Wednesday, May 31, 2006

Fourth Circuit Holds that State Law of Res Judicata Should Have Been Applied in Federal Diversity Case

Per Q. Intern. Courier, Inc. v. Smoak, 441 F.3d 214 (4th Cir. Mar. 20, 2006):

In this case, the first action--which was based on diversity jurisdiction--was adjudicated in the federal district court sitting in Virginia. Under Semtek, [Semtek Int'l Inc. v. Lockheed Martin Corp., 531 U.S. 497, 121 S.Ct. 1021, 149 L.Ed.2d 32 (2001)] the preclusive effect, if any, of the first action on the second action should have been decided under the res judicata law of the state of Virginia--the law of the state where the federal district court sat in the first action. Thus, we hold that the district court erred by applying the federal law of res judicata rather than the Virginia state law of res judicata.

SCOTUS Denies Cert. in LICRA v. Yahoo!

BNA reported yesterday in US Law Week’s Supreme Court Today that the Supreme Court has denied certiorari in La Ligue Contre le Racisme et l'Antisemitisme v. Yahoo! Inc., No. 05-1302, 2006 WL 993483. By denying review, the Supreme Court allowed to stand a Ninth Circuit decision, Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199 (9th Cir. January 12, 2006), that reversed the district court’s ruling that personal jurisdiction existed over the French defendants, and that French court orders were unenforceable “by six-judge majority, three of whom find action not ripe, and three of whom find that district court lacked personal jurisdiction over French citizens, even though total of eight judges agree that district court properly exercised personal jurisdiction over French citizens.”

The questions presented in the case were as follows:

(1) By litigating bona fide claim in foreign court and receiving favorable judgment, does foreign party automatically assent to being haled into court in other litigant's home forum?

(2) Under "effects" test set forth in Calder v. Jones, must underlying action in non-contract case be tortious or otherwise wrongful to justify exercise of personal jurisdiction, or is "express aiming" of any action, regardless of culpability, sufficient?

Seventh Circuit Finds No SMJ Under FIRREA for Untimely Filed Claims

Per Maher v. F.D.I.C., 441 F.3d 522 (7th Cir. Mar. 21, 2006):

Under [Financial Institutions Reform Recovery and Enforcement Acts (FIRREA)], a claimant can file an administrative claim with the receiver, which then has 180 days to allow or deny the claim. If the receiver denies or does not render a decision within 180 days, the claimant has 60 days to file suit. Federal courts lack jurisdiction to address claims that fail to comply with FIRREA's administrative claims process. 12 U.S.C. § 1821(d)(6)(A); Maher, 75 F.3d at 1190-91; Capitol Leasing Co. v. F.D.I.C., 999 F.2d 188, 193 (7th Cir.1993). Maher and Gravee [vice-president and president of First Federal Savings and Loan of Wilmette, Illinois] filed this lawsuit [seeking pension trust funds from their employment with a failed bank] more than a year after the termination of the receivership and more than a decade after they claimed to have filed administrative claims on April 12, 1990. Thus, since they failed to comply with the administrative procedures, FIRREA does not provide subject matter jurisdiction over these claims.

Tuesday, May 30, 2006

D. Conn. Finds Civil Rights Claim “Inextricably Intertwined” with Past Juvenile Court Proceedings and Thus Barred by Rooker-Feldman Doctrine

Per Inkel v. Connecticut Dept. of Children and Families, 421 F.Supp.2d 513 (D.Conn. Mar 17, 2006):

Plaintiffs claim that the orders of temporary custody that were entered for [their children] were obtained by fraud and false testimony presented by D.C.F. [Department of Children and Families] employees and accepted and condoned by defendants Pellegrino and Pisani, a deputy clerk for the Connecticut Superior Court for Juvenile Matters at Waterford. Defendants argue that claims arising out of false testimony or false affidavits are barred by the Rooker-Feldman doctrine, and the Court agrees.

“Rooker-Feldman applies not only to decisions of the highest state courts, but also to decisions of lower state courts.” Ashton v. Cafero, 920 F.Supp. 35, 37 (D.Conn.1996). It applies to “challenges to final and interlocutory state court decisions.” Id. (emphasis added).

Here, plaintiffs' claims that D.C.F. personnel submitted false evidence and thereby obtained unwarranted orders of temporary custody over the children are “inextricably intertwined” with the juvenile court proceedings themselves. The state court judges who issued the custody orders evidently credited the information presented by D.C.F. Plaintiffs now ask this Court to second-guess the state courts' factual and credibility findings. Plaintiffs' remedy for an incorrect or unfair juvenile court decision is to appeal that decision to higher state courts, not to seek federal court intervention by way of a civil rights action. Therefore any claims brought under 42 U.S.C. § 1983 relating to the submission of false testimony or information to state court must be dismissed.

Friday, May 26, 2006

Tenth Circuit Holds that Discretionary Function Exemption Shields Coast Guard from SAA Liability

Per Harrell v. U.S., 443 F.3d 1231 (10th Cir. Apr 06, 2006):

In the Suits in Admiralty Act (SAA), the United States waives its sovereign immunity from suit for maritime torts committed by its agents. See 46 U.S.C.App. § 742; Tew v. United States, 86 F.3d 1003, 1005 (10th Cir.1996). The SAA contains no express exceptions to the waiver of sovereign immunity. In contrast, the Federal Tort Claims Act (FTCA), which waives sovereign immunity for tort claims against the United States, contains an express exception with respect to claims “based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the government.” Tew, 86 F.3d at 1005. The Tenth Circuit has held that a similar discretionary function exception is to be implied into the SAA. See id.

