Tuesday, January 31, 2006

Delayed Nonsuit of Claim against Sole Non-Diverse Defendant Equitably Tolls 1-Year Period for Seeking Removal

Per Elsholtz v. Taser Intern., Inc., --- F.Supp.2d ----, 2006 WL 177621 (N.D. Tex. Jan. 05, 2006):

Plaintiff's motion to remand contends that removal was improper under 28 U.S.C. § 1446(b), which prohibits removal of a case founded upon diversity jurisdiction “more than 1 year after commencement of the action.” Plaintiff contends that the action was commenced on June 22, 2004, the date she filed her original complaint, and was not removed until August 1, 2005, more than one year after its commencement.Defendant does not dispute that it removed the case outside of the one-year period, but instead contends that the one-year period should be equitably tolled. The Fifth Circuit Court of Appeals has concluded that this one-year period is not jurisdictional but instead is subject to equitable exceptions. See Tedford v. Warner-Lambert Co., 327 F.3d 423, 426 (5th Cir.2003). TI contends that it is entitled to the benefit of equitable tolling due to the fact that Plaintiff failed to nonsuit the City, the only non-diverse defendant, until after the one-year period passed. The Court agrees.

Plaintiff did not join TI in the lawsuit until over four months after initially filing suit. Thereafter, Plaintiff repeatedly pressed for continuances of the hearing on the City's plea to jurisdiction, contending that discovery was necessary to determine the plea. Shortly before the fourth setting of the hearing, and after the one-year deadline for removal passed, Plaintiff nonsuited the City, the only non-diverse defendant. TI immediately removed the action to this Court. The Court concludes that these facts warrant equitably tolling the one-year period to permit TI's removal. See Shiver v. Sprintcom, Inc., 167 F.Supp.2d 962, 963 (S.D.Tex.2001) (refusing remand where defendant removed case outside of the one-year period when plaintiff nonsuited the only non-diverse defendant on the eve of trial), cited in Tedford, 327 F.3d at 426 n. 4. It is, therefore, ORDERED that Plaintiff's Motion to Remand is hereby DENIED.

Monday, January 30, 2006

North Carolina Law Review Publishes Article on Forum Shopping

The North Carolina Law Review has just published an interesting piece by Professor Debra Lyn Bassett entitled The Forum Game, 84 N. Car. L. Rev. 333 (2006), which discusses the legal framework and ethical rules surrounding forum shopping. Here is the abstract:

One of the more interesting contradictions in law is the common description of litigation as a "game," while simultaneously decrying "game playing" in the litigation process. Litigation involves strategic choice, as game theory illustrates. One of those strategic choices includes the plaintiff's initial selection of the forum, which the defendant may attempt to counter through transfer strategies of its own. Criticizing and trivializing forum selection through the label of forum "shopping" misapprehends the forum game by treating forum selection as a parlor trick--as unfair and abusive--rather than as a lawful, authorized strategy. Forum shopping is not a form of "cheating" by those who refuse to play by the rules. Playing by the rules includes the ability of plaintiff's counsel to select--and the ability of defendant's counsel to attempt to counter--the set of rules by which the litigation "game" will be played.

Friday, January 27, 2006

New Class Representative Did Not ‘Commence' New Action Under CAFA

BNA's Class Action Litigation Report is reporting on an Eighth Circuit case, Plubell v. Merck & Co., 8th Cir., No. 05-4217, which held that substituting a new class representative for one who had not actually bought or used the drug at issue does not "commence" a new class action for purposes of the Class Action Fairness Act. Per BNA, "The claims in the original and amended petitions are identical, the substitute class representative was a member of the putative class, and there was no evidence of bad faith use of a "placeholder" plaintiff, Judge Duane Benton said. In those circumstances, the defendant was not prejudiced, and both Missouri law and Federal Rule of Civil Procedure 15(c) would allow the amended pleading to relate back to the original."

The full text of BNA's article on the case can be viewed by clicking here. A PDF of the text of the opinion is available by clicking here.

Law.com Posts Article on Empirical Debate over Punitive Damages

Law.com's In-House Counsel today has an article on the ongoing debate between Viscusi (Harvard) and Eisenberg (Cornell) over whether punitive damages are too large and out of control. Here's an excerpt from the article, which is entitled Are Punitive Damage Awards Too High?:

Viscusi, an economist who has been writing about punitive damages since 1991, says the system is broken -- thanks largely to the capriciousness of juries. Compared to judges, he says, juries are more likely to grant punitive awards and grant them at a higher level. Juries are also almost exclusively responsible for the growth of the $100 million-plus "blockbuster" awards, he says. Viscusi doesn't advocate the wholesale abolition of punitive damages, but he favors more guidance for jurors in the determination of these awards. He also advocates a regulatory compliance defense option that would eliminate punitive damages for parties that have met government regulatory standards.

Eisenberg, a lawyer by training, self-taught economist and an editor of the Journal of Empirical Legal Studies, disagrees. Having studied punitive damages since 1997, he says there is no evidence that the tort system is broken or that juries are irrational in their determination of damages. In fact, he finds that juries and judges award punitive damages in approximately the same ratio to compensatory damages, and that the level of punitive damages has not increased over time. He argues there is no reason for dramatic change. "Congress should spend more time worrying about real problems," he says. "This [punitive damages] problem is manufactured by self-interested groups to change the tort system," he says.

The full article is available at http://www.law.com/jsp/ihc/PubArticleIHC.jsp?id=1138269913844.

Thursday, January 26, 2006

Review of Litigation Publishes Article Entitled "The Other Federal Rules of Civil Procedure"

The Review of Litigation has just published an article by Professor Laurens Walker entitled The Other Federal Rules of Civil Procedure, 25 Rev. Litig. 79 (2006). Here is an excerpt from the Introduction:

The Federal Rules of Civil Procedure have attracted much general analysis and comment since their adoption in 1938. However, the rich context of common law procedural rules that function in conjunction with the 1938 Rules to determine the actual function of the federal district courts has not yet received any systematic analysis and comment. Among these background rules are, for example, heightened pleading requirements, the burdens of production and persuasion, and the doctrine of res judicata. These Other Federal Rules of Civil Procedure Rules are the subject of this article. My thesis is straightforward: The Other Rules interact with the 1938 Rules in such a way as to counter the apparent progressive character of the 1938 Rules and produce a functioning system which is not progressive in reality but conservative.

