First Circuit Says Plaintiff Cannot Collaterally Attack Settlement Judgment on Ground that District Court Lacked Subject Matter Jurisdiction

Per Baella-Silva v. Hulsey, 454 F.3d 5 (1st Cir. June 30, 2006):

Because the parties settled the underlying dispute, the district court did not explicitly rule on the jurisdictional issues raised in Baella-Silva's motion to remand. By incorporating the settlement completely into a final judgment, however, the district court assumed it had jurisdiction to enter the settlement judgment. In the settlement judgment, the parties acknowledged and agreed to that jurisdiction as well as the court's continuing jurisdiction to enforce the agreement. The parties did not bring a direct appeal challenging the district court's jurisdiction or any other aspect of the settlement judgment within the time period provided for appeal. See Lipman v. Dye, 294 F.3d 17, 20 (1st Cir.2002) (noting that "[w]ithout appeal, the court's prior Settlement Order of Dismissal became final thus barring any further attempt to reopen the case in ordinary course"). Now, as part of his appeal of the sanctions order, Baella-Silva attempts to collaterally attack the jurisdictional basis for the settlement judgment, asserting a lack of complete diversity.

"It has long been settled that a lack of complete diversity between the parties deprives the federal courts of jurisdiction over the lawsuit." Casas Office Machs., Inc. v. Mita Copystar Am., Inc., 42 F.3d 668, 673 (1st Cir.1994) (internal marks omitted). Furthermore, "[a] court without subject-matter jurisdiction may not acquire it by consent of the parties." Fafel v. DiPaola, 399 F.3d 403, 410 (1st Cir.2005). "Weighing against this seemingly 'inflexible' jurisdictional requirement, however, is a strong interest in the finality of judgments." Id. (internal citation omitted). A district court's express or implicit determination that it has jurisdiction is open to direct review, but it is res judicata when collaterally attacked. Id.

In an effort to balance the competing policies of observing limits on federal jurisdiction and respecting the finality of judgments, "this court has established a high bar for collaterally vacating a judgment for lack of subject-matter jurisdiction." Id. Namely, the judgment must be void in order to be vacated for lack of subject-matter jurisdiction on collateral review: A void judgment is to be distinguished from an erroneous one, in that the latter is subject only to direct attack. A void judgment is one which, from its inception, was a complete nullity and without legal effect.... While absence of subject matter jurisdiction may make a judgment void, such total want of jurisdiction must be distinguished from an error in the exercise of jurisdiction ... [which] will not render the judgment void. Only in the rare instance of a clear usurpation of power will a judgment be rendered void. Id. (internal marks omitted) (quoting Lubben v. Selective Serv. Sys. Local Bd. No. 27, 453 F.2d 645, 649 (1st Cir.1972)). Under this standard, if the record supports an "arguable basis" for concluding that subject-matter jurisdiction existed, a final judgment cannot be collaterally attacked as void. Id. at 411.

The district court implicitly found it had jurisdiction to enter the settlement judgment. We will therefore treat Baella-Silva's collateral attack on the settlement judgment in this appeal as we would treat an appeal from the denial of a motion for relief from a void judgment pursuant to Federal Rule of Civil Procedure 60(b)(4). See id. at 409. Accordingly, we will independently examine the record to determine whether there is an arguable basis for concluding that subject-matter jurisdiction existed or whether the judgment is void as a clear usurpation of power. See id. at 410 (applying de novo review).

Our review of the record convinces us that there is an arguable basis for concluding that subject matter jurisdiction existed to enter the settlement judgment. The complaint indicates that the citizenship of the parties is not completely diverse because Palmas del Sol and its partners are citizens of Puerto Rico, as is Baella-Silva. The notice of removal, however, avers that complete diversity exists and specifically asserts that the nondiverse parties listed on the complaint are not real parties in interest but were in fact fraudulently joined in an effort to preclude removal to federal court.

Seventh Circuit Treats Subpoena as Part of Pleadings under FRCP 10(c)

Per McCready v. EBay, Inc., 453 F.3d 882 (7th Cir. July 10, 2006):

…[Plaintiff] McCready alleged that McDuffee, acting as Kamminga's lawyer, served eBay with a "phony" subpoena. eBay complied with the subpoena and gave McDuffee printouts of electronic communications involving McCready. McCready claims he did not become aware of the subpoena until his appeal to the Sixth Circuit and that these events violated the ECPA [Electronic Communications Privacy Act] and SCA [Stored Communications Act].

At the 12(b)(6) stage, we typically would be confined to McCready's complaint, which did not contain the subpoena. Rosenblum v. Travelbyus.com Ltd., 299 F.3d 657, 661 (7th Cir.2002). But Rule 10(c) provides that "[a] copy of any written instrument which is an exhibit to a pleading is a part thereof for all purposes." From this rule, we have concluded " 'documents attached to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to his claim.' " 188 LLC v. Trinity Indus., Inc., 300 F.3d 730, 735 (7th Cir.2002) (quoting Wright v. Assoc. Ins. Cos., 29 F.3d 1244, 1248 (7th Cir.1994)); see Cont'l Cas. Co. v. Am. Nat'l Ins. Co., 417 F.3d 727, 731 n. 3 (7th Cir.2005) (" '[T]his rule includes a limited class of attachments to Rule 12(b)(6) motions' that are 'central to the plaintiff's claim." ') (quoting Rosenblum, 299 F.3d at 661). We are " 'not bound to accept [McCready's] allegations as to the effect of the [subpoena], but can independently examine the document and form [our] own conclusions as to the proper construction and meaning to be given the material.' " Rosenblum, 299 F.3d at 661 (quoting 5 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1327 at 766 (2d ed.1990)). The heart of McCready's lawsuit is based upon the subpoena, to which he made repeated reference in his complaint. The subpoena was included by the defense in its motion to dismiss, and there is no factual dispute as to its contents. Thus, we may look at the subpoena without converting the motion to dismiss into a motion for summary judgment.

