Friday, June 29, 2007

11th Circuit Upholds Motion to Dismiss for Insufficient Service in Case Involving Pro Se Plaintiff

Per Albra v. Advan, Inc., --- F.3d ----, 2007 WL 1814677 (11th Cir. June 26, 2007):

Albra argues that service to Advan was proper because he mailed a copy of the summons to Advan's registered agent, Wayne Abbott, who was also named as a defendant in the action. . . .

Federal Rule of Civil Procedure 4(c) provides that service of process shall be effected by serving a summons “ together with a copy of the complaint. ... within the time allowed under [Rule 4(m) ] .... by any person who is not a party and who is at least 18 years of age.” Fed.R.Civ.P. 4(c) (emphasis added). A defendant's actual notice is not sufficient to cure defectively executed service. See Schnabel v. Wells, 922 F.2d 726, 728 (11th Cir.1991) (interpreting former Rule 4(j)), superseded in part by rule as stated in Horenkamp v. Van Winkle And Co., Inc., 402 F.3d 1129, 1132 n. 2 (11th Cir.2005). And although we are to give liberal construction to the pleadings of pro se litigants, “we nevertheless have required them to conform to procedural rules.” Loren v. Sasser, 309 F.3d 1296, 1304 (11th Cir.2002).

Here, the record demonstrates that Albra, the plaintiff in the suit, served Advan by mailing a copy of the summons without attaching a copy of the complaint. Accordingly, Albra failed to properly effect service upon Advan in accordance with Rule 4(c), and the district court's grant of Advan's motion to dismiss was proper.

Thursday, June 28, 2007

Second Circuit Discusses Its View of Zippo and Jurisdiciton Based on Internet Activity

Per Best Van Lines, Inc. v. Walker, --- F.3d ----, 2007 WL 1815511 (2d Cir. June 26, 2007):

Several federal district courts in New York have applied the Zippo formulation to website defamation cases in analyzing personal jurisdiction under section 302(a)(1). See Citigroup, 97 F.Supp.2d at 565 (“At the very least, the interactivity of the [defendant's] site brings this case within the middle category of internet commercial activity. Moreover, the interaction is both significant and unqualifiedly commercial in nature and thus rises to the level of transacting business required under CPLR § 302(a)(1).”); Realuyo, 2003 WL 21537754, at *6-*7, 2003 U.S. Dist. LEXIS 11529, at *20-*22 (declining to exercise jurisdiction over defendant newspaper/website proprietor because its website, on which alleged libel was posted, was “passive”; having 332 non-paying email registrants in New York was insufficient to establish jurisdiction under Section 302(a)(1)). In Lenahan Law Offices, LLC v. Hibbs, 04-cv-6376, 2004 WL 2966926, at *6 (W.D.N.Y. Dec. 22, 2004), the plaintiff argued that the defendant's website, which contained allegedly defamatory material about the plaintiff, fell into the “middle range” of the Zippo sliding scale because the website permitted the defendant to answer questions posted by users. The court rejected that argument, concluding that such low-level interactivity was insufficient to support jurisdiction. “Absent an allegation that Hibbs is projecting himself into New York, this Court cannot exercise specific personal jurisdiction over him.” Id. Even if such interactivity could constitute “transacting business” under section 302(a)(1), the court concluded, the plaintiff had failed to show that its cause of action “arose” from such transactions since the allegedly defamatory material was posted on a passive portion of the website. Id.

While analyzing a defendant's conduct under the Zippo sliding scale of interactivity may help frame the jurisdictional inquiry in some cases, as the district court here pointed out, “it does not amount to a separate framework for analyzing internet-based jurisdiction.” Best Van Lines, 2004 WL 964009, at *3, 2004 U.S. Dist. LEXIS 7830, at *9. Instead, “traditional statutory and constitutional principles remain the touchstone of the inquiry.” Id. As the Zippo court itself noted, personal jurisdiction analysis applies traditional principles to new situations. Zippo, 952 F.Supp. at 1123 (“[A]s technological progress has increased the flow of commerce between States, the need for jurisdiction has undergone a similar increase.” (quoting Hanson, 357 U.S. at 250-51) (internal quotation marks omitted)). We think that a website's interactivity may be useful for analyzing personal jurisdiction under section 302(a)(1), but only insofar as it helps to decide whether the defendant “transacts any business” in New York-that is, whether the defendant, through the website, “purposefully avail[ed] himself of the privilege of conducting activities within New York, thus invoking the benefits and protections of its laws.” Cutco Indus. v. Naughton, 806 F.2d 361, 365 (2d Cir.1986); see also Deutsche Bank, 7 N.Y.3d at 71-72, 850 N.E.2d at 1143, 818 N.Y.S.2d at 167 (determining that there was jurisdiction over a sophisticated institutional trader from Montana who “knowingly initiat[ed] and pursu[ed] a negotiation with [plaintiff] in New York [via instant messaging] that culminated in the sale of $15 million in bonds,” thus “enter[ing] New York to transact business”).FN13

FN13. The spectrum may also be helpful in analyzing whether jurisdiction is permissible under due process principles. We note that the court in Zippo and most, if not all, of the courts that subsequently adopted the Zippo sliding scale were evaluating whether jurisdiction in those cases comported with due process, under state long-arm statutes that recognized jurisdiction coterminous with the extent allowed by the federal Constitution. See, e.g., Young, 315 F.3d at 261. We make no comment at this point on the relevance of the Zippo sliding scale in New York in evaluating whether the exercise of jurisdiction would be consistent with due process.

Wednesday, June 27, 2007

Review of Litigation Publishes Article on Constitutional Procedure

The Review of Litigation has just published an article by Prof. William M. Wiecek entitled The Debut of Modern Constitutional Procedure, 26 Rev. Litig. 641 (2007). Here is an excerpt from the Introduction:

With only modest exaggeration, we may say that the United States Supreme Court assembled the structure of modern constitutional procedure in the mid-twentieth century--specifically, in the years bracketed by the Chief Justiceships of Harlan Fiske Stone and Fred M. Vinson, 1941 to 1953. It was in this period that the Justices fully realized for the first time the importance of the Constitution's latent ordering of the constraints on judicial power in Article III. They displayed an unprecedented concern for the procedural endoskeleton of constitutional adjudication. This was due in part, but only in part, to the influence of the preeminent proceduralist among them, Justice Frankfurter, who in his prior career as a professor at the Harvard Law School had pioneered the academic specialty of Federal Courts. But more importantly, it was almost inevitable that the Court would confront procedural constraints when it redirected its activist energies away from its Lochner-era preoccupation with economic regulation, to the agenda adumbrated in Carolene Products' footnote 4: civil liberties, democratic process, and the civil rights of minorities.