Sixth Circuit Rejects 23(b)(2) Class Certification of Civil Rights Action Claiming Injunctive and Compensatory Relief

Per the Sixth Circuit in Reeb v. Ohio Dept. of Rehabilitation and Correction, --- F.3d ----, 2006 WL 162836 (6th Cir. Jan. 24, 2006):

Four named female employees of the Belmont Correctional Institution (“Belmont”), a prison operated by the State of Ohio, filed a class action against Belmont and certain officials under Title VII of the Civil Rights Act of 1964, alleging that female corrections officers have been treated differently from similarly situated male corrections officers and accordingly have been denied promotions, denied leave and overtime, given undesirable positions, and replaced by men. The plaintiffs specifically requested money damages and an injunction, though they did not specify the conduct they sought to have enjoined. The U.S. District Court for the Southern District of Ohio certified the plaintiff class, finding that the plaintiffs had shown the requirements of Federal Rule of Civil Procedure 23(a) and (b)(2) had been met, and refused to certify the class under subdivision (b)(3). Reeb v. Ohio Dep't of Rehab. & Corr., 203 F.R.D. 315 (S.D.Ohio 2001) (hereinafter Reeb I ). We granted an interlocutory appeal pursuant to Federal Rule of Civil Procedure 23(f) and reversed the grant of certification, finding that the record did not demonstrate that the district court had engaged in the rigorous analysis required to determine whether the Rule 23(a) requirements had been met. Reeb v. Ohio Dep't of Rehab. & Corr., 81 Fed. Appx. 550 (6th Cir.2003) (hereinafter Reeb II ).

Upon remand, the district court received no new evidence and re-certified the plaintiff class, again finding the requirements of Rule 23(a) and (b)(2) met and declining to certify the class under subdivision (b)(3). Reeb v. Ohio Dep't of Rehab. & Corr., 221 F.R.D. 464, 469 (S.D.Ohio 2004) (hereinafter Reeb III ). We again permitted Belmont's appeal. Because the district court did not follow our instructions and conduct a “rigorous analysis” of the requirements of Rule 23(a), and because Title VII cases in which plaintiffs seek individual compensatory damages are not appropriately brought as class actions under Rule 23(b)(2) because such individual claims for money damages will always predominate over requested injunctive or declaratory relief, we VACATE the district court's grant of class certification and REMAND the case to the district court for further proceedings.

Wednesday, January 25, 2006

Florida Law Review Publishes Article on Due Process in Class Arbitration

The Florida Law Review has just published an article by Carole J. Buckner entitled Due Process in Class Arbitration, 58 Fla. L. Rev. 185 (2006). Here's an excerpt from the Introduction:

The ubiquity of arbitration clauses in consumer and employment agreements and the Supreme Court's plurality opinion in Green Tree Financial Corp. v. Bazzle, which implicitly permitted class arbitration, marked the beginning of a new era in class arbitration. Although it is well-established that procedural due process is not required in non-class arbitration, at least two state supreme court decisions assume that due process is required in class arbitration. The United States Supreme Court has not directly addressed the issue of whether the law requires due process in class arbitration, despite at least two opportunities to do so. After the Supreme Court implicitly authorized class arbitration in Bazzle, two arbitration providers promulgated procedural rules for class arbitration that provide some measure of due process-like protection to participants, presumably because in the litigation context, class action judgments bind absent class members only when due process protections are present, but probably also because of the uncertainty surrounding this newly developing area of the law.

This Article examines three issues concerning due process in class arbitration. First, it examines whether due process is required in class arbitration under the state action doctrine, even though it is not required in non-class arbitration, and concludes that state action may exist under some current models of class arbitration, requiring due process. Second, the Article addresses whether providing due process in class arbitration is appropriate even if it is not required, given other important doctrinal and practical considerations, just as due process-like protections are provided in non-class arbitration through voluntary protocols. Finally, the Article analyzes three existing approaches to providing due process or due process-like protections in class arbitration and concludes that the provision of such protections through a voluntary due process protocol consistent with a pure arbitral paradigm is preferable-both doctrinally and as a practical matter-to the provision of such protections through a hybrid system of class arbitration or through existing provider systems, all of which to varying degrees "judicialize" class arbitration in violation of the Federal Arbitration Act (FAA).

Tuesday, January 24, 2006

Tulane Law Review Publishes Student Note Discussing Choice-of-Law Complexities in Multi-State Class Actions

The Tulane Law Review has just published a student Note by Jeremy T. Grabill entitled Multistate Class Actions Properly Frustrated By Choice-Of-Law Complexities: The Role Of Parallel Litigation In The Courts, 80 Tulane L. Rev. 299 (2005). Here's an excerpt from the Introduction:

Ongoing concern exists regarding the expenses, delays, and inconsistencies that arise in complex litigation in the bifurcated American judiciary. It is generally accepted that unified treatment of related claims would prevent duplicative parallel litigation, avoid inconsistent outcomes in similar cases, and work to equalize the bargaining power of plaintiffs. Over the last decade, however, choice-of-law complexities have frustrated class treatment of state-law claims in both federal and state courts. Specifically, when a class includes citizens of different states (multistate class action), a court must engage in a choice-of-law analysis to decide whether it can properly select one state's law to apply to all class claims or whether it must instead apply multiple states' laws.

This Comment will discuss the increasing unwillingness of courts to certify multistate classes when this choice-of-law analysis requires the application of multiple states' laws. Conventional wisdom is that the emergence of a choice-of-law roadblock to class certification is a negative development. Accordingly, most scholarship in this area tends to be "problem-solving," and has produced numerous proposals that would allow for unified federal treatment of complex cases. Not only does the literature marginalize the costs of class treatment, but it also fails to recognize the benefits of parallel litigation, namely diversified decisionmaking and respect for state sovereignty.

Harvard Law Review Publishes Student Comment on Hague Convention on Choice of Court Agreements

The Harvard Law Review has just published a student comment: Recent International Agreement, Private International Law -- Civil Procedure -- Hague Conference Approves Uniform Rules Of Enforcement For International Forum Selection Clauses. -- Convention On Choice Of Court Agreements, Concluded June 30, 2005, 119 Harv. L. Rev. 703 (2006). Here is the Introduction:

Trade is greatly facilitated when international parties can make contracts safe in the knowledge that their disputes will be recognized and resolved in the forum of their choice. Yet legal systems may fail to protect these reasonable expectations. Recently, the member states of the Hague Conference on Private International Law approved the Convention on Choice of Court Agreements, which lays out uniform rules for the enforcement of international choice of court clauses. The Convention not only requires that courts in member states assume jurisdiction pursuant to certain forum selection agreements between businesses around the world, but also lays out rules for the recognition of judgments thereby entered. These provisions will--if signed and ratified by the United States--render immaterial difficult Erie questions regarding which law federal courts should apply to such agreements. Moreover, the Convention may also serve as a catalyst for standardized treatment of domestic forum selection clauses among the states and may later promote a much-needed legislative standardization of domestic jurisdictional law.