The Supreme Court has set forth a two-part test to determine whether conduct is encompassed by the discretionary function exception and thereby immunized from SAA liability. See Berkovitz v. United States, 486 U.S. 531, 536, 108 S.Ct. 1954, 100 L.Ed.2d 531 (1988) (FTCA context); Thames Shipyard & Repair Co. v. United States, 350 F.3d 247, 254 (1st Cir.2003) (applying Berkovitz test in SAA context). The court must first consider whether the challenged conduct was “discretionary,” meaning whether it was “a matter of judgment or choice for the acting employee.” See Lopez v. United States, 376 F.3d 1055, 1057 (10th Cir.2004) (citing Berkovitz, 486 U.S. at 536, 108 S.Ct. 1954). If the court finds that it was, the court must then consider whether it was the type of decision the discretionary function exception was designed to protect, namely one requiring the exercise of judgment based on considerations of public policy. See id. (citing Berkovitz, 486 U.S. at 536-37, 108 S.Ct. 1954).

… With respect to the first prong of the Berkovitz test, plaintiffs do not point to any statute, regulation or policy mandating that the Coast Guard warn mariners about the location or condition of aids to navigation in any particular fashion. The challenged conduct, then, is discretionary under the first prong. The Coast Guard's decisions about the appropriate manner in which to warn the public about potential hazards relating to buoys are also discretionary under the second prong, as those decisions implicate the exercise of a policy judgment of an economic nature, including the feasibility and costs of erecting and maintaining physical markers in light of available resources and the relative risks to the public health and safety from alternative actions. Thus, it is clear that the Coast Guard's decision whether to place a warning sign or marker at the buoy's location was a discretionary decision that required judgment and one that was grounded in public policy considerations.

Thursday, May 25, 2006

N.D. Alabama Holds that CAFA Does Not Shift Burden of Proof to Plaintiff to Disprove Federal Jurisdiction When Facing Removal

Per Eufaula Drugs, Inc. v. TDI Managed Care Serv., Inc, 2006 WL 986976 (M.D. Ala. Apr. 14, 2006):

In the typical case invoking federal diversity jurisdiction under 28 U.S.C. § 1332(a), the party asserting federal jurisdiction bears the burden of demonstrating that jurisdiction exists. See McNutt v. Gen. Motors Corp., 298 U.S. 178, 189, 56 S.Ct. 780, 785, 80 L.Ed. 1135 (1936). When the plaintiff files suit in state court, “[t]he defendant can remove to federal court if he can show, by a preponderance of the evidence, facts supporting jurisdiction.” Burns, 31 F.3d at 1094 (emphasis added). That is, the defendant must show by a preponderance of the evidence that the amount in controversy has been met.

The Court recognizes, however, that a number of courts have concluded that CAFA shifts the burden to the plaintiff to prove that the amount in controversy has not been met, and that therefore federal jurisdiction does not exist. See, e.g., Waitt v. Merck & Co., No. C05-0759L, 2005 WL 1799740 (W.D.Wash. July 27, 2005); Yeroushalami v. Blockbuster, Inc., No. CV 05-225-AHM(RCX), 2005 WL 2083008 (C.D.Cal. July 11, 2005). Though the text of CAFA makes no mention of the burden of proof, these courts base their conclusion that CAFA shifts the burden on a report of the Senate Committee on the Judiciary. . . .

. . .

. . . “[A] cardinal principle of the judicial function of statutory interpretation is that courts have no authority to enforce principles gleaned solely from legislative history that has no statutory reference point.” Id. United States v. Thigpen, 4 F.3d 1573, 1577 (11th Cir.1993). Therefore, this Court will not consider the Senate report on CAFA, and will apply the traditional burden, requiring Defendants to show by a preponderance of the evidence that the amount in controversy has been met.

Wednesday, May 24, 2006

Notre Dame Law Review Publishes a Report Examining Forum Choice in Class Actions

The Notre Dame Law Review has just published a report by Thomas E. Willging, Senior Researcher at the Federal Judicial Center (FJC), and Shannon R. Wheatman, Notice Director of Hilsoft Notifications and former FJC research associate, entitled Attorney Choice of Forum in Class Action Litigation: What Difference Does It Make?, 81 Notre Dame L. Rev. 591 (2006), which discusses the factors that influence forum selection and the impact of that selection on the case outcomes. Here’s an excerpt from the introduction:

Rather than rely on assumptions, we sought to answer some of the following empirical questions about the pre-CAFA class action litigation process:

• What factors influence plaintiff attorneys' choice of forum for filing a class action?
• What factors influence defendant attorneys' choice of forum for defending a class action?
• How different are judicial rulings on class certification and other procedural matters in state and federal forums?
• How different are the case outcomes--mostly in the form of dismissals or settlements--in state and federal forums?
• To the extent that both sides to the litigation base their forum-selection decisions on expectations of favorable legal rules or judicial predispositions, how accurate do their perceptions prove to be?

. . .

. . . This report presents empirical data and analysis relevant to the above questions. Overall, our data lend support to the conventional wisdom that attorney choice of forum is influenced by attorneys' perceptions of how the state and federal forums are likely to treat their cases, both as to class certification and settlement review. But, our data also show that attorneys considered more than the perceived attitudes of judges. Attorneys also factored in the underlying substantive and procedural law to be applied in state and federal court as well as local factors, such as the number of class members residing in the forum state and the local origin of the facts underlying the complaint.

Our data, however, lend little support to the view that state and federal courts differ greatly in how they resolve class actions. For example, state and federal courts were equally unlikely to certify cases filed as class actions. Both state and federal courts certified classes in fewer than one in four cases filed as class actions. Although state courts approved settlements awarding more money to the class than did federal courts, that difference was a product of the size of the class; individual class members on average were awarded more from settlements in federal courts than in state courts.

