Co., --- F.3d ----, 2005 WL 2456929 (9th Cir. Oct. 06, 2005) announced its position on the question of whether defendants have the burden to investigate removability within 30 days of receiving an indeterminate complaint. Here's an excerpt:

The question we must decide is whether, under 28 U.S.C. § 1446(b), the burden lies with the defendant to investigate the necessary jurisdictional facts within the first thirty days of receiving an indeterminate complaint, or whether the determination be limited to the face of the initial pleading. Courts are divided on this issue, although every circuit court to consider the question has rejected the duty to investigate approach. The Ninth Circuit has not resolved this question.

. . .

We now conclude that notice of removability under § 1446(b) is determined through examination of the four corners of the applicable pleadings, not through subjective knowledge or a duty to make further inquiry. Thus, the first thirty-day requirement is triggered by defendant's receipt of an "initial pleading" that reveals a basis for removal. If no ground for removal is evident in that pleading, the case is "not removable" at that stage. In such case, the notice of removal may be filed within thirty days after the defendant receives "an amended pleading, motion, order or other paper" from which it can be ascertained from the face of the document that removal is proper. See 28 U.S.C. § 1446(b).

Monday, October 17, 2005

First Circuit Denies Appeal Based on Failure to Translate Documents

The First Circuit has just issued the following per curiam opinion in Camacho v. Puerto Rico:

"After carefully reviewing the briefs and record on appeal, we affirm. The appellant does not establish that the court erred in ruling that he had not exhausted state remedies. We do not consider the documents submitted in Spanish that have not been translated. Loc. R. 30(d)."

The First Circuit's Local Rule 30(d) provides, "The court will not receive documents not in the English language unless translations are furnished."

The opinion can be viewed by clicking here. Thanks to Appellate Law & Practice for the tip.

Two Procedural Cases Denied SCOTUS Review Today

The Supreme Court denied review in several cases today, two among them pertaining to procedural issues:

- Carroll v. Faucheux, where the question presented was, "Does accelerated procedure in Texas governing appeals from parental rights termination judgments violate federal due process by depriving parents of appeal when parent suffers ineffective assistance of counsel that causes failure to timely perfect appeal?"

- American Family Mutual Insurance Co. v. Messina, where the question presented was, "Are defendant's 14th Amendment due process rights violated when trial court orders class notice to approximately 24,000 non-class members in opt-out state class action and thereby forces defendant to litigate against these non-class members, given that (i) it is undisputed that these non-class members are identifiable and (ii) it is undisputed that these non-class members have no justiciable claim against defendant?"

BNA subscribers can view more information on these and all the cases denied review today by clicking here.

Sunday, October 16, 2005

Seventh Circuit Upholds Rejection of SJ Opposition Papers for Failure to Comply with Local Rule

The Seventh Circuit in F.T.C. v. Bay Area Business Council, Inc., 423 F.3d 627 (7th Cir. Aug. 25, 2005 ) recently upheld a district court's refusal to consider the defendants' affidavits submitted in opposition to the FTC's summary judgment motion because they did not comply with Northern District of Illinois Local Rule 56.1. That rule requires the party opposing summary judgment to submit a response to each numbered paragraph of the movant's statement of material facts (a.k.a. the movant's "Rule 56.1 statement"), "including, in the case of any disagreement, specific references to the affidavits, parts of the record, and other supporting materials relied upon." Id. 56.1(b)(3)(A). Concluding that the defendants' affidavits did not comply with the strictures of the rule, the district court disregarded them. The Seventh Circuit wrote, "We are hard-pressed to see how [defendants'] affidavit could constitute compliance with Rule 56.1" and thus considered only the facts in the FTC's Rule 56.1 statement.

Fifth Circuit Permits Offensive Use of Documents Subject to A/C Privilege

The Fifth Circuit has just released an opinion in Willy v. Administrative Review Bd., 423 F.3d 483 (5th Cir. Aug. 24, 2005), where the Court held that "no rule or case law imposes a per se ban on the offensive use of documents subject to the attorney-client privilege in an in-house counsel's retaliatory discharge claim against his former employer under the federal whistleblower statutes when the action is before an ALJ." In the process of reaching its decision, the court noted that federal common law, not state law, governed the analysis of the attorney-client privilege given that the claims at issue arose under federal law.

