Interesting Erie Doctrine Article Made Available on Westlaw

An article entitled A Formstone Of Our Federalism": The Erie/Hanna Doctrine & Casebook Law Reform, authored by Robert Condlin and published in the July 2005 issue of the University of Miami Law Review has just become available on Westlaw. Here's a brief excerpt from the Introduction:

Law students learn one or another casebook version of Erie/Hanna, since casebooks are one of a student's primary sources of information about the doctrinal universe. When the students become law clerks, as ultimately some must, they draft Erie/Hanna opinions based on their slightly-off-track versions of the doctrine because these are the only versions they know. The principal consequence of this exercise in what one might think of as "casebook law reform," is a major doctrinal disconnect between the upper and lower branches of the federal judicial system, with the Supreme Court on one page (pretty much), and the lower federal courts on several others. As if playing an extended telephone game, the lower federal courts report back a different version of the Erie/Hanna doctrine than the one sent out by the Supreme Court. . . .

In this article I examine this episode of casebook law reform to determine how and why it occurs, and whether anything can or should be done about it. For the most part I do not discuss the wisdom of the Erie/Hanna doctrine itself. That ground has been plowed, almost to exhaustion, by many excellent commentators and I have little, if any, new growth to tease from those well-worn furrows. Instead, I examine the way in which the casebook authors codify the Erie/Hanna doctrine, so to speak, for study by law professors and students, in order to suggest ways in which the efforts of courts and authors could be better coordinated. I do not doubt that what I say about Erie/Hanna also could be said about other complicated statutory and constitutional doctrines.

The citation for the article is 59 U. Miami L. Rev. 475 (2005).

Ninth Circuit Holds that § 303(i) of the Bankruptcy Code Provides Complete Preemption

Per In re Miles, --- F.3d ----, 2005 WL 3358843 (9th Cir. Dec. 12, 2005):

In general, “a cause of action arises under federal law only when the plaintiff's well-pleaded complaint raises issues of federal law.” A defense is not part of a plaintiff's properly pleaded statement of his claim. Therefore, “a case may not be removed to federal court on the basis of a federal defense, including the defense of pre-emption, even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue.”

The “complete preemption doctrine” provides an exception to this general proposition. The Supreme Court has concluded that the preemptive force of some federal statutes is so strong that they “completely preempt” an area of state law. “In such instances, any claim purportedly based on that preempted state law is considered, from its inception, a federal claim, and therefore arises under federal law.”

. . .

Like section 301 of the LMRA, section 502 of ERISA, and sections 85 and 86 of the National Bank Act, § 303(i) of the Bankruptcy Code“provide[s] the exclusive cause of action for the claim[s] asserted and also set[s] forth procedures and remedies governing that cause of action.” Therefore, complete preemption is appropriate here. . . . (citations omitted).

Iowa Law Review Publishes Article on Removal Based on Fraudulent Joinder

The Iowa Law Review has just published an article by E. Farish Percy entitled Making A Federal Case Of It: Removing Civil Cases To Federal Court Based On Fraudulent Joinder 91 Iowa L. Rev. 189 (2005). Here's the abstract:

As defendants increasingly prefer to litigate in federal rather than state court, a new doctrine has emerged authorizing removal of civil cases to federal court based on diversity jurisdiction--fraudulent procedural misjoinder. Although the doctrine was first recognized by the Eleventh Circuit almost a decade ago, appellate courts have provided little guidance concerning the doctrine's application. As a result, district courts have failed to establish a cohesive framework for evaluating allegations of fraudulent misjoinder and have sometimes construed the evolving doctrine in a manner that raises serious federalism concerns. This Article proposes a framework for evaluating alleged fraudulent misjoinder so as to protect a diverse defendant's statutory right to remove while also ensuring that federal courts do not intrude upon the jurisdiction of state courts. It addresses many of the issues that currently lack clarity. First, it argues that state rather than federal joinder rules should control. Next, it demonstrates that the doctrine should apply equally to the misjoinder of defendants and the misjoinder of plaintiffs. Third, the Article suggests that the definitional standard for fraudulent misjoinder should mimic the definitional standard for traditional fraudulent joinder such that fraudulent misjoinder only occurs when the plaintiff lacks a reasonable basis under state procedural law for the joinder of the non-diverse party. Finally, it concludes that in cases involving fraudulent misjoinder, federal courts should remand rather than dismiss misjoined claims over which they have no jurisdiction.

First Circuit Reverses Grant of Summary Judgment

The First Circuit in Massachusetts Asset Financing Corp. v. Harter, Secrest & Emery, LLP, 430 F.3d 59 (1st Cir.(Mass.) Dec 01, 2005) (NO. 04-2541) issued an opinion earlier this month in which they reversed the district court's entry of summary judgment. The plaintiff in the case had alleged simple negligence under circumstances the district court concluded involved a mere gratuitous undertaking on the part of the defendant, something that would have to be accompanied by "gross negligence" in order to be actionable for damages under Massachusetts law. Thus, the district court entered summary judgment in favor of the defendant.