Ninth Circuit Finds Recusal Unnecessary under Rule of Necessity Where Vexatious Litigant Sued Entire Ninth Circuit

Per Ignacio v. Judges of U.S. Court of Appeals for Ninth Circuit, 453 F.3d 1160 (9th Cir. July 12, 2006):

In a typical situation we would be disqualified from hearing this appeal. See 28 U.S.C. § 455(b)(5)(i) (providing that a federal judge "shall" disqualify him or herself when "a party to the proceeding"). There is, however, an exception to disqualification--the "rule of necessity." [FN1] Pursuant to the rule of necessity, a judge is not disqualified to try a case because of a personal interest in the matter at issue if "the case cannot be heard otherwise." United States v. Will, 449 U.S. 200, 213 (1980) (holding that the rule of necessity is an exception to the recusal requirements of 28 U.S.C. § 455).

FN1. The rule of necessity is an ancient law that was part of the English common law and that has been traced back to 1430. See Dimes v. Grand Junction Canal Co., 10 Eng. Rep. 301, 313 (1852). The rule has been applied numerous times in state and federal courts in this country. See Atkins v. United States, 214 Ct.Cl. 186, 556 F.2d 1028, 1036-38 (1977) (setting forth the history of the rule of necessity in this country).

The question here is whether the rule of necessity applies when a plaintiff, like Ignacio, has sued all the members of the Ninth Circuit, thereby making it impossible for the circuit to convene a three-member panel consisting of Ninth Circuit judges that are not a party to this suit. For the reasons set forth below, we hold that the rule of necessity applies when, like here, a litigant indiscriminately sues all the judges of the Ninth Circuit.

…

The rule of necessity allows a judge, normally disqualified, to hear a case when "the case cannot be heard otherwise." Will, 449 U.S. at 213, 101 S.Ct. 471. The case cannot be heard otherwise, when as pointed out by our sister circuits, a plaintiff has named all of the judges in a circuit as defendants. Thus, an underlying legal maxim for the rule of necessity is that "where all are disqualified, none are disqualified." Pilla v. American Bar Ass'n., 542 F.2d 56, 59 (8th Cir.1976) (internal citations omitted); see also Chad M. Oldfather, Defining Judicial Inactivism: Models of Adjudication and the Duty to Decide; 94 Geo. L.J. 121, 128 n. 18 (2005). This maxim applies here. Ignacio has sued the judges of the Ninth Circuit--he has indiscriminately sued all. If all the judges of the Ninth Circuit are disqualified as a result of Ignacio's complaint, he has eliminated the proper legal forum charged with reviewing the dismissal of his action. As this goes to the very purpose of the rule of necessity--not permitting a litigant to "destroy the only tribunal with power in the premises," see Brinkley v. Hassig, 83 F.2d 351, 357 (10th Cir.1936)--we hold that the rule should be extended to circumstances like this where a litigant has named uncritically all the judges of this circuit.

To hold otherwise would allow and possibly encourage plaintiffs to impede the administration of justice by suing wholesale all the judges in a district or circuit until their case is transferred. See Andersen v. Roszkowski, 681 F.Supp. 1284, 1289 (N.D.Ill.1988). Furthermore, we reject the contention that the ability to bring in judges from other circuits to hear the case precludes the application of the rule of necessity as this would be the pragmatic equivalent of having the case transferred out of circuit. As with the Tenth Circuit, we have reservations about giving litigants a veto right over sitting judges by providing them an improper means for getting their case transferred out of the circuit. See Switzer, 198 F.3d at 1258 (citing United States v. Cooley, 1 F.3d 985, 993 (10th Cir.1993)).

D.C. Circuit Considers What Constitutes "Agency Records" for FOIA Purposes

Per Consumer Federation of America v. Department of Agriculture, 455 F.3d 283 (D.C. Cir. June 30, 2006):

[The Freedom of Information Act] grants the district court "jurisdiction to enjoin [an] agency from withholding agency records and to order the production of any agency records improperly withheld from the complainant." 5 U.S.C. § 552(a)(4)(B). Hence, the court must determine whether the defendant agency has "(1) 'improperly'; (2) 'withheld'; (3) 'agency records.' " Kissinger v. Reporters Comm. for Freedom of the Press, 445 U.S. 136 (1980) (quoting 5 U.S.C. § 552(a)(4)(B)). The only question at issue on this appeal is the validity of the district court's determination that the USDA [officials' appointment] calendars are not "agency records."