Constitutional procedure, that complex of rules and practices that controls the appellate litigation of cases presenting constitutional issues in federal courts, is underappreciated as an influence on constitutional outcomes. It determines what kinds of cases federal courts can entertain and how they resolve those cases. When our attention is focused on substantive issues such as due process, equal protection, or First Amendment liberties, it is easy to overlook the gatekeeping role played by constitutional procedure, where outcomes are too often dismissed in journalistic accounts as results based on nothing more than being "decided on technical grounds." But this ignores Henry Maine's dictum, popularized by Frederic William Maitland, "that substantive law is gradually secreted in the interstices of procedure." As a corrective, judges, constitutional litigators, and scholars should heed Justice Frankfurter's admonition that "the history of American freedom is, in no small measure, the history of procedure." Given the central role of procedure, it is fitting that Frankfurter's Court (he served from 1939 to 1962) should have taken the lead in "proceduralizing" constitutional appellate litigation.

Tuesday, June 26, 2007

Eleventh Circuit Holds that Section 43(a) of the Lanham Act Does Not Abrogate Prudential Standing Limitations

Per Phoenix of Broward, Inc., ex rel. Burger King Franchisees v. McDonald's Corp., --- F.3d ----, 2007 WL 1791886 (11th Cir. June 22, 2007):

The issue of whether prudential standing doctrine applies to § 43(a) of the Lanham Act is one of first impression in this circuit. The Third and Fifth Circuits have addressed this question, and both have held that Congress did not abrogate prudential limitations on the standing of plaintiffs to bring suit under § 43(a). See Conte Bros., 165 F.3d at 227-30; Procter & Gamble Co. v. Amway Corp., 242 F.3d 539, 561-62 (5th Cir.2001). We agree.

Congress is presumed to incorporate background prudential standing limitations unless the statute expressly negates such principles. Bennett v. Spear, 520 U.S. 154, 163, 117 S.Ct. 1154, 1162, 137 L.Ed.2d 281 (1997). Although § 43(a)'s use of the term “any person” might lead to the conclusion that Congress intended to negate the background of prudential standing by allowing “any person” who could achieve Article III standing to bring suit, “the Supreme Court has twice held that Congress has not expressly abrogated prudential standing doctrine merely by passing a statute the text of which admits a broad interpretation.” Conte Bros., 165 F.3d at 227. For example, in Associated General Contractors of California, Inc. v. California State Council of Carpenters, the Supreme Court held that Congress did not abrogate prudential standing principles when it enacted the Clayton Act, despite statutory language allowing “[a]ny person who shall be injured in his business or property” to bring suit under that act. 459 U.S. 519, 535 & n. 31, 103 S.Ct. 897, 907 & n. 31, 74 L.Ed.2d 723 (1983). And as noted by the courts in Conte Bros. and Procter & Gamble, language contained in § 45 of the Lanham Act “makes clear that the focus of the [Lanham Act] is on anti-competitive conduct in a commercial context,”FN1 so that conferring standing to the full extent implied by the plain language of § 43(a) would give standing to parties that have not had their competitive or commercial interests affected by the defendant's conduct. Conte Bros., 165 F.3d at 229; Procter & Gamble, 242 F.3d at 561. Rather, “[t]he congressionally-stated purpose of the Lanham Act” evinces a congressional “intent to limit standing to a narrow class of potential plaintiffs possessing interests the protection of which furthers” that congressionally stated purpose. Conte Bros., 165 F.3d at 229.

Accordingly, in light of the text of § 43(a) and the purpose of the Lanham Act as expressed in § 45, we join the Third and the Fifth Circuits and hold that Congress did not intend to abrogate prudential standing limitations when it enacted the Lanham Act.

Monday, June 25, 2007

Prof. Gensler Provides Update on Civil Rules Committee Proceedings

Prof. Steven Gensler (Oklahoma) has sent the following update on the activities of the civil rules committee to the Civil Procedure Professors Listserv:

The Civil Rules committee met in April. The Standing Committee met last week. Here’s the latest, at least in the Civil Rules arena:

The Standing Committee approved the Time-Counting Project for publication. As you may recall, the TCP is a coordinated project to standardize the method of calculating time periods across the Civil, Appellate, Bankruptcy, and Criminal Rules. For the Civil Rules, the biggest change is that all days will count when calculating all time periods. This would change current practice under Rule 6(a), which excludes weekends and holidays for periods of less than eleven days. To compensate for the new counting method, some of the shorter time periods in the rules will be lengthened – e.g., from 10 days to 14 days. The “last day rule” under current Rule 6(a) remains; if the period would end on a weekend day, holiday, or day when the clerk’s office otherwise is inaccessible, then the period extends to the next “countable” day. There’s quite a bit more to the project, but it’s more than I can relate in a brief update. The full proposal will be available soon when it is published for comment.

At the April Civil Rules meeting, the committee continued work on projects on Rules 26 and 56.

The Rule 26 project is looking at several issues involving expert disclosures and expert discovery. The proposals are still being developed, but it is likely that proposed amendments will be forwarded to the Standing Committee for permission to publish in the next year.

The Rule 56 project as currently conceived would amend Rule 56 to implement a uniform motion practice, as well as to provide clearer authority in the rule for various established practices like motions for partial summary judgment. Work on the Rule 56 proposal is substantially complete, and it is expected that the committee will present it in full to the Standing Committee for permission to publish when the Standing Committee next meets in January 2008. However, some aspects of the Rule 56 proposal that involve timing were presented to the Standing Committee last week and approved for publication as part of the Time Counting Project. When the Rule 56 proposal is presented in full, I think we can expect some lively debate, at least if the 1992 experience is any indicator. The current proposal is narrower than the '92 proposal, but people tend to have strong views on summary judgment, just as they did 15 years ago.