Monday, January 23, 2006

Supreme Court Rejects Appellate Insufficiency of Evidence Consideration in Absence of Renewal of Rule 50 Motion

The Court today issued a decision in UNITHERM FOOD SYSTEMS, INC. V. SWIFT-ECKRICH, INC. (04-597), a case in which they rejected the notion that a circuit court could consider insufficiency of evidence arguments where a Rule 50(a) motion had been made but the party failed to renew that motion per Rule 50(b). Here is the Syllabus of the case:

After respondent ConAgra warned companies selling equipment and processes for browning precooked meats that it intended to protect its rights under its patent for that process, petitioner Unitherm, whose president had invented the process six years before ConAgra filed its patent application, and one of ConAgra’s direct competitors jointly filed suit in an Oklahoma federal court. As relevant here, they sought a declaration that ConAgra’s patent was invalid and unenforceable and alleged that ConAgra had violated §2 of the Sherman Act by attempting to enforce a patent obtained by fraud on the Patent and Trademark Office, see Walker Process Equipment, Inc. v. Food Machinery & Chemical Corp., 382 U.S. 172, 174. The District Court found the patent invalid and allowed the Walker Process claim to proceed to trial. Before the case was submitted to the jury, ConAgra moved for a directed verdict under Federal Rule of Civil Procedure 50(a) based on legal insufficiency of the evidence. The court denied the motion, the jury returned a verdict for Unitherm, and ConAgra neither renewed its motion for judgment as a matter of law pursuant to Rule 50(b) nor moved for a new trial on antitrust liability pursuant to Rule 59. On appeal to the Federal Circuit, ConAgra maintained that there was insufficient evidence to sustain the Walker Process verdict. The court applied Tenth Circuit law, under which a party that has failed to file a postverdict sufficiency of the evidence challenge may nonetheless raise such a claim on appeal, so long as the party filed a Rule 50(a) motion before submission of the case to the jury. The only available relief in such a circumstance is a new trial. Freed to examine the sufficiency of the evidence, the Federal Circuit vacated the judgment and ordered a new trial.

Held: Since respondent failed to renew its preverdict motion as specified in Rule 50(b), the Federal Circuit had no basis for reviewing respondent’s sufficiency of the evidence challenge. Rule 50 sets forth the requirements, establishing two stages, for challenging the sufficiency of the evidence in a civil jury trial. Rule 50(a) allows a challenge prior to the case’s submission to the jury, authorizing the district court to grant the motion at the court’s discretion. Rule 50(b), by contrast, sets forth the requirements for renewing the challenge after the jury verdict and entry of judgment. A party’s failure to file a Rule 50(b) postverdict motion deprives an appellate court of the “power to direct the District Court to enter judgment contrary to the one it had permitted to stand.” Cone v. West Virginia Pulp & Paper Co., 330 U.S. 212, 218. It also deprives an appellate court of the power to order the entry of judgment in favor of that party where the district court directed the jury’s verdict, Globe Liquor Co. v. San Roman, 332 U.S. 571, and where the district court expressly reserved a party’s preverdict directed verdict motion and then denied it after the verdict, Johnson v. New York, N. H. & H. R. Co., 344 U.S. 48. A postverdict motion is necessary because determining “whether a new trial should be granted or a judgment entered under Rule 50(b) calls for the judgment in the first instance of the judge who saw and heard the witnesses and has the feel of the case which no appellate printed transcript can impart.” Cone, supra, at 216. Moreover, the requirement “is not an idle motion” but “an essential part of the rule, firmly grounded in principles of fairness.” Johnson, supra, at 53. These authorities require reversal of the judgment below. This Court’s observations about the postverdict motion’s necessity and the benefits of the district court’s input at that stage apply with equal force whether a party is seeking judgment as a matter of law or simply a new trial. Contrary to respondent’s argument, the Cone, Globe Liquor, and Johnson outcomes underscore this holding. Those litigants all secured new trials, but they had moved for a new trial postverdict in the district court and did not seek to establish their entitlement to a new trial based solely on a denied Rule 50(a) motion. This result is further validated by the purported basis of respondent’s appeal, namely the District Court’s denial of its Rule 50(a) motion. Cone, Globe Liquor, and Johnson unequivocally establish that the precise subject matter of a party’s Rule 50(a) motion cannot be appealed unless that motion is renewed pursuant to Rule 50(b). Respondent, rather than seeking to appeal the claim raised in its Rule 50(a) motion, seeks a new trial based on legal insufficiency of the evidence. If a litigant that has failed to file a Rule 50(b) motion is foreclosed from seeking the relief sought in its Rule 50(a) motion, then surely respondent is foreclosed from seeking relief it did not and could not seek in its preverdict motion. Rule 50(b)’s text confirms that respondent’s Rule 50(a) motion did not give the District Court the option of ordering a new trial, for it provides that a district court may only order a new trial based on issues raised in a Rule 50(a) motion when “ruling on a renewed motion” under Rule 50(b). If the District Court lacked such power, then the Court of Appeals was similarly powerless. Rule 50(a)’s text and application also support this result. A district court may enter judgment as a matter of law when it concludes that the evidence is legally insufficient, but it is not required to do so. Thus, the denial of respondent’s Rule 50(a) motion was not error, but merely an exercise of the District Court’s discretion. Pp. 4—12.

375 F.3d 1341, reversed.

Thomas, J., delivered the opinion of the Court, in which Roberts, C. J., and O’Connor, Scalia, Souter, Ginsburg, and Breyer, JJ., joined. Stevens, J., filed a dissenting opinion, in which Kennedy, J., joined.

Review of Litigation Publishes Piece Critical of Congressional Underfunding of Federal Judiciary

The Review of Litigation has just published an article by Prof. James P. George entitled Jurisdictional Implications In The Reduced Funding Of Lower Federal Courts, 25 Rev. Litig. 1 (Winter 2006) . Here's the abstract:

This article argues two related propositions. First, if Congress were to eliminate all funding for lower federal courts, its constitutional authority to regulate those courts would become as meaningless as the empty courthouses. Second, Congress breaches its duty to furnish a forum at a point short of full defunding, and with that breach, Congress's regulatory power over private civil disputes otherwise litigable in state courts--preempted and removable state law claims--becomes constitutionally invalid. The first fact setting of full defunding is hypothetical; the second has been underway for several years.

Thursday, January 19, 2006

U. Illinois Law Review Publishes Internet Jurisdiction Article

The University of Illinois Law Review has just published an Article by Prof. A. Benjamin Spencer entitled Jurisdiction and the Internet--Returning to Traditional Principles to Analyze Network-Mediated Contacts, 2006 U. Ill. L. Rev. 71 (2006). Here's the abstract from the piece:

Courts have been evaluating the issue of personal jurisdiction based on Internet or "network-mediated" contacts for some time. The U.S. Supreme Court has remained silent on this issue, permitting the federal appeals courts to develop standards for determining when personal jurisdiction based on network-mediated contacts is appropriate. Unfortunately, the circuit approaches--which emphasize a Web site's "interactivity" and "target audience"--are flawed because they are premised on an outdated view of Internet activity as uncontrollably ubiquitous. This view has led courts to depart from traditional jurisdictional analysis and impose elevated and misguided jurisdictional standards. This article argues that courts should reinstitute traditional principles to analyze jurisdiction based on network-mediated contacts in light of current technology that enables Internet actors to restrict the geographical reach of their virtual conduct. Such a return will be fairer for plaintiffs while recognizing the legitimate due process rights of defendants.