We review the district court's grant of summary judgment on this question de novo. See Students Against Genocide v. Department of State, 257 F.3d 828, 834 (D.C.Cir.2001). "In the FOIA context this requires that we ascertain whether the agency has sustained its burden of demonstrating that the documents requested are not 'agency records.' " Gallant v. NLRB, 26 F.3d 168, 171 (D.C.Cir.1994); see United States Dep't of Justice v. Tax Analysts, 492 U.S. 136, 142 n. 3 (1989); Grand Cent. P'ship, Inc. v. Cuomo, 166 F.3d 473, 478 (2d Cir.1999). Under FOIA, "[s]ummary judgment may be granted on the basis of agency affidavits if they contain reasonable specificity of detail rather than merely conclusory statements, and if they are not called into question by contradictory evidence in the record or by evidence of agency bad faith." Gallant, 26 F.3d at 171 (internal quotation marks omitted).

Although FOIA "limited access to 'agency records,' [it] did not provide any definition" of the term. Forsham v. Harris, 445 U.S. 169 (1980) (internal citation omitted). We must nonetheless be careful to ensure that "[t]he term 'agency records' ... not be manipulated to avoid the basic structure of the FOIA: records are presumptively disclosable unless the government can show that one of the enumerated exemptions applies." Bureau of Nat'l Affairs, Inc. v. United States Dep't of Justice, 742 F.2d 1484, 1494 (D.C.Cir.1984). As the Supreme Court has repeatedly reminded us, in enacting FOIA, "Congress sought to open agency action to the light of public scrutiny." Tax Analysts, 492 U.S. at 142, 109 S.Ct. 2841 (internal quotation marks omitted); see Department of Justice v. Reporters Comm. for Freedom of Press, 489 U.S. 749, 772, 109 S.Ct. 1468, 103 L.Ed.2d 774 (1989); Department of Air Force v. Rose, 425 U.S. 352, 372, 96 S.Ct. 1592, 48 L.Ed.2d 11 (1976).

Mindful of this caution, our circuit has adopted a totality of the circumstances test to distinguish "agency records" from personal records. The test "focus[es] on a variety of factors surrounding the creation, possession, control, and use of the document by an agency." Bureau of Nat'l Affairs, 742 F.2d at 1490. There is no precedent in which we have applied that test to facts directly paralleling those before us. This is due, at least in part, to the technological advances of recent years.

Comity Dictates that Claim Determination in Foreign Court Should Operate as Res Judicata in U.S. Bankruptcy Court, Rules S.D.N.Y

Per In re Aerovias Nacionales De Colonbia S.A. Avianca, 345 B.R. 120 (Bkrtcy. S.D.N.Y. July 12, 2006):

A claim determination by a non-bankruptcy court in the United States would seemingly be conclusive as to the issues determined, for bankruptcy purposes, based on res judicata or collateral estoppel grounds. See Kelleran v. Andrijevic, 825 F.2d 692 (2d Cir.1987). A similar result should ordinarily apply to the determinations of foreign courts by virtue of principles of comity. Hilton v. Guyot, 159 U.S. 113, 163-64, 16 S.Ct. 139, 40 L.Ed. 95 (1895), sets out the classic definition of comity: "Comity," in the legal sense, is neither a matter of absolute obligation, on the one hand, nor of mere courtesy and good will, upon the other. But it is the recognition which nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.

United States courts will ordinarily defer to foreign proceedings so long as "the foreign court had proper jurisdiction and enforcement does not prejudice the rights of United States citizens or violate domestic public policy." Finanz AG Zurich v. Banco Economico S.A., 192 F.3d 240, 246 (2d Cir.1999), quoting Victrix S.S. Co., S.A. v. Salen Dry Cargo A.B., 825 F.2d 709, 713 (2d Cir.1987); see also International Transactions Ltd. v. Embotelladora Agral Regiomontana, 347 F.3d 589, 594 (5th Cir.2003) (to obtain recognition, foreign procedures must provide "a system compatible with the requirements of due process of law"); In re Hackett, 184 B.R. 656, 658 (Bankr.S.D.N.Y.1995); In re Gee, 53 B.R. 891, 901 (Bankr.S.D.N.Y.1985).

U.S. courts have frequently granted comity in cases involving foreign insolvency proceedings. See, e.g., Ecoban Fin. Ltd. v. Grupo Acerero del Norte, S.A. de C.V., 108 F.Supp.2d 349, 352-53 (S.D.N.Y.2000), aff'd, 2 Fed.Appx. 80 (2d Cir.2001), cert. denied, 534 U.S. 814, 122 S.Ct. 39, 151 L.Ed.2d 12 (2001); Finanz AG Zurich v. Banco Economico S.A., 192 F.3d at 246; Cunard S.S. Co. v. Salen Reefer Servs. AB (In re Cunard), 773 F.2d 452, 457 (2d Cir.1985). They have also granted comity to foreign proceedings in determining issues arising in a Chapter 11 case where the underlying conduct took place abroad. In Maxwell Communication Corp., the dispute involved alleged preferential transfers, and the Second Circuit concluded that England had a "much closer connection to these disputes than does the United States," that England had a greater interest in the application of its rule of law, that the U.S. bankruptcy court should forbear from applying its own laws, and that comity should be granted to the English proceedings. 93 F.3d at 1051-53. As noted above, the Court, in particular, rejected the contention that U.S. law should apply automatically. Id. at 1049.The same reasoning leads to the conclusion that Colombian law and the determinations of the Colombian courts should, in principle, govern the determination of these Colombian labor claims.

