Monday, April 30, 2007

First Circuit Rejects Assertion that Consumer Protection Provision of the Airline Deregulation Act Implies Private Right of Action

Per Buck v. Am. Airlines, Inc., 476 F.3d 29 (1st Cir. Feb. 7, 2007):

We begin our analysis with the plaintiffs' lone federal-law claim: their claim of an implied right of action under 14 C.F.R. § 253.4 and § 253.7. These provisions govern the disclosure of terms in contracts for air travel. . . .

. . .

. . . The plaintiffs maintain that the regulations' goal is to protect consumers and, thus, that it is appropriate to imply a private right of action.

This argument cannot withstand scrutiny. In the first place, the plaintiffs misapprehend the relevant unit of analysis. Regulations alone cannot create private rights of action; the source of the right must be a statute. . . . We recently rejected an entreaty to imply a private cause of action pursuant to other regulations implementing the [Airline Deregulation Act] ADA. See Bonano v. E. Carib. Airline Corp., 365 F.3d 81, 84-85 (1st Cir.2004). In the process, we made clear that, for the purpose of implying private rights of action, the Federal Aviation Act (and, hence, the ADA, see supra note 5) is barren soil. See id. There is nothing about the case at bar that shakes our confidence in that assessment.

To cinch matters, “[e]very court faced with the question of whether a consumer protection provision of the ADA allows the implication of a private right of action against an airline has answered the question in the negative.” Casas v. Am. Airlines, Inc., 304 F.3d 517, 522 n. 7 (5th Cir.2002). We see no justification for creating a circuit split. Thus, we hold that the consumer protection provisions of the ADA do not permit the imputation of a private right of action against an airline and that, therefore, the plaintiffs do not have an implied right of action under 14 C.F.R. § 253.4 or § 253.7.

Friday, April 27, 2007

S.D.N.Y. Certifies Class in Employment Action, Holding that Individualized Questions Regarding Named Plaintiff's Claim Do Not Bar Certification

Per Iglesias-Mendoza v. La Belle Farm, Inc., 239 F.R.D. 363 (S.D.N.Y. Jan. 29, 2007):

Rule 23(a)(4) requires that plaintiffs demonstrate that the proposed action will fairly and adequately protect the interests of the class. To satisfy this requirement, plaintiffs must show 1) that there is an absence of conflict and antagonistic interests between them and the class members, and 2) that plaintiffs' counsel is qualified, experienced and capable. Vengurlekar v. Silverline Techs., Ltd., 220 F.R.D. 222, 227; see also In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 291 (2d Cir.1992).

Defendants contend that plaintiffs fail to satisfy the first of these two prongs on the ground that one of the named plaintiffs, Iglesias-Mendoza, was fired for misconduct, and defendants therefore intend to raise additional defenses against him that they will not raise against other class members.

As discussed above, individualized factual questions concerning the representative's claim will not necessarily bar class certification. A defense unique to the putative class representative will be fatal under Rule 23 only when it threatens to become the focus of the litigation. Baffa v. Donaldson, Lufkin & Jenrette Sec. Corp., 222 F.3d 52, 59 (2d Cir.2000). Defendants assert, in conclusory fashion, that the defenses they intend to raise against Iglesias-Mendoza amount to a "conflict between plaintiffs and the class members they seek to represent." (Opp. Brief at 23).
I fail to see why the circumstances of Iglesias-Mendoza's termination are relevant to whether he was paid overtime wages or less than the minimum wage during the period while he was employed. Indeed, I am prepared to rule today that such evidence is irrelevant and will not be considered by the court.

As with the FLSA [Fair Labor Standards Act] claims, defendants argue that plaintiffs are inadequate representatives because the resolution of their overtime claims depends on whether they are exempt from coverage under the New York Labor Law. But this affirmative defense does not appear to be unique to the named plaintiffs. It seems to apply (or not apply) to the class as a whole. It is therefore irrelevant to the adequacy of the named plaintiffs' representation of the proposed class.

Nor are plaintiffs inadequate class representatives because Plaintiffs Iglesias-Mendoza and Leyva Garcia initially struggled at their depositions to articulate the legal bases for some of their claims. Rule 23 requires that the named plaintiffs have adequate personal knowledge of the essential facts of the case; the court is satisfied that they do. For the legal underpinnings of their claims, plaintiffs are entitled to rely on the expertise of their counsel. See Cromer Fin. Ltd. v. Berger, 205 F.R.D. 113, 124 (S.D.N.Y.2001).

Thursday, April 26, 2007

Eleventh Circuit Holds That General Discovery Rules Apply to 28 U.S.C.§ 1782 Discovery Order; Discovery Not Barred by FRCP 69

Per In re Clerici, --- F.3d ---, 2007 WL 840327 (11th Cir. Mar. 21, 2007):

Appellant Patricio Clerici (“Clerici”) appeals the district court's January 27, 2006 order denying his motion to vacate the district court's October 12, 2005 order granting the government's application, filed pursuant to 28 U.S.C. § 1782, for judicial assistance to foreign tribunals. In its January 27, 2006 order, the district court appointed an Assistant United States Attorney to obtain sworn answers from Clerici to the questions posed in the Panamanian Court's letter rogatory [regarding plaintiff NoName's efforts to recover a sizable Panamanian judgment against Clerici]. . . .