Friday, June 22, 2007

Prof. Gensler Posts Paper on Complexity of Modern American Civil Litigation

Prof. Stephen Burbank has posted a paper entitled The Complexity of Modern American Civil Litigation: Curse or Cure? on the NELCO Legal Scholarship Repository (link: Here is the Abstract:

Originally prepared for the 2007 meetings of the Italian Association of Comparative Law, this paper seeks to excavate the roots of procedural complexity in modern American litigation. Proceeding from the view that there is no accepted definition of complex litigation in the United States, the paper discusses five related phenomena that the author regards as consequential: (1) the architecture of modern American lawsuits and the procedural philosophy that architecture reflects, (2) the volume of litigation and the public and private policies, attitudes and arrangements that affect it, (3) the dynamic nature of, and dispersed institutional responsibility for, American law, (4) the enormous amounts of money at stake in some litigation, and (5) the search for, and the forms of, relevant evidence in modern American litigation, and the impact of science and technology on both. The paper argues that, having opted for equity’s approach to the joinder of claims and parties – in part to ensure effective enforcement of rights but also in part to make such enforcement more efficient -- Americans have repeatedly turned to the tools of aggregation as a remedy for that success. In doing so, the people responsible for the courts often override the preferences of the parties (and thus the principle of party autonomy), alter the balance of power in litigation, and render trial effectively impossible. In such instances, they are creating complexity where it is not necessary for effective access to court; the stated goal of efficiency may be a delusion, and in any event aggregation can make little pretense to a goal of accuracy as opposed to dispute resolution simpliciter. Moreover, as the Class Action Fairness Act of 2005 suggests, in a federal system the unremitting quest for aggregation may come at a heavy price to individual state autonomy. In sum, taken to the extremes to which Americans appear to be heading, complex litigation appears to be a cure that has become a curse.

Thursday, June 21, 2007

SCOTUS Issues Decision Interpreting PSLRA Pleading Standards

Today the Supreme Court issued its decision in Tellabs Inc. v. Makor Issues & Rights, Ltd., No. 06-484. Here is the Syllabus from the case:

As a check against abusive litigation in private securities fraud actions, the Private Securities Litigation Reform Act of 1995 (PSLRA) includes exacting pleading requirements. The Act requires plaintiffs to state with particularity both the facts constituting the alleged violation, and the facts evidencing scienter, i.e.,the defendant’s intention “to deceive, manipulate, or defraud.” Ernst & Ernst v. Hochfelder, 425 U. S. 185 , and n. 12. As set out in §21D(b)(2), plaintiffs must “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind.” 15 U. S. C. §78u–4(b)(2). Congress left the key term “strong inference” undefined.

Petitioner Tellabs, Inc., manufactures specialized equipment for fiber optic networks. Respondents (Shareholders) purchased Tellabs stock between December 11, 2000, and June 19, 2001. They filed a class action, alleging that Tellabs and petitioner Notebaert, then Tellabs’ chief executive officer and president, had engaged in securities fraud in violation of §10(b) of the Securities Exchange Act of 1934 and Securities and Exchange Commission Rule 10b–5, and that Notebaert was a “controlling person” under the 1934 Act, and therefore derivatively liable for the company’s fraudulent acts. Tellabs moved to dismiss the complaint on the ground that the Shareholders had failed to plead their case with the particularity the PSLRA requires. The District Court agreed, dismissing the complaint without prejudice. The Shareholders then amended their complaint, adding references to 27 confidential sources and making further, more specific, allegations concerning Notebaert’s mental state. The District Court again dismissed, this time with prejudice. The Shareholders had sufficiently pleaded that Notebaert’s statements were misleading, the court determined, but they had insufficiently alleged that he acted with scienter. The Seventh Circuit reversed in relevant part. Like the District Court, it found that the Shareholders had pleaded the misleading character of Notebaert’s statements with sufficient particularity. Unlike the District Court, however, it concluded that the Shareholders had sufficiently alleged that Notebaert acted with the requisite state of mind. In evaluating whether the PSLRA’s pleading standard is met, the Circuit said, courts should examine all of the complaint’s allegations to decide whether collectively they establish an inference of scienter; the complaint would survive, the court stated, if a reasonable person could infer from the complaint’s allegations that the defendant acted with the requisite state of mind.

Held: To qualify as “strong” within the intendment of §21D(b)(2), an inference of scienter must be more than merely plausible or reasonable—it must be cogent and at least as compelling as any opposing inference of nonfraudulent intent. Pp. 6–18.

(a) Setting a uniform pleading standard for §10(b) actions was among Congress’ objectives in enacting the PSLRA. Designed to curb perceived abuses of the §10(b) private action, the PSLRA installed both substantive and procedural controls. As relevant here, §21D(b) of the PSLRA “impose[d] heightened pleading requirements in [§10(b) and Rule 10b–5] actions.” Dabit, 547 U. S., at 81. In the instant case, the District Court and the Seventh Circuit agreed that the complaint sufficiently specified Notebaert’s alleged misleading statements and the reasons why the statements were misleading. But those courts disagreed on whether the Shareholders, as required by §21D(b)(2), “state[d] with particularity facts giving rise to a strong inference that [Notebaert] acted with [scienter],” §78u–4(b)(2). Congress did not shed much light on what facts would create a strong inference or how courts could determine the existence of the requisite inference. With no clear guide from Congress other than its “inten[tion] to strengthen existing pleading requirements,” H. R. Conf. Rep., at 41, Courts of Appeals have diverged in construing the term “strong inference.” Among the uncertainties, should courts consider competing inferences in determining whether an inference of scienter is “strong”? This Court’s task is to prescribe a workable construction of the “strong inference” standard, a reading geared to the PSLRA’s twin goals:to curb frivolous, lawyer-driven litigation, while preserving investors’ ability to recover on meritorious claims. Pp. 6–10.

(b) The Court establishes the following prescriptions: First, faced with a Federal Rule of Civil Procedure 12(b)(6) motion to dismiss a §10(b) action, courts must, as with any motion to dismiss for failure to plead a claim on which relief can be granted, accept all factual allegations in the complaint as true. See Leatherman v. Tarrant County Narcotics Intelligence and Coordination Unit, 507 U. S. 163 . Second, courts must consider the complaint in its entirety, as well as other sources courts ordinarily examine when ruling on Rule 12(b)(6) motions. The inquiry is whether all of the facts alleged, taken collectively, give rise to a strong inference of scienter, not whether any individual allegation, scrutinized in isolation, meets that standard. Third, in determining whether the pleaded facts give rise to a “strong” inference of scienter, the court must take into account plausible opposing inferences. The Seventh Circuit expressly declined to engage in such a comparative inquiry. But in §21D(b)(2), Congress did not merely require plaintiffs toallege facts from which an inference of scienter rationally could be drawn. Instead, Congress required plaintiffs to plead with particularity facts that give rise to a “strong”—i.e., a powerful or cogent—inference. To determine whether the plaintiff has alleged facts giving rise to the requisite “strong inference,” a court must consider plausible nonculpable explanations for the defendant’s conduct, as well as inferences favoring the plaintiff. The inference that the defendant acted with scienter need not be irrefutable, but it must be more than merely “reasonable” or “permissible”—it must be cogent and compelling, thus strong in light of other explanations. A complaint will survive only if a reasonable person would deem the inference of scienter cogent and at least as compelling as any plausible opposing inference one could draw from the facts alleged. Pp. 11–13.

