Wednesday, January 31, 2007

Seventh Circuit Determines that Complaint was Timely Filed, Even Though It Was Rejected By Electronic Filing System

Per Farzana K. v. Indiana Department of Education, ---F.3d----, 2007 WL 16217 (7th Cir. Jan. 4, 2007):

[The district court] dismissed the complaint for want of jurisdiction. . . . Farzana K.'s lawyer made the mistake of waiting until late afternoon of the last possible day [to file the complaint]. . . . The Northern District of Indiana accepts electronic filings, and counsel submitted the complaint online. Making a second mistake, counsel used the docket number of the 2004 suit. The computer rejected the filing with the notation that the case had been closed. . . . Farzana K.'s lawyer then dispatched paper copies, but the courier did not reach the courthouse until the clerk's office had closed. The district court held that . . . counsel's delay had deprived the court of subject-matter jurisdiction. 2005 U.S. Dist. LEXIS 38561 (N.D.Ind. Dec. 20, 2005). . . . Timely filing may be a condition to success, but it is not a jurisdictional requirement in federal court. See, e.g., Day v. McDonough, --- U.S. ----, ----, 126 S.Ct. 1675, 1681 (2006); Zipes v. Trans World Airlines, Inc., 455 U.S. 385 (1982). The law is full of rules that are mandatory in the sense that courts must enforce them punctiliously if a litigant insists. Rules are not jurisdictional, however, no matter how unyielding they may be, unless they set limits on the federal courts' adjudicatory competence. See, e.g., Arbaugh v. Y & H Corp., 546 U.S. 500 (2006); Eberhart v. United States, 546 U.S. 12 (2005); Kontrick v. Ryan, 540 U.S. 443 (2004).

Plaintiff submits that equitable tolling excuses the delay, but that doctrine deals with situations in which timely filing is not possible despite diligent conduct. See, e.g., Cada v. Baxter Healthcare Corp., 920 F.2d 446 (7th Cir.1990). Waiting until the last hours is not diligent; the errors that often accompany hurried action do not enable the bungling lawyer to grant himself extra time. See Johnson v. McBride, 381 F.3d 587 (7th Cir.2004). Nothing prevented plaintiff's lawyer from acting a day or a week earlier, so that counsel could recover from any gaffe. If counsel blundered to his client's prejudice, the remedy is malpractice litigation against the culprit, not the continuation of litigation against an adversary who played no role in the error. See, e.g., Pioneer Investment Services Co. v. Brunswick Associates L.P., 507 U.S. 380, 396-97, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993); United States v. 7108 West Grand Avenue, 15 F.3d 632 (7th Cir.1994). Allowing more time under the rubric of equitable tolling, when a federal rule covers the subject of extensions, would just contradict the rule--and for no good reason. . . . Because this 30-day time limit has been borrowed from Indiana law, however, whether it is subject to equitable tolling (and, if so, under what circumstances) is a question of state law. Farzana K. does not cite any Indiana decision holding that the period supplied by Ind.Code § 4-21.5-5-5 may be extended via a tolling doctrine; our own research has not turned up any such holding. Instead Indiana's courts treat this time limit as absolute. See Warram v. Stanton, 415 N.E.2d 114 (Ind.App.1981). Tolling therefore cannot save this litigation.

So was this complaint filed on time? It was. . . . Litigation in federal court commences with the filing of the complaint, see Fed.R.Civ.P. 3, and the plaintiff then has 120 days to serve copies on each defendant, see Fed.R.Civ.P. 4(m). All defendants received copies well inside the 120-day window after filing (indeed, all but the state agency received the complaint electronically on July 6). Defendants insist that this complaint was not "filed" because a computer rejected it. . . . Still, the fact remains that the complaint was tendered to the clerk's office on the 30th day, and the computer's reaction does more to show the limits of some programmer's imagination than to render the suit untimely. Had a paper copy of the complaint been handed over the counter on July 6, a deputy clerk would have crossed out the old docket number, stamped a new one, and filed the document; there is no reason to throw this suit out of court just because the e-filing system did not know how to take an equivalent step. By refusing to accept complaints (or notices of appeal) for filing, clerks may prevent litigants from satisfying time limits. To prevent this--to ensure that judges rather than administrative staff decide whether a document is adequate-- Fed. R. Civ. P. 5(e) was amended in 1993 to require clerks to accept documents tendered for filing. The last sentence of this rule provides: "The clerk shall not refuse to accept for filing any paper presented for that purpose solely because it is not presented in proper form as required by these rules or any local rules or practices." See also Fed.R.Civ.P. 83(b). The software that operates an e-filing system acts for "the clerk" as far as Rule 5 is concerned; a step forbidden to a person standing at a counter is equally forbidden to an automated agent that acts on the court's behalf.

Clerks thus must take in whatever is tendered to them; a document may be rejected later if a judicial officer finds a problem, but the initial filing ensures that the process of vetting papers for compliance with the rules does not prevent satisfaction of time limits. An e-filing system likewise must accept every document tendered for filing; it cannot reject any paper that the clerk must accept.

Tuesday, January 30, 2007

E.D.N.Y. Notes Split Re Proper Rule 12 Clause for Dismissing Claims Based on Forum Selection Clauses

Per Private One of New York, LLC v. JMRL Sales & Service, Inc., Slip Copy, 2007 WL 203960 (E.D.N.Y. Jan. 24, 2007):

Although JMRL bases its motion to dismiss this action on Rule 12(b)(3) of the Federal Rules of Civil Procedure and 28 U.S.C. § 1406(a), JMRL's argument is not literally based on these provisions but is predicated on the existence of a valid forum-selection clause. JMRL's decision to proceed under Rule 12(b)(3) appears to be based on district court cases which have applied this rule. See JMRL's Memorandum in Support of its Motion for Dismissal ("JMRL's Memo") at 4-5 (citing HongKong & Shanghai Banking Corp. v. Suveyke, 392 F.Supp.2d 489, 490-91 (E.D.N.Y.2005)); see also Person v. Google, Inc., 456 F.Supp.2d 488, 492-93 (S.D.N.Y.2006). However, while some courts in this Circuit have analyzed motions to dismiss based on a forum-selection clauses as if they were brought under Rule 12(b)(3), the Second Circuit has analyzed such motions under Rule 12(b)(1), see, e.g., AVC Nederland B.V. v. Atrium Inv. P'ship, 740 F.2d 148, 152 (2d Cir.1984), and other Circuits have used Rule 12(b)(6). See, e.g., LFC Lessors, Inc. v. Pacific Sewer Maintenance Corp., 739 F.2d 4, 7 (1st Cir.1984).