Saturday, October 15, 2005

Ninth Circuit Rebuffs Effort to Use Rule 50 on First Day of Trial

In McSherry v. City of Long Beach, 423 F.3d 1015 (9th Cir. Sep. 08, 2005) the Ninth Circuit had the opportunity to resolve whether Rule 50 could be usedat the outset of a trial prior to the presentation of evidence. Here's an excerpt:

Leonard McSherry appeals the district court's order granting defendant City of Long Beach's ("City's") motion for judgment as a matter of law under Federal Rule of Civil Procedure 50. The court granted defendant's motion on the first day scheduled for trial, prior to the presentation of any evidence in the case.

. . .

The pre-trial use of Rule 50 in this case presents a matter of first impression in this circuit. Indeed, it is difficult to find any case making a comparable use of the rule. We review the grant of judgment as matter of law de novo to determine whether the use of Rule 50 at the outset of trial, prior to the presentation of any evidence, is appropriate. See City Solutions, Inc. v. Clear Channel Comm. Inc., 365 F.3d 835, 839 (9th Cir.2004). We conclude that this use of Rule 50 is not supported by the language of the rule, the advisory committee's notes, or caselaw governing the proper use of Rule 50. Accordingly, we remand for further proceedings.

The text of Rule 50(a) provides: "If during a trial by jury a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue, the court may determine the issue against that party and may grant a motion for judgment as a matter of law against that party with respect to a claim or defense that cannot under the controlling law be maintained or defeated without a favorable finding on that issue." Fed.R.Civ.P. 50(a)(1). Thus, Rule 50(a) presumes that a jury trial has begun, and that the nonmoving party "has been fully heard" on the issue prior to the court's ruling. However, Rule 50(a)(2) provides: "Motions for judgment as a matter of law may be made at any time before submission of the case to the jury. Such a motion shall specify the judgment sought and the law and the facts on which the moving party is entitled to the judgment." Fed.R.Civ.P. 50(a)(2). Defendants urge that their motion is proper under Rule 50(a)(2), pointing to the language authorizing motions "at any time before submission of the case to jury" as supporting the principle that a Rule 50 motion may be made at, literally, "any time" once a trial has commenced, regardless of the state of evidence admitted.

We decline to adopt this interpretation of Rule 50(a)(2). Nothing about the language or structure of the provisions suggests that Rule 50(a)(2) has a force independent of Rule 50(a)(1). Reading the two provisions together, it is apparent that Rule 50(a)(1) sets forth the standards under which a court may grant judgment as a matter of law, while Rule 50(a)(2) explains when a party may make a motion. The latter section thus supplements the former by instructing the moving party that it may file a motion until the case is submitted to the jury, but does not eliminate the substantive requirement that a party be "fully heard" on an issue prior to the grant of judgment as a matter of law.

Friday, October 14, 2005

Ninth Circuit Holds That Jurisdicitonal Issues Must Be Resolved Before 12(b)(7) Motion

Resolving an issue of first impression, the Ninth Circuit in Wilbur v. Locke, 423 F.3d 1101 (9th Cir. Sep. 09, 2005) held that all jurisdictional and standing issues should be decided before reaching a Rule 12(b)(7) motion to dismiss for failure to join a Rule 19 party. In this particular case, although the court determined that standing existed and that no other jurisdicitonal bar to the action was present, the court nonetheless concluded that an absent party was indispensable and thus granted the Rule 12(b)(7) motion to dismiss.

Eighth Circuit Reviews A Post-Removal Remand Order, Notwithstanding 28 U.S.C. § 1447(d)

The Eighth Circuit in Ali v. Ramsdell, 423 F.3d 810 (8th Cir. Sep. 09, 2005), has held that a remand to state court after removal is an appealable final order, notwithstanding 28 U.S.C. § 1447(d)--which holds that a remand order "is not reviewable on appeal or otherwise"--on the ground that the remand was discretionary in the wake of the dismissal of the federal claim on the merits. The court explained that defects that cause the federal court to lack subject matter jurisdiction require remand under 28 U.S.C. § 1447(c), an order that would not be appealable. However, where federal claims are dismissed on the merits post-removal, the district court then has discretion to remand the remaining pendent state law claims. Such discretionary post-removal remand orders are final and appealable.