Clerici . . . asserts that . . . Rule 69(a) of the Federal Rules of Civil Procedure bars any § 1782 discovery in this case. More specifically, Clerici contends that (1) any evidence must be obtained in accordance with the Federal Rules of Civil Procedure; (2) Federal Rule 69(a) is applicable because the Panamanian Court is seeking discovery to aid NoName in the execution of its judgment; and (3) no discovery is authorized under Rule 69(a) until NoName obtains a valid, domesticated judgment in this country. We agree that the discovery rules in the Federal Rules of Civil Procedure apply here but conclude that Rule 69(a) does not. We explain why.

The district court's authority to order Clerici to give testimony “for use in a proceeding in a foreign ... tribunal” stems from § 1782. . Section 1782(a) then provides that, in its order granting § 1782 assistance, the district court “may prescribe the practice and procedure . . . for taking the testimony or statement or producing the document or other thing.” Id. (emphasis added). This “practice and procedure” may be “in whole or part the practice and procedure of the foreign country or the international tribunal.” Id. To the extent that the district court does not otherwise prescribe the practice and procedure, § 1782(a) provides that “the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure.” Id.

Here, the district court's order did not prescribe the “practice and procedure” for taking Clerici's testimony. Thus, under § 1782, this testimony must be taken “in accordance with the Federal Rules of Civil Procedure.” Section 1782(a) refers to the Federal Rules, not for whether the district court can order Clerici to give any testimony, but only for the procedures or manner in which that testimony is to be taken.

Once discovery is authorized under § 1782, the federal discovery rules, Fed.R.Civ.P. 26-36, contain the relevant practices and procedures for the taking of testimony and the production of documents. For example, Rule 26(a)(5) authorizes the taking of testimony by deposition upon written questions, and Rule 31 provides the specific practices and procedures for taking depositions upon written questions. See Fed.R.Civ.P. 26(a)(5), 31.

In contrast, Rule 69(a) provides the process by which a judgment creditor can enforce a money judgment and authorizes post-judgment discovery in aid of execution of that judgment.Fed.R.Civ.P. 69(a). Rule 69(a) itself does not prescribe a practice and procedure for gathering evidence, but gives the judgment creditor the choice of federal or state discovery rules. Rule 69(a) simply authorizes a setting, post-judgment execution, in which discovery may take place, not the specific manner or procedures in which testimony should be taken or documents should be produced. Id. Because § 1782(a) refers to the Federal Rules only for the manner or procedure in which evidence is to be obtained, and Rule 69(a) prescribes no such manner or procedure, Rule 69(a) is inapplicable to § 1782 orders.

. . .

In sum, Rule 69(a) does not bar the discovery authorized in this case by the district court's § 1782 order just because NoName's foreign judgment has not been domesticated in the United States. . . .

Wednesday, April 25, 2007

Federal Circuit Holds Suits Seeking Monetary Rewards from the Government Must be Heard in Court of Federal Claims Under the Tucker Act

BNA’s U.S. Law Week, Vol. 75, No. 35 (Mar. 20, 2007), recently reported on the case Suburban Mortgage Associates Inc. v. Department of Housing and Urban Development, --- F.3d ----, 2007 WL 725715 (Fed. Cir. Mar. 12, 2007). Here is an excerpt from that case:

This case requires us to reexamine the jurisdictional boundary between the Tucker Act and the Administrative Procedure Act, as that boundary is understood in the light of the Supreme Court's decision in Bowen v. Massachusetts. The case began as a dispute between plaintiff Suburban Mortgage Associates, Inc. ("Suburban"), and defendants, the United States Department of Housing and Urban Development ("HUD") et al. ("Government"), with regard to a contract for insurance. Plaintiff sued the Government in the United States District Court for the District of Columbia. The suit was cast in part as an action for specific performance of the contract and in part as a declaratory judgment action. The relief sought was to require the Government to perform its contract obligations so that Suburban Mortgage could get the money allegedly due it under the insurance agreement. The action quickly morphed into a dispute over what court had been authorized by Congress to hear the case: was it the district court (the plaintiff's choice) or was it the United States Court of Federal Claims (the Government's choice)?

. . .

In sum, when the plaintiff's claims, regardless of the form in which the complaint is drafted, are understood to be seeking a monetary reward from the Government, then, for the reasons explained, a straightforward analysis calls for determining whether the case falls within the jurisdiction of the Court of Federal Claims. If that court can provide an adequate remedy--if a money judgment will give the plaintiff essentially the remedy he seeks--then the proper forum for resolution of the dispute is not a district court under the APA but the Court of Federal Claims under the Tucker Act. There is no need at that point to even address the other APA limitations, the "money damages" and the "expressly or impliedly forbids" provisions. The three limitations function in the disjunctive; the application of any one is enough to deny a district court jurisdiction under the APA.