In New Moon Shipping Co. v. MAN B & W Diesel AG, 121 F.3d 24 (2d Cir.1997), the Second Circuit acknowledged this split in authority, noting that the circuits had not reached "consensus ... as to the proper procedural mechanism to request dismissal of a suit based upon a valid forum selection clause." Id. at 28. Recognizing that "there is no existing mechanism with which forum selection enforcement is a perfect fit," id. at 29, the Second Circuit "refused to pigeon-hole these claims into a particular clause of Rule 12(b)." Asoma Corp. v. SK Shipping Co., 467 F.3d 817, 822 (2d Cir.2006). Instead, it established a separate framework for analyzing these cases.

Under this framework, the moving party must first show evidence of "an apparently governing forum selection clause." Id. The burden is then on the plaintiff who brought suit in a forum other than the one designated by that clause "to make a 'strong showing' in order to overcome the presumption of enforceability." Id. (quoting New Moon Shipping, 121 F.3d at 29). That burden is "analogous to that imposed on a plaintiff to prove that the federal court has subject matter jurisdiction over his suit or personal jurisdiction over the defendant." New Moon Shipping, 121 F.3d at 29. In the early stages of litigation, such a plaintiff "need only make a prima facie showing by alleging facts which, if true, would support the court's exercise of jurisdiction." Id. (citing Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir.1981)).

Monday, January 29, 2007

Ninth Circuit Discusses Discretion Bestowed on District Court Under FRCP 4(m); Reverses, Finding Abuse of Discretion

Per Efaw v. Williams, --- F.3d ----, 2007 WL 92647 (9th Cir. Jan. 16, 2007):

Plaintiff Robert Efaw claims that he was beaten severely by two guards while imprisoned at a Navajo County jail in Arizona. He filed suit against Defendant Officer Teresa Williams, one of the two guards involved in the incident, and various institutional and individual defendants. Plaintiff failed to serve Defendant with the complaint until seven years after it was filed. Defendant moved to be dismissed as a defendant pursuant to Federal Rule of Civil Procedure 4(m). The district court denied the motion and granted Plaintiff additional time to effect service of process. A jury trial followed, resulting in a judgment for Plaintiff. Defendant appeals. We vacate the judgment and remand with instructions to dismiss the action against Williams.

. . .

Rule 4(m) provides in part:

If service of the summons and complaint is not made upon a defendant within 120 days after the filing of the complaint, the court, upon motion or on its own initiative after notice to the plaintiff, shall dismiss the action without prejudice as to that defendant or direct that service be effected within a specified time; provided that if the plaintiff shows good cause for the failure, the court shall extend the time for service for an appropriate period.

Fed.R.Civ.P. 4(m). Plaintiff did not serve Defendant within 120 days of filing his complaint. Rather, Defendant was not served until more than seven years after Plaintiff filed his amended complaint.

Rule 4(m), as amended in 1993, requires a district court to grant an extension of time when the plaintiff shows good cause for the delay. Mann, 324 F.3d at 1090 n. 2. Additionally, the rule permits the district court to grant an extension even in the absence of good cause. Id. Here, Plaintiff does not argue that he showed "good cause," nor did the district court find that he established good cause. Rather, Plaintiff contends that the district court acted within the scope of its Rule 4(m) discretionary power when it extended the time to serve Defendant. The question presented, then, is how much discretion Rule 4(m) bestows on the district court.

District courts have broad discretion to extend time for service under Rule 4(m). In Henderson v. United States, 517 U.S. 654, 661, 116 S.Ct. 1638, 134 L.Ed.2d 880 (1996), the Supreme Court stated that Rule 4's 120-day time period for service "operates not as an outer limit subject to reduction, but as an irreducible allowance." This court in Mann, 324 F.3d at 1090-91, held that Rule 4(m) gave the district court discretion to extend time of service. "On its face, Rule 4(m) does not tie the hands of the district court after the 120-day period has expired. Rather, Rule 4(m) explicitly permits a district court to grant an extension of time to serve the complaint after that 120-day period." Id. at 1090. However, no court has ruled that the discretion is limitless. In making extension decisions under Rule 4(m) a district court may consider factors "like a statute of limitations bar, prejudice to the defendant, actual notice of a lawsuit, and eventual service." Troxell v. Fedders of N. Am., Inc., 160 F.3d 381, 383 (7th Cir.1998). Here, the district court provided no indication that it had considered those factors in reaching its decision. . . .

The facts of this case weigh strongly against the district court's ruling. First, the length of the delay was extraordinary. Plaintiff offered no reasonable explanation for his seven-year failure to serve Defendant. . . . Second, there is no evidence in the record that Defendant knew about the action notwithstanding Plaintiff's failure to effect proper service. Nor did the district court find that Defendant knew that Plaintiff had filed the complaint. Finally, the delay prejudiced Defendant. Under these circumstances, the district court abused its discretion in denying Defendant's motion for dismissal based on Plaintiff's failure to comply with Rule 4's service requirements.

Friday, January 26, 2007

Securities Litigation Filings Plunge in '06

Per BNA's Class Action Litigation Report, vol. 8 no. 1 (1/12/97):

Securities class action filings dropped precipitously--by more than a third--in 2006 compared to 2005, hitting the lowest level since the adoption of the Private Securities Litigation Reform Act in 1995, according to separate studies released Jan. 2 by the Stanford Law School Securities Class Action Clearinghouse and NERA Economic Consulting.

Joseph Grundfest, a professor at Stanford Law School, told BNA he attributes the decrease in filings, which began in mid-2005, to stronger corporate governance and federal government enforcement of the securities laws, and a consequent decline in corporate fraud. "I think we are seeing the effects of a tougher and smarter campaign against white collar fraud by the [Securities and Exchange Commission] and the Justice Department," he said in a statement.

BNA subscribers can access the full article here.