(c) Tellabs contends that when competing inferences are considered, Notebaert’s evident lack of pecuniary motive will be dispositive. The Court agrees that motive can be a relevant consideration, and personal financial gain may weigh heavily in favor of a scienter inference. The absence of a motive allegation, however, is not fatal for allegations must be considered collectively; the significance that can be ascribed to an allegation of motive, or lack thereof, depends on the complaint’s entirety. Tellabs also maintains that several of the Shareholders’ allegations are too vague or ambiguous to contribute to a strong inference of scienter. While omissions and ambiguities count against inferring scienter, the court’s job is not to scrutinize each allegation in isolation but to access all the allegations holistically. Pp. 13–15.

(d) The Seventh Circuit was unduly concerned that a court’s comparative assessment of plausible inferences would impinge upon the Seventh Amendment right to jury trial. Congress, as creator of federal statutory claims, has power to prescribe what must be pleaded to state the claim, just as it has power to determine what must be proved to prevail on the merits. It is the federal lawmaker’s prerogative, therefore, to allow, disallow, or shape the contours of—including the pleading and proof requirements for—§10(b) private actions. This Court has never questioned that authority in general, or suggested, in particular, that the Seventh Amendment inhibits Congress from establishing whatever pleading requirements it finds appropriate for federal statutory claims. Provided that the Shareholders have satisfied the congressionally “prescribe[d] … means of making an issue,” Fidelity & Deposit Co. of Md. v. United States, 187 U. S. 315 , the case will fall within the jury’s authority to assess the credibility of witnesses, resolve genuine issues of fact, and make the ultimate determination whether Notebaert and, by imputation, Tellabs acted with scienter. Under this Court’s construction of the “strong inference” standard, a plaintiff is not forced to plead more than she would be required to prove at trial. A plaintiff alleging fraud under §10(b) must plead facts rendering an inference of scienter at least as likely as any plausible opposing inference. At trial, she must then prove her case by a “preponderance of the evidence.” Pp. 15–17.

(e) Neither the District Court nor the Court of Appeals had the opportunity to consider whether the Shareholders’ allegations warrant “a strong inference that [Notebaert and Tellabs] acted with the required state of mind,” 15 U. S. C. §78u–4(b)(2), in light of the prescriptions announced today. Thus, the case is remanded for a determination under this Court’s construction of §21D(b)(2). P. 18.

437 F. 3d 588, vacated and remanded.

Ginsburg, J., delivered the opinion of the Court, in which Roberts, C. J., and Kennedy, Souter, Thomas, and Breyer, JJ., joined. Scalia, J., and Alito, J., filed opinions concurring in the judgment. Stevens, J., filed a dissenting opinion.

Tuesday, June 19, 2007

SCOTUS Holds that Appeals Court May Not Consider Party's Claim that It Is a Foreign State under FSIA

Yesterday the Supreme Court issued its decision in Powerex Corp. v. Reliant Energy Services, Inc., --- S.Ct. ----, 2007 WL 1731097 (June 18, 2007). Here is the Syllabus of the case:

No. 05–85. Argued April 16, 2007—Decided June 18, 2007

Plaintiffs-respondents filed state-court suits alleging that various companies in California’s energy market had conspired to fix prices in violation of state law. Some of the defendants filed cross-claims seeking indemnity from, inter alios, two United States Government agencies (BPA and WAPA); a Canadian corporation (BC Hydro) wholly owned by British Columbia and thus a “foreign state” under the Foreign Sovereign Immunities Act of 1976 (FSIA); and petitioner Powerex, a wholly owned subsidiary of BC Hydro. The cross-defendants removed the entire case to federal court, with BC Hydro and petitioner relying on the FSIA. Plaintiffs-respondents moved to remand, arguing that petitioner was not a foreign state and that the cross-claims against BPA, WAPA, and BC Hydro were barred by sovereign immunity. The District Court agreed and remanded. As relevant here, petitioner appealed, arguing that it was a foreign sovereign under the FSIA, but plaintiffs-respondents rejoined that the appeal was jurisdictionally barred by 28 U. S. C. §1447(d), which provides that “[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise.” The Ninth Circuit held that §1447(d) did not preclude it from reviewing substantive issues of law that preceded the remand order, but affirmed the holding as to petitioner’s foreign-state status.

Held: Section 1447(d) bars appellate consideration of petitioner’s claim that it is a foreign state for FSIA purposes. Pp. 3–14.

(a) Appellate courts’ authority to review district-court orders remanding removed cases to state court is substantially limited by statute. Section 1447(d) is read in pari materia with §1447(c), so that only remands based on the grounds specified in the latter are shielded by the review bar mandated by the former. Thermtron Products, Inc. v. Hermansdorfer, 423 U. S. 336 . For purposes of this case, it is assumed that the grounds specified in §1447(c) are lack of subject-matter jurisdiction and defects in removal procedure. Cf. Quackenbush v. Allstate Ins. Co., 517 U. S. 706 . Given the proceedings below, review of the remand order is barred only if it was based on lack of subject-matter jurisdiction. Pp. 3–5.

(b) Nothing in §1447(c)’s text supports the claim that a case cannot be remanded for lack of subject-matter jurisdiction within the meaning of that provision if the case was properly removed in the first instance. Indeed, statutory history conclusively refutes the argument that §1447(c) is implicitly limited in such a manner. When a district court remands a properly removed case because it nonetheless lacks subject-matter jurisdiction, the remand is covered by §1447(c) and shielded from review by §1447(d). Pp. 5–7.

(c) The District Court relied upon a ground that is colorably characterized as subject-matter jurisdiction and so §1447(d) bars appellate review. As an initial matter, it is clear from the record that the court was purporting to remand for lack of subject-matter jurisdiction. Even assuming that §1447(d) permits appellate courts to look behind a district court’s characterization of the basis for the remand, such review is hereby limited to ascertaining whether the characterization was colorable. In this case, the only plausible explanation of the District Court’s remand was that it believed that it lacked the power to adjudicate the claims against petitioner once it had determined that petitioner was not a foreign state and that the other cross-defendants had sovereign immunity. It is unnecessary to determine whether that belief was correct; it was at least debatable. Petitioner contends instead that the District Court was actually remanding based on Carnegie-Mellon Univ. v. Cohill, 484 U. S. 343 , which authorizes remand when a district court declines to exercise supplemental jurisdiction. This is implausible. The District Court never mentioned the possibility of supplemental jurisdiction, and petitioner does not appear to have argued that the claims against it could be retained based on supplemental jurisdiction. Pp. 7–10.