E.D. Ark. Rejects Argument that Amended Complaint "Commences" Action under CAFA

Per Smith v. Collinsworth,Slip Copy, 2005 WL 3533133 (E.D. Ark. Dec 21, 2005):

The Complaint was filed on October 8, 2004, in the Circuit Court of Saline County, Arkansas, alleging that Plaintiffs represented a class of similarly situated consumers in the State of Arkansas. An Amended Complaint was filed in the same court on September 7, 2005.
. . .
The Amended Complaint added facts and expanded the class, and it eliminated many of the causes of action alleged in the first Complaint.
. . .
State procedural law governs cases originating in state court until they are removed to federal court. [Under] Arkansas procedure . . . an action is commenced when a complaint is filed. In this case, the complaint that "commenced" this action was filed long before CAFA became law.
. . .
Defendants rely on Seventh Circuit cases that hold, if an amended complaint does not relate back to the original complaint, the action may be removed to federal court, even though the original complaint was filed before CAFA was enacted.
. . .
Defendants also argue that the additional facts alleged by Plaintiffs, and the addition of the class members, do not "relate back" to the original complaint under Rule 15(c). Therefore, Defendants contend, the Amended Complaint is removable. I am persuaded by Weekley that, in view of the simple directive in § 9 of CAFA, whether an amended complaint relates back is irrelevant. However, even if the relation back analysis applies, Defendants' attempt to remove this action would still fail.

Wednesday, January 18, 2006

Ninth Circuit Issues En Banc Opinion Regarding Personal Jurisdiction in Yahoo v. LICRA Case

Last week the Ninth Circuit per Judge W. Fletcher issued an en banc opinion in Yahoo v. La Ligue Contre Le Racisime et L'Antisemitisme (LICRA) in which it held that California courts could exercise personal jurisdiciton over LICRA based on its sending of a cease and desist letter to Yahoo in California, serving process on Yahoo in California to commence its lawsuit against Yahoo in France, and obtaining and serving two interim orders from the French court. The majority acknowledged that these contacts/actions alone would be insufficient to confer jurisdiciton but reasoned that together they were enough under its interpretation of Calder v. Jones. Notwithstanding their view of the jurisdicitonal issue, the majority felt that the matter was not ripe and should thus be dismissed on those grounds.

A concurrence by Judge Ferguson argued that dismissal was appropriate based upon a lack of personal jurisdiction, arguing that LICRA in no way expressly aimed its French litigation activities at California as would be required to find jurisdiciton proper under Calder.

A separate concurrence by Judge O'Scannlain had the following to say: "The Supreme Court has never approved such a radical extension of personal jurisdiction as would sanction the majority’s holding that, by litigating a bona fide claim in a foreign court and receiving a favorable judgment, a foreign party automatically assents to being haled into court in the other litigant’s home forum." Judge O'Scannlain also took issue with the majority's determination that under Calder, the relevant forum contacts need not be wrongful; according to Judge O'Scannlain, it is clear that the Calder Court was pronouncing a rule of jurisdiction applicable to intentional tortious actions directed at the forum state.

The full set of opinions can be read by clicking here.

Tuesday, January 17, 2006

SCOTUS Holds that National Banks Located in State of Main Office for Diversity Purposes

The Supreme Court issued a decision in Wachovia Bank v. Schmidt, No. 04-1186, in which it held that a national bank is a citizen of the state in which its main office is located, for purposes of federal diversity jurisdiction under 28 U.S.C. 1348, not of every state in which it maintains a business establishment.

The text of the opinion can be accessed by visiting Cornell's LII website by clicking here.

Second Circuit Holds that Remand Orders not Authorized by 1447(c) Are Reviewable

Per the Second Circuit in Mitskovski v. Buffalo and Fort Erie Public Bridge Authority, --- F.3d ----, 2006 WL 51390 (2d Cir. Jan. 11, 2006):

Our initial issue is whether this Court has appellate jurisdiction over the appeal from the District Court's remand order.FN1 Despite the broad language of 28 U.S.C. § 1447(d) limiting appeal of remand orders,FN2 it is settled that section 1447(d) FN3 precludes appeal only of remand orders authorized by section 1447(c). See Quackenbush v. Allstate Insurance Co., 517 U.S. 706, 711-12, 116 S.Ct. 1712, 135 L.Ed.2d 1 (1996); Thermtron Products, Inc. v. Hermansdorfer, 423 U.S. 336, 346, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976); Hamilton v. Aetna Life and Casualty Co., 5 F.3d 642, 644 (2d Cir.1993).

We have interpreted section 1447(c) to authorize a remand for either a procedural defect asserted within 30 days of the filing of notice of removal or a lack of subject matter jurisdiction. See Hamilton, 5 F.3d at 644. Such remands, because they are authorized by section 1447(c), are barred from review by section 1447(d). See id. However, “an order remanding on procedural grounds either upon an untimely motion or sua sponte more than 30 days after removal, since such order is not authorized by § 1447(c), is reviewable.” Id.

In the pending case, the Plaintiffs filed a timely motion asserting an alleged procedural defect, and the District Court granted the motion, but did so more than 30 days after removal and on a ground identified by the Court on its own motion-noncompliance with a local rule. The Plaintiffs contend that the remand order is not appealable because the District Court granted a timely motion that had asserted a procedural defect. The Authority responds that the remand order is appealable because the order was based on a ground identified by the Court on its own motion more than 30 days after removal.

We think the Authority has the better of the dispute on this novel issue. The Congressional scheme contemplated by the interplay between sections 1447(c) and 1447(d) emphasizes prompt return to the state court of cases improperly removed and prompt processing of cases in the federal court of cases not authorized to be remanded. Toward that end, a motion asserting a procedural defect must be made within 30 days of removal, and a court of appeals may not delay the litigation by reviewing the grant of such a motion. In the same vein, a district court may not act to remand on its own motion more than 30 days after removal in the absence of a party's timely remand motion, and if it does so, a court of appeals may review and correct the improper remand. It is more consistent with this scheme to review a remand order based on a ground identified by a district court more than 30 days after removal than to preclude review because the court acted upon a timely filed motion asserting a procedural defect other than the one the court thought warranted a remand. We understand Hamilton to permit review not only of a remand order issued by a district court on its own motion more than 30 days after removal in the absence of a party's timely remand motion, but also of a remand order issued by a district court on a ground identified by a district court on its own motion more than 30 days after removal even though a party has filed a timely motion to remand.