BNA subscribers may read the full report here.

Tuesday, April 24, 2007

9th Cir Holds Defendant Removing Under CAFA Must Prove with “Legal Certainty” That Amount in Controversy is More Than $5 Million

BNA’s U.S. Law Week Vol. 75, No. 34 (Mar. 13, 2007) recently reported on the case Lowdermilk v. U.S. Bank National Ass'n, --- F.3d ----, 2007 WL 678221 (9th Cir. Mar. 2, 2007). Here is an excerpt from that case:

In this case we are called upon to resolve a question of first impression: Under the Class Action Fairness Act of 2005 ("CAFA"), Pub.L. 109-2, 119 Stat. 4 (2005), when the plaintiff has pled damages less than the jurisdictional amount, what must the defendant prove in order to remove the case to federal court? We reserved this question in Abrego Abrego v. The Dow Chemical Co., 443 F.3d 676, 683 n. 8 (9th Cir.2006) (per curiam). We answer that the party seeking removal must prove with "legal certainty" that the amount in controversy is satisfied, notwithstanding the prayer for relief in the complaint.

. . .

We now turn to the question we reserved in Abrego Abrego: What proof must the defendant adduce to contradict the plaintiff's claim that her damages are less than the jurisdictional amount? There are two principles that inform our judgment here. First, as federal courts, we are courts of limited jurisdiction and we will strictly construe our jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994); 13 WRIGHT, MILLER & COOPER, at § 3522. Second, it is well established that the plaintiff is "master of her complaint" and can plead to avoid federal jurisdiction. See, e.g., Holmes Group, Inc. v. Vornado Air Circulation Sys., Inc., 535 U.S. 826, 831 (2002); Caterpillar Inc. v. Williams, 482 U.S. 386, 398-99 (1987); Valles v. Ivy Hill Corp., 410 F.3d 1071, 1075 (9th Cir.2005). Accordingly, subject to a "good faith" requirement in pleading, a plaintiff may sue for less than the amount she may be entitled to if she wishes to avoid federal jurisdiction and remain in state court. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288-89 (1938). Where the plaintiff has alleged her facts and pled her damages, and there is no evidence of bad faith, the defendant must not only contradict the plaintiff's own assessment of damages, but must overcome the presumption against federal jurisdiction. See id . at 290. We think that the familiar "legal certainty" standard best captures the proof the defendant must produce. We are joined in this judgment by the Third Circuit, which recently held in a CAFA case, Morgan v. Fay, that "[g]ood faith in this context is entwined with the legal certainty test, so that a defendant will be able to remove the case to federal court by showing to a legal certainty that the amount in controversy exceeds the statutory minimum." 471 F.3d at 474 (internal quotation marks omitted).

BNA subscribers can read the full report here.

Monday, April 23, 2007

Eighth Circuit Holds Release of Opinion in Separate Case Does Not Warrant Recommencement of Thirty-Day Limit for Removal

BNA’s U.S. Law Week Vol. 75, No. 34 (Mar. 13, 2007) recently reported on the case Dahl v. R.J. Reynolds Tobacco Co., --- F.3d ----, 2007 WL 601502 (8th Cir. Feb. 28, 2007). Here is an excerpt from that case:

After defendants unsuccessfully attempted to remove the case to federal court on diversity grounds, plaintiffs' claims were dismissed as preempted by federal law. Plaintiffs appealed the dismissal to the Minnesota Court of Appeals. While their appeal was pending, our court decided Watson v. Philip Morris Companies, 420 F.3d 852 (2005), cert. granted, --- U.S. ----, 127 S.Ct. 1055, --- L.Ed.2d ---- (Jan. 12, 2007) (No. 05- 1284), holding in a case also involving the marketing of light cigarettes that there was removal jurisdiction under 28 U.S.C. § 1442(a) because Philip Morris had established federal officer jurisdiction. R.J. Reynolds then made a second try at removing this case, this time alleging federal officer jurisdiction under § 1442(a). Plaintiffs moved to remand the case to state court on the ground that the attempted removal was untimely. The district court denied the motion to remand, and plaintiffs appeal. We reverse.

. . .

Receipt of our Watson opinion could only recommence the thirty day limit for removal if Congress intended that receipt of a decision issued in a different case from the one before the court would be covered by the terms: "an amended pleading, motion, order or other paper."
All of the document types listed in § 1446(b) are commonly produced in the course of litigating an individual case of any complexity, and each might introduce a new element into the case which could affect jurisdiction. For example, federal jurisdiction could be created by an amended pleading adding a federal cause of action or an order dismissing a non diverse party. See, e.g. Caterpillar Inc. v. Lewis, 519 U.S. 61, 69, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996). The types of documents mentioned in § 1446(b) are listed in a logical sequence in the development of an individual case. In light of this context, in which the words "order or other paper" follow immediately after amended pleading and motion, it would be an unsupported stretch to interpret "order" to include a decision in a separate case with different parties.