Third Circuit Rejects Heightened Pleading (Again)

In Evancho v. Fisher, 423 F.3d 347 (3d Cir. Sep. 12, 2005), a special panel of the Third Circuit (all three judges were sitting by designation because all the judges on the Third Circuit were recused) rejected a district court's attempt to impose pre-1993, pre-Leatherman, heightened pleading requirements on a Section 1983 plaintiff. This was consistent with the Third Circuit's position announced in Abbott v. Latshaw, 164 F.3d 141 (3d Cir.1998) that the liberal notice pleading standard of Rule 8(a) applies to civil rights actions. However, the court here found that the plaintiff's complaint failed to satisfy even Rule 8's lesser standard because the complaint seemingly relied on a respondeat superior theory of liability, which is inadequate in the Third Circuit where personal involvement in the alleged wrongdoing must be proved.

Several Hurricane Related Federal Class Action Claims Filed

BNA reports: "Groups representing Louisiana residents, businesses, and other entities have filed multiple lawsuits in federal court claiming negligence by big oil and gas companies, pipeline owners, refineries, and engineering/construction contractors contributed to catastrophic personal, property, and environmental damage after storm surge from Hurricane Katrina swept through southeast Louisiana in late August. "

The actions filed include:

- Danos v. Bass Enterprises Production, E.D. La., No. 05-4212, complaint filed 9/21/05 (suit by commercial fisherman against oil and gas pipelines for destruction of protective marshes)
- Barasich v. Columbia Gulf Transmission Co., E.D. La., No. 5-4161, complaint filed 9/13/05 (suit by individuals and businesses against oil and gas pipelines for wetlands damage)
- Turner v. Murphy Oil USA Inc., E.D. La., No. 05-4206, complaint filed 9/9/05 & Duckert v. Murphy Oil USA Inc., E.D. La., No. 2:05-cv-04210-EEF-JCW, complaint filed 9/21/05 (suit by persons harmed by 25,000 barrels of crude after a storage tank ruptured in the hurricane)
- Berthelot v. Boh Brothers Construction Co., E.D. La., No. 2:05-CV-04142-GTP-KW2, complaint filed 9/19/05 (suit against construction, engineering, and related companies for negligence in constructing and designing the levees that breached)

BNA subscribers may read the full story by clicking here.

Thursday, October 13, 2005

Foreign Intelligence Surveillance Court Proposes Rules Amendments

The Foreign Intelligence Surveillance Court (FISC) has announced its proposed amendments to its "Rules of Procedure" and seeks public comment on them. The proposed amendments may be accessed by clicking here. The public comment period for the proposed rules amendments ends on November 7, 2005.

Seventh Circuit Reaffirms Position that Expanding Proposed Class Post-CAFA Enactment Does Not Constitute "Commencement"

The Seventh Circuit in Schillinger v. Union Pacific R. Co., 425 F.3d 330 (7th Cir. Oct. 5 2005), has held that expanding the proposed class of plaintiffs after the enactment date of the Class Action Fairness Act does not change the parties to the litigation or add new claims and thus does not constitute "commencement" under CAFA. Because such a change did not alter the fact that commencement of the action occurred when it was filed in state court, and that took place prior to the effective date of CAFA, the case was not removable to federal court under CAFA. This decision reaffirmed the essence of the Seventh Circuit's recent decision in Schorsch v. Hewlett-Packard Co., 417 F.3d 748 (7th Cir. Aug 08, 2005).

Wednesday, October 12, 2005

Judge Bars Probe of National Banks by NY AG

NEW YORK (AP) — A federal judge Wednesday blocked New York state Attorney General Eliot Spitzer from investigating national banks' lending practices, saying the probe is prohibited by federal law.

U.S. District Judge Sydney H. Stein ruled in favor of the Clearing House Association and the Office of the Comptroller of the Currency, an arm of the Treasury Department that oversees the banking system.