The First Circuit held that it was for a jury to decide whether the act was indeed gratuitous or whether it was undertaken for a business purpose, even though the defendant received no pecuniary compensation. Were a jury to decide there indeed was a business purpose, simple negligence would suffice.

Tenth Circuit Rules on Miscellaneous Summary Judgment Issues

The Tenth Circuit has just issued an opinion in Bryant v. Farmers Insurance Exchange (10th Cir. Dec. 20, 2005) in which they addressed the propriety of an affidavit submitted by the plaintiff and the sufficiency of the plaintiff's response to the summary judgment motion lodged against her. Here is the court's summary introduction of the opinion:

This case involves various age and gender discrimination claims brought by Plaintiff-Appellant Judith A. Bryant ("Bryant") against her former employer, Defendant-Appellee Farmers Insurance Exchange ("Farmers"). The district court granted summary judgment in favor of Farmers. On appeal, Bryant raises two issues: (1) whether the district court abused its discretion in excluding portions of her summary judgment affidavit as inadmissable; and (2) whether there existed a genuine dispute of material fact regarding the pretextual nature of Farmers' proffered nondiscriminatory reasons for terminating Bryant. As to Bryant's affidavit, we hold, inter alia, that so long as the other prerequisites of Fed. R. Civ. P. 56(e) are met, it is permissible to submit simple statistical calculations such as averages without first being designated as an expert witness. Regarding pretext, we conclude that Bryant's evidence calling into question the veracity of Farmers' nondiscriminatory reasons for firing her are sufficient to establish pretext for summary judgment purposes.

Class Certification Denied for Landowners Alleging Mercury Contamination

BNA's Class Action Litigation Report for December 23 is reporting on an Alabama federal court's denial of class certification in an environmental suit: "Individual fact issues are too numerous to permit certification of a class of property owners who allege mercury from a superfund site damaged their properties, a federal court in Alabama says." Labauve v. Olin Corp., S.D. Ala., No. 03-0567-WS-B, 11/10/05.

Click here for the full story.

S.D. Iowa Rejects Removability of Pre-CAFA Action Based on Post-Enactment Addition of Claim

A federal judge in the Southern District of Iowa (Comes v. Microsoft Corp., --- F.Supp.2d ----, 2005 WL 3454427 (S.D. Iowa Nov. 22, 2005) has rejected Microsoft's argument that the addition of a new claim in an action post-CAFA's enactment date (Feb. 18, 2005) makes the case removable to federal court:

Microsoft asserts that federal jurisdiction is appropriate for two reasons: . . . (2) amendments in the Proposed Fourth Amended Complaint bring the case within the bounds of the Class Action Fairness Act of 2005,

. . .

Plaintiffs filed their initial complaint in this case more than five years ago in February 2000. Microsoft argues that when plaintiffs filed the Proposed Fourth Amended Complaint a particular section raised a new claim. . . . Section 9 of the CAFA clearly states that the Act “shall apply to any civil action commenced on or after the date of enactment of this Act.” 109 P.L. 2 § 9. The Iowa rules of Civil Procedure provide that, “a civil action is commenced by filing a petition with the court.”Iowa Rules of Civil Procedure Rule 1.301(1).FN6 A “civil action” is distinguishable from a “claim” or a “cause of action” because it is the case in its entirety, including all pleading, motions, discovery and other elements of the proceeding. Weekley v. Guidant Corp., 392 F.Supp.2d 1066, 1067 (E.D.Ark.2005) (explaining instances where Congress has chosen to use terms such as “claim or cause of action” and “civil action” to distinguish between the whole proceeding and only a portion of the proceeding). Accordingly, “a civil action, viewed as the whole case, the whole proceeding, can only be commenced once.” Id. (citing Sneddon v. Hotwire Inc., 2005 WL 1593593 (N.D.Cal. June 29, 2005)). Thus, even when pleadings are amended, a new “civil action” is not commenced. Weekly, 392 F.Supp. at 1068.

Eleventh Circuit Issues Venue Opinion

The Eleventh Circuit just issued a decision reversing an erroneous dismissal for improper venue in Algodonera De Las Cabezas, S.A. v. American Suisse Capital, Inc., --- F.3d ----, 2005 WL 3453884 (11th Cir. Dec. 19, 2005). Here is an extended excerpt reproducing most of the opinion:

The defendants were served with process in the Southern District of Florida but failed to respond or otherwise appear. Upon Algodonera's motion, the clerk of court entered default judgment against the defendants. The district court then held a hearing to determine damages. At the close of the hearing, the district court requested a memorandum of law concerning the recovery of lost profits.However, before Algodonera filed such a memo, the district court entered a sua sponte order dismissing the case based on improper venue. The district court's order proceeded on the assumption that Algodonera relied on § 1391(a)(3), under which venue was not proper because the case could have been filed in New York. Algodonera timely filed a motion for reconsideration, explaining that venue was proper under § 1391(a)(1), given that both defendants were residents of Florida and the Southern District within the meaning of § 1391(c). The district court denied the motion for reconsideration, explaining only that it remained “unconvinced.”