If Congress had intended new developments in the law to trigger the recommencement of the thirty day time limit, it could have easily added language making it clear that § 1446(b) was not only addressing developments within a case.

BNA subscribers can read the full report here.

Friday, April 20, 2007

Second Circuit Holds Bankruptcy Court Order Allowing an Uncontested Proof of Claim Constitutes a “Final Judgment” for Purposes of Res Judicata

Per EDP Medical Computer Systems, Inc. v. U.S., 2007 WL 706925 (2nd Cir. Mar. 09, 2007):

Plaintiff-appellant EDP Medical Computer Systems, Inc. (“EDP”), brought this lawsuit seeking refund of a tax liability paid by the bankruptcy trustee after EDP had filed for bankruptcy protection. The United States District Court for the Eastern District of New York (Frederic Block, Judge ) granted defendant-appellee United States' motion for summary judgment because, inter alia, EDP's claim was barred by res judicata. The question this case presents is whether a bankruptcy court order allowing an uncontested proof of claim constitutes a final judgment on the merits that can be a predicate for res judicata. We hold that it does and affirm.

. . .

Although we have not had occasion to decide whether a bankruptcy court order allowing an uncontested proof of claim is a “final judgment” for res judicata purposes, the Fifth Circuit has held that it is. See Baudoin, 981 F.2d at 742. Moreover, the Ninth Circuit has held that a bankruptcy court's allowance of an uncontested proof of claim, even without a separate order, is a final judgment for res judicata purposes. See Siegel v. Fed. Home Loan Mortgage Corp., 143 F.3d 525, 528-31 (9th Cir.1998) (citing Baudoin with approval). We now join these two circuits in holding that a bankruptcy court order allowing an uncontested proof of claim constitutes a “final judgment” and is thus a predicate for res judicata.

Thursday, April 19, 2007

9th Cir Holds Local Controversy and Home-State Controversy Provisions of CAFA Provide Exceptions to CAFAs Jurisdiction, Not Add'l Prima Facie Elements

Per Serrano v. 180 Connect, Inc., 2007 WL 601984, (9th Cir. Feb. 22, 2007):

Our resolution of this issue derives first and foremost from the plain text and structure of the statute. Section 1332(d)(2) confers “original jurisdiction” where the amount in controversy exceeds $5,000,000 and minimal diversity exists. Thus, this section sets out the contours of original jurisdiction. In contrast, § 1332(d)(3) describes situations where district courts may “decline to exercise jurisdiction” “in the interests of justice and looking at the totality of the circumstances”; and § 1332(d)(4) sets out two circumstances that require district courts to decline jurisdiction, the so-called “local controversy” and “home-state controversy” exceptions. Implicit in both subsections (d)(3) and (d)(4) is that the court has jurisdiction, but the court either may or must decline to exercise such jurisdiction. See § 1332(d)(3)-(4).

. . .

Serrano argues that the circumstances enumerated in § 1332(d)(4) do not represent “exceptions” to CAFA's jurisdiction, but simply constitute additional elements that must affirmatively be shown by the party seeking to establish CAFA jurisdiction in the first instance. Serrano cites to a recent district court opinion, Lao v. Wickes Furniture Co., Inc., 455 F.Supp.2d 1045 (C.D.Cal.2006), for support. In Lao, the district court held that §§ 1332(d)(3) and (d)(4) provide additional criteria that must be proven as part of the prima facie case of diversity jurisdiction under CAFA, and that § 1332(d)(5) is an exception to the application of CAFA. Id. at 1054-59. We are not persuaded by Lao's reasoning because it is inconsistent with the statute. As noted above, §§ 1332(d)(4)(A) and (B) require federal courts-although they have jurisdiction under § 1332(d)(2)-to “ decline to exercise jurisdiction ” when the criteria set forth in those provisions are met. Subsections (d)(4)(A) and (B) are not part of the prima facie elements of jurisdiction.

That the provisions of §§ 1332(d)(4)(A) and (B) are not labeled as “exceptions” does not prevent them from operating as such, as Serrano suggests. Nor does it solve the interpretive puzzle to label them as “negative conditions,” another of Serrano's suggestions. The provisions fit into the statutory structure as exceptions to jurisdiction, not elements of original jurisdiction. We thus hold that the provisions set forth in §§ 1332(d)(3) and (4) are not part of the prima facie case for establishing minimal diversity jurisdictional under CAFA, but, instead, are exceptions to jurisdiction. See Hart, 457 F.3d at 681 (construing §§ 1332(d)(4)(A) and (B) as “express exceptions” to § 1332(d)(2)'s grant of jurisdiction).