(d) The Ninth Circuit held that §1447(d) does not preclude reviewing a district court’s substantive determinations that precede a remand order, a holding that appears to be premised on Waco v. United States Fidelity & Guaranty Co., 293 U. S. 140 . Waco, however,does not permit an appeal when, as here, there is no order separate from the unreviewable remand order. Pp. 10–11.

(e) Petitioner’s contention that Congress did not intend §1447(d) to govern suits removed under the FSIA is flatly refuted by this Court’s longstanding precedent that “[a]bsent a clear statutory command to the contrary, [the Court] assume[s] that Congress is ‘aware of the universality of th[e] practice’ of denying appellate review of remand orders when Congress creates a new ground for removal.” Things Remembered, Inc. v. Petrarca, 516 U. S. 124 . Pp. 12–13.

391 F. 3d 1011, vacated in part and remanded.

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

Monday, June 18, 2007

Prof. Patrick Borchers recently posted a paper entitled Jones v. Flowers: An Essay on a Unified Theory of Procedural Due Process, on SSRN. The paper will be published in volume 40 of the Creighton Law Review. You can access a copy of the paper by visiting Here is the Abstract:

Procedural due process has always been seen as having at least three independent strands. One is the jurisdictional or minimum contacts strand. That strand, derived from the Supreme Court's decision in International Shoe Co. v. Washington, requires that a defendant in a civil case have at least a minimal connection to a state before he can be forced to defend an action there. Another is the fair procedures or administrative due process strand. That strand, emanating principally from the Supreme Court's Mathews v. Eldridge decision, requires that for additional procedures to be mandated that they must be cost-justified relative to the private party's interest and the increased accuracy of the resolution of the case. Finally, there is the fair notice strand to which the Supreme Court's 2006 decision in Jones v. Flowers is addressed. The Jones decision actually imports some of the cost-benefit analysis of the fair procedures strand. Moreover, the reasonableness component of the jurisdictional due process strand can be recast along the same lines. Thus, it may be possible to have a coherent and unified theory of procedural due process.

Friday, June 15, 2007

SCOTUS Issues Opinion Affirming Jurisdiciton over Lawsuit to Establish the Validity of Tax Liens against Properties Owned by Foreign Governments

Yesterday the Supreme Court issued its opinion in Permanent Mission of India to United Nations v. New York City, --- S.Ct. ----, 2007 WL 1702793 (June 14, 2007). Here is the Syllabus of the case:

Under New York law, real property owned by a foreign government is exempt from taxation when used exclusively for diplomatic offices or quarters for ambassadors or ministers plenipotentiary to the United Nations. For years, respondent (City) has levied property taxes against petitioner foreign governments for that portion of their diplomatic office buildings used to house lower level employees and their families. Petitioners have refused to pay the taxes. By operation of state law, the unpaid taxes converted into tax liens held by the City against the properties. The City filed a state-court suit seeking declaratory judgments to establish the liens’ validity, but petitioners removed the cases to federal court, where they argued that they were immune under the Foreign Sovereign Immunities Act of 1976 (FSIA), which is “the sole basis for obtaining jurisdiction over a foreign state in federal court,” Argentine Republic v. Amerada Hess Shipping Corp., 488 U. S. 428 . The District Court disagreed, relying on an FSIA exception withdrawing a foreign state’s immunity from jurisdiction where “rights in immovable property situated in the United States are in issue.” 28 U. S. C. §1605(a)(4). The Second Circuit affirmed, holding that the “immovable property” exception applied, and thus the District Court had jurisdiction over the City’s suits.

Held: The FSIA does not immunize a foreign government from a lawsuit to declare the validity of tax liens on property held by the sovereign for the purpose of housing its employees. Pp. 3–8.

(a) Under the FSIA, a foreign state is presumptively immune from suit unless a specific exception applies. In determining the immovable property exception’s scope, the Court begins, as always, with the statute’s text. Contrary to petitioners’ position, §1605(a)(4) does not expressly limit itself to cases in which the specific right at issue is title, ownership, or possession, or specifically exclude cases in which a lien’s validity is at issue. Rather, it focuses more broadly on “rights in” property. At the time of the FSIA’s adoption, “lien” was defined as a “charge or security or incumbrance upon property,” Black’s Law Dictionary 1072, and “incumbrance” was defined as “[a]ny right to, or interest in, land which may subsist in another to the diminution of its value,” id., at 908. New York law defines “tax lien” in accordance with these general definitions. A lien’s practical effects bear out the definitions of liens as interests in property. Because a lien on real property runs with the land and is enforceable against subsequent purchasers, a tax lien inhibits a quintessential property ownership right—the right to convey. It is thus plain that a suit to establish a tax lien’s validity implicates “rights in immovable property.” Pp. 3–5.

(b) This Court’s reading is supported by two of the FSIA’s related purposes. First, Congress intended the FSIA to adopt the restrictive theory of sovereign immunity, which recognizes immunity “with regard to sovereign or public acts (jure imperii) of a state, but not … private acts (jure gestionis).” Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U. S. 682 . Property ownership is not an inherently sovereign function. The FSIA was also meant to codify the real property exception recognized by international practice at the time of its enactment. That practice supports the City’s view that petitioners are not immune, as does the contemporaneous restatement of foreign relations law. The Vienna Convention on Diplomatic Relations, on which both parties rely, does not unambiguously support either party, and, in any event, does nothing to deter this Court from its interpretation. Pp. 5–8.
446 F. 3d 365, affirmed and remanded.

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

Thursday, June 14, 2007

Professor Bone Publishes Article on Procedural Discretion

The Cardozo Law Review has recently published an article by Prof. Robert Bone entitled Who Decides? A Critical Look at Procedural Discretion, 28 Cardozo L. Rev. 1961 (2007). Here is an excerpt from the Introduction:

How much discretion should a trial judge have to design procedures for a given lawsuit? This is a difficult and important question for civil proceduralists today. Federal district judges exercise extremely broad and relatively unchecked discretion over many of the details of litigation. They have extensive power to manage cases, and broad, essentially unreviewable power to promote settlements. Even when a procedural rule includes decisional standards, those standards often rely on expansive judicial discretion to make critical case-specific determinations. Indeed, it is only a slight exaggeration to say that federal procedure, especially at the pretrial stage, is largely the trial judge's creation, subject to minimal appellate review.

