Wednesday, September 26, 2007

D.D.C. Denies Without Prejudice Plaintiff's Request for a Jury Trial on Issue of Damages Under ATCA

Per Mwani v. Bin Ladin, --- F.R.D. ----, 2007 WL 2230910 (D.D.C., August 05, 2007) (NO. CIV A 99-125 CKK):

Plaintiffs argue that because a jury trial on damages must be held after default has been entered where one is "required by any statute of the United States," Fed.R.Civ.P. 55(b)(2) (emphasis added), this statutory element is satisfied by Federal Rule of Civil Procedure 38, which was authorized by federal statute though it is not a statute in and of itself. Pursuant to Federal Rule of Civil Procedure 38(a), "[t]he right of trial by jury as declared by the Seventh Amendment to the Constitution or as given by a statute of the United States shall be preserved to the parties inviolate." Fed.R.Civ.P. 38(a). Plaintiffs point to no specific statute (as referenced in the text of Rule 38(a)) that guarantees the Parties in this case the right to a trial by jury. Pursuant to the Seventh Amendment, "[i]n Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved." U.S. Const. amend. VII. However, the Supreme Court has interpreted the Seventh Amendment to guarantee the right to a jury trial only where a matter is one that would have been tried in courts of law rather than courts of equity or admiralty in the eighteenth century. See Tull v. United States, 481 U.S. 412, 417-418, 107 S.Ct. 1831, 95 L.Ed.2d 365 (1987).

While no precedent from this circuit exists on this issue, several other circuits (and district court opinions from this and other circuits) have explicitly rejected Plaintiffs' claim that the Federal Rules of Civil Procedure and the Seventh Amendment trigger a right to a jury determination of damages with respect to a Rule 55(b) evidentiary motion. Thus, as a logical next step, the Court shall look to the ATCA [Alien Tort Claims Act] first in determining whether the ATCA provides any basis for Plaintiffs' alleged entitlement to a jury determination of damages, and second in exercising its discretion to determine whether damages in the instant case would be more appropriately ascertained via a jury trial or a bench proceeding if a jury trial is not required.

. . .

Plaintiffs asserted (and the Court concluded) that subject matter jurisdiction over Plaintiffs' claims lies in the ATCA. The ATCA, in its entirety, reads: "The district courts shall have original jurisdiction of any civil action by an alien for a tort only, committed in violation of the law of nations or a treaty of the United States." 28 U.S.C. § 1350. Those claiming jurisdiction under the ATCA must allege facts sufficient to establish that: (1) they are aliens; (2) they are suing for a tort; and (3) the tort in question has been committed in violation of the law of nations or a treaty of the United States. Plaintiffs' assertion of subject matter jurisdiction withstood this Court's " 'more searching merits-based inquiry [than that required] in a less sensitive arena.' " However, the ATCA is a jurisdictional statute and does not create an independent cause of action, nor does it afford any procedural guidance as to the manner in which damages should be calculated.

In addition, the Court notes that an exhaustive survey of federal cases reveals that a bench (rather than a jury) determination of damages is the norm in cases brought pursuant to the ATCA where default has been entered. This is the case even where the amount of damages is uncertain, where punitive damages are sought, and where the determination of damages is necessarily complicated by choice of law questions. See Doe v. Saravia, 348 F.Supp.2d 1112, 1159 (E.D.Cal.2004) (the court awarded compensatory and punitive damages related to the assassination of an El Salvadorian archbishop after considering the availability of punitive damages under El Salvadorian law); Tachiona v. Mugabe, 234 F.Supp.2d 401, 406, 423 (S.D.N.Y.2002) (after entering default and receiving a report and recommendation from a magistrate judge on the issue of damages, the district court requested additional briefing on choice of law issues with respect to the determination of damages on claims pursuant to the ATCA and ultimately awarded as part of its decision compensatory and punitive damages under the ATCA to Zimbabwe citizens for torture and extrajudicial killings); Paul v. Avril, 901 F.Supp. 330, 331, 335-36 (S.D.Fla.1994) (after the defendant declined to participate in court proceedings, the court granted $41 million in compensatory and punitive damages to six Haitian victims of torture and false imprisonment); Filartiga v. Pena-Irala, 577 F.Supp. 860, 864 (E.D.N.Y.1984) (after entry of default, the court determined an award of damages by "look[ing] first to Paraguayan law in determining the remedy for the violation of international law"). In fact, the complicated choice of law questions accompanying the determination of an appropriate legal basis for a remedy crafted in an ATCA case necessitates court involvement in the determination of damages, at least with respect to any open legal questions.

This case, it seems, is no different from the cases cited above in terms of the necessity of determining the legal basis for a remedy after resolution of complicated choice of law questions. In this case, Plaintiffs (which number in the hundreds) have brought their claims before this Court pursuant to the ATCA for actions that transpired and injury that occurred in Nairobi, Kenya, such that choice of law questions with respect to the assessment and availability of damages are at issue, despite Plaintiffs' apparent assumption that District of Columbia law would provide the legal basis for any court-crafted remedy. As Plaintiffs in this case are not entitled under any statute to a jury determination of damages, the question of whether a jury or bench trial should be held on the issue of damages is a discretionary determination to be made by the Court. As the Court would need more information than that presently before it as to why a jury determination of damages would be appropriate and how it would be practicable considering the number of Plaintiffs in this case and the choice of law questions at issue, the Court shall deny without prejudice Plaintiffs' request for a jury trial rather than a bench trial on the issue of damages.