Thursday, January 25, 2007

Second and Third Circuits Hold that Defendant Has Burden of Proving CAFA Jurisdiction

BNA's Class Action Litigation Report (1/12/07, Vol. 8, no. 1) recently reported on two circuit decisions touching on the issue of who has the burden of establishing jurisdiciton under the Class Action Fairness Act (2005). Here is an excerpt from BNA's article on the decisions:

Two federal appeals courts ruled unanimously in December 2006 that the burden of proving federal jurisdiction in a case removed under the Class Action Fairness Act falls on the defendant (Blockbuster Inc. v. Galeno, 2d Cir., No. 05-8019, 12/26/06; Morgan v. Gay, 3d Cir., No. 06-4497, 12/15/06).

Both courts rejected arguments by the removing defendant that language in the U.S. Senate's legislative history meant CAFA placed the burden on the party opposing removal, usually the plaintiff. Finding that established law on removal puts the burden on the removing party, the two courts said that only specific legislative action could shift the burden to the other party.
Writing for the U.S. Court of Appeals for the Second Circuit in the Dec. 26, 2006, decision in Blockbuster Inc. v. Galeno, Judge Richard J. Cardamone said, "We assume that the drafters of CAFA were well aware of the statutory language necessary to express an intent to shift the burden of proof to the plaintiff, especially in light of long-standing judicial rules placing the burden on the defendant."

In the Dec. 15, 2006, opinion for the U.S. Court of Appeals for the Third Circuit in Morgan v. Gay, Judge D. Brooks Smith made a similar ruling:

It should take more than a few lines in a Senate Judicial Committee Report and some vague language in a statute's "Findings and Purposes" section to reverse the well-established proposition that the party seeking removal carries the jurisdiction-proving burden. Second, and related, as a general matter this Court need not look to legislative history at all when the text of the statute is unambiguous and there is no indication that Congress, for example, made a typographical error in drafting this part of the statute.

Both courts pointed out that every federal appeals court that has addressed the issue has found that CAFA did not shift the burden of proving jurisdiction in a removal situation.

BNA Subscribers may access the full story by clicking here.

Wednesday, January 24, 2007

SCOTUS Grants Cert. In Permanent Mission of India to United Nations v. New York City

BNA's Supreme Court Today (1/19/07) is reporting on the Supreme Court's grant of review in Permanent Mission of India to United Nations v. New York City, 06-134. It summarizes the ruling below as follows:

"Summary of Ruling Below: Foreign Sovereign Immunities Act exception to general rule that foreign country is immune from suit in U.S. courts, under which foreign state is not immune in any case in which "rights in immovable property situated in the United States are in issue," 28 U.S.C. § 1605(a)(4), authorizes federal court jurisdiction over New York City's suit to get two foreign countries--India and Mongolia--to pay taxes on property they use to house some of their United Nations diplomatic employees."

Here are the questions presented in this case:

(1) Does exception to sovereign immunity for cases "in which . . . rights in immovable property situated in the United States are in issue," 28 U.S.C. § 1605(a)(4), provide jurisdiction for municipality's lawsuit seeking to declare validity of tax lien on foreign sovereign's real property when municipality does not claim any right to own, use, enter, control, or possess real property at issue?

(2) Is it appropriate for U.S. courts to interpret U.S. statutes by relying on international treaties that have not been signed by U.S. Government and that do not accurately reflect international practice because they have been signed only by limited number of other nations?

Tuesday, January 23, 2007

U.S. Supreme Court Issues Decision in Osborn v. Haley

The Supreme Court has decided Osborn v. Haley, No. 05–593. Argued October 30, 2006—Decided January 22, 2007. Here is the Syllabus of the case:

The federal statute commonly known as the Westfall Act accords federal employees absolute immunity from tort claims arising out of acts undertaken in the course of their official duties, 28 U. S. C. §2679(b)(1), and empowers the Attorney General to certify that a federal employee sued for wrongful or negligent conduct “was acting within the scope of his office or employment at the time of the incident out of which the claim arose,” §2679(d)(1), (2). Upon such certification, the United States is substituted as defendant in place of the employee, and the action is thereafter governed by the Federal Tort Claims Act. If the action commenced in state court, the Westfall Act calls for its removal to a federal district court, and renders the Attorney General’s certification “conclusiv[e] … for purposes of removal.” §2679(d)(2).

Plaintiff-petitioner Pat Osborn sued federal employee Barry Haley in state court. Osborn alleged that Haley tortiously interfered with her employment with a private contractor, that he conspired to cause her wrongful discharge, and that his efforts to bring about her discharge were outside the scope of his employment. The United States Attorney, serving as the Attorney General’s delegate, certified that Haley was acting within the scope of his employment at the time of the conduct alleged in Osborn’s complaint. She thereupon removed the case to a federal district court, where she asserted that the alleged wrongdoing never occurred. The District Court, relying in Osborn’s allegations, entered an order that rejected the Westfall Act certification, denied the Government’s motion to substitute the United States as defendant in Haley’s place, and remanded the case to the state court. The Sixth Circuit vacated the District Court’s order, holding that a Westfall Act certification is not improper simply because the United States denies the occurrence of the incident on which the plaintiff centrally relies. Based on §2679(d)(2)’s direction that certification is “conclusiv[e] … for purposes of removal,” the Court of Appeals instructed the District Court to retain jurisdiction over the case.


1. The Attorney General’s certification is conclusive for purposes of removal, i.e., once certification and removal are effected, exclusive competence to adjudicate the case resides in the federal court, and that court may not remand the suit to the state court. Pp. 9–17.

(a) The Sixth Circuit had jurisdiction to review the order rejecting the Attorney General’s certification and denying substitution of the United States as defendant. Under the collateral order doctrine of Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541 , the District Court’s ruling, which effectively denied Haley Westfall Act protection, qualifies as a reviewable final decision under 28 U. S. C. §1291. Meeting Cohen’s three criteria, the District Court’s denial of certification and substitution conclusively decided a contested issue, the issue decided is important and separate from the merits of the action, and the District Court’s disposition would be effectively unreviewable later in the litigation. 337 U. S., at 546. Pp. 9–11.
(b) The Sixth Circuit also had jurisdiction to review the District Court’s remand order. Pp. 11–17.