Many federal judges and procedure scholars favor maintaining and even expanding broad case-specific discretion, arguing that trial judges have the necessary expertise and experience to tailor procedures to the needs of particular cases. More skeptical scholars worry about the high costs and the legitimacy and accountability problems that broad and relatively unchecked discretion can generate. The debate has even reached a global level.

In this Article, I side with the skeptics, but for reasons that have not been fully explored before. Most critics focus on risk of abuse and give short shrift to competency concerns. This is a mistake. The pervasive assumption that expert trial judges can do a good job of tailoring procedures to individual cases is empirically unsupported and at best highly questionable. In fact, judges face serious problems fashioning case-specific procedures to work well in the highly strategic environment of litigation, and these competency problems deserve much more serious attention than they have received to date.

Wednesday, June 13, 2007

D.N.J. Rejects Supplemental Jurisdiciton over Class Action Claims Seeking to Piggyback on FSLA Claim

Per Hyman v. WM Financial Services, Inc., Slip Copy, 2007 WL 1657392 (D.N.J. June 07, 2007):

When first enacted, the FLSA [Federal Fair Labor Standards Act] produced a tremendous amount of litigation. In response, Congress passed the Portal-to-Portal Act in 1947. Under this Act, Congress prevented plaintiffs from bringing class actions under the FLSA. Now, plaintiffs are only allowed to bring “collective actions” under the Act. In a collective action, a plaintiff only becomes a member of the action if he affirmatively “opts-in” to the action. See 29 U.S.C. § 216(b). This is in stark contrast to the traditional Rule 23 class action, which operates as an “opt-out” scheme.

. . .

In the present case, Plaintiffs are attempting to bring a FLSA collective action and a Rule 23 class action. WM [the defendant] objects to this tactic. . . . According to WM, Plaintiffs are attempting an end-run around the FLSA's opt-in requirement. . . . This result, WM contends, contravenes Congress's express intent in amending the FLSA.

A recent line of cases from our District agree. [citing cases]. Therefore, these decisions hold that FLSA collective actions and state law overtime actions under Rule 23 may not be maintained together.

In De Asencio v. Tyson Foods, Inc., 342 F.3d 301, 306 (3d Cir.2003) though, the Third Circuit analyzed the joinder of a state law Rule 23 overtime class action claim with a FLSA collective action claim under the rubric of supplemental jurisdiction. . . .

Keeping in line with De Asencio, this Court shall analyze whether supplemental jurisdiction exists over some or all of Plaintiffs' state law claims. Here, the Court finds that it lacks supplemental jurisdiction over counts three through seven of Plaintiffs' complaint. . . . In this case, the only link between count one and counts three through seven is the general employer-employee relationship between Plaintiffs and WM. This is insufficient to confer supplemental jurisdiction. . . . Here, Plaintiffs are attempting to string together five unrelated state law claims to an FLSA overtime action. These five state law claims involve factual determinations that overlap little with their FLSA claim. Furthermore, . . . exercising supplemental jurisdiction over these claims would likely contravene Congress's intent in passing the FLSA. Therefore, the Court shall deny supplemental jurisdiction over counts three through seven for failing to arise out of the same “common nucleus of operative facts.”

Tuesday, June 12, 2007

SCOTUS Issues Opinion Interpreting Federal Officer Removal Statute

Yesterday the Supreme Court issued its decision in Watson v. Philip Morris Companies, Inc. --- S.Ct. ----, 2007 WL 1660910 (June 11, 2007), in which it unanimously held that the fact that a federal agency directs, supervises, and monitors a company’s activities in considerable detail does not bring that company within §1442(a)(1)’s scope and thereby permit removal. You can view the Syllabus of the case and the Opinion by visiting Cornell's LII here.

Monday, June 11, 2007

Eleventh Circuit on Burden of Establishing the Jurisdictional Amount under CAFA

Per Lowery v. Alabama Power Co., 483 F.3d 1184 (11th Cir. Apr. 11, 2007):

We have held that, in the removal context where damages are unspecified, the removing party bears the burden of establishing the jurisdictional amount by a preponderance of the evidence.

. . .

We note, however, that in situations like the present one--where damages are unspecified and only the bare pleadings are available--we are at a loss as to how to apply the preponderance burden meaningfully. We have no evidence before us by which to make any informed assessment of the amount in controversy. All we have are the representations relating to jurisdiction in the notice of removal and the allegations of the plaintiffs' third amended complaint. As such, any attempt to engage in a preponderance of the evidence assessment at this juncture would necessarily amount to unabashed guesswork, and such speculation is frowned upon.

[W]e conclude that the removal-remand scheme set forth in 28 U.S.C. §§ 1446(b) and 1447(c) requires that a court review the propriety of removal on the basis of the removing documents. If the jurisdictional amount is either stated clearly on the face of the documents before the court, or readily deducible from them, then the court has jurisdiction. If not, the court must remand. Under this approach, jurisdiction is either evident from the removing documents or remand is appropriate. Significantly, if a defendant can only carry the burden of establishing jurisdiction under these circumstances, then the defendant could have satisfied a far higher burden than preponderance of the evidence. Regardless, our precedent compels us to continue forcing this square peg into a round hole.

Friday, June 08, 2007

Eighth Circuit Holds Case Involving Immunity of Non-Diverse Defendant Will Not Be Remanded Simply Because State Law is Ambiguous Or Difficult To Apply

Per Simpson v. Thomure, 484 F.3d 1081 (8th Cir. May 7, 2007):

Crissy Simpson's right hand was severely injured in an accident at work while she was operating a power press machine. Simpson filed suit in Missouri state court against the out-of-state power press manufacturer and Tim Thomure, her supervisor, a fellow Missouri resident. The manufacturer defendants removed. The district court denied Simpson's motion to remand to state court and dismissed her claim against Thomure, concluding that he was fraudulently joined and therefore the court had diversity jurisdiction over the action. After resolving her claims against the out-of-state manufacturer defendants, Simpson appealed the order denying her motion to remand and dismissing her claim against non-diverse defendant Thomure. Reviewing that order de novo, we affirm.

. . .