. . .

In this case, both of the defendants conducted business through their offices in the Southern District of Florida, received correspondence there, and were subject to service of process there. Accordingly, both defendants were “residents” of the Southern District of Florida, within the meaning of 28 U.S.C. § 1391(c). Venue was thus proper in the Southern District within the meaning of § 1391(a)(1).

While the district court relied on § 1391(a)(3) to hold that venue was improper because the action could be brought in New YorkFN1, venue may be predicated on § 1391(a)(3) only when neither § 1391(a)(1) or (2) are satisfied. Doctor's Assocs. v. Stuart, 85 F.3d 975, 983 (2d. Cir.1996); see also, 17 Moore's Federal Practice, § 110.02 (describing § 1391(a)(3) as a “fall-back provision” used where “venue will be unavailable under § 1391(a)(1)”). Section 1391(a)(3) does not dictate that venue is improper in diversity cases any time the case could be brought in another district. Stuart, 85 F.3d at 893.

Moreover, we have previously made clear that while a district court may dismiss a suit sua sponte for lack of venue, it may not do so “without first giving the parties an opportunity to present their views on the issue.” Lipofsky v. N.Y. State Workers Comp. Bd., 861 F.2d 1257, 1259 (11th Cir.1988). This rule gives defendants an opportunity to waive the venue defense and plaintiffs an opportunity to present arguments as to why venue is proper before the case is dismissed. Id. In this case, the district court dismissed the case sua sponte before receiving any submissions or arguments from the parties on the propriety of venue in the Southern District. While the district court opined that Algodonera's motion for reconsideration gave it the opportunity to present its position on venue, that opportunity came only after the district court had dismissed the case and ordered the clerk of court to close it. This does not satisfy Lipofsky's command that the parties be given an opportunity to present their views, and bolsters our conclusion that the district court abused its discretion.

Sixth Circuit Applies Allapattah Services to Uphold Diversity Jurisdiction over Insufficient Supplemental Claims

The Sixth Circuit in Engstrom v. Mayfield, Slip Copy, 2005 WL 3448278 (6th Cir. Dec. 15, 2005) (Unpuplished Opinion) recently upheld the exercise of supplemental jurisdiction over jurisdictionally insufficient claims asserted by plaintiffs joined under Rule 20. Although one plaintiff had a claim that satisfied the amount in controversy, the remainder did not. However, because the plaintiffs were proceeding jointly against the defendants as Rule 20 parties, the court concluded that under Exxon Mobil Corp. v. Allapattah Services, Inc., --- U.S. ----, ----, 125 S.Ct. 2611, 2615, 162 L.Ed.2d 502 (2005), 28 U.S.C. sec. 1367 provided for supplemental jurisdiction over the jurisdictionally insufficient claims so long as one plaintiff had a claim that satisfied the amount-in-controversy requirement.

Texas Law Review Publishes "A Theory of Punitive Damages"

The November issue of the Texas Law Review includes a piece penned by Prof. Benjamin Zipursky entitled A Theory of Punitive Damages. Westlaw subscribers can view the piece by clicking here. Here's the abstract:

A contemporary theory of punitive damages must answer two questions: (1) What place, if any, do punitive damages have in the civil law of tort, given that they appear to involve an idea of criminal punishment? (2) Why are punitive damages subject to special constitutional scrutiny, as in the Supreme Court's decision in BMW v. Gore, if they really are part of the civil law of tort? The article offers a theory that can answer both of these questions. Punitive damages have a double aspect, corresponding to two senses of "punitive." Insofar as they pertain to the state's goal of imposing a punishment upon a defendant who merits deterrence or retribution, they have a criminal aspect. Insofar as they pertain to the plaintiff's "right to be punitive," they have a civil aspect. Drawing upon the theory of civil recourse that the author has developed as a challenger to corrective justice theory, the article explains what a "right to be punitive" means. It then uses the recourse theory of punitive damages to support a rational reconstruction of the Supreme Court's constitutional jurisprudence of punitive damages. When a case can be understood as involving principally a plaintiff's right to be punitive, heightened constitutional scrutiny is not appropriate. However, where, as in BMW v. Gore, the state is essentially imposing punishment, the excessiveness of a damages award is properly scrutinized under heightened constitutional standards.

Seventh Circuit Upholds Sanctions Against Civil Rights Plaintiff for Frivolous Assertion of Fifth Amendment Privilege

Per Ienco v. Angarone, 429 F.3d 680 (7th Cir. Nov. 14, 2005):

[Plaintiff] Ienco also challenges the district court's imposition of monetary sanctions, totaling $4075, for asserting his Fifth Amendment privilege in response to deposition questioning. The court concluded that Ienco's assertion of privilege lacked merit and was an obstructionist tactic. Reviewing an order of sanctions for abuse of discretion . . . we conclude that the district court did not err when it sanctioned Ienco. We also find that $4075 is a reasonable and appropriate award for attorneys' fees and costs related to Ienco's conduct.