Tuesday, September 25, 2007

S.D. Indiana Withholds Documents From Disclosure Under Rule 26(b)(c) Based on Work Product Doctrine

Per Estate of Williams v. Iowa Pipeline Associates, Inc., --- F.R.D. ----, 2007 WL 2114404 (S.D.Ind., July 19, 2007) (NO. 306-CV-48-SEB-WGH):

Iowa Pipeline also argues that the attorney work product doctrine applies and should result in a decision to withhold this document from disclosure. Federal Rule of Civil Procedure 26(b)(3) governs this issue.

Under Federal Rule of Civil Procedure 26(b)(3), Vectren may obtain discovery of a document otherwise discoverable and prepared in anticipation of litigation by or for another party only upon a showing that the party seeking the discovery has substantial need of the materials in preparation of its case and that Vectren is unable to-without undue hardship-obtain the substantial equivalent of the materials by other means. Under this rule, "the court shall protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of an attorney or other representative of a party concerning the litigation."

The first issue to be discussed is whether the July 29 letter directing Mr. Rudisill to enter an appearance in the Hydromax litigation on behalf of Iowa Pipeline and Vectren is a document prepared "in anticipation of litigation."

The Magistrate Judge notes that Mr. Krohn's letter was prepared in anticipation of the Hydromax litigation, but not in anticipation of the case at bar. Although we find no definitive Seventh Circuit precedent, most cases indicate that materials prepared in anticipation of one piece of litigation retain the protection of the work product rule in subsequent litigation. See Jumper v. Yellow Corp., 176 F.R.D. 282 (D.C.Ill.1997).

It is also clear that the materials enclosed in the letter and the letter itself are materials and information clearly produced in anticipation of the Hydromax litigation-indeed that suit had been filed when the letter was written.

Therefore, the letter at issue falls within the rule's definition of work product produced in anticipation of litigation, and the burden then shifts to Vectren to show that it has substantial need for the materials and that it cannot, without undue expense, obtain the substantial equivalent of the materials.

Has Vectren shown that it has a substantial need for this information? This Magistrate Judge concludes that the opinion of Iowa Pipeline's outside counsel about the effect of indemnification language in this case, and his action in conformance with that understanding, certainly could be evidence of the parties' intent on entering into the contract and the course of performance under the contract. Should this court find the indemnity language to be ambiguous and require extrinsic evidence to be produced, Vectren could be expected to have some need for this information. However, Vectren can certainly establish the course of dealings of the parties by reference to other documents in the public record. Specifically, all of the steps taken by Mr. Rudisill in the Hydromax litigation establish that on at least this prior occasion Iowa Pipeline did provide Vectren with indemnity and defense. The Magistrate Judge concludes that while a showing of some need has been made here, the need is not "substantial" as the rule requires.

If the Magistrate Judge should have concluded that Vectren's need was substantial in this case, has Vectren shown that it will be unable to obtain the substantial equivalent of this evidence without undue expense? Certainly the alternative to production of this document would require Vectren to attempt to depose Mr. Krohn-although that procedure may only serve to cast this dispute over the disclosure of his opinions in a slightly different context. Vectren might also seek the opinion on the meaning of the language from some other attorney who frequently deals with this issue as expert testimony. However, that is also a considerable expense.

However, in the end, even if this court could conclude that Vectren has a substantial need and cannot obtain the equivalent evidence without substantial additional cost, Federal Rule of Civil Procedure 26(b)(3) requires that this court protect the "mental impressions, conclusions, opinions, or legal theories of an attorney"-and that is precisely what Vectren seeks here. Vectren seeks the opinion of Mr. Krohn as to the legal effect of the contract between Iowa Pipeline and Vectren on the issue of indemnity. The rule requires protection of that opinion, and that protection is appropriate for this document.

Monday, September 24, 2007

W.D.N.Y. Holds Structural Ironworkers Fund Satisfied Requirements of Rule 23 in PSLRA Securities Fraud Class Action

Per In re Bausch & Lomb Incorporated Securities Litigation, --- F.R.D. ----, 2007 WL 2027385 (W.D.N.Y., July 13, 2007) (NO. 06-CV-6294T):

This Court now turns to the question of whether the Structural Ironworks Fund otherwise satisfies the requirements of Rule 23 of the Federal Rules of Civil Procedure. Rule 23 sets forth four prerequisites that a party must satisfy to serve as a class representative: numerosity, commonality, typicality, and adequacy. Fed.R.Civ.P. 23(a). Only two of these factors-typicality and adequacy-are relevant to a motion for appointment as lead plaintiff. See Weinberg v. Atlas Air Worldwide Holdings, Inc., 216 F.R.D. 248, 252 (S.D.N.Y.2003) ("The moving plaintiff must make only a preliminary showing that the adequacy and typicality requirements under Rule 23 have been met") (citing In re Crayfish Co. Sec. Litig., 2002 WL 1268013, *4 (S.D.N.Y.2002); Weltz v. Lee, 199 F.R.D. 129, 133 (S.D.N.Y.2001)); In re Olsten Corp. Sec. Litig., 3 F.Supp.2d at 296. Indeed, "a 'wide ranging analysis under Rule 23 is not appropriate' at this initial stage of the litigation 'and should be left for consideration of a motion for class certification .' " Weinberg v. Atlas Air Worldwide Holdings, Inc., 216 F.R.D. at 252 (quoting In re Party City Sec. Litig., 189 F.R.D. 91, 106 (D.N.J.1999)).