Monday, January 16, 2006

Failure of Main Text to Deliver the Substance of an Appellate Brief Heading Waives Argument Says Ninth Circuit

Per the Ninth Circuit in Affordable Housing Development Corp. v. City of Fresno, --- F.3d ----, 2006 WL 51198 (9th Cir. Jan. 11, 2006):

AHDC appeals the grant of summary judgment to the citizens. . . . The caption for this section of AHDC's brief refers to AHDC suing the citizens for “making threats” and “conspiring.” The brief, however, goes on to make no mention of any evidence of threats or of conspiracy. A caption is not an argument. These issues were abandoned as to all citizen defendants except Compton. Fed. R.App. Proc. 28(a)(4) [; Leer v. Murphy, 844 F.2d 628, 634 (9th Cir.1988).

Friday, January 13, 2006

LII Previews Notice Case to Be Argued Next Week before the Supreme Court

Jones v. Flowers, a due process/notice case, is set to be argued before the Supreme Court next week on January 18, 2006. Here is a portion of the summary of the case provided by Cornell's Legal Information Institute:

The due process clause of the Fourteenth Amendment requires the government to give "reasonably calculated" notice to inform an affected party of an upcoming governmental proceeding. The issue before the Court is whether, when mailed notice of a tax sale or property forfeiture is returned undelivered, due process requires the government to take additional steps to locate the owner before taking the property. A holding that the government is required to take additional steps may subject the government to significant administrative burdens and undermine the process of transferring property rights. A holding that due process does not require the government to take additional steps may make property from tax sales more transferable, but may also deprive property owners of their constitutional right to due process.

The full preview of the case can be viewed by clicking here.

Second Circuit Invokes Collateral Order Doctrine to Exercise Jurisdiction over Motion Held in "Abeyance"

Per the Second Circuit in Lugosch v. Pyramid Co. of Onondaga, --- F.3d ----, 2006 WL 45865 (2d Cir. Jan. 10, 2006):

Before turning to the merits of the appeal, we must first consider whether we have jurisdiction to do so. Although the decision here appealed from-namely, the district court's order holding the Newspapers' intervention motion in abeyance-was not a final judgment, the Newspapers assert that this Court nonetheless has jurisdiction under the collateral order doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949), “a narrow exception to the general rule that interlocutory orders are not appealable as a matter of right.” Schwartz v. City of New York, 57 F.3d 236, 237 (2d Cir.1995). “To fit within the collateral order exception, the interlocutory order must: [i] conclusively determine the disputed question, [ii] resolve an important issue completely separate from the merits of the action, and [iii] be effectively unreviewable on appeal from a final judgment.” (citation omitted)

We have previously allowed media intervenors to appeal from apparently interlocutory orders under the collateral order doctrine on the grounds that orders denying access are final as to the intervenors and that the intervention motion could have been treated as a separate civil case in which the ruling would have been final. See, e.g., ABC, Inc. v. Stewart, 360 F.3d 90, 97 (2d Cir.2004); In re New York Times Co., 828 F.2d 110, 113 (2d Cir.1987). The instant matter stands in a slightly different posture from those cases, however, as the district court held “in abeyance” the intervention motion rather than outright denying it. The defendants argue that because of this distinction, there was no conclusive determination of the disputed question and the appeal should be dismissed for want of jurisdiction. (citations omitted)

However, in none of the cases dealing with motions held “in abeyance” was the relief sought dependent on timing. Here, in contrast, the Newspapers seek immediate right of access to the contested documents, bringing the instant matter more within the ambit of our other cases dealing with media intervenors. . . . [I]t is clear that the district court's decision here did conclusively resolve a disputed issue-whether the Newspapers had a right of immediate access to the contested documents-and accordingly, the first prong of the collateral order doctrine is satisfied.

The defendants argue that the second prong of the collateral order doctrine is not met because the issue of immediate release of the contested documents is intertwined with the underlying summary judgment motion. . . . The question of public access to the contested documents is thus completely separate from the merits of the underlying action, satisfying the second prong.

As to the third prong, it is patently clear that the denial of “prompt public disclosure” the Newspapers seek will be unreviewable, not to mention any damage irreparable, on appeal from a final judgment. Accordingly, we find that the district court's order falls within the collateral order doctrine, and we thus have jurisdiction to review it.

Thursday, January 12, 2006

D.N.D. Rejects Argument That CAFA Shifts Burden of Proof on Remand Motion to Plaintiffs

The court in Ongstad v. Piper Jaffray & Co., --- F.Supp.2d ----, 2006 WL 14399 (D.N.D. Jan. 04, 2006), has rejected an argument that CAFA shifts the burden of proof on a motion to remand to the plaintiff. Here is an extended exerpt from the case that discusses this issue:

Following removal of a case to federal court, a plaintiff can seek remand of the action back to state court. See28 U.S.C. 1447(c). Removal statutes are strictly construed in favor of state court jurisdiction and federal district courts must resolve all doubts concerning removal in favor of remand. The removing party bears the burden of showing that removal was proper. Although CAFA does not address the issue, courts are currently split on whether the new Class Action Fairness Act of 2005 shifts that burden of proof to the party seeking remand.

Several courts have held that CAFA shifts the burden to the party seeking remand. See Harvey v. Blockbuster, Inc., 384 F.Supp.2d 749, 752 (D.N.J.2005); In re Textainer Partnership Sec. Litigation, No. C 05-0969 MMC, 2005 WL 1791559, *3 (N.D.Cal. Jul.27, 2005); Waitt v. Merck & Co., Inc., No. C05-0759L, 2005 WL 1799740, *2 (W.D.Wash. Jul.27, 2005); Yeroushalmi v. Blockbuster, Inc., No. CV 05-225-AHM(RCX), 2005 WL 2083008, *3 (C.D.Cal. Jul. 11, 2005); Berry v. Am. Express Pub., Corp., 381 F.Supp.2d 1118, 1122-23 (C.D.Cal.2005). In doing so, most point to the legislative history of CAFA. An oft-quoted Senate Judiciary Committee report reads, in relevant part, as follows: “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 requirements are not satisfied).” S. Rep. 14, 109th Cong. 1st Sess. 42 (2005). Under such a framework, the plaintiff would bear the burden of establishing the lack of federal jurisdiction.