There is no federal diversity jurisdiction if the plaintiff and any defendant are citizens of the same State. 28 U.S.C. § 1332(a). However, the right of an out-of-state defendant to remove a diversity suit to federal court "cannot be defeated by a fraudulent joinder of a resident defendant." Wilson v. Republic Iron & Steel Co., 257 U.S. 92, 97, 42 S.Ct. 35, 66 L.Ed. 144 (1921). Invoking this principle, the out-of-state defendants filed a timely notice of removal under 28 U.S.C. § 1446(b), asserting that defendant Thomure was fraudulently joined because, as Simpson's co-worker, he was immune from suit under the Missouri Workers' Compensation Law. See Mo.Rev.Stat. § 287.120.2. Simpson responded with a timely motion to remand under 28 U.S.C. § 1447, arguing that Thomure was not fraudulently joined because there was a "reasonable basis in fact and law" supporting the claim against him and therefore the district court lacked diversity jurisdiction. Menz v. New Holland N. Am., Inc., 440 F.3d 1002, 1004 (8th Cir.2006), quoting Wiles v. Capitol Indem. Corp., 280 F.3d 868, 871 (8th Cir.2002).

The district court denied the motion to remand and dismissed Simpson's claim against Thomure for failure to state a claim upon which relief may be granted. See Fed.R.Civ.P. 12(b)(6). After dismissing Thomure, the court had diversity jurisdiction to proceed with Simpson's claims against the manufacturer defendants. See Caterpillar Inc. v. Lewis, 519 U.S. 61, 73, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996). Four months later, the remaining parties filed stipulations of dismissal, and the court entered final judgment. Simpson then appealed the order denying her remand motion and dismissing her claim against Thomure.

On appeal, Simpson argues that the district court erred in denying her motion to remand because a Missouri court might impose co-worker liability on Thomure based on the facts alleged in her complaint. She argues that Missouri law of coworker liability is fact intensive and ambiguous; therefore, the district court was obligated to "resolve all facts and ambiguities in the current controlling substantive law in the plaintiff's favor" and remand. Filla v. Norfolk S. Ry. Co., 336 F.3d 806, 811 (8th Cir.2003).

We doubt this is a sound principle for deciding fraudulent joinder issues that turn on the non-diverse defendant's alleged immunity from suit. We also note that the Filla opinion discussed the merits of the fraudulent joinder issue before dismissing, for lack of appellate jurisdiction, an appeal from the grant of a remand motion. See 28 U.S.C. § 1447(d). This discussion was of no precedential force because we lacked jurisdiction to review the merits of the remand order "whether erroneous or not and whether review [was] sought by appeal or by extraordinary writ." Thermtron Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 343, 96 S.Ct. 584, 46 L.Ed.2d 542 (1976).

In our view, Simpson attacks the wrong half of the district court's order. Caterpillar v. Lewis teaches that, because Thomure, the non-diverse party, was dismissed from the case, we must decide this appeal based upon the present procedural posture of the case. Compare Grupo Dataflux v. Atlas Global Group, L.P., 541 U.S. 567, 572-73, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004). At this time, final judgment has been entered, so there is nothing to remand to state court unless the district court's Rule 12(b)(6) dismissal of Simpson's claim against Thomure is reversed. If that claim is revived, remand will follow automatically because Simpson and Thomure, the only remaining defendant, are citizens of the same State. Thus, the significant issue on appeal is whether the district court erred in dismissing the claim against Thomure on the merits. Our review is still de novo, but we may not grant Simpson relief simply because Missouri law may be unclear or hard to apply. Rather, we must review under state law the correctness of the district court's decision to dismiss, just as we would if Simpson and Thomure were citizens of different States and the district court granted Thomure's Rule 12(b)(6) motion to dismiss.

Thursday, June 07, 2007

Second Circuit Approves of Federal Question Jurisdiction over Claims Asserting Property Rights Created by the Social Security Act

Per Binder & Binder PC v. Barnhart , 481 F.3d 141 (2d Cir. Mar. 27, 2007):

Binder now claims that there are three possible sources of subject matter jurisdiction: federal question jurisdiction, see 29 U.S.C. § 1331; mandamus, see 28 U.S.C. § 1361; and the judicial review provision of the Act, see 42 U.S.C. § 405(g).

Under § 405(g):

Any individual, after any final decision of the Commissioner of Social Security made after a hearing to which he was a party, irrespective of the amount in controversy, may obtain a review of such decision by a civil action commenced within sixty days after the mailing to him of notice of such decision or within such further time as the Commissioner of Social Security may allow. Such action shall be brought in the district court of the United States for the judicial district in which the plaintiff resides, or has his principal place of business, or, if he does not reside or have his principal place of business within any such judicial district, in the United States District Court for the District of Columbia.

42 U.S.C. § 405(g) (emphasis supplied). We suggested in Binder I that this section is "seemingly inapplicable to Binder's suit because [it] limits judicial review to those decisions involving 'a party.' " Binder I, 399 F.3d at 130 (citing Cordoba v. Massanari, 256 F.3d 1044, 1047 (10th Cir.2001)). We now so hold: because Binder was not a party in the proceedings before the SSA, it cannot avail itself of section 405(g).

Normally, Section 405(h) channels all challenges that "arise under" the Act through the proper administrative proceedings by forbidding federal suits that have not been administratively reviewed first. See 42 U.S.C. § 405(h) ("The findings and decision of the Commissioner of Social Security after a hearing shall be binding upon all individuals who were parties to such hearing. No findings of fact or decision of the Commissioner of Social Security shall be reviewed by any person, tribunal, or governmental agency except as herein provided. No action against the United States, the Commissioner of Social Security, or any officer or employee thereof shall be brought under section 1331 or 1346 of Title 28...."). Thus, as we explained in Binder I, federal question jurisdiction does not generally lie under section 28 U.S.C. § 1331 for suits brought under the Social Security Act, even if they raise constitutional questions. See Ill. Council, 529 U.S. at 10-15, 120 S.Ct. 1084; Heckler v. Ringer, 466 U.S. 602, 614-16, 104 S.Ct. 2013, 80 L.Ed.2d 622 (1984); Mathews v. Eldridge, 424 U.S. 319, 326-32, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976); Weinberger v. Salfi, 422 U.S. 749, 760-61, 95 S.Ct. 2457, 45 L.Ed.2d 522 (1975).