The typicality requirement is satisfied if claims "arise[ ] from the same course of events, and each class member makes similar legal arguments to prove the defendant's liability." In re Drexel Burnham Lambert Group, Inc., 960 F.2d 285, 291 (2d Cir.1992), cert. dismissed, 506 U.S. 1088, 113 S.Ct. 1070, 122 L.Ed.2d 497 (1993). The claims of the representative party need not, however, be identical to those of all class members in order to be considered typical. See Weinberg v. Atlas Air Worldwide Holdings, Inc., 216 F.R.D. at 253; In re Crayfish Co. Sec. Litig., 2002 WL 1268013 at *5. The adequacy requirement demands that the representative party "fairly and adequately protect the interests of the class." Fed.R.Civ.P. 23(a)(4). To determine adequacy, the court must consider whether class counsel is "qualified, experienced and generally able to conduct the litigation" and whether the proposed lead plaintiff has interests that are antagonistic to those of other class members. In re Drexel Burnham Lambert, 960 F.2d at 291 (internal quotation omitted); Eisen v. Carlisle and Jacquelin, 391 F.2d 555, 562 (2d Cir.1968); Dietrich v. Bauer, 192 F.R.D. 119, 126 (S.D.N.Y.2000).

Here, the Structural Ironworkers Fund, like each of the other plaintiffs and potential class members in this litigation, seeks to hold Bausch & Lomb liable for the consequences of its alleged violations of the federal securities laws. The course of events giving rise to the Structural Ironworkers Fund's claims is the same course of events giving rise to the claims of other class members. Examination of the four complaints that thus far comprise this consolidated action, as well as the two motions for appointment of lead counsel that have been withdrawn, reveal the reliance by all named plaintiffs and class members, including the Structural Ironworkers Fund, on similar legal theories in support of their securities claims against Bausch & Lomb. Finally, all allege economic injury from the same purported wrongdoing.

Moreover, the Structural Ironworkers Fund, a large public pension fund with 3,600 members and $505 million in assets (Docket # 49-2 at ¶ 3), is a sophisticated institutional investor and appears well-suited to serve as a lead plaintiff in a securities class action. See In re Veeco Instruments, Inc., 233 F.R.D. 330, 332-33 (S.D.N.Y.2005) ("[T]he PSLRA was passed, at least in part, to increase the likelihood that institutional investors would serve as lead plaintiffs in actions such as this one"); Bassin v. deCODE Genetics, Inc., 230 F.R.D. 313, 315-16 (S.D.N.Y.2005) (noting that purpose of PLRA is to attract institutional investors). Finally, as discussed below, I find that the Structural Ironworkers Fund is represented by competent, experienced counsel which appears more than able to prosecute this litigation. For these reasons, I conclude that the Structural Ironworkers Fund has satisfied the requirements of Federal Rule 23.

Wednesday, September 19, 2007

D. Nebraska Notes Split Re Whether Federal Counsel's Liability for Excessive Costs Statute Applies to Pro Se Litigants

Per Wallace v. Kelley, Slip Copy, 2007 WL 2248105 (D.Neb . Aug 01, 2007) (NO. 4:06CV3214):

The Defendants move for an award of attorney's fees against Plaintiff Edith Jackson pursuant to 28 U.S.C. § 1927, or in the alternative under the inherent power of the court.

28 U.S.C. § 1927 states:

Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct.

Several courts of appeals have considered whether 28 U.S.C. § 1927 applies to pro se litigants. See, e.g. Wages v. I.R.S., 915 F.2d 1230, 1235-36 (9th Cir.1990), cert. denied, 498 U.S. 1096, 111 S.Ct. 986, 112 L.Ed.2d 1071 (1991)) (holding that § 1927 is applicable to pro se plaintiffs); see also Brown v. Adidas Int., 938 F.Supp. 628 (S.D.Cal.1996) (holding that § 1927 is applicable to pro se plaintiffs); contra Sassower v. Field, 973 F.2d 75, 80 (2nd Cir.1992) (emphasis added), cert. denied, 507 U.S. 1043, 113 S.Ct. 1879, 123 L.Ed.2d 497 (1993)(holding that pro-se litigants are not included within the phrase "other person admitted to conduct cases" in § 1927); Meadowbriar Home for Children, Inc. v. G.B. Gunn, 81 F.3d 521, 535 (5th Cir.1996) (holding that § 1927 applies not to parties but rather to the parties' attorneys); see also Alexander v. U.S., 121 F.3d 312, 316 (7th Cir.1997) (noting circuit split on whether § 1927 applies to pro se litigants and deciding to impose sanctions under court's inherent powers). The Eighth Circuit Court of Appeals has not considered the applicability of 28 U.S.C. § 1927 to pro se litigants, however, this Court will follow the approach of the Ninth Circuit Court of Appeals and apply the statute to pro se litigants. In the alternative, the Court will assess fees against the Plaintiff pursuant to the inherent power of the court. Chambers v. NASCO, Inc., 501 U.S. 32, 43, 111 S.Ct. 2123, 115 L.Ed.2d 27 (1991) (holding that a court may assess attorney's fees when a party has " 'acted in bad faith, vexatiously, wantonly, or for oppressive reasons.' " ( citing Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 258-259, 95 S.Ct. 1612, 44 L.Ed.2d 141 (1975) ( quoting F.D. Rich Co. v. United States ex rel. Industrial Lumber Co., 417 U.S. 116, 129, 94 S.Ct. 2157, 40 L.Ed.2d 703 (1974))).