Conversely, other courts have held that CAFA does nothing to alter the traditional rule of law that the party opposing remand bears the burden of establishing federal jurisdiction. See Plummer v. Farmers Group, Inc., 388 F.Supp.2d 1310, 1317-18 (E.D.Okla.2005); Judy v. Pfizer, Inc., No. 4:05CV1208RWS, 2005 WL 2240088, *2 (E.D.Mo. Sep.14, 2005); Schwartz v. Comcast, Corp., No. Civ .A. 05-2340, 2005 WL 1799414, *4 (E.D.Pa. Jul.28, 2005); In re Expedia Hotel Taxes and Fees Litigation, 377 F.Supp.2d 904, 905 (W.D.Wash.2005); Sneddon v. Hotwire, Inc., No. C 05-0951 SI, C 05-0952 SI, C 05-0953 SI, 2005 WL 1593593, *1 (N.D.Cal. Jun.29, 2005). Most notably, the Seventh Circuit has so concluded. See Brill v. Countrywide Home Loans, Inc., 427 F.3d 446, 448 (7th Cir.2005).

The United States Supreme Court and the Eighth Circuit Court of Appeals have not yet addressed this issue. Despite the absence of binding precedent, Piper Jaffray urges the Court to adopt the burden-shifting approach requiring the Plaintiffs to establish federal court jurisdiction. Piper Jaffray points to the legislative history of CAFA, as well as the trend of bringing securities-related litigation within federal jurisdiction.As it stands, the removing party bears the burden of establishing federal jurisdiction. See In re Business Men's Assur. Co. of America, 992 F.2d 181, 183 (8th Cir.1993). The express language of CAFA does nothing to disrupt that maxim, nor should its legislative history. A recent decision out of the Eastern District of Missouri accurately summarizes the reason that is so.[A]lthough the CAFA is silent about the burden of proof in cases removed under the Act, a Committee Report, S.Rep. No. 109-14, at 44 (2005), contemplates the shifting of the burden to the plaintiff seeking remand. See Berry v. American Express Pub., Corp. ., 2005 WL 1941151, *3 (C.D.Cal. June 15, 2005).

At the time of the enactment of the CAFA, Congress was presumed to be aware of the well settled case law regarding the burden of proof in removed actions. Contract Freighters, Inc. v. Secretary of U.S. Dept. of Transp., 260 F.3d 858, 861 (8th Cir.2001) (Congress is presumed to know the legal background in which it is legislating). A court may resort to legislative history to interpret a statute when it contains an ambiguity. Absent some ambiguity in the statute, there is no occasion to look to legislative history. Neosho R-V School Dist. v. Clark, 315 F.3d 1022, 1032 (8th Cir.2003). The omission of a burden of proof standard in the CAFA does not create an ambiguity inviting courts to scour its legislative history to decide the point. By failing to specifically address the burden of proof in the Act, especially in light of discussing the issue in a Committee Report, Congress is deemed to have not intended to change the settled case law on that issue. Had Congress wished to change which party bears the burden of proof in a removal action under the CAFA it could have explicitly done so.Judy v. Pfizer, Inc., No. 4:05CV1208RWS, 2005 WL 2240088, *1-2 (E.D.Mo. Sep.14, 2005). The Seventh Circuit also endorsed such an approach.

Countrywide maintains that the Class Action Fairness Act reassigns that 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 a poll of legislators less, really, as it speaks for fewer. Thirteen Senators signed this report and five voted not to send the proposal to floor. Another 82 Senators did not express themselves on the question; likewise 435 Members of the House and one President kept their silence.We recognized that a dozen or so district judges have treated this passage as equivalent to a statute and reassigned the risk of non-persuasion accordingly. See e.g., Berry v. American Express Publishing, Corp., 381 F.Supp.2d 1118 (C.D.Cal.2005); Natale v. Pfizer, Inc., 379 F.Supp.2d 161 (D.Mass.2005), affirmed on other grounds, 424 F.3d 43 (C.A.1 (Mass.) 2005). But naked legislative history has no legal effect, as the Supreme Court held in Pierce v. Underwood, 487 U.S. 552, 108 S.Ct. 2541, 101 L.Ed.2d 490 (1988). A Committee of Congress attempted to alter an established legal rule by a forceful declaration in a report; the Justices concluded, however, that because the declaration did not correspond to any new statutory language that would change the rule, it was ineffectual. Just so here. The rule that the proponent of federal jurisdiction bears the risk of non-persuasion has been around for a long time. To change such a rule, Congress must enact a statute with the President's signature (or by a two-thirds majority to override a veto). A declaration by 13 Senators will not serve.

This Court is persuaded by the holdings in Judy and Brill. The Court will decline Piper Jaffray's invitation to break from the well-established rule of law that the removing party bears the burden of establishing federal subject-matter jurisdiction. There is simply nothing in CAFA that contemplates such a change.

Wednesday, January 11, 2006

First Circuit Upholds Hasty Dismissal with Prejudice

Westlaw provides the following summary of the First Circuit's recent decision in Torres-Vargas v. Pereira, 431 F.3d 389 (1st Cir. Dec. 19, 2005):

Territorial police officer brought § 1983 action against territorial police department, its superintendent, and individual officers, alleging politically discriminatory workplace persecution and hostile work environment. The United States District Court for the District of Puerto Rico, Pieras, Senior District Judge, dismissed with prejudice for failure to prosecute and failure to obey Court's order to satisfy outstanding discovery requests, and officer appealed.Holdings: The Court of Appeals, Selya, Circuit Judge, held that:

(1) District Court did not abuse its discretion by dismissing with prejudice, given officer's repeated flouting of civil procedure rules' and Court's discovery deadlines, and

(2) District Court did not have to exhaust lesser sanctions before dismissing with prejudice, given Court's clear warning that dismissal would follow further disregard of its orders.

Tuesday, January 10, 2006

High Court Denies Review in Several Procedure Cases

The Court yesterday denied review in several cases relevant to civil procedure. Here are the cases followed by their questions presented:

Breezevale Ltd. v. Dickinson--1) To what extent, if any, is exercise of court's inherent power to sanction restricted by Seventh Amendment when case turned on disputed facts and witness credibility, and jury found bad faith conduct to be immaterial and entered judgment in favor of plaintiff? (2) Were petitioner's due process rights violated when trial court denied it evidentiary hearing prior to imposing both sanction of dismissal and multi-million dollar punitive sanction award for bad faith litigation? (3) Must bad faith conduct be material before court can exercise its inherent power to dismiss case and impose multi-million dollar punitive sanction award? (4) Was petitioner entitled, consistent with due process constraints on punitive damages, to more "exacting appellate review" of various punitive sanctions imposed by trial court than was performed by District of Columbia Court of Appeals?

Invention Submission Corp. v. Dudas--Should amendment of complaint after remand to remedy inadequate allegations of subject matter jurisdiction be allowed pursuant to Section 1653 of Judicial Code?

Lee v. 2050 S. Havana LLC--(1) Did fraud on part of petitioner's attorney result in denial of petitioner's due process and equal protection rights? (2) Did petitioner's refusal to sign proposed "global settlement" in investors' action against petitioner justify court's contempt citation?

Michau v. Jones--(1) Are employees of U.S. Supreme Court unreachable by writ of mandamus? (2) Was it unlawful for court employee to intercept correspondence to court official that was marked "personal" and posted by registered mail?