D.C. Circuit Publishes Opinion Addressing Pleading and Amendment Issues

Judge Janice Rogers Brown in Jones v. District of Columbia Dept. of Corrections, 429 F.3d 276 (D.C. Cir. Nov. 15, 2005) has issued a brief opinion announcing the following two procedural holdings:

1. Based on the language of Rule 8(c), A party who fails to raise an affirmative defense in their responsive pleading and fails to seek an amendment of their pleadings to raise the defense may not raise the defense for the first time in a motion for summary judgment. In this case, the district court considered the newly raised affirmative defense in the summary judgment motion and Judge Brown concluded that was erroneous.

2. A district court's denial of a motion for leave to amend the complaint without stating the reasons for doing so is an abuse of discretion.

Alien Obtaining Court Order Incorporating Voluntary Stipulation Staying Deportation is Prevailing Party Under EAJA

Per Carbonell v. I.N.S., 429 F.3d 894 (9th Cir. Nov. 18, 2005):

Congress has authorized fee recovery by prevailing parties in EAJA [Equal Access to Justice Act]. Under EAJA, a litigant is entitled to attorney's fees and costs if: (1) he is the prevailing party; (2) the government fails to show that its position was substantially justified or that special circumstances make an award unjust; and (3) the requested fees and costs are reasonable.

. . .

The first question that must be resolved, therefore, is whether Carbonell is a "prevailing party." In Buckhannon Bd. & Care Home, Inc. v. West Virginia Dep't of Health & Human Res., 532 U.S. 598, 121 S.Ct. 1835, 149 L.Ed.2d 855 (2001), the Supreme Court clarified who constitutes a prevailing party for the purpose of awarding attorney's fees. According to Buckhannon, a litigant must meet two criteria to qualify as a prevailing party. First, he must achieve a "material alteration of the legal relationship of the parties." Second, that alteration must be "judicially sanctioned." Id. at 604-05, 121 S.Ct. 1835; Labotest, Inc. v. Bonta, 297 F.3d 892, 895 (9th Cir.2002).

. . .

[A]lthough Carbonell obtained relief that was not an enforceable judgment on the merits or a consent decree, he nonetheless can qualify as a prevailing party--and he does so under the two-part test set forth by the Supreme Court in Buckhannon as elaborated on by this court in subsequent cases.

. . .

We agree with the Second, Fourth, and Eleventh Circuits [and] hold that when a court incorporates the terms of a voluntary agreement into an order, that order is stamped with sufficient "judicial imprimatur" for the litigant to qualify as a prevailing party for the purpose of awarding attorney's fees.

. . .

[T]he district court's order incorporating the voluntary stipulation to a stay of departure materially altered the relationship between Carbonell and the government and . . . this alteration was judicially sanctioned. As a result, we hold that Carbonell is a prevailing party for the purpose of awarding attorney's fees under EAJA.

Michigan Law Review Publishes Class Actions Article

The Michigan Law Review has just published a piece by Prof. Myriam Giles on class actions entitled Opting Out Of Liability: The Forthcoming, Near-Total Demise Of The Modern Class Action, 104 MILR 373 (2005). In it, she makes the following claim:

"[I]n the ongoing and ever-mutating battle between plaintiffs' lawyers and the protectors of corporate interests, the corporate guys are winning. And they are winning because they have developed a new set of tools powerful enough to imperil the very viability of class actions in many--actually, most--areas of the law. In fact, I believe it is likely that, with a handful of exceptions, class actions will soon be virtually extinct."

This article promises to be an interesting read for anyone interested in this subject.

Eleventh Circuit Affirms Assertion of Subject Matter Jurisdiction over Petition to Vacate Zero Dollar Arbitration Award

The Eleventh Circuit in Peebles v. Merrill Lynch, --- F.3d ----, 2005 WL 3357496 (11th Cir. Dec. 12, 2005) has upheld a district court's assertion of subject matter jurisdiction over a petition seeking to vacate a zero dollar award. The court reasoned that diversity jurisdiction existed because the party seeking to vacate the award was also seeking a new arbitration hearing at which he would demand a sum that exceeded the amount in controversy for diversity jurisdiction purposes.

Arbitrators' Refusal to Compel Discovery Does Not Support Vacatur of Panel's Award

Per BNA's U.S. Law Week (Volume 74 Number 22 Tuesday, December 13, 2005, Page 1339):

Arbitrators' refusal to compel requested discovery in a reinsurance dispute does not justify vacatur of the arbitration award under the Federal Arbitration Act, the U.S. Court of Appeals for the First Circuit held Dec. 2 (National Casualty Co. v. First State Insurance Group, 1st Cir., No. 05-1505, 12/2/05).

Even if the FAA allows vacatur based on such a refusal, no violation occurred here, Judge Norman H. Stahl said, because the arbitration panel, by drawing negative inferences against the party that resisted discovery, avoided any deprivation of a fair hearing that could justify vacatur.

BNA subscribers may view the full story by clicking here.