Tuesday, September 18, 2007

D.C. Circuit Determines Plaintiff Fails to Present Genuine Issue of Material Fact; Does Not Rule on Admissibility of Supplemental Affidavits

Per Galvin v. Eli Lilly and Co. , 488 F.3d 1026 (D.C.Cir. Jun 08, 2007) (NO. 05-7134):

A party opposing summary judgment may submit affidavits in support of its position provided such affidavits meet the requirements of Federal Rule of Civil Procedure 56(e). Virtually every circuit has adopted a form of the so-called "sham affidavit rule," which precludes a party from creating an issue of material fact by contradicting prior sworn testimony unless the "shifting party can offer persuasive reasons for believing the supposed correction" is more accurate than the prior testimony. Pyramid Sec. Ltd. v. IB Resolution, Inc., 924 F.2d 1114, 1123 (D.C.Cir.1991); see Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 806-07, 119 S.Ct. 1597, 143 L.Ed.2d 966 (1999) (collecting cases). See generally 10A Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane, Federal Practice & Procedure § 2726, at 448-52 (3d ed.1998). FN* If the supplemental affidavit does not contradict but instead clarifies the prior sworn statement, then it is usually considered admissible. See, e.g., Selenke v. Med. Imaging of Colo., 248 F.3d 1249, 1258 (10th Cir.2001); Slowiak v. Land O'Lakes, Inc., 987 F.2d 1293, 1297 (7th Cir.1993); see also Aka v. Wash. Hosp. Ctr., 156 F.3d 1284, 1296 n. 14 (D.C.Cir.1998) (en banc); Wright, Miller, & Kane, supra.

FN* Although we have not formally addressed the standard applicable to review of a district court decision to treat an affidavit as a sham, Pyramid suggests the determination is part of our overall review of summary judgment and accordingly subject to de novo review. See 924 F.2d at 1123-24. Similarly, the Second Circuit has implied this determination is a matter of law, while the First, Sixth, Seventh, Tenth, and Eleventh Circuits have treated this issue as an evidentiary one subject to review for abuse of discretion. Compare Langman Fabrics v. Graff Californiawear, Inc., 160 F.3d 106, 112 (2d Cir.1998), with Torres v. E.I. Dupont De Nemours & Co., 219 F.3d 13, 21 (1st Cir.2000); Briggs v. Potter, 463 F.3d 507, 512-13 (6th Cir.2006); Kalis v. Colgate-Palmolive Co., 231 F.3d 1049, 1055-56 (7th Cir.2000); Lantec, Inc. v. Novell, Inc., 306 F.3d 1003, 1016 (10th Cir.2002); Telfair v. First Union Mortg. Corp., 216 F.3d 1333, 1342-43 (11th Cir.2000).

The district court refused to consider the supplemental Keller and Waltrip affidavits on the ground it was improper for the affiants to "recharacterize" their prior testimony after the close of discovery. We agree that "parties' opportunism should not readily imperil summary judgment," Pyramid, 924 F.2d at 1124; see also Cowan v. Prudential Ins. Co. of Am., 141 F.3d 751, 756 (7th Cir.1998) ("[A] deposition is the time for the plaintiff to make a record capable of surviving summary judgment-not a later filed affidavit"), and also recognize that a district court has broad discretion with respect to discovery, see Hussain v. Nicholson, 435 F.3d 359, 363 (D.C.Cir.2006). A supplemental affidavit filed by an interested party should not be deemed inadmissible solely because it was filed in response to a motion for summary judgment, however; the important considerations are whether the affidavit contradicts a prior sworn statement without justification or the filing party breached its obligations in discovery. See Fed. R. Civ. P. 37.

Galvin contends the supplemental affidavits do not contradict but merely clarify the affiants' prior statements. Because we conclude there would not be a genuine dispute over a material fact even if the supplemental affidavits were admitted, we find it unnecessary to rule upon their actual admissibility. Were it otherwise, we would have to determine whether these affidavits contradict or clarify prior statements and possibly also whether the sham affidavit rule should be applied to a non-party witness.