Wednesday, April 18, 2007

7th Circuit Discusses District Court's Decision to Strike Exert's Affidvait for Failure to Disclose Per Rule 26(a)(2)

Per Mannoia v. Farrow, 476 F.3d 453 (7th Cir. Feb. 7, 2007):

The district court granted Farrow's motion to strike because it found that Mannoia violated Federal Rule of Civil Procedure 26(a)(2) by failing to disclose the expert testimony to Farrow until after Farrow filed his motion for summary judgment. . . .

We review for an abuse of discretion the district court's decision to strike the expert's affidavit submitted by Mannoia in opposition to Farrow's motion for summary judgment. Holbrook v. Norfolk S. Ry. Co., 414 F.3d 739, 745 (7th Cir.2005). Under this standard, decisions that are reasonable and not arbitrary will not be disturbed. Id. (citing Adusumilli v. City of Chi., 164 F.3d 353, 359 (7th Cir.1998)).

On October 13, 2005, the district court issued an order giving the parties until November 18, 2005 to conduct limited discovery on the issue of qualified immunity. During this time, the parties took depositions and exchanged written discovery requests. On December 1, 2005, after the discovery period had closed, Farrow filed his motion for summary judgment. In opposing that motion, Mannoia submitted the affidavit of a police procedures expert witness as an exhibit to his Local Rule 56.1 Statement. In the affidavit, the expert offered the opinion that “[n]o reasonably well trained police officer given the facts which Detective Farrow knew or which he could reasonably have obtained, would believe that there was probable cause to arrest Mr. Mannoia for the crime of child abduction.” Pl.'s Local Rule 56.1 Statement Ex. N at 3. Farrow moved to strike this affidavit and related portions of Mannoia's response memorandum, and the district court granted the motion concluding that Mannoia did not disclose the expert testimony as required by Federal Rule of Civil Procedure 26(a)(2), but waited until after Farrow filed his summary judgment motion.

Per Rule 26(a)(2), “a party shall disclose to other parties the identity of any person who may be used at trial to present evidence under Rules 702, 703, or 705 of the Federal Rules of Evidence.” Mannoia's argument that “there was no request” to disclose expert witnesses fails in light of Rule 26(a)(2)(C)'s requirement that such disclosures “be made at the times and in the sequence directed by the court.” It is undisputed that Mannoia did not disclose his expert witness within the time-frame provided in the district court's October 13 order. As for Mannoia's contention that he was unable to retain an expert until after the close of discovery when the deposition transcripts were prepared, it was his duty to seek relief from the court. In addition, Mannoia was required by Rule 26(e) to supplement his 26(a) disclosures of all individuals having discoverable information upon learning that his disclosures were incomplete. Mannoia does not contend that he did not consider the need to retain an expert during the discovery period. The district court's decision to strike Mannoia's expert witness affidavit and accompanying argument for non-compliance with Rule 26(a) was well within its discretion. See Fed.R.Civ.P. 37(c)(1) (A party who, without “substantial justification,” fails to make a disclosure required by Rule 26(a) cannot rely on the withheld evidence “at a trial, at a hearing, or on a motion.”). So, we affirm the district court on this ground.

Tuesday, April 17, 2007

D.C. Circuit Discusses Standing; Finds Problems with Causation and Redressability

Per Citizens for Responsibility and Ethics in Washington v. Federal Election Commission, 475 F.3d 337 (D.C. Cir. Jan. 12, 2007):

This is an appeal from an order of the district court granting summary judgment in favor of the Federal Election Commission. Citizens for Responsibility and Ethics in Washington (CREW) sought judicial review of the Commission's dismissal of CREW's administrative complaint. The issue is whether CREW has standing to challenge the Commission's decision. . . .

After the election, CREW filed this action pursuant to 2 U.S.C. § 437g(a)(8)(A), which states that “Any party aggrieved by an order of the Commission dismissing a complaint filed by such party ... may file a petition with the United States District Court for the District of Columbia.” CREW's complaint sought a declaration that the Commission's “failure to require reporting and disclosure of the value of the master contact list ... was contrary to law.” The district court, Bates, J., granted summary judgment in favor of the Commission on the ground that CREW lacked standing to litigate its claims. The court reasoned that CREW suffered no injury in fact because the precise dollar value of the list would not be useful either to voters generally or to CREW in particular. See Citizens for Responsibility and Ethics in Wash. v. FEC, 401 F.Supp.2d 115, 120-22 (D.D.C.2005). Moreover, because CREW's administrative complaint did not seek to discover the precise dollar value of the list, the court found that CREW's “endeavor is tantamount to seeking enforcement of the law.” Id. at 122.