(1) The Sixth Circuit had jurisdiction to review the District Court’s remand order, notwithstanding 28 U. S. C. §1447(d), which states that “[a]n order remanding a case to the State court … is not reviewable on appeal or otherwise … .” This Court held, in Thermtron Products, Inc. v. Hermansdorfer, 423 U. S. 336 , that §1447(c) confines §1447(d)’s scope. Section §1447(c) provides that a case must be remanded “if … it appears that the district court lacks subject matter jurisdiction.” Under Thermtron, “only remand orders issued under §1447(c) and invoking the [mandatory ground] specified therein … are immune from review” under §1447(d). Id., at 346. To determine whether Thermtron’s reasoning controls here, the Westfall Act’s design, particularly its prescriptions regarding the removal and remand of actions filed in state court, must be examined.

When the Attorney General certifies that a federal employee named defendant in a state-court tort action was acting within the scope of his or her employment at the time in question, the action “shall be removed” to federal court and the United States must be substituted as the defendant. §2679(d)(2). Of prime importance here, §2679(d)(2) concludes with the command that the “certification of the Attorney General shall conclusively establish scope of office or employment for purposes of removal.” (Emphasis added.) This directive markedly differs from Congress’ instruction for cases in which the Attorney General “refuse[s] to certify scope of office or employment.” §2679(d)(3). In that event, the defendant-employee may petition the court in which the action is instituted to make the scope-of-employment certification. If the employee so petitions in an action filed in state court, the Attorney General may, at his discretion, remove the action to federal court. If removal has occurred, and thereafter “the district court determines that the employee was not acting within the scope of his office or employment, the action … shall be remanded to the State court.” Ibid. (emphasis added).

The Act’s distinction between removed cases in which the Attorney General issues a scope-of-employment certification and those in which he does not leads to the conclusion that Congress gave district courts no authority to return cases to state courts on the ground that the Attorney General’s certification was unwarranted. Section 2679(d)(2) does not preclude a district court from resubstituting the federal official as defendant for purposes of trial if the court determines, postremoval, that the Attorney General’s scope-of-employment certification was incorrect. For purposes of establishing a forum for adjudication, however, §2679(d)(2) renders the Attorney General’s certification dispositive. Were it open to a district court to remand a removed action on the ground that the Attorney General’s certification was erroneous, §2679(d)(2)’s final instruction would be weightless. Congress adopted the “conclusiv[e] … for the purposes of removal” language to “foreclose needless shuttling of a case from one court to another,” Gutierrez de Martinez v. Lamagno, 515 U. S. 417 , n. 10. The provision assures that “once a state tort action has been removed to a federal court after a certification by the Attorney General, it may never be remanded to the state system.” Id., at 440 (Souter, J., dissenting).

Thermtron held that §1447(d) must be read together with §1447(c). There is stronger cause to hold that §1447(c) and (d) must be read together with the later enacted §2679(d)(2). Both §1447(d) and §2679(d)(2) are antishuttling provisions that aim to prevent “prolonged litigation of questions of jurisdiction of the district court to which the cause is removed.” United States v. Rice, 327 U. S. 742 . Once the Attorney General certifies scope of employment, triggering removal of the case to a federal forum, §2679(d)(2) renders the federal court exclusively competent and categorically precludes a remand to the state court. By declaring certification conclusive as to the federal forum’s jurisdiction, Congress has barred a district court from passing the case back to state court based on the court’s disagreement with the Attorney General’s scope-of-employment determination. Of the two antishuttling commands, §1447(d) and §2679(d)(2), only one can prevail and the Court holds that the latter controls. Tailor-made for Westfall Act cases, §2679(d)(2) “conclusively” determines that the action shall be adjudicated in the federal forum, and may not be returned to the state system. Pp. 11–16.

(2) The Westfall Act’s command that a district court retain jurisdiction over a case removed pursuant to §2679(d)(2) does not run afoul of Article III. An Article III question could arise in this case only if, after full consideration, the District Court determined that Haley engaged in tortious conduct outside the scope of his employment. Because, at that point, little would be left to adjudicate as to his liability, and because a significant federal question (whether he has Westfall Act immunity) would have been raised at the outset, the case would “aris[e] under” federal law as that term is used in Article III. Even if only state-law claims remained after resolution of the federal question, the District Court would have authority, consistent with Article III, to retain jurisdiction. Pp. 16–17.

2. Westfall Act certification is proper when a federal officer charged with misconduct asserts, and the Attorney General concludes, that the incident or episode in suit never occurred. Pp. 17–24.

(a) Because the Westfall Act’s purpose is to shield covered employees not only from liability but from suit, it is appropriate to afford protection to an employee on duty at the time and place of an “incident” alleged in a complaint who denies that the incident occurred. Just as the Government’s certification that an employee “was acting within the scope of his employment” is subject to threshold judicial review, Lamagno, 515 U. S., at 434, so a complaint’s charge of conduct outside the scope of employment, when contested, warrants immediate judicial investigation. Otherwise, a federal employee would be stripped of suit immunity not by what the court finds, but by what the complaint alleges. This position is supported by Willingham v. Morgan, 395 U. S. 402 , which concerned 28 U. S. C. §1442, the federal officer removal statute. Section 1442 allows a federal officer to remove a civil action from state court if the officer is “sued in an official or individual capacity for any act under color of such office.” The Court held in Willingham that the language of §1442 is “broad enough to cover all cases where federal officers can raise a colorable defense arising out of the duty to enforce federal law.” 395 U. S., at 406–407. There is no reason to conclude that the Attorney General’s ability to remove a suit to federal court under §2679(d)(2), unlike a federal officer’s ability to remove under §1442, should be controlled by the plaintiff’s allegations. Pp. 19–21.

(b) Tugging against this reading is a “who decides” concern. If the Westfall Act certification must be respected unless and until the District Court determines that Haley, in fact, engaged in conduct beyond the scope of his employment, then Osborn may be denied a jury trial. Upon the Attorney General’s certification, however, the action is “deemed to be … brought against the United States,” §2679(d)(2), and the Seventh Amendment , which preserves the right to a jury trial in common-law suits, does not apply to proceedings against the sovereign. Thus, at the time the district court reviews the Attorney General’s certification, the plaintiff has no right to a jury trial. The Westfall Act’s core purpose—to relieve covered employees from the cost and effort of defending the lawsuit and to place those burdens on the Government—also bears on the appropriate trier of any facts essential to certification. Immunity-related issues should be decided at the earliest opportunity. See, e.g., Hunter v. Bryant, 502 U. S. 224 (per curiam). Pp. 22–24.