Monday, September 17, 2007

E.D. Louisiana Holds CAFA Case to be Decided by Louisiana Law; Denies Motion to Set Aside Ruling that Required Production of Privileged Information

Per Martin v. Lafon Nursing Facility of the Holy Family, Inc., Slip Copy, 2007 WL 2228633 (E.D.La. Jul 31, 2007) (NO. CIV.A. 06-5108):

The language in Garza that Judge Roby cites refers to confusion in federal jurisprudence where "state law claims appear in federal question cases pursuant to the federal court's supplemental jurisdiction." 234 F.R.D. at 624. In this case, however, plaintiff has only alleged state law claims. Applying federal privilege law to the jurisdictional discovery, as Judge Roby ordered, would lead to an awkward result: the privilege would not be recognized at this early stage of the litigation, yet it might later be raised in conjunction with plaintiff's state law claims. See Pearson v. Miller, 211 F.3d 57, 66 (3d Cir.2000), cited in Garza, 234 F.R.D. at 625 (noting that "the problems associated with the application of two separate privilege rules in the same case are readily apparent" and applying federal privilege law where case presented both federal and state law claims); Wm. T. Thompson Co. v. Gen. Nutrition Corp., 671 F.2d 100, 104 (3d Cir.1982) ("Obviously applying two separate disclosure rules with respect to different claims tried to the same jury would be unworkable.") (citations omitted); see also Mem. Hosp. for McHenry County v. Shadur, 664 F.2d 1058, 1061 n. 3 (7th Cir.1981). As noted above, this case does not present a situation in which both federal and state law claims are alleged and where, as noted in Garza, some courts have held that state and federal privilege law could co-exist in the same case.

The dispute in this matter concerns the applicability of CAFA and discovery related to that determination. CAFA is an extension of the district courts' diversity jurisdiction. See Exxon Mobil Corp. v. Allapattah Servs., 545 U.S. 546, 571, 125 S.Ct. 2611, 2627, 162 L.Ed.2d 502 (2005) ("Subject to certain limitations, the CAFA confers federal diversity jurisdiction over class actions where the aggregate amount in controversy exceeds $5 million."); Braud v. Transp. Serv. Co., 445 F.3d 801, 803 (5th Cir.2006) ("CAFA broadens diversity jurisdiction for certain qualifying class actions ....") (citation omitted). CAFA conveys federal jurisdiction over class actions when there is minimal diversity, that is, where at least one plaintiff and one defendant are from different states, and the amount in controversy exceeds $5,000,000, exclusive of interests and costs. While CAFA is a federal statute, it does not alter the nature of plaintiff's state law claims.

. . .

The Court finds that jurisdiction in this matter is founded solely on the diversity of the parties pursuant to CAFA. Because jurisdiction is based on the diversity of the parties, state law will provide the rule of decision in this case. See Budinich v. Becton Dickinson & Co., 486 U.S. 196, 198, 108 S.Ct. 1717, 1720, 100 L.Ed.2d 178 (1988) ("[S]tate law generally supplies the rules of decision in federal diversity cases ....") (citing 28 U.S.C. § 1652; Erie R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)). Accordingly, Louisiana law will govern the applicable evidentiary privileges.

Thursday, September 13, 2007

S.D. Illinois Determines it Lacks Federal Jurisdiction Under CAFA; Denies Attorney's Motion to Transfer

Per Coy Chiropractic Health Center, Inc. v. Travelers Cas. & Surety Co., Slip Copy, 2007 WL 2219102 (S.D.Ill. Jul 27, 2007) (NO. 06-CV-678 DRH):
This case was removed to this Court from the Circuit Court of the Third Judicial Circuit, Madison County, Illinois, on the basis of 28 U.S.C. § 1332, as amended by the Class Action Fairness Act of 2005 ("CAFA"), Pub.L. No. 109-2, 119 Stat. 4 (codified in scattered sections of 28 U.S.C.), as well as 28 U.S.C. § 1441 and 28 U.S.C. § 1453(b). Weiss's motion for transfer asks the Judicial Panel on Multidistrict Litigation ("JPML") to establish a multidistrict litigation ("MDL") proceeding to conduct coordinated or consolidated pretrial proceedings in this action and five other actions. See 28 U.S.C. § 1407(a). Under Section 1407, Weiss is required to file a copy of his motion for transfer in all of the courts where the subject actions are pending. See 28 U.S.C. § 1407(c)(ii) . See also Tim W. Koerner & Assocs., Inc. v. Aspen Labs, Inc., 492 F.Supp. 294, 298 (S.D.Tex.1980) ("Under 28 U.S.C. § 1407 a party can only initiate proceedings for transfer of an action by filing a motion with the [ JPML] and by filing a copy of such motion with the district court in which the action is pending."). An examination of the Court's electronic docket shows that Weiss is counsel of record for the plaintiffs in at least two of the actions as to which transfer by the JPML is sought, specifically, Roche v. Travelers Property Casualty Insurance Co., No. 07-cv-302-JPG (S.D. Ill. filed Apr. 20, 2007), and Roche v. Liberty Mutual Managed Care, Inc., No. 07-cv-331-JPG (S .D. Ill. filed May 4, 2007). See Futch v. AIG, Inc., Civil No. 07-402-GPM, 2007 WL 1752200, at *6 n. 3 (S.D.Ill. June 15, 2007) (judicially noticing cases on the Court's electronic docket); Kircher v. Putnam Funds Trust, Nos. 06-cv-939-DRH, 06-cv-1001-DRH, 2007 WL 1532116, at * 1 (S.D.Ill. May 24, 2007) (same). Thus, the fact that Weiss is not counsel of record in this case does not preclude him from seeking transfer of the case, given that he represents persons with an interest in the proposed MDL proceeding. See In re Western Liquid Asphalt Antitrust Litig., 303 F.Supp. 1053, 1053-54 (J.P.M.L.1969) (parties to actions in which transfer by the JPML is contemplated have standing to file motions for transfer for the purpose of coordination or consolidation under Section 1407).