Rie v. Bank of America NA--What standard of review is applicable when court fails to give civil litigant warning regarding dangers and risks of self-representation in complex civil case, similar to warning given to criminal defendant that requires that defendant "be made aware of the dangers and disadvantages of self-representation, so that the record will establish that he knows what he is doing and his choice is made with eyes open"?

Monday, January 09, 2006

SCOTUS Grants Review in Case to Determine Federal Question Jurisdiction Issue

On Friday the Supreme Court granted review in several cases of importance to federal procedure:

- Empire Healthchoice Assurance Inc. v. McVeigh, No. 05-200, which presented the following question: Does federal question jurisdiction exist over suit by federal government contractor to enforce, on behalf of United States, provision in health benefits plan for federal employees that is part of government contract established pursuant to Federal Employees Health Benefits Act?

- Arlington Central School District v. Murphy, No. 05-18, which presented the following question: Does IDEA's attorneys' fees provision, 20 U.S.C. § 1415(i)(3)(B), authorize court to award "expert" fees to parents of child with disability who is prevailing party under IDEA?

- Kircher v. Putnam Funds Trust, No. 05-409, which presented the following question: Did court of appeals have jurisdiction, contrary to holdings of three other circuits, to review district court order remanding for lack of subject matter jurisdiction suit removed under SLUSA, notwithstanding 28 U.S.C. § 1447(d)'s bar on appellate review of remand orders based on lack of subject matter jurisdiction and district courts' conclusion that petitioners' claims are not preempted by and thus not removable under SLUSA?

Friday, January 06, 2006

Seventh Circuit Reverses Erroneous Rule 12(b)(1) Dismissal of IDEA Claim that Was Based on Plaintiff's Failure to Exhaust

The Seventh Circuit in Mosely v. Board of Educ. of City of Chicago, --- F.3d ----, 2006 WL 12982 (7th Cir. Jan. 04, 2006), has reversed a district court's dismissal of an IDEA action for lack of jurisdiction based on the mother's alleged failure to exhaust administrative remedies. Because the failure to exhaust is a waivable affirmative defense, said the court, it was inappropriate for the district court to grant a Rule 12(b)(1) motion to dismiss merely on the basis of the plaintiff's complaint. Here is an excerpt from the opinion:

As we noted earlier, the district court dismissed No. 03-4074 on “jurisdictional” grounds because Mosely failed adequately to allege that she exhausted the IDEA's administrative remedies. The district court should not, however, have ascribed such fundamental importance to a failure to allege exhaustion. As the Supreme Court has recently reminded us in Eberhart v. United States, --- U.S. ----, 126 S.Ct. 403, 163 L.Ed.2d 14 (2005), “[c]larity would be facilitated ··· if courts and litigants used the label ‘jurisdictional’ not for claim-processing rules, but only for prescriptions delineating the classes of cases (subject-matter jurisdiction) and the persons (personal jurisdiction) falling within a court's adjudicatory authority.”126 S.Ct. at 405 (quoting Kontrick v. Ryan, 540 U.S. 443, 455, 124 S.Ct. 906, 157 L.Ed.2d 867 (2004) (internal quotation marks omitted)). In the past, this court has described the exhaustion requirement found in the IDEA as a claims-processing rule, pointing out that “lack of exhaustion usually is waivable, as lack of jurisdiction is not.” Charlie F. v. Bd. of Educ. of Skokie Sch. Dist. 68, 98 F.3d 989, 991 (7th Cir.1996).

A number of consequences flow from this basic fact. First, the district court should not have turned to FED. R. CIV. P. 12(b)(1) when it decided the motion to dismiss. A failure to exhaust is normally considered to be an affirmative defense, see, e.g., Walker v. Thompson, 288 F.3d 1005, 1009 (7th Cir.2002), and we see no reason to treat it differently here. That means that the earliest possible time to consider it would normally be after the answer has been filed, if it is possible to decide the issue through a Rule 12(c) motion for judgment on the pleadings. Parties and courts occasionally take short-cuts and present certain arguments through a motion to dismiss for failure to state a claim upon which relief can be granted under Rule 12(b)(6), if the allegations of the complaint in the light most favorable to the plaintiff show that there is no way that any amendment could salvage the claim. Mosely's case is not a candidate for that treatment, however. She had no obligation to allege facts negating an affirmative defense in her complaint, see Tregenza v. Great Am. Communications Co., 12 F.3d 717, 718 (7th Cir.1993) (citing Gomez v. Toledo, 446 U.S. 635, 640, 100 S.Ct. 1920, 64 L.Ed.2d 572 (1980)). There is nothing on the face of her complaint that compels a conclusion that she failed to exhaust. Her case must therefore be remanded to the district court for further proceedings.

Thursday, January 05, 2006

SMU Law Review Publishes Piece Analyzing Personal Jurisdiction Issues Arising from CAFA

Southern Methodist University Law Review has just published an article by Carol Rice Andrews entitled The Personal Jurisdiction Problem Overlooked In The National Debate About "Class Action Fairness", 58 SMU L. Rev. 1313 (Fall 2005). Here is an excerpt from the Introduction:

The Class Action Fairness Act became law in early 2005. A principal aim of the Act was to broaden the jurisdiction of federal courts so that they could hear more nationwide (or multi-state) class actions--class actions that purport to resolve claims of persons throughout the United States. Previously, state courts had been the primary forum for many nationwide class actions, but in the early 1990s, critics increasingly complained of a variety of problems and abuses in state court class actions. This view was not universally shared, and for over a decade, debate raged about the fairness of state courts hearing nationwide class actions. The debate about class action fairness overlooked one fundamental fairness issue: whether any court (state or federal) may properly assert personal jurisdiction over a defendant on all claims of the nationwide class, when only a small portion of the class claims arise out of the defendant's forum state activities. In federal court, this issue principally is one of policy, but in state court, personal jurisdiction raises constitutional questions, primarily due process issues but also some dormant commerce clause concerns. This article examines all of the personal jurisdiction issues arising in nationwide class actions in both state and federal court.