The opinions in this case are available by visiting

Monday, January 22, 2007

SCOTUS Issues Pleadings Decision in Jones v. Bock

Today the Supreme Court issued a decision in Jones v. Bock, U.S., No. 05-7058. Here is the Syllabus of the case:

No. 05–7058. Argued October 30, 2006—Decided January 22, 2007

The Prison Litigation Reform Act of 1995 (PLRA), in order to address the large number of prisoner complaints filed in federal court, mandates early judicial screening of prisoner complaints and requires prisoners to exhaust prison grievance procedures before filing suit. 42 U. S. C. §1997e(a). Petitioners, inmates in Michigan prisons, filed grievances using the Michigan Department of Corrections (MDOC) grievance process. After unsuccessfully seeking redress through that process, petitioner Jones filed a 42 U. S. C. §1983 suit against six prison officials. The District Court dismissed on the merits as to four of them and as to two others found that Jones had failed to adequately plead exhaustion in his complaint. Petitioner Williams also filed a §1983 suit after his two MDOC grievances were denied. The District Court found that he had not exhausted his administrative remedies with regard to one of the grievances because he had not identified any of the respondents named in the lawsuit during the grievance process. While the court found Williams’s other claim properly exhausted, it dismissed the entire suit under the Sixth Circuit’s total exhaustion rule for PLRA cases. Petitioner Walton’s §1983 lawsuit also was dismissed under the total exhaustion rule because his MDOC grievance named only one of the six defendants in his lawsuit. The Sixth Circuit affirmed in each case, relying on its procedural rules that require a prisoner to allege and demonstrate exhaustion in his complaint, permit suit only against defendants identified in the prisoner’s grievance, and require courts to dismiss the entire action if the prisoner fails to satisfy the exhaustion requirement as to any single claim in his complaint.

Held: The Sixth Circuit’s rules are not required by the PLRA, and crafting and imposing such rules exceeds the proper limits of the judicial role. Pp. 10–24.

(a) Failure to exhaust is an affirmative defense under the PLRA, and inmates are not required to specially plead or demonstrate exhaustion in their complaints. There is no question that exhaustion is mandatory under the PLRA, Porter v. Nussle, 534 U. S. 516 , but it is less clear whether the prisoner must plead and demonstrate exhaustion in the complaint or the defendant must raise lack of exhaustion as an affirmative defense. Failure to exhaust is better viewed as an affirmative defense. Federal Rule of Civil Procedure 8(a) requires simply a “short and plain statement of the claim” in a complaint, and PLRA claims are typically brought under 42 U. S. C. §1983, which does not require exhaustion at all. The fact that the PLRA dealt extensively with exhaustion, but is silent on the issue whether exhaustion must be pleaded or is an affirmative defense, is strong evidence that the usual practice should be followed, and the practice under the Federal Rules is to regard exhaustion as an affirmative defense, including in the similar statutory scheme governing habeas corpus, Day v. McDonough, 547 U. S. ___, ___. Courts should generally not depart from the Federal Rules’ usual practice based on perceived policy concerns. See, e.g., Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U. S. 163 Those courts that require prisoners to plead and demonstrate exhaustion contend that prisoner complaints must be treated outside of the typical framework if the PLRA’s screening requirement is to function effectively. But the screening requirement does not—explicitly or implicitly—justify deviating from the usual procedural practice beyond the departures specified by the PLRA itself. Although exhaustion was a “centerpiece” of the PLRA, Woodford v. Ngo, 548 U. S. ___, ___, failure to exhaust was notably not added in terms to the enumerated grounds justifying dismissal upon early screening. Section1997e(g)—which allows defendants to waive their right to reply to a prisoner complaint without being deemed to have admitted the complaint’s allegations—shows that when Congress meant to depart from the usual procedural requirements, it did so expressly. Given that the PLRA does not itself require plaintiffs to plead exhaustion, such a result “must be obtained by … amending the Federal Rules, and not by judicial interpretation.” Leatherman, supra, at 168. Pp. 10–16.

(b) Exhaustion is not per se inadequate under the PLRA when an individual later sued was not named in the grievance. Nothing in the MDOC policy supports the conclusion that the grievance process was improperly invoked because an individual later named as a defendant was not named at the first step of the process; at the time each grievance was filed here, the MDOC policy did not specifically require a prisoner to name anyone in the grievance. Nor does the PLRA impose such a requirement. The “applicable procedural rules” that a prisoner must properly exhaust, Woodford, supra, at ___, are defined not by the PLRA, but by the prison grievance process itself. As the MDOC’s procedures make no mention of naming particular officials, the Sixth Circuit’s rule imposing such a prerequisite to proper exhaustion is unwarranted. The Circuit’s rule may promote early notice to those who might later be sued, but that has not been thought to be one of the leading purposes of the exhaustion requirement. The court below should determine in the first instance whether petitioners’ grievances otherwise satisfied the exhaustion requirement. Pp. 16–19.

(c) The PLRA does not require dismissal of the entire complaint when a prisoner has failed to exhaust some, but not all, of the claims included in the complaint. Respondents argue that had Congress intended courts to dismiss only unexhausted claims while retaining the balance of the lawsuit, it would have used the word “claim” instead of “action” in §1997e(a), which provides that “[n]o action shall be brought” unless administrative procedures are exhausted. That boilerplate language is used in many instances in the Federal Code, and statutory references to an “action” have not typically been read to mean that every claim included in the action must meet the pertinent requirement before the “action” may proceed. If a complaint contains both good and bad claims, the court proceeds with the good and leaves the bad. Respondents note that the total exhaustion requirement in habeas corpus is an exception to this general rule, but a court presented with a mixed habeas petition typically “allow[s] the petitioner to delete the unexhausted claims and to proceed with the exhausted claims,” Rhines v. Weber, 544 U. S. 269 , which is the opposite of the rule the Sixth Circuit adopted, and precisely the rule that respondents argue against. Although other PLRA sections distinguish between actions and claims, respondents’ reading of §1997e(a) creates its own inconsistencies, and their policy arguments are also unpersuasive. Pp. 19–23.