However, the matter does not end quite there. The Court recently ordered this case remanded to state court for lack of federal subject matter jurisdiction. See Coy Chiropractic Health Ctr., Inc. v. Travelers Cas. & Sur. Co., No. 06-cv-678-DRH, 2007 WL 2122420 (S.D.Ill. July 20, 2007). Under 28 U.S.C. § 1447, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). The statute provides further, " [a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise[.]" 28 U.S.C. § 1447(d) . In general, under Section 1447, upon entry of an order remanding a removed case to state court on grounds enumerated in subsection (c) of the statute, including lack of subject matter jurisdiction, a district court is precluded by subsection (d) of the statute from reconsidering its remand order. FN2 Ordinarily, then, the Court would hold that, in view of its previous determination that it lacks federal subject matter jurisdiction in this case, it similarly lacks power to entertain motions in the case. See Missouri Franchise Dev. Sys., LLC v. McCord, No. 07-CV-00099-DRH-DGW, 2007 WL 1149198, at * 1 (S.D.Ill. Apr.18, 2007) (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514, 19 L.Ed. 264 (1868)) ("Without [subject matter] jurisdiction the court cannot proceed at all in any cause.").

FN2. As this Court has recognized previously, although 28 U.S.C. § 1447(d) precludes reconsideration of orders remanding cases for lack of subject matter jurisdiction, it is not a bar to successive removals of a case where intervening legal or factual changes disclose grounds for removal.

On the other hand, this Circuit recognizes an exception to the rule against reconsideration of remand orders discussed supra where a remand order in fact is appealable. See Good v. Kvaerner U.S., Inc., No. IP 1:03-CV-0476 SEB-VSS, 2003 WL 23104240, at *2 (S.D.Ind. Dec.12, 2003) (citing J.O. v. Alton Cmty. Unit Sch. Dist. 11, 909 F.2d 267, 271 (7th Cir.1990)). In light of the fact that CAFA authorizes appellate review of orders remanding cases removed under the statute, see 28 U.S.C. § 1453(c) , it is not clear that the Court's jurisdiction in this case was terminated by entry of the order directing remand of this case to state court. What is clear, however, is that on July 23, 2007, a certified copy of the Court's remand order in this case was mailed to the clerk of the Madison County circuit court, thereby terminating the Court's jurisdiction in this case. "It is well established that once a federal district court remands a case and mails a certified copy of its order to the state court, the district court loses all jurisdiction." Pickard v. Central States S.E. & S.W. Areas Health & Welfare Fund, No. 02-C-0282-C, 2003 WL 23104276, at * 1 (W.D.Wis. Feb.12, 2003) (collecting cases). Therefore, jurisdiction in this case has been re-vested in the state court, and this Court possesses no jurisdiction in the case.

Wednesday, September 12, 2007

E.D. Pennsylvania Grants Defendant's Motion to Dismiss for Failure to Plead Fraud with Particularity

Per Rosenberg v. Avis Rent A Car System, Inc., Slip Copy, 2007 WL 2213642 (E.D.Pa. Jul 31, 2007) (NO. CIV.A 07-1110):

Defendant next argues that Rosenberg fails to plead the alleged violation of the UTPCPL with sufficient particularity, as required by Rule 9(b). Rosenberg responds that he has fully complied with Rule 9(b), but he requests leave to amend the complaint if this Court disagrees.

Both parties agree that Rule 9(b) requires a heightened level of specificity when pleading fraud. It states, in part, that "[i]n all averments of fraud or mistake, the circumstances constituting fraud or mistake shall be stated with particularity." Fed.R.Civ.P. 9(b) . Federal courts have analogized fraud pleading to "the first paragraph of any newspaper story," requiring "the who, what, when, where, and how" of the circumstances. DiLeo v. Ernst & Young, 901 F.2d 624, 627 (11th Cir.1990); see In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1422 (3d Cir.1997); Kanter v. Barella, 2007 U.S. Dist. WL 1519894, at *2 (3d Cir. May 25, 2007). However, "focusing exclusively on [the Rule's] 'particularity' language is too narrow an approach and fails to take account of the general simplicity and flexibility contemplated by the rules." Id. at 100 (quotations omitted), quoting 5 Wright & Miller, supra, § 1298, at 407 (1969).

Rule 9(b) "applies not only to fraud actions under federal statutes, but to fraud claims based on state law." Christidis v. First Pa. Mortg. Trust, 717 F.2d 96, 99 (3d Cir.1983). In order to properly state a UTPCPL claim in Pennsylvania courts-and consequently in federal courts applying the state law via diversity jurisdiction-"a plaintiff must plead the following elements with particularity: (1) a specific false representation of material fact; (2) knowledge by the person who made it of its falsity; (3) ignorance of its falsity by the person to whom it was made; (4) the intention that it should be acted upon; and (5) that the plaintiff acted upon it to his damage." Fass v. State Farm Fire & Cas. Co., 2006 U.S. Dist. WL 2129098, at *2 (E.D.Pa. July 26, 2006), quoting U.S. ex. rel. Atkinson v. Pa. Shipbuilding Co., 255 F.Supp.2d. 351, 407 (E.D.Pa.2002); see Lutzky v. Petcove, 2006 U.S. Dist. WL 2456466, at *2 (E.D.Pa. Aug. 21, 2006). However, the application of Rule 9(b) is relaxed "when the factual information regarding the alleged fraud is within the defendant's control." Christidis, 717 F.2d at 99-100.