Tuesday, May 23, 2006

Fourth Circuit Holds ICARA Does Not Confer Federal Jurisdiction for Access Claims

Per Cantor v. Cohen, 442 F.3d 196 (4th Cir. Mar. 21, 2006):

. . . [T]his appeal presents the question of whether federal courts are authorized to hear access claims under ICARA [International Child Abduction Remedies Act]. ICARA is the federal legislation which implemented the Hague Convention on the Civil Aspects of International Child Abduction, October 25, 1980, 19 I.L.M. 1501 (1980) (the “Hague Convention” or “Convention”) in the United States.

. . .

[U]nder the Convention, the Appellant has no right to initiate judicial proceedings for access claims and the federal courts are not authorized to exercise jurisdiction over the access claims brought by the Appellant. It is on this premise that we find, and the district court found, that the courts of the United States lack a substantive basis for the resolution of the access claims asserted by the Appellant.

Monday, May 22, 2006

Seventh Circuit Holds that Arbitrator Must Determine Whether Agreement Consolidates Arbitrations

Per Employers Ins. Co. of Wausau v. Century Indem. Co., 443 F.3d 573 (7th Cir. Apr. 4, 2006):
Wausau incorrectly characterizes the consolidation question as a question of arbitrability. Cases since First Options [of Chicago, Inc. v. Kaplan, 514 U.S. 938, 115 S.Ct. 1920, 131 L.Ed.2d 985 (1995)], have helped clarify which questions qualify as “arbitrability” questions. In Howsam v. Dean Witter Reynolds, Inc., 537 U.S. 79, 123 S.Ct. 588, 154 L.Ed.2d 491 (2002), the Court explained:

. . . The Court's case law . . . makes clear that, for purposes of applying the interpretive rule, the phrase “question of arbitrability” has a far more limited scope. The Court has found the phrase applicable in the kind of narrow circumstance where contracting parties would likely have expected a court to have decided the gateway matter, where they are not likely to have thought that they had agreed that an arbitrator would do so, and, consequently, where reference of the gateway dispute to the court avoids the risk of forcing parties to arbitrate a matter that they may well not have agreed to arbitrate.Id. at 83-84.

. . . The Court also explained that “[t]he phrase ‘question of arbitrability’ is not applicable in other kinds of general circumstances where parties would likely expect that an arbitrator would decide the gateway matter.” Id. For example, “‘procedural’ questions which grow out of the dispute and bear on its final disposition are presumptively not for the judge, but for an arbitrator, to decide.” Id. (quoting John Wiley & Sons, Inc. v. Livingston, 376 U.S. 543, 557, 84 S.Ct. 909, 11 L.Ed.2d 898 (1964)) (emphasis added). . . .

We find based on Howsam that the question of whether an arbitration agreement forbids consolidated arbitration is a procedural one, which the arbitrator should resolve. It does not involve whether Wausau and Century are bound by an arbitration clause or whether the arbitration clause covers the Aqua-Chem policies. Instead, the consolidation question concerns grievance procedures-i.e., whether Century can be required to participate in one arbitration covering both the Agreements, or in an arbitration with other reinsurers.

D.D.C. Finds Allowing Others to Download Copyrighted Materials Through P2P Software Provides Sufficient Contacts for Jurisdiction

Per Virgin Records America, Inc. v. Does 1-35, 2006 WL 1028956 (D.D.C. Apr. 18, 2006):

. . . [B]y installing P2P software and logging onto a P2P network, each defendant transformed his or her computer into an interactive Internet site, allowing others to complete transactions by downloading copyrighted works over the Internet. Importantly, each Defendant was disseminating copyrighted works to anyone that wanted them and was downloading copyrighted works from others who offered them-including residents of this jurisdiction. Engaging in such “interactive” electronic transactions provides the sort of “continuous” and “systematic” contacts with the District of Columbia that the Gorman court and others have recognized as sufficient to support this Court's jurisdiction over Defendant Doe # 18. See Gorman, 293 F.3d at 511-13; see also Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F.Supp. 1119, 1124 (W.D.Pa.1997) (distinguishing between passive websites which generally do not provide sufficient contacts with a forum to justify an assertion of jurisdiction with “interactive” websites which generally do support an assertion of jurisdiction).

Friday, May 19, 2006

Milberg Weiss and Two Partners Indicted for Class Action Kickback Scheme

The New York Times is reporting today on the indictment of the law firm of Milberg Weiss Bershad & Schulman and two of its partners for making more than $11 million in secret payments to three individuals who served as plaintiffs in more than 150 lawsuits. "In the 20-count indictment by a federal grand jury in Los Angeles yesterday, Milberg Weiss and two of its prominent partners, David J. Bershad and Steven G. Schulman, are accused of racketeering conspiracy, mail fraud, money laundering conspiracy and obstruction of justice."

The full story on the indictment can be found by clicking here.

Texas Law Review Publishes Article Reviewing Rehnquist Court's Hostility Towards Litigation

The Texas Law Review has just published a piece by Prof. Andrew M. Siegel entitled The Court Against the Courts: Hostility To Litigation as an Organizing Theme in the Rehnquist Court's Jurisprudence, 84 Tex. L. Rev. 1097 (2006). Here is the Abstract:

Previous commentators on the Rehnquist Court's history, seeking an overarching explanation for the Court's cases, have focused their attention primarily on a revitalized "federalism," an agenda-driven "conservatism," and a constitutionally fixated "judicial supremacy." While each of these themes is undoubtedly present in the Court's later jurisprudence, this Article argues that one cannot understand the Rehnquist Court's complicated intellectual matrix without taking account of its profound hostility toward the institution of litigation and its concomitant skepticism as to the ability of litigation to function as a mechanism for organizing social relations and collectively administering justice.