The opinion in the case is available from Cornell's Legal Information Institute at

Ninth Circuit Discusses Law of the Case Doctrine

Per Snow-Erlin v. United States, 470 F.3d 804 (9th Cir. Dec. 6, 2006):

This case is before us for the second time. Previously, we reversed the district court's dismissal of the action on statute-of-limitations grounds. We held that a cause of action for miscalculating a release date does not accrue until a prisoner establishes that he is legally entitled to release from custody. Erlin v. United States, 364 F.3d 1127, 1133 (9th Cir.2004). On remand, the district court dismissed the action for lack of subject matter jurisdiction, holding that the claim is, in essence, one for false imprisonment and thus is barred by 28 U.S.C. § 2680(h). Plaintiff timely appeals. Plaintiff first asserts that our earlier opinion in this case, Erlin, 364 F.3d 1127, already decided that the claim sounds in negligence. From that premise, Plaintiff argues that the law of the case doctrine forbade the district court on remand from examining the nature of the claim and characterizing it as one for false imprisonment. We disagree; Plaintiff construes our prior opinion too broadly.

"Law of the case is a jurisprudential doctrine under which an appellate court does not reconsider matters resolved on a prior appeal." Jeffries v. Wood, 114 F.3d 1484, 1488-89 (9th Cir.1997) (en banc), overruled on other grounds by Lindh v. Murphy, 521 U.S. 320 (1997). For the sake of efficiency and consistency, a " 'decision of an appellate court on a legal issue must be followed in all subsequent proceedings in the same case.' " Id. at 1489 (quoting Caldwell v. Unified Capital Corp. (In re Rainbow Magazine, Inc.), 77 F.3d 278, 281 (9th Cir.1996)). Of course, for the law of the case doctrine to apply, we must actually have decided the matter, explicitly or by necessary implication, in our previous disposition. Milgard Tempering, Inc. v. Selas Corp. of Am., 902 F.2d 703, 715 (9th Cir.1990). " '[O]n remand, courts are often confronted with issues that were never considered by the remanding court.' In such cases, 'broadly speaking, mandates require respect for what the higher court decided, not for what it did not decide.' " United States v. Kellington, 217 F.3d 1084, 1093 (9th Cir.2000). (quoting Biggins v. Hazen Paper Co., 111 F.3d 205, 209 (1st Cir.1997)). Here, our prior decision dealt solely with the issue of accrual of a cause of action. . . . The issue of jurisdiction under the FTCA was not before us at that time. The district court's opinion did not decide the issue, nor did the parties' briefs to this court raise it. . . . We thus hold that the district court did not run afoul of the "law of the case" doctrine when it examined subject matter jurisdiction under the FTCA.

Friday, January 19, 2007

Prof. Hoffman Publishes Article on CAFA Commencement Issue

The U.C. Davis Law Review has just published an article by Prof. Lonny Hoffman entitled, The "Commencement" Problem: Lessons from a Statute's First Year, 40 U.C. Davis L. Rev. 469 (Dec. 2006). Here is the abstract:

Whenever new legislation is enacted, questions can arise over its applicability to pending and future cases. One of the most common formulations used by Congress is to provide for a statute's application to all cases "commenced" on or after the date of enactment. It routinely uses a commencement trigger both in substantive legislation as well as in positive procedural enactments. Statutory commencement battles have high stakes. Judicial infidelity to statutory text can truncate or expand ab initio the reach of regulatory measures. Surprisingly, however, courts and commentators previously have not given rigorous attention to the commencement problem. As a result of this lack of careful attention, most of the reported decisions either follow older, not particularly well-reasoned precedents or simply engage in dubious analysis. Even the most nimble of judicial craftsmen can stumble.

Using the cases dealing with the commencement problem under the newly enacted Class Action Fairness Act of 2005, I critique the reflexive--and quite common--practice among courts of relying on rules directed to purposes other than answering the statutory inquiry. Such misguided analysis confuses the court's responsibility. The focal question in interpreting statutory text governing its applicability is what Congress intended when it provided that the statute would apply only to cases "commenced" on or after the law's effective date. I propose three canons of construction for courts to rely upon in interpreting the meaning of "commenced" when used as a statutory application trigger. The suggestion is that a court that follows these three canons of construction is more likely to keep straight the proper statutory inquiry before it and, thus, more likely to attend to the policies underlying the statute it is applying.

Thursday, January 18, 2007

Eleventh Circuit Analyzes All Writs Act and Anti-Injunction Act

Per Burr & Forman v. Blair, 470 F.3d 1019 (11th Cir. Nov. 27, 2006):

These consolidated appeals arise from a dispute among several groups of attorneys over the entitlement to attorney's fees awarded in connection with the settlement of a mass tort litigation in the district court, Tolbert v. Monsanto Co. . . . In these consolidated appeals, Blair and Trussell challenge the district court's assumption of subject matter jurisdiction over their claim against Burr & Forman, and the court's authority to enjoin them from prosecuting that claim in state court. We conclude that the district court lacked subject matter jurisdiction to adjudicate Blair and Trussell's claim against Burr & Forman and to enter the injunction. We therefore reverse.

The district court found its authority to issue the Injunction in the All Writs Act and the Anti-Injunction Act, two statutes that work in conjunction to enable a federal court to exercise its jurisdiction and enforce its judgments and, at the same time, limit the court's ability to interfere with state court proceedings. The All Writs Act provides that federal courts "may issue all writs necessary or appropriate in aid of their respective jurisdictions and agreeable to the usages and principles of law." 28 U.S.C. § 1651(a) . . . . Courts have read the language of this statute broadly. . . . The broad authority that the Act invests in the federal courts to utilize traditional equitable tools is not unlimited. The Act does not create subject matter jurisdiction for courts where such jurisdiction would otherwise be lacking. Henson v. Ciba-Geigy Corp., 261 F.3d 1065 (11th Cir.2001). . . . Instead, the Act provides courts with a procedural tool to enforce jurisdiction they have already derived from another source. Brittingham v. Commissioner, 451 F.2d 315, 317 (5th Cir.1971) [(internal quotation omitted)]. . . . The Anti-Injunction Act serves as a check on the broad authority recognized by the All Writs Act. It prohibits federal courts from utilizing that authority to stay proceedings in state court unless the requirements of one of three narrow exceptions are met. . . . The All Writs Act and the Anti-Injunction Act are closely related, and where an injunction is justified under one of the exceptions to the latter a court is generally empowered to grant the injunction under the former. See Olin Corp. v. Ins. Co. of North America, 807 F.Supp. 1143, 1152 (S.D.N.Y.1992). Thus, in assessing the propriety of an injunction entered to stop a state court proceeding, the sole relevant inquiry is whether the injunction qualifies for one of the exceptions to the Anti-Injunction Act. . . .