Sixth Circuit Discusses Law of the Case Doctrine; Indicates Inapplicability to Issues Raised but not Clearly Decided

Per Westside Mothers v. Olszewski, 454 F.3d 532 (6th Cir. Jul 17, 2006):

This suit filed under 42 U.S.C. § 1983 alleges that the State of Michigan has failed to provide services required by the Medicaid program. [W]e must consider whether our determination in Westside Mothers I that "[p]laintiffs have a cause of action under § 1983 for alleged noncompliance with the screening and treatment provisions of the Medicaid Act," Westside Mothers I, 289 F.3d at 863, was binding on the district court under the law of the case doctrine. The doctrine precludes a court from reconsideration of issues "decided at an early stage of the litigation, either explicitly or by necessary inference from the disposition." Hanover Ins. Co. v. Am. Eng'g Co., 105 F.3d 306, 312 (6th Cir.1997) (quoting Coal Res., Inc. v. Gulf & Western Indus., Inc., 865 F.2d 761, 766 (6th Cir.1989)).

The law of the case doctrine precludes reconsideration of a previously decided issue unless one of three "exceptional circumstances" exists: (1) where substantially different evidence is raised on subsequent trial; (2) where a subsequent contrary view of the law is decided by the controlling authority; or (3) where a decision is clearly erroneous and would work a manifest injustice. Hanover Ins. Co., 105 F.3d at 312. None of these "exceptional circumstances" are present[.] However, . . . the law of the case doctrine is limited to those issues decided in the earlier appeal, and the district court may therefore consider those issues not decided expressly or impliedly by the appellate court. See Hanover Ins. Co., 105 F.3d at 312. In Westside Mothers I, we identified a specific issue[.] Where there is substantial doubt as to whether a prior panel actually decided an issue, the district court should not be foreclosed from considering the issue on remand. See United Artists Theatre Circuit, Inc. v. Township of Warrington, 316 F.3d 392, 398 (3d Cir.2003). Accordingly, we conclude that the law of the case doctrine does not apply.

D.D.C. Denies Application for Temporary Injunction on Grounds of Younger and Rooker-Feldman Doctrines

Per Bannum, Inc. v. District of Columbia, 433 F.Supp.2d 1 (D.D.C. Mar 30, 2006) (NO. CIV.A. 05-858 JDB):

[Plaintiff sought a temporary restraining order to prevent defendant District of Columbia from preventing it from operating its community center, despite the fact that the D.C. Superior Court had ordered plaintiff to vacate the premises.]

Granting the relief sought would be squarely at odds with fundamental principles underlying this nation's system of federalism and also with statutory limitations on this Court's jurisdiction. On the first point, it is well-settled that, "except in extraordinary circumstances, a federal court should not enjoin a pending state proceeding that is judicial in nature and involves important state interests," see JMM Corp. v. Dist. of Columbia, 378 F.3d 1117, 1120 (D.C.Cir.2004) (citing Younger v. Harris, 401 U.S. 37 (1971)), and the D.C. Circuit has held that the same rule applies to proceedings of the District of Columbia, id. at 1121-22. This Court does not accept Bannum's argument that such extraordinary circumstances exist here simply by virtue of its asserted inability to appeal the Order to Vacate or otherwise await the outcome of future state proceedings.

As for the second, related reason for this Court's refusal to intervene here, Bannum's TRO application appears to cross into jurisdictional territory forbidden to this Court by the so-called "Rooker-Feldman doctrine," which protects the Supreme Court's exclusive jurisdiction to reverse or modify a state-court judgment that conflicts with the constitution or federal law. Indeed, this application is very close to the "paradigm situation in which Rooker-Feldman precludes a federal district court from proceeding," namely where the losing party in state (or, in this case, District of Columbia) court "repair[s] to federal court to undo [the state court's judgment]." Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (2005); see also id. at 1521-22 (describing Rooker v. Fidelity Trust Co., 263 U.S. 413 (1923), as a "suit commenced in Federal District Court to have a judgment of a state court, adverse to the federal court plaintiffs, 'declared null and void' ")…Simply put, this Court cannot and will not act as a de facto court of appeals for parties aggrieved by unfavorable decisions in the District of Columbia courts.

Congress Considers Changing Lead Attorney Selection Process in Class Action Suits

An August 18, 2006 article by Charles Delafuente in the ABA Journal eReport notes that a bill sponsored by Rep. Richard Baker, R-La., is being debated in the House of Representatives that would allow judges to use competitive bidding by law firms as a means of selecting lead counsel in securities class actions. Although this method has been considered and rejected by the Third and Ninth Circuits in favor of the traditional method of selecting lead counsel—allowing the lead plaintiff, once determined, to select their own counsel—the issue has resurfaced in light of the recent charges against plaintiffs’ firm Milberg Weiss Bershad & Schulman.

The article may be viewed in its entirety by clicking here.