The Article takes a pointillist approach, commenting on a large swath of the Court's caseload and allowing a broader picture to gradually emerge from observations about seemingly discrete areas of law. It first unpacks the contours of the Rehnquist Court's hostility toward litigation, focusing attention on a number of areas where the Court has acted aggressively and explicitly to limit the scope or availability of litigation, including remedies and rights of action, qualified immunity and attorney's fees, the enforceability of mandatory arbitration agreements, and limitations on the permissible scope of punitive damage awards. The Article then moves from the explicit to the implicit, examining well-rehearsed areas of the Court's jurisprudence (such as its federalism cases and the 2000 Presidential election controversy) in an effort to identify the subtler effects of the Court's reflexive hostility to litigation on its constitutional docket. Finally, the Article pulls back from the cases to interrogate the sources of the Court's hostility to litigation, exploring not only the reasons for that hostility but also its curious coexistence with the Court's concurrent commitment to an aggressive form of judicial supremacy, particularly in the constitutional arena.

Thursday, May 18, 2006

Seventh Circuit Holds that It Is Within the District Court’s Discretion to Require Exhaustion Only of the Named Plaintiff in an ERISA Class Action

Per In re Household Int’l Tax Reduction, 441 F.3d 500 (7th Cir. Mar. 20, 2006):

. . . If the complaint or subsequent filings adequately identify the class members' claims and demonstrate that they are indeed very similar to those of the named plaintiff, the defendant knows what he is facing and can make efforts to settle the full array of claims. In such a case, requiring exhaustion by the individual class members would merely produce an avalanche of duplicative proceedings and accidental forfeitures, and so is not required.

This is emphatically the case when dealing with class actions under [Employee Retirement Income Security Act (ERISA)], where, there being no statutory requirement of exhaustion, the district court has discretion to require no exhaustion by anyone. Powell v. A.T. & T. Communications, Inc., 938 F.2d 823, 825 (7th Cir.1991); Gallegos v. Mount Sinai Medical Center, supra, 210 F.3d at 808. The district judge in this case did not abuse her discretion by requiring only the named plaintiff to exhaust, given the similarity of the plaintiff's claim to the claims of the unnamed class members; both he and they are complaining about the termination of their rights under Household's pension plan. . . .

Wednesday, May 17, 2006

OCC Posts Guidance for Notifying OCC of Proposed Class Action Settlements per CAFA

The Office of the Comptroller of the Currency has published guidance for national banks and federal branched and agencies notifying the OCC of proposed class action settlements, as required by CAFA. The publication can be found here. Here’s an excerpt:

. . . The notice must include the following eight items:

· A copy of the complaint and any materials filed with the complaint;
· Notice of any scheduled judicial hearing in the class action;
· Any proposed or final notification to class members;
· Any proposed or final class action settlement;
· Any settlement or other agreement contemporaneously made between class counsel and counsel for the defendants;
· Any final judgment or notice of dismissal;
· If feasible, the names of class members who reside in each state and their proportional share of the settlement or, if that is not feasible, a reasonable estimate of the number of class members in the state and their share of the settlement; and
· Any written judicial opinion relating to the materials described above.

Tuesday, May 16, 2006

S.D. W.Va. Retains Traditional Removal Burden in CAFA Cases

Per Adams v. Insurance Corp. of America, --- F.Supp.2d ----, 2006 WL 897945 (S.D. W.Va. March 30, 2006):

Initially, the parties dispute whether CAFA requires plaintiffs to demonstrate the necessity of remand or, instead, whether defendants are charged with proving up the propriety of removal. The analysis begins with recognition of the long-settled proposition, espoused repeatedly by our court of appeals, that the proponent of federal jurisdiction bears the burden of demonstrating the legitimacy of its exercise. (Citation omitted). Defendants contend that CAFA altered this longstanding rule. They cite not CAFA itself, but instead rely primarily upon language found in Senate Report 109-14 [at 43]…

Surprisingly, the lower courts are split on whether this committee report altered the burden of demonstrating the propriety of exercising subject matter jurisdiction. The only superior tribunal to date that has squarely addressed the question is the United States Court of Appeals for the Seventh Circuit. Judge Easterbrook…offers a compelling analysis as to why the burden has not shifted:

[Defendant] maintains that the Class Action Fairness Act reassigns th[e] burden to the proponent of remand. It does not rely on any of the Act's language, for none is even arguably relevant. Instead it points to this language in the report of the Senate Judiciary Committee: “If a purported class action is removed pursuant to these jurisdictional provisions, the named plaintiff(s) should bear the burden of demonstrating that the removal was improvident (i.e., that the applicable jurisdictional provisions are not satisfied).”S. Rep. 14, 109th Cong. 1st Sess. 42 (2005). This passage does not concern any text in the bill that eventually became law. When a law sensibly could be read in multiple ways, legislative history may help a court understand which of these received the political branches' imprimatur. But when the legislative history stands by itself, as a naked expression of “intent” unconnected to any enacted text, it has no more force than an opinion poll of legislators-less, really, as it speaks for fewer.
Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir.2005).