[F]or the Injunction to have been permissible under the Anti-Injunction Act, it must have been issued under the Act's second or third exceptions, i.e., it must have been necessary in aid of the court's jurisdiction or to protect or effectuate the court's judgment. In light of the federalism concerns underlying Anti-Injunction Act, courts construe both the "necessary in aid of its jurisdiction" and the "to protect and effectuate its judgments" exceptions narrowly. See T. Smith & Son, Inc. v. Williams, 275 F.2d 397, 407 (5th Cir.1960); Delta Air Lines, Inc. v. McCoy Rests., Inc., 708 F.2d 582, 585 (5th Cir.1983) [internal quotations omitted]. Courts have upheld injunctions predicated on the "necessary in aid of its jurisdiction" exception in two distinct situations. The first is where the federal court in an in rem proceeding obtains jurisdiction over the res before the state court action involving the same res is brought. See In re Abraham, 421 F.2d 226, 228 (5th Cir.1970). . . . Orders enjoining state court proceedings have also been upheld in contexts roughly analogous to proceedings in rem, such as where enjoining the state court proceeding is necessary to protect an earlier federal court injunction. See Wesch v. Folsom, 6 F.3d 1465, 1470 (11th Cir.1993). . . . The third exception to the Anti-Injunction Act authorizes a federal court to issue an injunction to, "protect or effectuate its judgments." 28 U.S.C. § 2283. This exception is generally referred to as the "relitigation exception." See Jacksonville Blow Pipe Co. v. R.F.C., 244 F.2d 394, 400 (5th Cir.1957) An injunction under the relitigation exception is appropriate where the state law claims would be precluded by the doctrine of res judicata. . . .

Although the court's order did not cite the "protect or effectuate" exception of the Anti-Injunction Act, we infer from the language the court used in drafting the order that it based the Injunction on that exception. Burr & Forman agree and contend that the "necessary in aid of its jurisdiction" exception provided an alternative basis for issuing the Injunction. We disagree on both counts. . . .

The "necessary in aid of its jurisdiction" exception provides the basis for an injunction "[w]hen particular property is before the district court ... such as when it is the subject of an in rem proceeding or in the custody of a bankruptcy trustee[.]" Klay v. United Healthgroup, Inc., 376 F.3d 1092, 1103 (11th Cir.2004). The principle focus of this exception is on parallel in rem proceedings--one in federal court, the other in state court. See Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 641-42 (1977) (noting that traditionally the exception has been used to enjoin parallel in rem proceedings, while concurrent in personam proceedings have traditionally been allowed to continue). . . . This is simply not a situation in which a state court in rem proceeding is competing with a federal court in rem proceeding to resolve ownership of a res. . . . Burr & Forman argue alternatively that the Injunction was justified because Blair and Trussell's contract action may affect the disbursement of attorney's fees from the QSF--specifically, the amount paid to Burr & Forman--such that the administration of the QSF was closely analogous to an in rem proceeding. . . . [N]othing in the record indicates that Blair and Trussell's breach of contract action challenges the Tolbert settlement or seeks a lien on the money held in the QSF for attorney's fees. . . . The district court did not have to enjoin the state court proceedings to enable it to exercise its jurisdiction in Tolbert.

We now turn to the applicability of the "protect and effectuate its judgments" exception, the so-called "relitigation exception." This exception is essentially a res judicata concept. For an injunction to be proper under this exception, each of the claim preclusion requirements of the applicable state law--here, Alabama law--must be met. . . . Once the court remanded the case for the first time, any jurisdiction it may have had over the case ceased. The court, therefore, lacked subject matter jurisdiction to issue the Merits Order disposing of Blair and Trussell's claim. Because the court lacked subject matter jurisdiction to issue it, the order was not entered by a court of competent jurisdiction. Thus, the Injunction does not fall within the Anti-Injunction Act's relitigation exception.

Wednesday, January 17, 2007

Sixth Circuit Discusses Reviewability of Summary Judgment Post Jury-Verdict; Reviewable Where Jury Verdict Advisory

Per General Motors Corp. v. Lanard Toys, Inc., 468 F.3d 405 (6th Cir. Oct. 25, 2006):

The district court, in a trademark and trade dress infringement suit filed against Lanard Toys by General Motors Corporation . . . den[ied] Lanard's motion for summary judgment based on the affirmative defenses of laches and estoppel. Lanard now appeals those decisions.

Before we can reach the merits of the laches and estoppel defenses, we must be sure that an appeal of a summary judgment can be heard. After denying Lanard's motion for summary judgment on laches, the district court submitted the question of the laches and estoppel defenses to the jury and the jury rejected Lanard's defenses. We will generally not rule on an appeal of summary judgment if the issue went to trial. Garrison v. Cassens Transport Co., 334 F.3d 528, 537 (6th Cir.2003). However, an exception to that rule exists if the summary judgment was based on a pure question of law rather than on a material issue of facts, in which case this Court may review the summary judgment motion. Paschal v. Flagstar Bank, 295 F.3d 565, 572 (6th Cir.2002). Although the district court did not provide an explanation for why it denied Lanard's motion for summary judgment on laches and estoppel, it subsequently submitted the question to the jury, thereby insinuating that there were questions of fact for the jury to answer. We thus reason from the district court's ruling that its denial of summary judgment was not based on a pure question of law, but on factual disputes over the elements of laches.

Lanard argues that the submission of the question of laches to a jury is irrelevant because the district court did so "in an advisory sense." Because the jury's determination on this issue was only advisory, Lanard argues, there was no jury verdict on the issue of laches and this Court may therefore hear the appeal. Based on this "advisory" jury determination, we agree. While a jury may be used to consider factual disputes in a laches defense, the fact that the jury was used in an advisory manner suggests that our review of the denial of summary judgment is appropriate.