D.R.I. Considers Abstention Pursuant to Colorado River Doctrine

Per U.S. v. Fairway Capital Corp., 433 F. Supp. 2d 226 (D.R.I. June 8, 2006):

Claimant argues that this Court should abstain from deciding its equitable claim based on the abstention doctrine set forth by the United States Supreme Court in Colorado River Water Conservation Dist. v. United States, 424 U.S. 800 (1976). Under this doctrine, a federal court may, in exceptional circumstances, exercise its discretion in choosing to abstain when there is a parallel proceeding pending in state court. Id. at 817-18; Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 19 (1983). Federal courts have a "virtually unflagging obligation ... to exercise the jurisdiction given them." Colorado River, 424 U.S. at 817. In deciding whether to refrain from acting, therefore, district courts should maintain a "heavy presumption favoring the exercise of jurisdiction." Villa Marina Yacht Sales, Inc. v. Hatteras Yachts, 915 F.2d 7, 13 (1st Cir.1990).

The First Circuit has recognized a non-exhaustive list of factors, based on the United States Supreme Court's decision in Colorado River and its subsequent decision in Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 19 (1983), that a court should consider in determining whether to abstain from its unflagging obligation to exercise jurisdiction:

(1) Whether either court has assumed jurisdiction over a res; (2) the [geographical] inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation; (4) the order in which the forums obtained jurisdiction; (5) whether state or federal law controls; (6) the adequacy of the state forum to protect the parties' interests; (7) the vexatious or contrived nature of the federal claim; and (8) respect for the principles underlying removal jurisdiction.

Rio Grande Cmty. Health Ctr., Inc. v. Rullan, 397 F.3d 56, 71-72 (1st Cir.2005) (quoting KPS & Assocs., Inc. v. Designs by FMC, Inc., 318 F.3d 1, 10 (1st Cir.2003)).

…

In order to apply the Colorado River doctrine, a parallel state proceeding must exist such that substantially the same parties are litigating substantially the same issues in the state and federal forums. See McLaughlin v. United Virginia Bank, 955 F.2d 930, 935 (4th Cir.1992). …[T]he action pending before the [Virgin Islands] Territorial Court is sufficiently parallel to warrant consideration of the Colorado River doctrine.

In balancing the factors that are relevant to the present case, however, it is apparent that the requisite exceptional circumstances needed to justify abstention do not exist.

9th Circuit Holds that Attorney’s Alleged Misconduct Does Not Suffice as “Fraud of an Adverse Party” in Denying Relief from Judgment

Per Latshaw v. Trainer Wortham & Co., Inc., 452 F.3d 1097 (9th Cir. July 6, 2006):

Rule 60(b)(3) permits relief "from a final judgment ... for ... fraud ... or other misconduct of an adverse party." Citing subsection (b)(3), Latshaw contends that Nygaard committed two fraudulent acts sufficient to warrant Rule 60(b) relief: (1) Nygaard misinformed Latshaw that she could be liable for the defendants' legal fees, and (2) Nygaard misinformed Latshaw that Harrison intended to resign. Latshaw argues that Nygaard's fraud, in part, induced Latshaw to sign the Rule 68 offer. The district court again denied Latshaw's requested relief, noting that Latshaw "expressly instructed her counsel to file the acceptance," a situation "clearly" not among those meriting relief as fraud.

We agree. Even if it is true that Nygaard committed fraud, the district court did not abuse its discretion in concluding that the circumstances failed to warrant Rule 60(b)(3) relief. Subsection (b)(3) permits relief only when the fraud was committed by "an adverse party." See In re Grantham Bros., 922 F.2d 1438, 1442-43 (9th Cir.1991) (declining to apply Rule 60(b)(3) where fraud was committed by the appellant's clients in part because the rule "is aimed at fraud perpetrated by an adverse party"). Thus, in order to prevail on a Rule 60(b)(3) motion, the defendants must have committed the fraud at issue. Here, however, Nygaard represented Latshaw herself, not an adverse party. Meanwhile, the defendants were innocent bystanders. Since Nygaard's alleged fraud adversely affected only her own client, Latshaw cannot satisfy the express "adverse party" requirement of Rule 60(b)(3).

[The Court also rejected plaintiff’s arguments based on Rule 60(b)(1) and (b)(6).]

W.D. Okla. Holds that Intervention of Plaintiffs Does Not Constitute Addition by Amendment under CAFA

Per Weber v. Mobil Oil Corp., Not Reported in F. Supp. 2d., 2006 WL 2045875 (W.D. Okla. July 20, 2006):

Resolution of plaintiffs' motion [to remand after defendants removed to federal court under CAFA] depends on when this action commenced as to the removing defendants because CAFA only applies "to any civil action commenced on or after [February 18, 2005]." 119 Stat. at 14. In Prime Care of Northeast Kansas, LLC v. Human Ins. Co., 447 F.3d 1284 (10th Cir.2006), the Court of Appeals for the Tenth Circuit addressed "whether CAFA permits the removal of a class action filed before the Act's effective date if the removing defendant was first added by amendment after the effective date." Id. at 1285. The answer, the Court held, depends on whether "the amendment relates back to the pre-CAFA pleading that is being amended." Id. at 1289. In response to the court's request for supplemental briefing discussing the impact of the Court's decision in Prime Care, MEPUS and MNGI [Defendants and Mobil Oil subsidiaries] argue CAFA applies because the Petition in Intervention constitutes a completely new case, asserting new claims against defendants the Mannering Plaintiffs had never before sued. This argument, however, elevates form over substance and ignores the reality of the case. MEPUS and MNGI concede this case commenced as to them at least as of December 21, 2004. They were thus not "first added by amendment" after CAFA's effective date. Furthermore, Judge Smith allowed the Mannering Plaintiffs to intervene [in the state court action] only if their intervention did not alter the claims asserted or the class definition. Thus, the Petition in Intervention, by court order, was merely a continuation of the action as it existed on December 21, 2004; it did not add any new defendants and therefore did not commence an action as to MEPUS and MNGI after the effective date of CAFA. CAFA therefore does not apply to this action.