The court adopts the Brill holding and analysis in its entirety. At a minimum, the holding is certainly consistent with how one would expect our court of appeals to resolve the issue. See Rosmer v. Pfizer Inc., 263 F.3d 110, 117 (4th Cir.2001) (“It is ‘the statute, and not the Committee Report, which is the authoritative expression of the law.’ ”) (quoting City of Chicago v. Envtl. Def. Fund, 511 U.S. 328, 337, 114 S.Ct. 1588, 128 L.Ed.2d 302 (1994)). Congress was no doubt aware of the time-honored principle that the proponent of federal jurisdiction bears the attendant obligation of proving its necessary prerequisites. If a different result was intended with the passage of CAFA, one would expect that landmark piece of legislation to have provided at least some textual indication it was altering what can only be described as a bedrock principle of federal jurisdiction. Absent such an explicit indicator, the burden remains with defendants to demonstrate the propriety of removal under CAFA.

Monday, May 15, 2006

SCOTUS Holds that Traditional Rules Used in Considering Whether to Award Permanent Injunctive Relief Apply to Patent Act Disputes

Per eBay Inc. v. MercExchange, L.L.C., --- S.Ct. ----, 2006 WL 1310670 (Argued Mar. 29, 2006; decided May 15, 2006) (No. 05-130):


Petitioners operate popular Internet Web sites that allow private sellers to list goods they wish to sell. Respondent sought to license its business method patent to petitioners, but no agreement was reached. In respondent's subsequent patent infringement suit, a jury found that its patent was valid, that petitioners had infringed the patent, and that damages were appropriate. However, the District Court denied respondent's motion for permanent injunctive relief. In reversing, the Federal Circuit applied its “general rule that courts will issue permanent injunctions against patent infringement absent exceptional circumstances.”401 F.3d 1323, 1339.

Held: The traditional four-factor test applied by courts of equity when considering whether to award permanent injunctive relief to a prevailing plaintiff applies to disputes arising under the Patent Act. That test requires a plaintiff to demonstrate: (1) that it has suffered an irreparable injury; (2) that remedies available at law are inadequate to compensate for that injury; (3) that considering the balance of hardships between the plaintiff and defendant, a remedy in equity is warranted; and (4) that the public interest would not be disserved by a permanent injunction. The decision to grant or deny such relief is an act of equitable discretion by the district court, reviewable on appeal for abuse of discretion. These principles apply with equal force to Patent Act disputes. “[A] major departure from the long tradition of equity practice should not be lightly implied.” Weinberger v. Romero-Barcelo, 456 U.S. 305, 320, 102 S.Ct. 1798, 72 L.Ed.2d 91. Nothing in the Act indicates such a departure. 401 F.3d 1323, vacated and remanded.

Thomas, J., delivered the opinion for a unanimous Court. Roberts, C.J., filed a concurring opinion, in which Scalia and Ginsburg, JJ., joined. Kennedy, J., filed a concurring opinion, in which Stevens, Souter, and Breyer, JJ., joined.

N.D. Illinois Certifies Class of 230 Workers in Nike Discrimination Case

In Smith v. Nike Retail Serv., Inc., --- F.R.D. ----, 2006 WL 715788 (N.D. Ill. Mar. 22, 2006), Judge Milton Shadur of the U.S. District Court for the Northern District of Illinois certified the following overall class and component subclasses in litigation against a Nike retail store in Chicago alleging violations of Title VII of the Civil Rights Act of 1991 and 42 U.S.C. 1981:

In the ensuing listing the overall class is referred to first, with the subclasses following thereafter . . . :

1. “Hostile Work Environment,” comprising all African-Americans employed by Nike Chicago at any time between December 17, 1999 and the present (P. Mem.24). . . .

2. “Job Segregation/Wage Disparity” (“Job Segregation”), comprising all current and former African-American Nike Chicago employees during the period between December 17, 1999 and the present who were assigned to lower paid positions in the stockroom or as cashiers because of their race (P. Mem.24). . . .

3. “Promotion,” comprising all current and former African-American Nike Chicago employees during the period between December 17, 1999 and the present who “were denied promotions or deprived of the ability to pursue promotions because of their race” (P. Mem.24). . . .

4. “Discipline,” comprising all current and former African-American Nike Chicago employees during the period between December 17, 1999 and the present who “suffered from racially-biased application workplace rules and regulations, including but not limited to, time and attendance, employee discount, employee checkouts, suspensions, and terminations” (P. Mem.24-25). . . .

5. “Benefits,” comprising all current and former African-American part-time Nike Chicago employees during the period between December 17, 1999 and the present who applied for, requested and/or were entitled to benefits but were denied those benefits because of their race (P. Mem.25). . . .

BNA's report on the case can be found here.

Friday, May 12, 2006

First Circuit Finds No Requirement to Grant Leave to Amend, Sua Sponte, in Political Discrimination Case

Per Otero v. Commonwealth of Puerto Rico Indus. Com'n, 441 F.3d 18 (1st Cir. Mar. 22, 2006):

Miranda never moved for leave to amend his complaint. He nevertheless argues that the district court should have, sua sponte, granted him time to amend his pleadings, and that it should have pushed ahead with any remaining discovery.

The contention is meritless. “Absent exceptional circumstances, a district court has no obligation to invite a plaintiff to amend his or her complaint when the plaintiff has not sought such amendment.” United States ex rel. Karvelas v. Melrose-Wakefield Hosp., 360 F.3d 220, 242 (1st Cir.2004). No such circumstances are present here. On the contrary, as defendants point out, even after the district court dismissed the case and Miranda moved for reconsideration, he still did not seek to amend his complaint.