Tuesday, January 16, 2007

Thirrd Circuit Discusses Remedies for Misjoinder

Per DirectTV, Inc. v. Leto, 467 F.3d 842 (3rd Cir. Nov. 6, 2006):

DirecTV, a satellite cable company, caught persons pirating (that is, intercepting without payment) its television transmissions. Its policy is to sue, and it did so here. Eight defendants, including Bennie Leto, were joined in one suit brought in the United States District Court for the Western District of Pennsylvania. The claims against the defendants were timely brought. The District Court, responding to a motion by the defendants under Federal Rule of Civil Procedure 21, entered in December 2003 what appeared to be an order severing DirecTV's claims against each defendant. Within days of the order, DirecTV paid a separate filing fee and filed a separate complaint against Leto. He responded by moving to dismiss on the ground that the later-filed complaint was outside the statute of limitations. This made sense only if the 2003 order dismissed DirecTV's complaint rather than severed one suit into eight separate suits. Counterintuitively, the District Court agreed with Leto that it had dismissed the initial DirecTV suit, and dismissed it with prejudice. Here DirecTV, initially having filed a timely complaint that misjoined defendants, is substantially prejudiced if that suit is deemed dismissed and not severed. We thus reverse and remand.

Misjoinder . . . occurs when there is no common question of law or fact or when, as here, the events that give rise to the plaintiff's claims against defendants do not stem from the same transaction. . . . To remedy misjoinder . . . a court may not simply dismiss a suit altogether. Instead, the court has two remedial options: (1) misjoined parties may be dropped "on such terms as are just"; or (2) any claims against misjoined parties "may be severed and proceeded with separately." Fed.R.Civ.P. 21. The effect of each option is quite different. When a court "drops" a defendant under Rule 21, that defendant is dismissed from the case without prejudice. Publicker Indus., Inc. v. Roman Ceramics Corp., 603 F.2d 1065, 1068 (3d Cir.1979); see also Elmore v. Henderson, 227 F.3d 1009, 1011-12 (7th Cir.2000) (Posner, J.). When that occurs, the "statute of limitations is not tolled" because we treat the initial complaint "as if it never existed." Brennan v. Kulick, 407 F.3d 603, 606 (3d Cir.2005) (internal quotation marks omitted). But when a court "severs" a claim against a defendant under Rule 21, the suit simply continues against the severed defendant in another guise. White v. ABCO Eng'g Corp., 199 F.3d 140, 145 n. 6 (3d Cir.1999); Elmore, 227 F.3d at 1012. The statute of limitations is held in abeyance, and the severed suit can proceed so long as it initially was filed within the limitations period. Id.

Because a district court's decision to remedy misjoinder by dropping and dismissing a party, rather than severing the relevant claim, may have important and potentially adverse statute-of-limitations consequences, the discretion delegated to the trial judge to dismiss under Rule 21 is restricted to what is "just." In this context, we turn to the DirecTV/Leto case. While we normally "give particular deference to [a] district court's interpretation of its own order," we cannot do so where the plain language of the order is completely contrary to the Court's interpretation. . . . In its 2003 order, the District Court made no reference to dropping--or even dismissing--any defendants. . . . Moreover, if the District Court had intended to drop the misjoined defendants, it should not have said that their "case[s] shall proceed." Dismissed cases do not proceed at all. . . . For these reasons, the District Court's 2003 order was no doubt a severance. In light of the precise wording of the order, it cannot subsequently be deemed a dismissal.

Even if the language of the District Court's 2003 order had not clearly severed DirecTV's claim against Leto, it nonetheless would have been improper for the Court to choose dismissal instead, as this misjoinder remedy would have imposed adverse statute-of-limitations consequences on DirecTV. Although a district court has discretion to choose either severance or dismissal in remedying misjoinder, it is permitted under Rule 21 to opt for the latter only if "just"--that is, if doing so "will not prejudice any substantial right." See Sabolsky v. Budzanoski, 457 F.2d 1245, 1249 (3d Cir.1972) (emphasis added). . . . We follow suit and hold that the discretion to drop and dismiss claims against misjoined defendants under Rule 21 is abated when it "prejudic[es] any substantial right" of plaintiffs, see Sabolsky, 457 F.2d at 1249, which includes loss of otherwise timely claims if new suits are blocked by statutes of limitations.

The plain language of the District Court's 2003 order requires the conclusion that it severed, rather than dismissed, DirecTV's suit against Leto. . . . In addition, even if the language of the District Court's 2003 order did not clearly constitute a severance but instead a dismissal, Rule 21 requires that, in remedying misjoinder, the Court must analyze the consequences of choosing dismissal over severance, and is obliged to avoid prejudicing any substantial right in exercising its discretion. We therefore reverse the District Court's grant of dismissal in favor of Leto and remand this case to the Court for further proceedings consistent with this opinion.

Monday, January 15, 2007

C.D. Cal. Splits with 5th, 7th & 11th Circuits in Holding that Party Seeking Removal Has Burden of Establishing Inapplicability of CAFA Exceptions

Per Lao v. Wickes Furniture Co., Inc., 455 F.Supp.2d 1045 (C.D. Cal. Oct. 04, 2006):

The thornier issue is who bears the burden of proof with respect to the local controversy and home-state rule provisions contained in section 1332(d)(4), a question that has not been addressed by the Ninth Circuit.

. . .

Other courts have accepted the analogy proffered by defendants and placed the burden on establishing (d)(4)'s provisions on the non-removing party. See Hart, 457 F.3d at 681 (holding "that the plaintiff has the burden of persuasion on the question whether the home-state or local controversy exceptions apply"); Frazier v. Pioneer Americas LLC, 455 F.3d 542, 546 (5th Cir.2006) (noting that the "longstanding § 1441(a) doctrine placing the burden on plaintiffs to show exceptions to jurisdiction" serves to "buttress[ ] the clear congressional intent to do the same with CAFA"); Evans v. Walter Indus., Inc., 449 F.3d 1159, 1165 (11th Cir.2006) (analogizing to Breuer, "we hold that the plaintiffs bear the burden of proving the local controversy exception to the jurisdiction otherwise established" by the provisions in (d)(2)). The Court is not convinced that such an analogy is appropriate.

. . .

Accordingly, the Court finds, as a matter of statutory construction, the burden of proving the elements outlined in subsection (d)(4) falls on the removing party. This finding is not without consequence. Much of the information used by the Court in applying subsection (d)(4)'s provisions in this case, see infra, was tendered by defendant only after the Court noted its tentative ruling with respect to the burden of proof question. But for defendants' submission of this additional information, plaintiffs' motion to remand would have been wanting.