[The Court granted the plaintiff’s motion to remand.]

Cross Motions for Summary Judgment Did Not Create a “Bench Trial” in District Court, Seventh Circuit Holds in Determining Appropriate Standard of Revi

Per In re United Air Lines, Inc., 453 F.3d 463 (7th Cir. July 6, 2006):

The next matter to address is the standard of appellate review, a point raised at oral argument. To do so, we must determine if we are confronting a question of law or fact or some mixture thereof. Some Colorado appellate opinions, as discussed at oral argument, have treated contract-severability rulings as questions of fact, reviewing those rulings in a manner akin to the federal clearly-erroneous standard. See John v. United Adver., Inc., 165 Colo. 193 (1968); Peterson v. Colo. Potato Flake & Mfg. Co., 164 Colo. 304 (1967); L.U. Cattle Co. v. Wilson, 714 P.2d 1344, 1346, 1349 (Colo. Ct. App. 1986). However, those opinions were reviewing bench trials in which the severability dispute turned on the trial court's factual findings. By contrast, when trial courts in Colorado have made severability rulings without the need of factual findings (e.g., based upon the face of the contract, at the summary judgment stage), Colorado appellate opinions have reviewed those determinations as questions of law, subject to independent appellate review. See Univex Int'l, Inc. v. Orix Credit Alliance, Inc., 914 P.2d 1355, 1356, 1357 (Colo.1996) (reviewing a summary judgment decision, interpreting the language of the disputed contract, and ruling that, by its language, the contract could not be severed as a matter of law)….

In this case, the trial court is the bankruptcy court, and it did not conduct a bench trial. Rather, the bankruptcy court's severability ruling was made at the summary judgment stage. It is true that the bankruptcy court faced cross motions for summary judgment, and it is also true that, under certain, rare circumstances, cross summary judgment motions can be converted into a bench-trial-like situation. See Betaco, Inc. v. Cessna Aircraft Co., 32 F.3d 1126, 1131-32 (7th Cir.1994). However, that did not happen here. The bankruptcy court's severability ruling was a purely legal ruling and was not based upon any factual findings. Thus, consistent with Colorado law, we review that ruling as a question of law. Handling that question of law, moreover, is a federal law concern; while state law controls the substance of the appeal, federal law supplies the standard of appellate review. See In re Kmart Corp., 434 F.3d 536, 541 (7th Cir.2006) (citing Mayer v. Gary Partners & Co., 29 F.3d 330, 332-35 (7th Cir.1994)); In re Abbott Labs. Derivative S'holders Litig., 325 F.3d 795, 803 (7th Cir.2003); Myers v. County of Lake, 30 F.3d 847, 851 (7th Cir.1994). Accordingly, our review of the bankruptcy court's decision here is the customary federal summary judgment standard: de novo review. See In re United Air Lines, Inc., 438 F.3d 720, 727 (7th Cir.2006).

Tenth Circuit Notes Ability to Consider Waived Judicial Estoppel Argument at its Discretion

Per Kaiser v. Bowlen, 2006 WL 2130439 (10th Cir. Aug 1, 2006):

The district court considered and rejected on the merits Kaiser's Fed.R.Civ.P. 50(b) motion for judgment as a matter of law in which he raised judicial estoppel for the first time. However, it did so in error because Kaiser did not bring a Rule 50(a) motion for a directed verdict raising this issue at the close of evidence. See FDIC v. United Pac. Ins. Co., 20 F.3d 1070, 1076 (10th Cir.1994) ("failure to move for a directed verdict on this issue bars us from considering whether the district court erred in denying the motion for [judgment notwithstanding the verdict]"). Despite this error, judicial estoppel is "an equitable doctrine invoked by a court at its discretion." New Hampshire, 532 U.S. at 750 (citations and quotation marks omitted). Hence, we are not bound to accept a party's waiver of a judicial estoppel argument and may consider the issue at our discretion. See Bethesda Lutheran Homes & Servs. v. Born, 238 F.3d 853, 858 (7th Cir.2001) (the doctrine of judicial estoppel "is for our protection as well as that of litigants, and so we are not bound to accept a waiver of it."); Grigson v. Creative Artists Agency L.L.C., 210 F.3d 524, 530 (5th Cir.2000) ("because that doctrine protects the judicial system, ... we can apply it sua sponte in certain instances").

Although we are not bound to abide by Kaiser's waiver, there is simply no reason to apply judicial estoppel here. The Supreme Court has made clear that judicial estoppel is "probably not reducible to any general formulation of principle." New Hampshire, 532 U.S. at 750 (quotation marks omitted).