To establish standing, CREW claims to have suffered the requisite injury in fact, see Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992), because it is being deprived of one piece of information about the list not posted on the Commission's website-namely, what the list was worth. . . . CREW claims it is still suffering an injury because if it knew the actual value of the list, it could better inform the public of the relationship between Norquist and the Bush Administration. See Br. for Appellant 17-18. . . . Like the district court, we see other problems with the remaining two prerequisites to standing-causation and redressability, see Lujan, 504 U.S. at 560-61. . . . Short of a Commission enforcement action in district court, further administrative proceedings will thus boot CREW nothing. . . . CREW must disagree with the Commission's judgment that its resources were better employed on other, more important matters. But we do not know what legal principle CREW thinks the Commission thereby violated, or in terms of standing, how CREW's alleged harm is “fairly traceable” to a Commission determination resting “upon an improper legal ground.” FEC v. Akins, 524 U.S. 11, 25 (1998). . . . CREW's request to the Commission also sought an investigation, a declaration that respondents had violated federal campaign finance laws, and the imposition of “sanctions.” As we have already mentioned, the Commission does not itself have coercive power. And even if it did, CREW never mentioned its desire to have the list precisely valued and never hinted that this is what it had in mind as a “sanction.” It is of no consequence that CREW also requested in its administrative complaint “such further action as may be appropriate.” Lujan specifically demanded a showing of injury that is “concrete and particularized,” not one that is indirectly inferred. 504 U.S. at 560. Given the precedent established in Common Cause v. FEC, 108 F.3d 413 (D.C.Cir.1997) and the lack of any meaningful distinction between that case and this one, we must hold that CREW lacks standing.

Monday, April 16, 2007

Prof. Lahav Publishes Piece on Preserving Adjudication in Complex Litigation

The Florida Law Review has just published a piece by Prof. Alexandra Lahav entitled The Law and Large Numbers: Preserving Adjudication in Complex Litigation, 59 Fla. L. Rev. 383 (2007). Here is the Abstract:

This Article describes the transfer of power to regulate tortfeasors from the legislature to private parties through the medium of the court system and proposes that instead of privatizing mass torts administration courts should humanize it. The federal courts are faced with large numbers of claims arising out of torts, civil rights violations, and consumer fraud. Federal judges, concerned about the transformation of their role from adjudicators to administrators, have applied various narrowing legal doctrines to avoid administering mass torts. Because courts have restricted procedures for resolving mass claims, litigants have resorted to private ordering through settlement.

The alternative to private settlement is bureaucratic administration of complex litigation. There are legitimate reasons to fear this outcome, such as concerns about litigants becoming alienated, capture by special interests, and erroneous results. These same concerns about bureaucracy animated the debate over the rise of administrative agencies in the last century. But bureaucratic administration has its virtues and serves the broader democratic goal of access to justice. When judges avoid mass claim administration, they are not deferring to the legislature. Instead, they are ceding power to private actors. To replace private ordering, courts need a method for administering large numbers of claims that is both humanized and humanizing. Such a bureaucracy should be open to public scrutiny and understood as an important, sophisticated judicial function intended to realize the widely recognized values of the judicial system.

Friday, April 13, 2007

Third Circuit Discusses Appealability of Sanction -- Whether Court's Statement Constitutes a Sanction

Per Bowers v. National Collegiate Atheltic Association, 475 F.3d 524 (3rd Cir. Feb. 1, 2007):

As a threshold matter, we must determine whether attorneys for Bowers have standing to appeal the sanctions order in this case. Standing is the “irreducible constitutional minimum” necessary to make a justiciable “case” or “controversy” under Article III, § 2. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). The sanctions order in this case clearly granted Temple's sanctions motion against Bowers, but did not impose any additional monetary or disciplinary sanctions on Bowers' attorneys beyond factual findings and language in the actual order that the conduct of those attorneys merited sanctions. Defendants argue that because the District Court did not impose any monetary penalty directly against counsel, but rather limited the sanction to precluding plaintiff from introducing and challenging certain evidence that was withheld under Rule 37, attorneys for Bowers have not suffered a cognizable “injury” to establish Article III standing. Id.