Third Circuit Rejects Collateral Challenge, Says Diet Drug Issues Were Fully Litigated

Per BNA's Class Action Litigation Report (Volume 06 Number 23 December 9, 2005, Page 851):
"The U.S. Court of Appeals for the Third Circuit Nov. 30 rejected three collateral challenges to the diet drug class settlement, saying all three sets of claimants had a full and fair opportunity to be heard, and already raised and litigated the issues they sought to assert (In re Diet Drugs Product Liability Litigation, 3d Cir., No. 03-3401, 11/30/05)."

BNA subscribers can get the full story, which includes a good discussion of the differences between the Third and Second Circuits on this issue, by clicking here.

Fourth Circuit Affirms District Court's Denial of Rule 60 Relief from Sec. 1988 Attorneys' Fees Award

Today the Fourth Circuit in Wendt v. Leonard issued an opinion upholding a district court's denial of Rule 60 relief from the imposition of attorneys' fees under 42 U.S.C. sec. 1988. The plaintiff in the action, Wendt, had brought a frivolous civil rights claim clearly barred by the Tax Injunction Act (28 U.S.C. sec. 1341). After declaring that it lacked jurisdiction over Wendt's claim under the Act, the court imposed attorneys' fees under sec. 1988. Wendt never appealed that determination. However, six months after the fact he sought relief from the order under Rule 60(b)(4), arguing that the district court lacked subject matter jurisdiction over his claim and thus lacked jurisdiction to impose attorneys' fees.

The district court denied Rule 60 relief and the Fourth Circuit affirmed. The panel, per Judge Traxler, stated that belated Rule 60 motions cannot substitute for a timely appeal. Thus, relief is only warranted when the jurisdictional error alleged is "egregious." Because circuits are split on whether court's lacking jurisdiction over the underlying civil rights claims may nonetheless impose attorneys' fees under sec. 1988, the panel concluded that the district court had an arguable basis for jurisdiction and the error, if any, was not egregious.

Because of the procedural posture of the case as an appeal from the denial of Rule 60 relief, the court found no need to weigh in on the matter that divides the circuits, which as mentioned, is whether court's lacking jurisdiction over the underlying civil rights claims may nonetheless impose attorneys' fees under sec. 1988.

Mistrial Declared in Federal Vioxx Trial

Earlier today, U.S. District Judge Eldon Fallon declared a mistrial in the first federal Vioxx case. The judge told the jury 20 minutes into their 4th day of deliberations that they had agreed to come to a verdict in a reasonable time. The judge said that they had deliberated for a reasonable time and had come to no verdict, so he was declaring a mistrial.

The Washington Post has a full story on the mistrial that can be read by clicking here.

Eighth Circuit Affirms District Court Rejection of Batson Challenge

The Eighth Circuit in Swope v. Razzaq, 428 F.3d 1152 (8th Cir. Nov. 17, 2005) [/05/11/051273P.pdf] recently affirmed the district court's rejection of a plaintiff's challenge of the defendant's use of peremptory challenges to create an all-white jury in a medical malpractice case. The plaintiff challenged the striking of three African-American jurors under Batson v. Kentucky, 476 U.S. 79, 106 S.Ct. 1712, 90 L.Ed.2d 69 (1986), which prohibits the use of peremptory challenges to engage in purposeful discrimination. Because the defendant proffered non-discriminatory reasons for striking each of the three prospective Black jurors, and the plaintiff failed to identify similarly situated white jurors who were not stricken, the circuit court affirmed the district court's conclusion that the Batson challenge should be rejected.

Supreme Court Lets Stand Appellate Ruling That Ryan's Arbitration Pact Unenforceable

BNA's Class Action Litigation Report (Volume 06 Number 23, Dec. 9, 2005) has an article today discussing Ryan's Family Steak Houses Inc. v. Walker, U.S., No. 04-1672, cert. denied 11/28/05. By denying certiorari, the Court let stand an appeals court decision that Ryan's Family Steak House Inc. cannot enforce an arbitration agreement contained in its job application forms. "The restaurant chain had asked the high court to review the U.S. Court of Appeals for the Sixth Circuit's March decision that the arbitration agreement was unenforceable for multiple reasons and that current and former employees could proceed with a Fair Labor Standards Act collective action alleging overtime and minimum wage violations (400 F.3d 370, 10 WH Cases2d 609)."

The full discussion is available to BNA subscribers by clicking here.

Wisc. Supreme Court Holds that 1983 Burden of Proof "Substantive" and Thus Applicable to State Tort Claim against Police

Per Prof. Steven H. Steinglass at Cleveland-Marshall College of Law:

On December 6, 2005, the Supreme Court of Wisconsin unanimously held in Shaw v. Leatherberry, 2005 WI 163 (Wis. Dec. 6, 2005), that the middle burden of proof (clear and convincing) does not as a matter of federal law apply to a sec. 1983 excessive force claim against police officers. Wisconsin applies this middle burden to state tort claims against police officers, and the trial court, following the state pattern jury instructions, applied it to a sec. 1983 claim. The Court of Appeals certified the question to the state supreme court.