UMKC Law Review Publishes Symposium Issue on Class Actions

NOTE: The earlier post regarding this Symposium neglected to mention the valuable contributions of Samuel Issacharoff and Geoffrey Miller this volume. This revised posting includes a listing of their articles appearing in the Symposium. The prior post also neglected to attribute authorship of the Introduction to Professor Klonoff, the organizer of the Symposium:

The UMKC Law Review has just published a Symposium on class actions commemorating the twentieth anniversary of Phillips Petroleum Co. v. Shutts. The Introduction to the Symposium by Robert H. Klonoff can be found at 74 UMKC L. Rev. 487 (2006). The Symposium includes the following contributions from an outstanding group of leading scholars in the field:

Arthur R. Miller, RELIVING AND REFLECTING ON SHUTTS, 74 UMKCLR 505

Debra Lyn Bassett, THE DEFENDANT'S OBLIGATION TO ENSURE ADEQUATE REPRESENTATION IN CLASS ACTIONS, 74 UMKCLR 511

Elizabeth J. Cabraser, THE MANAGEABLE NATIONWIDE CLASS: A CHOICE-OF-LAW LEGACY OF PHILLIPS PETROLEUM CO. V. SHUTTS, 74 UMKCLR 543

Edward H. Cooper, REWRITING SHUTTS FOR FUN, NOT TO PROFIT 74 UMKCLR 569

Deborah R. Hensler, BRINGING SHUTTS INTO THE FUTURE: RETHINKING PROTECTION OF FUTURE CLAIMANTS IN MASS TORT CLASS ACTIONS, 74 UMKCLR 585

Samuel Issacharoff, GETTING BEYOND KANSAS, 74 UMKCLR 613

Francis E. McGovern, A PROPOSED SETTLEMENT RULE FOR MASS TORTS, 74 UMKCLR 623

Geoffrey P. Miller, RETHINKING CERTIFICATION AND NOTICE IN OPT-OUT CLASS ACTIONS, 74 UMKCLR 637

Linda S. Mullenix, GRIDLAW: THE ENDURING LEGACY OF PHILLIPS PETROLEUM CO. V. SHUTTS, 74 UMKCLR 651

Richard A. Nagareda, BOOTSTRAPPING IN CHOICE OF LAW AFTER THE CLASS ACTION FAIRNESS ACT, 74 UMKCLR 661

Lee H. Rosenthal, BACK IN THE COURT'S COURT 74 UMKCLR 687

William B. Rubenstein, WHY ENABLE LITIGATION?: A POSITIVE EXTERNALITIES THEORY OF THE SMALL CLAIMS CLASS ACTION, 74 UMKCLR 709

Brian Wolfman & Alan B. Morrison, WHAT THE SHUTTS OPT-OUT RIGHT IS AND WHAT IT OUGHT TO BE, 74 UMKCLR 729

Patrick Woolley, SHUTTS AND THE ADEQUATE REPRESENTATION REQUIREMENT, 74 UMKCLR 765

Stephen C. Yeazell, OVERHEARING PART OF A CONVERSATION: SHUTTS AS A MOMENT IN A LONG DIALOGUE, 74 UMKCLR 779

D. Colo. Rules that Severance From State Court Action Does Not “Commence” a New Case for CAFA Purposes

Per Lally v. Country Mut. Ins. Co., Not Reported in F. Supp. 2d., 2006 WL 2092610 (D. Colo. July 27, 2006):

Country Mutual asserts that removal is proper pursuant to the Class Action Fairness Act of 2005 ["CAFA"]… This is because the severance of this action from the main state court action allegedly created a new case which triggered Country Mutual's right to remove. Alternatively, Country Mutual contends that removal is proper under diversity jurisdiction as that existed prior to CAFA. Counsel representing Country Mutual in this case also filed Notices of Removal on behalf of five other defendants.… Plaintiffs now seek to remand this case back to the state court on the basis that the removal was untimely.

Removal statutes are narrowly construed, and there is a presumption against removal jurisdiction. Pritchett v. Office Depot, Inc., 420 F.3d 1090, 1094- 95 (10th Cir.2005); Baby C v. Price, No. 04-3299, 138 Fed. Appx. 81, (10th Cir.2005) … Country Mutual, as the party seeking removal, has the burden of proving that federal jurisdiction is proper. Plog v. Colorado Ass. of Soil Conservation Districts, 841 F.Supp. 350, 352 (D.Colo.1993).

Section 1453(b) of CAFA provides for the removal of class actions from state court. CAFA is only applicable, however, to actions commenced on or after its effective date of February 18, 2005. The question of whether this court has jurisdiction over Plaintiffs' claims pursuant to CAFA therefore requires a determination of when this case was commenced. Plaintiffs argue that the applicable date is January 10, 2003, which is the date the original state court action was filed in the Boulder County District Court. Country Mutual argues that the applicable date is February 24, 2006, which is the date that Plaintiffs' claims against it were severed from the other claims asserted in the original state court action.

…

I find that this case, even though severed from the original state court action, commenced when the original complaint was filed in January of 2003. Thus, the CAFA is inapplicable, and the removal was not timely.