We have previously stated that “an attorney subjected to a sanction may appeal.” Bartels v. Sports Arena Employees Local 137, 838 F.2d 101, 104 (3d Cir.1988). However, a review of the case law on this question reveals some disagreement among the courts of appeals as to whether and when a court's statement in a judicial opinion amounts to a sanction “affecting an attorney's professional reputation” and thus “impos[ing] a legally sufficient injury to support appellate jurisdiction.” Butler v. Biocore Med. Techs., Inc., 348 F.3d 1163, 1167-68 (10th Cir.2003). Most courts agree that mere judicial criticism is insufficient to constitute a sanction. United States v. Talao, 222 F.3d 1133, 1138 (9th Cir.2000); Williams v. United States, 156 F.3d 86, 90 (1st Cir.1998); Bolte v. Home Ins. Co., 744 F.2d 572, 573 (7th Cir.1984). In addition, courts are in near complete agreement that an order rising to the level of a public reprimand is a sanction. See Bank of Nova Scotia v. United States, 487 U.S. 250, 263, 108 S.Ct. 2369, 101 L.Ed.2d 228 (1988) (noting ability to issue a formal reprimand of attorney for violating Federal Rule of Criminal Procedure); Talao, 222 F.3d at 1138 (equating formal finding with public reprimand and sanction); Williams, 156 F.3d at 91, 92 (“Words alone may suffice [as sanctions] if they are expressly identified as a reprimand.”); Walker v. City of Mesquite, Tx., 129 F.3d 831, 832 (5th Cir.1997) (finding appealable sanction where attorneys were “reprimanded sternly and found guilty of blatant misconduct”); United States v. Horn, 29 F.3d 754, 758 n. 1 (1st Cir.1994); see also Fed.R.Civ.P. 11(c)(2) (providing, inter alia, that sanctions may consist of “directives of a nonmonetary nature”). The reason for the courts' consensus is that a public reprimand carries with it the formal censure of the court and may, in many cases, have more of an adverse effect upon an attorney than a minimal monetary sanction. See, e.g., Precision Specialty Metals, Inc. v. United States, 315 F.3d 1346, 1353 (Fed.Cir.2003). Only the Seventh Circuit has clearly held that a public reprimand not accompanied by a monetary sanction is non-appealable. Clark Equip. Co. v. Lift Parts Mfg. Co., Inc., 972 F.2d 817, 820 (7th Cir.1992) (“[W]e have already decided that an attorney may not appeal from an order that finds misconduct but does not result in monetary liability, despite the potential reputational effects.”).

There is more substantial disagreement among the courts, however, as to whether a factual finding in an opinion that an attorney has engaged in improper conduct is in itself a sanction, or whether the court must enter an explicit order that the conduct is sanctionable. Compare Precision Specialty Metals, Inc., 315 F.3d at 1353 (stating fact that reprimand not explicitly contained in separate order was not determinative in whether the court has entered a formal reprimand), and Walker, 129 F.3d at 832 (factual finding of misconduct alone sufficient to constitute sanction), and Sullivan v. Comm. on Admissions and Grievances, 395 F.2d 954, 956 (D.C.Cir.1967) (same), with Weissman v. Quail Lodge, Inc., 179 F.3d 1194, 1199 (9th Cir.1999) (stating that a factual finding in an opinion that “merely serves to justify the imposition of a sanction is not an independent sanction”); Williams, 156 F.3d at 90 (same); The Baker Group, L.C. v. Burlington Northern and Santa Fe Ry. Co., 451 F.3d 484 (8th Cir.2006). We need not examine that dichotomy in great detail in this case because both the order and opinion issued by the District Court in this case explicitly stated that the Court was sanctioning not only Bowers but also her attorneys.

We find the weight of authority supports a finding that the repeated, explicit public reprimand of the attorneys in this case constitutes an appealable sanction. See Young v. City of Providence, 404 F.3d 33, 38 (1st Cir.2005) (finding a sanction where the district court explicitly imposed “the sanction of public reprimand”); Precision Specialty Metals, Inc., 315 F.3d at 1352-53. In similar cases, courts have concluded that express findings that a party violated a particular rule of civil procedure constituted a sanction. See Young, 404 F.3d at 38 (finding sanction where the district court stated that attorney violated Rule 11); Precision Specialty Metals, Inc., 315 F.3d at 1352-53 (same); Butler, 348 F.3d at 1168 (explicit finding that attorney violated state ethical rule was a sanction); Talao, 222 F.3d at 1138 (same); Walker, 129 F.3d at 832 (same). The order here clearly rose above mere judicial criticism. The District Court concluded not only that the attorneys violated Rule 26(e), but also entered a public reprimand by explicitly granting the sanctions motion against Bowers' attorneys. For these reasons, we agree with attorneys for Bowers that the sanctions order in this case is an appealable order.

Thursday, April 12, 2007

LII Bulletin Previews Upcoming SCOTUS Argument on Federal Officer Removal Statute

Here is a recent preview from Cornell's Legal Information Institute of an oral argument that is to take place April 25, 2007 before the Supreme Court:


Watson v. Philip Morris Companies, Inc. (05-1284)

Oral argument: Apr. 25, 2007

Philip Morris removed a class action tobacco lawsuit from an Arkansas state court to the Federal District Court for the Eastern District of Arkansas. Plaintiffs Watson and Lawson sought to remand the case to state court, but their motion was denied. The Eighth Circuit held that Philip
Morris was a corporation qualifying as a "person acting under a federal officer" and thus entitled to removal under 28 U.S.C. § 1442(a)(1). The Supreme Court takes up the question of whether parties operating in an arena of heavy federal regulation qualify under this federal officer
removal statute or, to the contrary, if the statute's origins and history preclude such interpretation.

The full preview is available at

Wednesday, April 11, 2007

E.D. Pennsylvania Holds District Courts Lack Diversity Jurisdiction Over Law Partnerships with Partners Domiciled Outside the U.S.