Further, discovery was conducted in the case. In Miranda's request for reconsideration, he referred to details from Charriez's deposition testimony and attached the full 251-page deposition. The district court did explicitly consider the evidence, which was undisputed. The court recounted the entirely legitimate reasons, as shown by the employment record, for Charriez's decision to suspend plaintiff from his job and for Rey's decision to release information at the hearing. There was no evidence proffered to show that these were not the real reasons or were a pretext for political discrimination.

1st Cir. Finds that Once Plaintiff Had Sufficient Knowledge to Trigger Accrual for One Theory of FTCA Liability, Accrual Was Triggered on All Theories

Per Rakes v. U.S., 442 F.3d 7 (1st Cir. Mar. 23, 2006):

. . . [A]n action under the Federal Tort Claims Act (FTCA) “accrues when the injured party knew or, in the exercise of reasonable diligence, should have known the factual basis for the cause of action.” Attallah v. United States, 955 F.2d 776, 780 (1st Cir.1992) (citing Kubrick, 444 U.S. at 121-25, 100 S.Ct. 352; Maggio v. Gerard Freezer & Ice Co., 824 F.2d 123, 130 (1st Cir.1987)). . . .

. . .

In this case, Rakes and Dammers ask us to conduct this accrual analysis three times, each with respect to a different proposed explanation of the way in which the government caused their injury.

. . .

In this case we need not make a precise choice as to whether the three theories (only two of which are advanced by Rakes on appeal) should be analyzed separately from one another. On the present facts, once the plaintiffs had sufficient knowledge (actual or constructive) to trigger accrual of the emboldening theory, they also had sufficient knowledge to trigger accrual of the wrongful disclosure and negligent supervision theories.

. . .

We note that Dammers . . . argues two distinct tolling doctrines. . . . Specifically, she argues that she was delayed in filing her claim because 1) she was under duress as a result of being threatened by members of the Winter Hill Gang, and 2) the government fraudulently concealed or misrepresented information vital to her claim. . . . [W]e conclude that fraudulent concealment and duress are both available for tolling FTCA claims.

. . .

. . . Once the misconduct ceased, and the United States began actively seeking to frustrate rather than further the Winter Hill Gang's criminal activities, the government was, under the facts in this case, no longer responsible for ongoing threats made by members of the Winter Hill Gang. We therefore agree with the district court that Dammers' duress argument fails.

. . .

Dammers also contends that her claim is tolled because the government fraudulently denied any wrongdoing and otherwise deliberately failed to disclose certain facts known to it that would have enabled her to bring her claim. . . . The district court found that the claim was not tolled under this rule because plaintiffs had not acted with diligence in investigating their claims. . . .

. . .

Where . . . a plaintiff could have turned up needed information through investigation, but has failed to exercise the requisite diligence, she will not be able to avail herself of either doctrine, and will lose her claim. Such was the case here, and as a result, the statute of limitations was not tolled.

Thursday, May 11, 2006

The University of Chicago Law Review Publishes Article Proposing Overhaul of Personal Jurisdiction Doctrine

The University of Chicago Law Review has just published an article by Professor A. Benjamin Spencer entitled Jurisdiction to Adjudicate: A Revised Analysis, 73 U. Chi. L. Rev. 617 (2006). Here's the Abstract:

Personal jurisdiction doctrine as articulated by the Supreme Court is in disarray. As a constitutional doctrine whose contours remain imprecise, the law of personal jurisdiction has generated confusion, unpredictability, and extensive satellite litigation over what should be an uncomplicated preliminary issue. Many commentators have long lamented these defects, making suggestions for how the doctrine could be improved. Although many of these proposals have had much to offer, they generally have failed to articulate (or adequately justify or explain) a simple and sound approach to jurisdiction that the Supreme Court can embrace. This Article revises the law of personal jurisdiction by reconceiving the proper role of due process within the doctrine—which is to ensure that defendants receive adequate notice of an action and are protected against arbitrary assertions of governmental power—and reasserting the role of state sovereignty and interstate federalism as concepts that permit jurisdiction over all disputes in which a state has a legitimate interest. The doctrines of venue and forum non conveniens are left to redress any meaningful burdens on defendants arising out of having to litigate in inconvenient fora. The result is a coherent analysis that will provide litigants and courts clear guidance regarding the scope of a court’s jurisdiction to adjudicate.

Ordinary Substitution of Plaintiffs Does Not Recommence a Case for Purposes of Removal under CAFA

Per In re Methyl Teriary Butyl Ether (“MTBE”) Products Liability Litigation, Slip Copy, 2006 WL 1004725 (S.D.N.Y. April 17, 2006):

[T]he substitution of named plaintiffs only recommences a case if the amended pleading does not relate back to the earlier complaint. Phillips v. Ford Motor Co., 435 F.3d 785, 787 (7th Cir.2006). “[A] new contention relates back to the original complaint (and hence is not a new claim for relief or cause of action) when the original pleading furnishes the defendant with notice of the events that underlie the new contention.Knudsen v. Liberty Mut. Ins. Co. (“Knudsen II”), 435 F.3d 755, 757 (7th Cir.2006).

Defendants cannot show that the amendments re-commenced the case. First, plaintiffs did not add a new defendant or a novel claim. Second, assuming, arguendo, that the substitution of McMannis and Graham as the named plaintiffs would completely alter the facts and proof at issue in the case, defendants cannot show that they lacked notice of the events at issue. Both the Fourth and Fifth Amended Complaints claim that defendants are liable for negligently breaching their duties to “ensure that MTBE, when used as intended, would not pose an unreasonable risk to groundwater from which [p]laintiffs and the Class draw their water.” Illinois “allows named plaintiffs to be substituted with relation back.Phillips, 435 F.3d at 788. The Fourth Amended Complaint's class allegations encompassed Graham and McMannis' claims as they were part of the purported class. The fact the named individual plaintiffs changed did not alter the underlying allegations.