Seventh Circuit Considers Admissibility of Oral Evidence in Establishing Genuine Issue of Material Fact

Per Randolph v. Indiana Regional Council of Carpenters and Millwrights, 453 F.3d 413 (7th Cir. June 28, 2006):

…[A] a party cannot get summary judgment simply by pointing out infirmities in evidence used by its opponent to bolster the opponent's testimony. Wilson v. Williams, 997 F.2d 348, 349-50 (7th Cir.1993); McGinest v. GTE Service Corp., 360 F.3d 1103, 1113 n. 5 (9th Cir.2004). Oral testimony if admissible will normally suffice to establish a genuine issue of material fact, though the qualification "if admissible" is important, particularly in discrimination cases; a plaintiff cannot get to the jury merely by testifying that she thought the employer or other alleged discriminator had a discriminatory purpose. Murray v. Chicago Transit Authority, 252 F.3d 880, 888 (7th Cir.2001); Stagman v. Ryan, 176 F.3d 986, 996 (7th Cir.1999); Filippo v. Northern Indiana Public Service Corp., 141 F.3d 744, 750 (7th Cir.1998); Quinones v. Buick, 436 F.3d 284, 290 (1st Cir.2006). Plaintiffs cannot qualify as mind readers. But a plaintiff can testify, as the plaintiff in this case did, that she made a phone call and said thus-and-so in the ensuing conversation, or left a message on an answering machine (the union had an answering machine) that said thus-and-so. That is testimony to a statement she made, not, as the union would have it, testimony "to her own subjective beliefs of discriminatory conduct."The grant of summary judgment to the union was therefore erroneous.

D. Del. Holds that Inmate May Not Bring Pro Se Class Action Suit

Per Jordan v. Delaware, 433 F.Supp.2d 433 (D. Del. June 9, 2006):

Jordan appears to be asserting the claims in his [§ 1983] complaint on behalf of himself and all other DOC inmates who are infected with HCV [Hepatitis C Virus]. [Citation omitted] ("Donald Jordan, individually and on behalf of all persons similarly situated"). However, "courts have consistently held that a prisoner acting pro se is inadequate to represent the interests of his fellow inmates in a class action." Brathwaite v. Taylor, No. 00-435-GMS, 2001 WL 1117134, at *2 n. 3 (D.Del. Sept.13, 2001) (citing Maldonado v. Terhune, 28 F.Supp.2d 284, 289 (D.N.J.1998); Caputo v. Fauver, 800 F.Supp. 168, 170 (D.N.J.1992)). That is certainly true here, as the case involves this particular inmate's particular medical history involving a particular ailment. Therefore, Jordan cannot bring a class action suit, and to the extent that he attempts to assert claims on behalf of anyone but himself, his claims must be dismissed.

D.C. Circuit Discusses “Important Issue” Factor in Determining Propriety of Interlocutory Review

Per Diamond Ventures, LLC v. Barreto, 452 F.3d 892 (D.C. Cir. July 7, 2006):

In Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949), the United States Supreme Court set forth the "collateral order" doctrine authorizing the interlocutory appeal of an order so long as the order "[1] conclusively determine[s] the disputed question, [2] resolve[s] an important issue completely separate from the merits of the action, and [3][is] effectively unreviewable on appeal from a final judgment." Will v. Hallock, --- U.S. ----, ----, 126 S.Ct. 952, 957 (2006) (quotations omitted). The doctrine is "stringent[ly]" applied so as not to "overpower the substantial finality interests" of 28 U.S.C. § 1291. Id.

The first and third Cohen factors are plainly met in this case. The Protective Order conclusively determines the sole issue in this dispute: Diamond Ventures' principals' and employees' access to the MAQs [Management Assessment Questionnaires]. In addition, the order granting such access would be unreviewable at the litigation's end because the harm the SBA alleges--competitive harm to the SBIC applicants caused by Diamond Ventures' principals' review of the formers' MAQs--could not be undone on appeal. See Providence Journal v. FBI, 595 F.2d 889, 890 (1st Cir.1979) (confidentiality lost once documents were surrendered pursuant to court order; "[t]he status quo could never be restored"). The closer issue is the second Cohen requirement, which itself consists of two prongs: separability and importance. As to separability, Diamond Ventures' management's access to the MAQs has nothing to do with the merits of its discrimination claim. Diamond Ventures argues that the "importance" factor is lacking because confidential information, unlike privileged material, is discoverable under the federal rules. …

An "important issue" under Cohen is determined not by the nature of the information being sought but by the interest that would be harmed if immediate review were not allowed weighed against the interest in finality. See United States v. Philip Morris, 314 F.3d 612, 617 (D.C.Cir.2003) (under Cohen, issue is important "if the interests that would potentially go unprotected without immediate appellate review of that issue are significant relative to the efficiency interests sought to be advanced by adherence to the final judgment rule") (citing Digital Equip. v. Desktop Direct, 511 U.S. 863, 879, 114 S.Ct. 1992, 128 L.Ed.2d 842 (1994)); id. at 618-19 ("The importance prong requires weighing the institutionally significant status or relationship at stake.") (quotations omitted). In Philip Morris we held that a discovery order implicating the attorney-client privilege was significant compared to the counterbalancing interest in finality because the privilege "rests at the center of our adversary system." Philip Morris, 314 F.3d at 618. In Medical Records, the significant interest under Cohen 's second factor was that the documents sought to be discovered were covered by the psychotherapist's privilege under Federal Rule of Evidence 501 and by the medical records privilege under the District of Columbia Municipal Code. Medical Records, 381 F.3d at 1209-10.

Using the Philip Morris test, we believe the privacy and competitive interests of the SBIC applicants that "would potentially go unprotected without immediate appellate review" overcome the interest in finality.