Upon reviewing the complaint and all subsequent documents submitted in this matter, I find that Rosenberg has failed to plead a violation of the UTPCPL with the particularity required by Rule 9(b) and Third Circuit precedent. The fraud allegations are vague, include internal contradictions, and failure to address specific elements of common law fraud. For example, Rosenberg fails to allege with particularity that defendant Avis or its representative had knowledge of the falsity of the alleged representation. The complaint does not provide the exact or even the approximate date of the alleged fraudulent transaction between Avis and Rosenberg. In addition, while one section of the complaint alleges fraudulent behavior for a period of four years, Doc. 1 at 2, another section alleges fraudulent behavior "[t]hroughout the relevant period, since at least 2006, but possibly before (which will be confirmed through discovery) ...." Doc. 1 at 3. Plaintiff's reply brief alleges fraudulent practices for "nearly six (6) years." Doc. 17 at 6.

Count I of Rosenberg's complaint does provide a litany of legal terms, assailing Avis's "unconscionable commercial practices, deceptions, frauds, false pretenses, false promises, misrepresentations or concealment, suppression, or omission of material facts with the intent that Plaintiff Larry Rosenberg and members of the class rely upon such concealment, suppression or omission in connection with the rental of a vehicle and are unlawful under the Act." Doc. 1 at 7. This list of accusations, unaccompanied by the substance of specific factual allegations that fit the elements of common law fraud, does not meet the Rule 9(b) requirement of specificity in fraud pleading.

In so deciding, I plainly disagree with Rosenberg's contention that he has "fully complied with Rule 9(b)" by stating in his complaint that "he was told a rental car would be a certain price, and upon receiving his bank statement he realized that Defendant Avis had deceptively added charges to his bill." Doc. 17 at 14. I also disagree with plaintiff that his vague UTPCPL allegations should be allowed to proceed because "much of the information is contained within [defendant Avis's] internal business operations" which could only be revealed upon discovery, Doc. 17 at 15, nor do I find that the "factual information is peculiarly within the defendant's knowledge or control." Id., citing Craftmatic Sec. Litig. v. Kraftsow, 890 F.2d 628, 645 (3d Cir.1989). While "[i]t is the function of discovery to fill in the details," Seville Indus. Machinery Corp. v. Southmost Machinery Corp., 742 F.2d 786, 790 (3d Cir.1984), citing Wright & Miller, supra, § 1215, plaintiff nevertheless has an obligation at the outset of his claim to plead the factual circumstances of the transaction that precipitated Rosenberg filing the class action complaint. Such a pleading would undoubtedly describe the outward conduct of both parties during the transaction-information that is surely within Rosenberg's knowledge.

. . .

Defendant's motion to dismiss for failure to plead fraud with particularity is granted, and Rosenberg is hereby provided 30 days from the date of this order to amend and resubmit his complaint in compliance with this order. See Grayson v. Mayview State Hospital, 293 F.3d 103, 108 (3d Cir.2002); Novinger Group Inc. v. Hartford Ins., 2007 U.S. Dist. WL 1450396, at *4 (M.D.Pa. May 16, 2007).

Tuesday, September 11, 2007

Tax Court: IRS Attorney Work Product Protection Continues to Apply After Trial

Here is a post from TaxProf Blog discussing a case touching on the work product doctrine:

Bryan Camp (Texas Tech) passed along these thoughts about Ratke v. Commissioner, 129 T.C. No. 6 (9/5/07):

The issue was whether attorney work product privilege protected a memo prepared for trial once the trial was over. The parties were in dispute over attorneys fees and possible sanctions against the IRS trial attorney. The taxpayer sought an unredacted copy of the IRS trial attorney's internal trial memo (a memo required to be sent to the National Office for review in certain cases). The taxpayer's theory was that the IRS trial attorney misrepresented the facts to the National Office in order to get clearance to pursue the matter). The Tax Court (1) held the trial memo was still protected work product even after trial was closed, judgment was entered (for taxpayer) and no appeal was taken; and (2) made an in-camera inspection of the trial memo, concluding that the taxpayer was not missing out on anything important.

This result is very consistent with the general inquisitorial approach taken by the Tax Court to disputes before it. I note that the taxpayer kinda got what he wanted, which is for the Court to take a look at the unredacted memo. If anything had jumped out at the Court I'm sure the case would have come out differently. The Court may have been concerned about a flood of requests for IRS memos. Seems reasonable, but this is not a common case.