The Wisconsin Supreme Court found that the burden of proof is "substantive" and that state courts entertaining sec. 1983 cases were required to follow federal substantive law (the preponderance of the evidence standard). Alternatively, the court held that even if the
burden was not substantive federal law preempted state law because the higher burden of proof is inconsistent with sec. 1983's purposes of compensation and deterrence. Finally, the court found that the higher burden was outcome-determinative in that it disrupted the federal interest in uniformity.

For the full opinion click here.

American Judicature Society Posts Commentary on Habeas Reform

The American Judicature Society has posted a commentary entitled "The erosion of the Great Writ," which comments on the The Streamlined Procedures Act, now before Congress. Those interested in reading the commentary can do so by clicking here.

Supreme Court Resolves Circuit Split Re Attorney Fees under 28 U.S.C. § 1447(c)

The Supreme Court today in Martin v. Franklin Capital Corp., --- S.Ct. ----, 2005 WL 3299410(U.S. Dec. 7, 2005) has resolved a circuit split on the standard for an award of attorney fees under 28 U.S.C. § 1447(c). Section 1447(c) provides, in pertinent part, that an order remanding a removed case "may require payment of just costs and any actual expenses, including attorney fees, incurred as a result of the removal."

The Court held that "Absent unusual circumstances, courts may award attorney's fees under § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively reasonable basis exists, fees should be denied."

This opinion is Chief Justice Roberts' first signed opinion as a member of the Court.

Second Circuit Holds that Arbitrators May Compel Nonparties to Appear for Pre-Hearing Discovery

The Second Circuit has held that Section 7 of Federal Arbitration Act, which provides that arbitrators "may summon in writing any person to attend before them or any of them as a witness and in a proper case to bring with him or them any book, record, document, or paper which may be deemed material as evidence in the case," authorizes arbitrators to compel nonparties to testify and produce documents at hearings before arbitrators prior to trial-type hearing on merits.

BNA's U.S. Law Week (Volume 74 Number 21 Tuesday, December 6, 2005, p. 1323) provides a full summary and analysis of the case (BNA subscribers may click here).

County's Effort to Intervene in Environmental Case 15 Years After Commencement Deemed Untimely Under FRCP Rule 24

A Florida federal court (Florida Key Deer v. Brown, --- F.Supp.2d ----, 2005 WL 3198012 (S.D. Fla. Nov. 22, 2005) has denied a motion to intervene under Rule 24 filed by a Florida county in a lawsuit between conservation groups and the Federal Emergency Management Agency (FEMA) on the ground that it was untimely. The motion came fifteen years after the lawsuit commenced, making it easy for the court do rule that the motion was untimely, even in the face of the county's arguments that it was never served with documents in the case. Because the lawsuit was well publicized, the court reasoned that the county was well aware of the action and thus reasonably should have known of its pendency. The court also held that the country's interests were adequately represented by the existing defendant in the action, FEMA, providing an additional reason to deny Rule 24 intervention.

CA6 Reverses District Court Denial of Rule 59(e) Relief on the Ground that Jurisdictional Dismissal Should Have Been Without Prejudice Per Rule 41(b)

Per Intera Corp. v. Henderson, 428 F.3d 605 (6th Cir. Nov. 10, 2005):

Based upon a plain reading of fed. R. Civ. P. 41(b), and the facts of this case, we hold that the district court clearly erred when it dismissed Plaintiffs' action for lack of personal jurisdiction "with prejudice."

Our reasons in support of this conclusion are two-fold. First, our conclusion is entirely consistent with the language of Rule 41(b), which provides in relevant part, "Unless the court in its order for dismissal otherwise specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other than a dismissal for lack of jurisdiction ..., operates as an adjudication upon the merits." fed. R. Civ. P. 41(b) (emphasis added). Thus, under Rule 41(b), dismissals for lack of personal jurisdiction should be made "without prejudice."

Second, in declaring that a dismissal for lack of jurisdiction does not "operate[ ] as an adjudication upon the merits," Rule 41(b) does not distinguish between subject matter and personal jurisdiction. fed. R. Civ. P. 41(b). Within the subject matter jurisdiction context, we have interpreted Rule 41(b) to mean that "a dismissal for lack of subject matter jurisdiction does not operate as an adjudication on the merits for preclusive purposes." See Pratt v. Ventas, Inc., 365 F.3d 514, 522 (6th Cir.2004) (citing *621 Holloway v. Brush, 220 F.3d 767, 778 (6th Cir.2000) (citing fed. R. Civ. P. 41(b))). This Court has explained the rationale underlying this rule: [M]erely because one court does not have jurisdiction over a dispute does not necessarily mean that another court is precluded from properly exercising jurisdiction over the matter. Moreover, if a court does not have jurisdiction over a matter, it cannot properly reach the merits of the case. Id. (quoting Wilkins v. Jakeway, 183 F.3d 528, 533 n. 6 (6th Cir.1999)).