Spitzer had said his probe to see if minorities are being charged higher interest rates on home mortgage loans had already shown a "significant racial disparity that could violate state civil rights laws."

The judge said Spitzer cannot enforce state fair lending laws against national banks or their operating subsidiaries by issuing subpoenas and bringing enforcement actions against them.

Both the Clearing House Association and the Office of the Comptroller of the Currency sued Spitzer earlier this year, arguing that the attorney general was interfering with their supervisory powers. The Clearing House Association is an organization representing federally chartered commercial banks.

They contended that the federal Fair Housing Act did not authorize Spitzer to bring civil actions to enforce its fair lending provisions against national banks.

The Fair Housing Act prohibits discrimination in lending but is broadly written to eliminate discrimination in housing.

Stein noted that the FHA directs the various federal banking regulators including the Office of the Comptroller of the Currency to cooperate with the Secretary of Housing and Urban Development and the U.S. attorney general to enforce its provisions.

He added that "none of the various enforcement provisions expressly grants state attorneys general the power to enforce the law."

In a statement, Spitzer said he would appeal the ruling.

"The law authorizes this office to protect New Yorkers against discrimination by all lenders that do business here," the statement said. "We urge the banks not to hide behind today's rulings but instead to stand up and voluntarily give this office the information necessary to answer the critical question: is there ongoing discrimination?"

Judicial Independence Conference This Monday

This Monday, October 17, Syracuse University's College of Law, Maxwell School of Citizenship and Public Affairs, and S.I. Newhouse School of Public Communications are putting on a conference entitled "Bench Press: The Collision of Media, Politics, Public Pressure, and an Independent Judiciary." It will be held at the JW Marriot Hotel on Pennsylvania Avenue, N.W. in Washington, D.C. and is free and open to the public. Visit for complete information.

For those interested, here is a recent commentary on the topic of judicial independence from the American Judicature Society (click here).

Use of Precalculated Lodestar Amount in S.D. Tex. O.K.'d

Appellate Law & Practice is reporting on In re Cahill, a Fifth Circuit decision issued today that finds nothing improper in a bankruptcy court's use of a precalculated lodestar amount contained in a general order adopted by bankruptcy judges in the Southern District of Texas.

The decision is available by clicking here.

BNA Reports on S.D. Ohio Internet Jurisdiction Case

BNA's Electronic Commerce & Law Report has an article today reporting on NCR Corp. v. PC Connection, Inc., 384 F.Supp.2d 1152 (S.D. Ohio Aug 24, 2005), a recent Internet jurisdiciton case where jurisdiction over a non-resident defendant was upheld based on the level of business being conducted with Ohio residents through the defendant's website.

BNA Subscribers can view the story by clicking here (Electronic Commerce & Law Report, Volume 10 Number 39, Wednesday, October 12, 2005, Page 986).

Tuesday, October 11, 2005

Review Denied in Case Denying Standing to Appeal For Non-Intervening Class Members

The Supreme Court today denied review in HealthPath of Mercer County Inc. v. Aetna Inc. (11th Cir. 2005), a case that held that unnamed, non-intervening class members lack standing to appeal a district court's order denying a Fed.R.Civ.P. 60(b) motion to enlarge time to opt out of a class action settlement and denying alternative motion for relief from settlement judgment. The petitioner was asking to court to construe Devlin v. Scardelletti, 536 U.S. 1 (2002)--which held that non-intervening unnamed class members had standing to appeal if they objected to the fairness of the settlement--also to give non-intervening class members standing to appeal a collateral lower federal court order denying a motion for enlargement of time to opt-out, even though such order was unrelated to the fairness or approval of the class action settlement.

SCOTUS Denies Review in Case Addressing Date of Accrual of Interest on Attorneys' Fee Award

Today the Supreme Court denied review in Bernback v. Greco, a case out of the Third Circuit that sought resolution of a circuit split regarding whether interest on an award of attorneys' fees is calculated from the time of entry of the judgment establishing a right to the fees as the Fifth, Sixth, Eighth, Ninth, Eleventh, and Federal Circuits hold, or from the time of entry of a later order fixing the amount of fees, as the Third, Seventh, and Tenth Circuits hold.