[The motion to remand was granted.]

Wednesday, May 10, 2006

Fifth Circuit Holds that Mandatory Abstention of 28 U.S.C. § 1369(b) Does Not Trump Supplemental Jurisdiction in Federal Court

BNA’s The United States Law Week (Volume 74 Number 38, Tues., Apr. 11, 2006, Page 1596, ISSN 1522-4317) is reporting on Wallace v. La. Citizens Property Ins. Corp., --- F.3d ----, 2006 WL 84858 (5th Cir. Mar. 31, 2006):

"Federal court abstention requirements imposed by the little known Multiparty, Multiforum Trial Jurisdiction Act do not preclude removal to federal court of a spate of insurance claims stemming from Hurricane Katrina losses, the U.S. Court of Appeals for the Fifth Circuit held March 31."

In Wallace, the Fifth Circuit held:

On the merits of their appeal, Petitioners argue that the district court erred by applying § 1369(b) to a case removed under § 1441(e)(1)(B). Although the district court recognized that Farm Bureau removed under § 1441(e)(1)(B), the court did not determine whether the defendants met the requirements of § 1441(e)(1)(B), instead stating that even if the defendants could meet those requirements, the abstention provisions of 1369(b) prevented the case from being heard in the federal courts.

The district court misapplied mandatory § 1369(b) abstention to the exercise of supplemental jurisdiction established by § 1441(e)(1)(B). Section 1369(b) applies only to original jurisdiction under § 1369(a). By its own terms, § 1369(b) limits its application to “any civil action described in subsection (a).” Subsection (a) sets out the prerequisites for original jurisdiction under the [Multiparty, Multiforum Trial Jurisdiction Act (MMTJA)]. Thus, it is proper for a district court to abstain from hearing a case brought as an original matter under § 1369(a), when the exceptions listed in § 1369(b) apply. In contrast, § 1441(e)(1)(B) permits removal in those situations where original federal subject matter jurisdiction does not exist. In so allowing, § 1441(e)(1)(B) establishes supplemental jurisdiction over the Wallace action, piggy-backing jurisdiction on the district court's original jurisdiction under § 1369(a) over the pending Chehardy action. When the requirements of § 1441(e)(1)(B) are met, defendants need not establish the existence of independent subject matter jurisdiction under any other provision, including under § 1369(a), because supplemental jurisdiction has been established. Consequently, § 1369(b) is not an independent bar to the exercise of jurisdiction over a case removed pursuant to § 1441(e)(1)(B), as it applies only to the exercise of original jurisdiction under § 1369(a).

Tuesday, May 09, 2006

Fourth Circuit Holds that Denial of Motions to Amend and to Reconsider Are Not Final Orders for Purposes of FRCP 54(b)

Per Bridges v. Maryland State Police, 441 F.3d 197 (4th Cir. March 20, 2006):

After the district court entered an administrative order denying the plaintiffs' motion for class certification without prejudice to its later renewal, the representative parties abandoned their efforts to represent a class. Instead, they filed a motion to amend their complaint to add 18 individuals as new plaintiffs. By order dated July 26, 2004, the district court denied their motion to amend, concluding that the new parties could not be added to the case because their claims were barred by the applicable statute of limitations. The 18 would-be plaintiffs then filed a motion on their own behalf, through counsel, for reconsideration, and by an order dated December 9, 2004, the district court also denied that motion. The plaintiffs and would-be plaintiffs appealed from the district court's orders denying the plaintiffs' motion to amend and denying the would-be plaintiffs' motion for reconsideration, challenging the district court's application of the statute of limitations.Five months after the district court denied the motion for reconsideration and after the plaintiffs and would-be plaintiffs filed appeals, the plaintiffs and would-be plaintiffs filed a motion to have the district court's two orders certified as final judgments under Federal Rule of Civil Procedure 54(b), asserting that “there is no just reason for delay of the entry of judgment as to the putative plaintiffs.” The district court signed the proposed order electronically on May 25, 2005, but never entered a corresponding judgment under Rule 58(a). The plaintiffs and would-be plaintiffs again appealed.

A denial of a motion to amend a complaint is not a final order, nor is it an appealable interlocutory or collateral order. Accordingly, we have no jurisdiction over the original plaintiffs' appeal of the district court's July 26, 2004 order denying their motion to amend the complaint to add new party plaintiffs to the action. Even if the order were somehow appealable, the original plaintiffs, who were and could be the only parties to the motion to amend, did not timely appeal the district court's order…

By force of the same reasoning, we also lack jurisdiction to hear the original plaintiffs' appeal of the district court's order denying the would-be plaintiffs' motion for reconsideration of the district court's July 26, 2004 order denying the amendment. The denial of reconsideration of a nonappealable order is not a final order.

Finally, Rule 54(b) does not provide the parties or the district court with the authority to convert an order denying a motion to amend or denying reconsideration of that motion into an order that “adjudicates fewer than all the claims or the rights and liabilities of fewer than all the parties,” as required by Rule 54(b). See Curtiss-Wright Corp. v. General Elect. Co., 446 U.S. 1, 7, 100 S.Ct. 1460, 64 L.Ed.2d 1 (1980) (district courts are authorized to use Rule 54(b) to certify final judgments-“ ‘final’ in the sense that it is an ultimate disposition of an individual claim entered in the course of a multiple claims action” (internal quotation marks omitted) (emphasis added)). The motion to amend and the motion for reconsideration of the motion to amend adjudicated no party's “claims”; the would-be plaintiffs were never “parties” whose “rights and liabilities” were adjudicated; and the actual plaintiffs' own claims were not in any way adjudicated by the district court's ruling. In addition, the plaintiffs and would-be plaintiffs' second appeal filed after the court granted the Rule 54(b) motion was not taken from a final judgment because a judgment was not entered as required by Rule 58(a). Indeed, such a judgment reflecting the adjudication of some claims or parties could not have been crafted because no claims of parties were adjudicated.