By logical extension, our rationale in Pratt applies with equal force to the personal jurisdiction context. Although Tennessee courts lack personal jurisdiction over Defendants Henderson and Englar, this does not lead to the inexorable conclusion that no court has personal jurisdiction over these defendants. Furthermore, upon a determination that personal jurisdiction is lacking, a court should not dismiss a case on the merits, especially when it appears that another court with appropriate jurisdiction may resolve the issues between the parties. In this case, because Henderson and Englar are residents of North Carolina, and many, if not all, of the alleged deceptive actions may have occurred in that state, the courts of North Carolina may be able to address Plaintiffs' claims against Defendants.

SCOTUS Denies Review in Three Civil Procedure Cases

The Supreme Court today denied review in several cases, including three civil procedure cases:

Andrews v. Pincay--Questions Presented: (1) May court of appeals review sufficiency of evidence supporting civil jury verdict, and if so to what extent, when party requesting review made motion for judgment as matter of law under Fed.R.Civ.P. 50(a) before submission of case to jury, but neither renewed that motion under Rule 50(b) after jury's verdict nor moved for new trial under Rule 59? (2) Does Johnson v. New York, N.H. & H.R. Co., 344 U.S. 48 (1952), bar federal appellate court from granting judgment as a matter of law to party whose post-verdict filing, while making clear that party is entitled to judgment, does not expressly ask for such relief?

Bidgood v. Cavendish, Vt.--Questions Presented: (1) Is landowner's private property taken without due process of law when trial court refuses to reopen trial in contravention of conditional orders of dismissal? (2) Is landowner denied right of free speech, right of association, right of procedural due process, right of substantive due process, right of equal protection of laws, right of interstate travel, and protections secured by 23 U.S.C. § 206, 42 U.S.C. § 1983, and 42 U.S.C. § 1988 when trial court refuses to reopen trial in contravention of conditional orders of dismissal?

Mosimann v. MSAS Cargo Int'l--Question Presented: Are there mitigating circumstances that might justify late submission of court materials and acceptance of such materials by U.S. courts?

Further details of these cases are available to BNA Subscribers at http://pubs.bna.com/ip/bna/lwt.nsf/StatusCasesDeniedRev.

American Enterprise Institute Publishes Vioxx Litigation Working Paper

The American Enterprise Institute has posted a copy of a new working paper entitled The Vioxx Litigation: Part I . Here's a summary of the document in their own words:

Part I of this AEI Working Paper looks at the history of Vioxx and asks questions about potential over-deterrence from having manufacturers bear the full measure of the social cost of drugs through strict products liability or failure-to-warn claims.

Copies are available by visiting the AEI Web site here.

New Federal Civil and Appellate Rules Effective Due to Congressional Inaction

A host of rule amendments became effective on December 1, 2005 as a result of the failure of Congress to take any action on those changes approved by the Supreme Court earlier this year:

Civil Rules:

Civil Rule 5.1 (Constitutional Challenge to a Statute - Notices, Certification, and Intervention) and 24 (Intervention)(sets forth the process when a party draws into question the constitutionality of a federal or state statute)

Civil Rule 6 (Time) (clarifies the method of counting the additional three days provided to respond if service is by mail or one of the methods in Civil Rule 5(b)(2)(C) or (D))

Civil Rule 27 (Depositions Before Action or Pending Appeal) (corrects the outdated cross-reference to former Civil Rule 4(d))

Civil Rule 45 (Subpoena) (requires that a deposition subpoena state the manner for recording testimony)

Admiralty Rule B (In Personam Actions: Attachment and Garnishment) (fixes the time for determining whether a defendant is "found" in the district at the time the verified complaint and the accompanying affidavit are filed)

Admiralty Rule C (In Rem Actions: Special Provisions) (technical amendments that correct amendments made in 2000)

Appellate Rules:

Appellate Rule 4 (Appeal as of Right — When Taken) (clarifies the conditions for reopening the time to appeal a district court's judgment or order)

Appellate Rule 26 (Computing and Extending Time) and Appellate Rule 45 (Clerk's Duties) (replaces the phrase "Presidents' Day" with "Washington's Birthday" to conform to statute)

Appellate Rule 27 (Motions) (a motion, a response to a motion, and a reply to a response to a motion must comply with typeface and type-style requirements of Appellate Rule 32) New

Appellate Rule 28.1 (Cross-Appeals) (consolidates provisions regarding briefing in cross-appeals and adds several new provisions dealing with cross-appeals). Appellate Rule 32 (Forms of Briefs, Appendices, and Other Papers) and Appellate Rule 34 (Oral Argument) (amended to cross reference new Rule 28.1). Appellate Rule 28 (Briefs) (provisions dealing with cross-appeals are transferred to new Rule 28.1)

Appellate Rule 35 (En Banc Determination) (adopts "case majority" approach, in which disqualified judges are not counted in the base in calculating whether a majority of judges have voted to hear a case en banc)