Wednesday, January 04, 2006

D.C. Circuit Issues FRCP Rule 6(b) Decision

Per Smith v. District of Columbia, 430 F.3d 450 (D.C. Cir. Dec 06, 2005):

Smith argues that the district court abused its discretion in entertaining the District's late motion for summary judgment. The District filed its third motion for summary judgment on April 9, 2004, contending that Smith's disability discrimination claim was not timely, as she did not file it in the district court within 90 days after her first “right to sue” letter was issued. Although the District concedes it never moved for an extension of the December 27, 2002, deadline for filing summary judgment motions, the district court granted the late motion without discussing the lack of a request for an extension. Federal Rule of Civil Procedure 6(b) governs extensions of time for various filings with the trial court. When a court sets a deadline, the court may, for cause, exercise its discretion “upon motion made after the expiration of the specified period” and permit the belated action “where the failure to act was the result of excusable neglect.” Fed.R.Civ.P. 6(b). In Lujan v. National Wildlife Federation, the Supreme Court noted the distinction between this provision and Rule 6(b)(1), which allows a court to grant an extension if a “request” is made before the time for filing expires. 497 U.S. 871, 896 n. 5, 110 S.Ct. 3177, 111 L.Ed.2d 695 (1990). By contrast, the Court emphasized that post-deadline extensions may be granted only “for cause shown” and “upon motion.” Id. at 896, 110 S.Ct. 3177. Any post-deadline motion “must contain a high degree of formality and precision, putting the opposing party on notice that a motion is at issue and that he therefore ought to respond.” Id. at 896 n. 5, 110 S.Ct. 3177. We review the district court's decisions under Rule 6(b) for abuse of discretion. See In re Vitamins Antitrust Class Actions, 327 F.3d 1207, 1209 (D.C.Cir.2003).

We have been quite deferential to Rule 6(b) decisions in the past, even affirming a deadline extension that was granted without a formal finding of excusable neglect when the court found no prejudice to the other party. FN5 See Yesudian ex rel. United States v. Howard Univ., 270 F.3d 969, 971 (D.C.Cir.2001). In Yesudian, however, we found that the Rule 6(b)(2) motion requirement may have been satisfied by a memorandum filed by the requesting party. Id. Here, the District concedes that it never moved for an extension of the deadline. In the absence of any motion for an extension, the trial court had no basis on which to exercise its discretion. See Lujan, 497 U.S. at 896, 110 S.Ct. 3177 (stating that “any post deadline extension must be ‘upon motion made’ ”). Under these circumstances, then, we are compelled to conclude that the district court abused its discretion in entertaining the late motion for summary judgment on Smith's disability discrimination claim.

Tuesday, January 03, 2006

Eighth Circuit Applies Post-Exxon Mobil Rooker/Feldman Doctrine

Per the Eighth Circuit in Dornheim v. Sholes, 430 F.3d 919 (8th Cir. Dec. 07, 2005)

[T]he Supreme Court has confined application of the Rooker/Feldman doctrine to “cases of the kind from which the doctrine acquired its name: cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the court proceedings commenced and inviting district court review and rejection of those judgments.” Exxon Mobil Corp. v. Saudi Basic Indus., --- U.S. ----, 125 S.Ct. 1517, 1521-22, 161 L.Ed.2d 454 (2005). The basis for the Rooker/ Feldman doctrine is that, other than in the context of habeas claims, federal district courts are courts of original jurisdiction, and by statute they are precluded from serving as appellate courts to review state court judgments, as that appellate function is reserved to the Supreme Court under 28 U.S.C. § 1257. Id. at 1526. Exxon Mobil makes clear that the Rooker/Feldman doctrine precludes federal district court jurisdiction only if the federal suit is commenced after the state court proceedings have ended. See id. at 1527 (“[N]either Rooker nor Feldman supports the notion that properly invoked concurrent jurisdiction vanishes if a state court reaches judgment on the same or related question while the case remains sub judice in a federal court.”); see also Mothershed v. Justices of Supreme Court, 410 F.3d 602, 604-05 n. 1 (9th Cir.2005) (determining whether state-court proceedings were complete as the first step of a post- Exxon Mobil Rooker/Feldman analysis). There is no judgment to review if suit is filed in federal district court prior to completion of the state-court action. Rather, “[d]isposition of the federal action, once the state-court adjudication is complete, would be governed by preclusion law.” Exxon Mobil, 125 S.Ct. at 1527.

The North Dakota District Court issued its final order in the divorce proceedings on August 13, 2003. The juvenile court filed its Order of Disposition in the deprivation proceeding on August 26, 2003. Dornheim appealed both state-court rulings to the Supreme Court of North Dakota, which affirmed the lower court judgment in each appeal on June 30, 2004. The Dornheims commenced this suit in federal court on August 13, 2003. At the time that the Dornheims commenced this federal action, the state court adjudication was not complete. See Mothershed, 410 F.3d at 604-05 n. 1 (noting that the state-court proceeding had ended for Rooker/Feldman purposes when the state supreme court denied the plaintiff's request for a writ of mandamus); Federación de Maestros de Puerto Rico v. Junta de Relaciones del Trabajo de Puerto Rico, 410 F.3d 17, 24 & n. 10 (1st Cir.2005) (concluding that the state proceeding has ended when it becomes appealable under § 1257 because the highest state court has issued its final decision, or when the lower state-court ruling otherwise carries preclusive effect, such as when the parties allow the time for appeal to lapse without filing an appeal in state court). Thus, any effect that the state court rulings might have on this federal action is limited to the application of preclusion law, and the state-court adjudications did not divest the federal district court of jurisdiction under the Rooker/Feldman doctrine. See Exxon Mobil, 125 S.Ct. at 1527. The court erred in holding that it lacked jurisdiction to consider the Dornheims' claims.

Monday, January 02, 2006

Stanford Law Review Publishes Law & Economics Analysis of Preliminary Injunction Doctrine

The Stanford Law Review has recently published an article by Professors Richard R.W. Brooks and Warren F. Schwartz entitled Legal Uncertainty, Economic Efficiency, And The Preliminary Injunction Doctrine, 58 Stan. L. Rev. 381 (2005). The article analyzes preliminary injunction doctrine from a law & economics perspective. Here's an excerpt from the Introduction:

In this Article, we consider preliminary injunctions from a radically different perspective than that articulated in judicial opinions and prior legal scholarship. By conventional accounts, when confronted with uncertain legal entitlements, courts should consider preliminary awards only if adequate compensatory remedies are unavailable. The trouble with this "compensatory" view is that it is unresponsive to the ex ante behavioral consequences of legal uncertainty. When rights are uncertain, parties appreciate the full benefits of their conduct, but they discount harm to others of this conduct by the likelihood that they possess a legal entitlement to so act. Hence, individual incentives to behave efficiently are distorted by uncertain legal entitlements. Preliminary injunctions correct this distortion by wielding a stick and providing a carrot for a defendant who would otherwise discount damages given some positive probability that she may not have to pay them. The powerful stick in this example is the in terrorem damages that defendant will be required to pay if an injunction is granted and she violates it. The carrot is the reimbursement of compliance costs if defendant prevails at the end of the litigation. These penalties and rewards come into play only if the plaintiff decides to pursue the injunction, which is to say that the preliminary injunction doctrine takes the conduct decision out of the hands of the biased defendant and places it in the hands of plaintiff who, by design, faces the proper marginal costs and benefits of the decision. Interestingly, although courts do not claim that they are promoting efficient behavior when granting preliminary injunctions, that characterization represents a good account for much of what courts are doing.