10th Circuit Explains Exception to Administrative-Remand Rule; Finds Exception Inapplicable

Per Trout Unlimited v. U.S. Dept. of Agriculture, 441 F.3d 1214 (10th Cir. March 28, 2006):

This court has jurisdiction over final decisions of the federal district courts pursuant to 28 U.S.C. § 1291. Jurisdiction under § 1291 generally is contingent upon “the existence of a decision by the District Court that ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Coopers & Lybrand v. Livesay, 437 U.S. 463, 467, 98 S.Ct. 2454, 57 L.Ed.2d 351 (1978). Under § 1291, “remand by a district court to an administrative agency for further proceedings is ordinarily not appealable because it is not a final decision.” Bender v. Clark, 744 F.2d 1424, 1426-27 (10th Cir.1984). Nonetheless, this court has recognized that the “administrative-remand rule” is not without exception. Baca-Prieto v. Guigni, 95 F.3d 1006, 1008 (10th Cir.1996).

In the context of a district court order remanding a matter to an administrative agency, jurisdiction may be appropriate when the issue presented is both urgent and important. Bender, 744 F.2d at 1427. If these two conditions are met, this court will apply a balancing test and assert jurisdiction if “the danger of injustice by delaying appellate review outweighs the inconvenience and costs of piecemeal review.” This court has warned, however, that Bender and Cotton Petroleum“must be narrowly construed ··· to preserve the vitality of § 1291.” Boughton v. Cotter Corp., 10 F.3d 746, 752 (10th Cir.1993).

Defendant-Intervenors make the conclusory allegation that delaying appellate review of the district court's Long Draw decision will “result in uncertainty, additional litigation, confusion and a very real danger of injustice.” They offer no support for this statement, however, and we can discern no reason why this case requires urgent or immediate judicial consideration. In this case, delayed review will not result in injustice. Defendant-Intervenors do not claim the Forest Service will require implementation of bypass flows during the remand process. If the Forest Service's decision on remand is not satisfactory, Defendant-Intervenors can pursue administrative remedies and, if necessary, seek review in the district and appellate courts at a later stage in the proceedings. Finally, Defendant-Intervenors have not supported their bare assertion that delay in judicial review has resulted in, or will result in, additional disputes and litigation.

In sum, this case does not fall within the narrow exception to the administrative-remand rule. Although the issues presented may be important, the need for judicial review is not urgent. Accordingly, this court lacks jurisdiction to hear the appeal.

Monday, May 08, 2006

D.C. Cir. Holds that IDEA Administrative Proceedings and Fee Suit Are One “Action” for Fee Cap Purposes

Per Kaseman v. District of Columbia, --- F.3d ----, 2006 WL 825016 (D.C. Cir. Mar. 31, 2006):
The Individuals with Disabilities Education Act (IDEA) provides that a parent who successfully challenges the Act's implementation may be awarded reasonable attorneys' fees. However, the District of Columbia Appropriations Act, 2005, caps the District's payment of IDEA attorneys' fees at $4,000 per “action.” This case requires us to determine whether a judicial proceeding to recover attorneys' fees incurred in a prior IDEA administrative proceeding is a separate “action” from the prior proceeding or whether the administrative and judicial proceedings together comprise a single “action.” The district court held that the administrative and judicial proceedings qualify as separate “actions.” . . .

. . .

We . . . hold the term “action” in the fee cap provision of the 2005 appropriations act encompasses both administrative proceedings and subsequent fee requests brought in the district court by prevailing parties. An award of fees for the underlying educational dispute and an award of fees-on-fees are thus both subject to a single application of the fee cap. The judgment of the district court is therefore reversed.

Friday, May 05, 2006

Seventh Circuit Holds that Filing by Mail Is Not Authorized by the FRCP and that the “Reasonable Time” Standard Does Not Trump Court-Imposed Deadlines

Per Raymond v. Ameritech Corp., 442 F. 3d 600 (7th Cir. Mar. 29, 2006) regarding Rule 5 and Rule 6:

. . . The posting of papers addressed to the clerk's office does not constitute “filing” under Rule 5(e). Unlike some state court rules the Federal Rules of Civil Procedure do not authorize filing to be accomplished by deposit of papers in the mail.

. . .

As for the governing deadline, Raymond does not explain how Rule 5(d)'s “reasonable time” standard prevails over a date set by a court. Rule 5(d) is a default rule, applicable to most interactions between litigating parties and between parties and the courts. Rule 5(d) does not by its terms eradicate the effect of court-imposed deadlines. Raymond merely quotes Blank v. Bitker, 135 F.2d 962, 965 (7th Cir.1943), which noted, “[T]here is no requirement in the Federal Rules of Civil Procedure as to filing···· And Rule 5(d) permits filing with the court within a reasonable time after service.” True, but this does not mean that Rule 5(d) trumps a deadline set by a court, so that the deadline to file is established by when service occurs. . . .

The rule which does apply is Rule 6(b), which clearly gives courts both the authority to establish deadlines and the discretion to enforce them.


In addition to the above, the Seventh Circuit here upheld the district court’s discretionary refusal to find “excusable neglect” as justification of Raymond’s failure to meet the court-imposed deadlines.