D. Mass. Imposes Heightened Pleading for Breach of Fiduciary Duty Claims under the ICA

The court in Yameen v. Eaton Vance Distributors, Inc., 394 F.Supp.2d 350 (D. Mass. Oct. 14, 2005) has dismissed a breach of fiduciary duty claim for failure to state a claim under FRCP 12(b)(6). In this case, the plaintiff alleged that the defendants breached their fiduciary duties under Sections 36(b) and (a) of the Investment Company Act of 1940 ("ICA"), 15 U.S.C. § 80a-1 et seq. The court wrote: "In cases, such as this one, where a plaintiff alleges that a mutual fund charged excessive fees, 'a complaint must state more than a legal conclusion that a fee is excessive in order to survive a motion to dismiss.' Krantz v. Fidelity Mgmt. & Research, Co., 98 F.Supp.2d 150, 158 (D.Mass.2000). 'Conclusory allegations in a complaint, if they stand alone, are a danger sign that the plaintiff is engaged in a fishing expedition.' DM Research v. College of Am. Pathologists, 170 F.3d 53, 55 (1st Cir.1999)."

After stating the six factors relevant to determining whether a fee is excessive, the court dismissed the plaintiff's claim because it appeared to implicate only one of these factors.

D. Mass Rejects Federal Medical Peer Review Privilege

Per In re Administrative Subpoena Blue Cross Blue Shield of Massachusetts, Inc., --- F.Supp.2d ----, 2005 WL 3178175 (D. Mass. Nov. 18, 2005):

The Court must decide whether to recognize a federal medical peer review privilege. No court in the First Circuit or District of Massachusetts has yet done so under federal law, but Massachusetts state law does recognize the privilege.

. . .

When the forum state has recognized a particular privilege, a court may take that into account when deciding whether to recognize that privilege as part of federal law. As a matter of comity, federal courts recognize state privileges "where this can be accomplished at no substantial cost to federal substantive and procedural policy." Although this Court must take the Massachusetts statute into account, it must also heed the Supreme Court's directive in University of Pennsylvania that courts should be "especially reluctant to recognize a privilege in an area where it appears that Congress has considered the relevant competing concerns but has not provided the privilege itself."

. . .

The Supreme Court has several times refused to recognize a privilege when doing so would inhibit a federal investigation. Furthermore, the federal interest in this investigation is to enforce laws against health care fraud, an interest other federal courts have found sufficiently strong to refuse to recognize a federal medical peer review privilege. Additionally, this decision comports with the findings of the vast majority of federal courts that have faced this issue in other contexts. As such, the government has shown sufficiently that the costs of withholding the documents would outweigh the benefits of recognizing a medical peer review privilege in the context of a federal criminal investigation. Therefore, the Court will not recognize a federal medical peer review privilege under Fed.Rules Evid.Rule 501, 28 U.S.C.A. (citations omitted).

Investors' Suit Dismissed For Failure To Plead Fraud

Per the Securities Class Action Reporter, Nov. 15, 2005:

The U.S. District Court for the District of Connecticut granted a company's motion to dismiss a group of investors' complaints alleging violations of federal securities laws. (Johnson v. NYFIX Inc., No. 04-0802 (D. Conn. Oct. 26, 2005)). The district court held that the investors had not properly pleaded fraud in their complaint. Douglas Johnson, THS&H Investment Associates L.L.C. and Bruce Frank sued on behalf of themselves and a class of other investors who purchased the common stock of NYFIX Inc. from Mar. 30, 2000, to Mar. 30, 2004. The plaintiffs alleged that NYFIX and five of its executive officers violated § 11 of the Securities Act of 1933 (the Act) and that two executives violated § 15 of the Act. Plaintiffs also alleged that NYFIX and three executives violated § 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and Rule 10b-5 promulgated thereunder. The plaintiffs further alleged that three executives violated § 20(a) of the Exchange Act. All allegations arose from NYFIX's method of accounting for its investment in NYFIX Millenium L.L.C., which led NYFIX to report inflated financial results in numerous SEC filings, a registration statement and several press releases. The district court held that, although NYFIX's executives had the opportunity to commit fraud as required under the Private Securities Litigation Reform Act (PSLRA), the plaintiffs failed to adequately demonstrate motive. The district court held that mere ownership of stock without a corresponding personal benefit tied to alleged misrepresentation could not constitute motive. Similarly, using inflated stock to transact a merger or acquisition does not alone support a finding of motive.

ALI-ABA Federal Courts Evidence Conference Materials Now Available Online

A series of CLE articles done for the recent American Law Institute - American Bar Association (ALI-ABA) course of study entitled "Trial Evidence in the Federal Courts: Problems and Solutions" is now available online through Westlaw. Among the collection are the following pertinent submissions:

- Electronic Spoliation, SL044 ALI-ABA 85.
- The 2000 Amendments to the Federal Rules of Civil Procedure & Evidence: A Preliminary Analysis, SL044 ALI-ABA 173.
- Current Trends in Electronic Discovery, SL044 ALI-ABA 343.
- 2005 Proposed Electronic Discovery Amendments to the Federal Rules of Civil Procedure, SL044 ALI-ABA 1151.