Monday, September 10, 2007

N.D. Ohio Holds Less Than Two-Thirds of a Class are Ohio Residents; Denies Diversity Jurisdiction Under CAFA

Per Ford Motor Credit Co. v. Jones, Slip Copy, 2007 WL 2236618 (N.D.Ohio Jul 31, 2007) (NO. 1:07 CV 728):

The Class Action Fairness Act ("the CAFA"), enacted February 18, 2005, gives federal courts jurisdiction to hear class action lawsuits involving minimally diverse parties and more than five-million dollars in controversy. 28 U.S.C. § 1332(d) . The CAFA grants original jurisdiction to the federal courts in class actions in which "any member of the class of plaintiffs" possesses the requisite diversity with respect to "any defendant." 28 U.S.C. § 1332(d). With regard to the requisite amount in controversy, CAFA eliminates the general rule of nonaggregation for purposes of determining the amount in controversy. While the general rule of nonaggregation holds that the $ 75,000 amount in controversy must be established for each individual plaintiff, the amount in controversy under CAFA can be satisfied by aggregating the individual class members' claims. 28 U.S.C. 1332(d)(6). The CAFA also provides special provisions regarding removal of class actions to federal court. 28 U.S.C. 1453(b). A class action may now be removed to federal court without regard to whether any defendant is a citizen of the state in which the action is brought, and any defendant can remove the action without the consent of the other defendants. Id. Further, the one-year bar to removal from the time a case has been commenced, see U.S.C. 1446(b), no longer applies to class actions. 28 U.S.C. 1453(b). Id.

As stated above, Mullinax was brought into this lawsuit through a cross-claim filed by Defendant Moore. In First National Bank of Pulaski v. Curry, 301 F.3d 456 (6th Cir.2002), the Sixth Circuit held that neither 28 U.S.C. § 1441(a) or § 1441(c) provide third-party defendants with the right to remove a case to Federal court. Id. at 460. Mullinax attempts to draw a distinction between the phrase "the defendant" as it is used in 28 U.S.C. § 1441(a), and the language of the CAFA, which provides that class actions "may be removed by any defendant without the consent of all defendants." 28 U.S.C. 1453(b). Mullinax discusses that the intent of Congress in enacting the CAFA was to expand federal jurisdiction over class actions, and, therefore, that the provisions of the CAFA should be construed broadly to allow a cross-claim defendant to remove an action to Federal Court.

The Court does not disagree that the intent of Congress was to expand federal jurisdiction over class actions, by doing away with the nonaggregation rule and providing for minimal diversity. However, the argument that Congress intended to allow a cross-claim defendant to remove a case in enacting the CAFA is tenuous at best. As noted by Mullinax, the Circuit Courts are split on the issue of whether a cross-claim defendant is a defendant for purposes of removal. In the Sixth Circuit, a cross-claim defendant is not permitted to remove an action. There is no basis upon which to find otherwise.

Mullinax cites the decision in Lessard v. City of Allen Park, 247 F.Supp.2d 843 (E.D.Mich.2003), finding that unlike 28 U.S.C. § 1441(a) which states that "the defendant or the defendants" may remove an action, there is no restriction as to who may remove under 28 U.S.C. § 1441(c). Relying on Lessard, Mullinax argues that because the CAFA uses the language "any defendant," it should also be interpreted to permit a cross-claim defendant to remove an action to Federal Court. The court does not find Lessard to be persuasive in this case.

28 U.S.C. § 1441(c) states "Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 of this title is joined with one or more otherwise nonremovable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates." 28 U.S.C. § 1441(c). In Lessard, the "joined" claims which served as the basis of removal were part of the original Complaint, not part of the third-party complaint brought against the third-party defendant. Lessard, 247 F.Supp.2d at 858. The Lessard Court distinguished the case from Curry on that basis. Further, the Court in Curry specifically held that a third-party defendant cannot remove a case under 28 U.S.C. § 1441(c) and that § 1441(c) was meant to apply to claims joined by the Plaintiff. In the case at bar, Mullinax, a cross-claim Defendant seeks to remove the case based upon cross-claims raised by Defendant Moore. Thus, pursuant to Sixth Circuit law, permitting Mullinax to remove this case is improper.

Even if this Court were to find that Mullinax could properly remove this case, which it does not, the case should be remanded pursuant to 28 U.S.C. § 1332(d)(4). 28 U.S.C. § 1332(d)(4) provides that a district Court should decline to exercise jurisdiction over a class in which at least two-thirds of the proposed class members are citizens of Ohio; at least one significant defendant is a citizen of Ohio; the principal injuries were incurred in Ohio; and, within the last three years, no other class-action complaint has been filed asserting the same or similar factual allegations.

Mullinax argues that Defendant Moore has failed to prove that the greater than two-thirds of the proposed class are Ohio residents. Mullinax relies on the decision in Nichols v. Progressive Direct Ins. Co., No. 06-146-DLB, 2007 U.S. Dist. LEXIS 28689 (E.D.Ken., March 31, 2007), in arguing that a proposed statewide class is insufficient to prove residency. In Nichols, the proposed class consisted of "all customers of the Defendants and customers of any other insurance company doing business in the Commonwealth of Kentucky who purchased an insurance policy and who were unlawfully charge local government premium taxes or collection fees for the period of time from January 2001 to the present ..." This is significantly different from the proposed class in the case at bar. In Nichols, the proposed class included all customers of insurance companies doing business in the Commonwealth of Kentucky during the specified time period. However, the Complaint in this case expressly limits the class members to "Ohio residents," as is acknowledged by Ms. Moore. Further, all of the leases at issue were entered into in Ohio between Ohio residents and Mullinax. Therefore, the principal injuries were incurred in Ohio and Mullinax is clearly a significant defendant in this case. Finally, neither party has identified a class-action filed within the last three years with the same or similar factual allegations. This is a local controversy. Accordingly, this Court must decline to exercise diversity jurisdiction over this matter.