BNA’s United States Law Week reported in Vol. 75, No. 33 (Mar. 6, 2007) on the case Swiger v. Allegheny Energy, Inc., 2007 WL 442383 (E.D. Pa. Feb. 7, 2007). Here is an excerpt from the case:

Plaintiff instituted this action on October 28, 2005 against the defendants under the state common law theories of abuse of process, wrongful use of civil proceedings, invasion of privacy and wrongful discharge. Jurisdiction was based on diversity of citizenship. Morgan Lewis moved to dismiss (and the Allegheny Energy defendants joined in that motion) on the grounds that because it had four partners [FN1] resident in the United Kingdom and Japan, it is not a citizen of any domestic or foreign state and thus is not subject to diversity jurisdiction under 28 U.S.C. § 1332(a). We stayed that motion and directed the parties to take jurisdictional discovery into the citizenship, residency and domicile of all of the Morgan Lewis partners who reside in foreign countries.

. . .

Given that for diversity purposes, the court must consult the citizenship of all of the members of an artificial entity such as a general or limited partnership and because a United States citizen who is not domiciled in one of the United States cannot invoke diversity jurisdiction in one particular state, we must conclude that we are without jurisdiction to act in this matter. See, Carden v. Arkoma Associates, 494 U.S. 185, 196-196, 110 S.Ct. 1015, 1021, 108 L.Ed.2d 157 (1990); Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828, 109 S.Ct. 2218, 104 L.Ed.2d 893 (1989); Herrick Co., Inc. v. SCS Communications, Inc., 251 F.2d 315, 322 (2d Cir.2001); Creswell v. Sullivan & Cromwell, 922 F.2d 60, 69 (2d Cir.1990); Brooks v. Girois, Civ. A. No. 03-3260, 2003 U.S. Dist. LEXIS 14051 (E.D.Pa. August 11, 2003); Gefen v. Upjohn Co., 893 F.Supp. 471 (E.D.Pa.1995). In so holding, we echo the observation made by the Honorable Berle M. Schiller of this Court in the Brooks, supra, case:

Although adopting this rationale would leave Defendant--as well as all similarly situated parties--unable to be sued in federal court under § 1332(a)(1) as [it] is a United States citizen domiciled abroad, ... (citation omitted) or under § 1332(a)(2), as [its] United States citizenship controls, ... (citation omitted) and there is no complete diversity between the parties as Plaintiff is also a United States citizen, (citation omitted), this anomaly must be rectified by Congress, not by the Court. Brooks, 2003 U.S. Dist. LEXIS at *9.
We shall therefore grant the defendants' motion to dismiss this matter for lack of jurisdiction and dismiss this matter without prejudice to the Plaintiff's right to re-file his claims in the appropriate court.

BNA subscribers may access the full article here.

Tuesday, April 10, 2007

Sixth Circuit Holds Administrative Costs Chargeable Only to Parties and Not their Counsel Under Rule 54(d)(1)

BNA’s United States Law Week reported in Vol. 75, No. 33 (Mar. 6, 2007) on the case In re Cardizem CD Antitrust Litigation, --- F.3d ----, 2007 WL 528044 (6th Cir. Feb. 22, 2007). Here is an excerpt from the case:

At the end of a case, "costs" are awarded to prevailing parties "as of course" for an assortment of trial-related expenses-such as court fees, court reporter fees and, as pertinent here, "compensation of court appointed experts." Fed.R.Civ.P. 54(d)(1); 28 U.S.C. § 1920(6). At the end of this case, the district court ordered Gordon Ball, an attorney for one of the parties to this action, to pay costs associated with the compensation of Rust Consulting, Inc., a class-action settlement administrator hired to disburse the $80 million settlement in this case. Because Rule 54(d)(1) and § 1920(6) permit costs to be charged against parties, not their counsel, we reverse.
. . .

The Supreme Court has set the table for resolving this dispute by giving us two pieces of guidance about the interrelation of the statute and the rule. The costs that courts may tax under Rule 54(d)(1) are confined to the costs itemized in 28 U.S.C. § 1920. Crawford Fitting Co. v. J.T. Gibbons, Inc., 482 U.S. 437, 441 (1987) ("[Section] 1920 defines the term 'costs' as used in Rule 54(d)."); id. (rejecting argument that "Rule 54(d) is a separate source of power to tax as costs expenses not enumerated in § 1920" because "no reasonable reading of these provisions together can lead to this conclusion, for [it] renders § 1920 superfluous"). And the discretion that Rule 54(d)(1) gives courts (the "unless the court otherwise directs" proviso) is discretion to decline requests for costs, not discretion to award costs that § 1920 fails to enumerate. Crawford Fitting, 482 U.S. at 441- 42 ("The discretion granted by Rule 54(d) ... is solely a power to decline to tax, as costs, the items enumerated in § 1920."). At least one problem with the costs award in this case is that Rule 54(d) and § 1920 do not permit district courts to impose costs on attorneys, as opposed to the parties they represent. While neither the rule nor the statute expressly says that costs may be awarded only against parties, that is the plain implication of what they do say.

BNA subscribers may access the full article here.