Judicial review is available to a plaintiff under 28 U.S.C. § 1331, however, where, as here, there are no alternative means to review a federal claim arising under the Social Security Act. See Ill. Council, 529 U.S. at 19, 120 S.Ct. 1084 (suggesting that § 405(h) does not bar federal question jurisdiction "where application of § 405(h) would not simply channel review through the agency, but would mean no review at all" (interpreting Bowen v. Mich. Acad. of Family Physicians, 476 U.S. 667, 106 S.Ct. 2133, 90 L.Ed.2d 623 (1986))); Fanning v. United States, 346 F.3d 386, 399 (3d Cir.2003) ("[T]he Court in Illinois Council seemed to read Michigan Academy as creating an exception to the channeling requirement of § 405(h) in those cases where no judicial review is available at all."); Buchanan v. Apfel, 249 F.3d 485, 490 (6th Cir.2001) ("The language of § 405(h) indicates that Congress never contemplated a situation where someone other than a party pursuing entitlement benefits would seek a review of a colorable claim that the Commissioner engaged in a statutory or constitutional violation. In addition, there is no clear and convincing evidence that Congress intended to deny a judicial forum for such a claim."); Furlong v. Shalala, 238 F.3d 227, 233-34 (2d Cir.2001) ("Whatever else the Illinois Council Court may have intended to do with respect to the recognition of federal court jurisdiction over Medicare challenges, it clearly stated ... that courts should not interpret [ § 405(h) ] as requiring such a problematic foreclosure of review in all circumstances."); see also Binder I, 399 F.3d at 131 (same).

We suggested in our prior opinion that "[i]f one conceives of Binder's claims (both constitutional and statutory) as arising out of property rights created by section 406 of the Act, then there probably is federal jurisdiction." Binder I, 399 F.3d at 133. Upon further review, we conclude that this is the best way to characterize Binder's claims for relief and that we do indeed have jurisdiction to consider them. Specifically, we now hold that Binder may invoke federal question jurisdiction under 28 U.S.C. § 1331 because, were such jurisdiction unavailable, it would be unable to obtain any judicial review of its claims under the Act.

Wednesday, June 06, 2007

SCOTUS Issues Another Pleading Decision

In a brief per curiam opinion the Supreme Court vacated a lower court holding that a prisoner's complaint failed to satisfy the standards of FRCP 8(a). The case is Erickson v. Pardus, --- S.Ct. ----, 2007 WL 1582936 (June 4, 2007). Here is an excerpt from the opinion:

Imprisoned by the State of Colorado and alleging violations of his Eighth and Fourteenth Amendment protections against cruel and unusual punishment, William Erickson, the petitioner in this Court, filed suit against prison officials in the United States District Court for the District of Colorado. He alleged that a liver condition resulting from hepatitis C required a treatment program that officials had commenced but then wrongfully terminated, with life-threatening consequences. Deeming these allegations, and others to be noted, to be “conclusory,” the Court of Appeals for the Tenth Circuit affirmed the District Court’s dismissal of petitioner’s complaint. 198Fed. Appx. 694, 698 (2006). The holding departs in so stark a manner from the pleading standard mandated by the Federal Rules of Civil Procedure that we grant review. We vacate the court’s judgment and remand the case for further consideration.

. . .

Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Specific facts are not necessary; the statement need only “ ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’ ” Bell Atlantic Corp. v. Twombly, 550 U. S. ___, ___ (2007) (slip op., at 7–8) (quoting Conley v. Gibson, 355 U. S. 41, 47 (1957) ). In addition, when ruling on a defendant’s motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint. Bell Atlantic Corp., supra, at ___ (slip op., at 8–9) (citing Swierkiewicz v. Sorema N. A., 534 U. S. 506, 508, n. 1 (2002) ; Neitzke v. Williams, 490 U. S. 319, 327 (1989) ; Scheuer v. Rhodes, 416 U. S. 232, 236 (1974) ).

The complaint stated that Dr. Bloor’s decision to remove petitioner from his prescribed hepatitis C medication was “endangering [his] life.” Petitioner’s Complaint 2. It alleged this medication was withheld “shortly after” petitioner had commenced a treatment program that would take one year, that he was “still in need of treatment for this disease,” and that the prison officials were in the meantime refusing to provide treatment. Id., at 3, 4. This alone was enough to satisfy Rule 8(a)(2). Petitioner, in addition, bolstered his claim by making more specific allegations in documents attached to the complaint and in later filings.

. . .

Whether petitioner’s complaint is sufficient in all respects is a matter yet to be determined, for respondents raised multiple arguments in their motion to dismiss. In particular, the proper application of the controlling legal principles to the facts is yet to be determined. The case cannot, however, be dismissed on the ground that petitioner’s allegations of harm were too conclusory to put these matters in issue.

Tuesday, June 05, 2007

SCOTUS Holds that a Party Who Obtains a Preliminary Injunciton that Later Is Dissolved Does not Qualify for Prevailing Party Statuts

Yesterday, the Supreme Court issued its decision in Sole v. Wyner, No. 06-531. Here is the Syllabus of the case:


Certiorari to the United States Court of Appeals for the Eleventh Circuit

No. 06–531. Argued April 17, 2007—Decided June 4, 2007

In private actions under 42 U. S. C. §1983, federal district courts may “allow the prevailing party … a reasonable attorney’s fee as part of the costs.” §1988(b). Plaintiff-respondent Wyner notified the Florida Department of Environmental Protection (DEP), in mid-January 2003, of her intention to create on Valentine’s Day, within MacArthur State Beach Park, an antiwar artwork consisting of nude individuals assembled into a peace sign. Responding on February 6, DEP informed Wyner that her display would be lawful only if the participants complied with Florida’s “Bathing Suit Rule,” which requires patrons of state parks to wear, at a minimum, a thong and, if female, a bikini top. To safeguard her display, and future nude expressive activities, against police interference, Wyner and a coplaintiff (collectively Wyner or plaintiff) sued Florida officials in the Federal District Court on February 12. Invoking the First Amendment ’s protection of expressive conduct, Wyner requested immediate injunctive relief against interference with the peace sign display and permanent injunctive relief against interference with future activities similarly involving nudity. An attachment to the complaint set out a 1995 settlement with DEP permitting Wyner to stage a play with nude performers at MacArthur Beach provided the area was screened off to shield beachgoers who did not wish to see the play. Although disconcerted by the hurried character of the proceeding, the District Court granted Wyner a preliminary injunction on February 13, suggesting that a curtain or screen could satisfy the interests of both the State and Wyner. The peace symbol display that took place the next day was set up outside a barrier apparently put up by the State. Once disassembled from the peace symbol formation, participants went into the water in the nude. Thereafter, Wyner pursued her demand for a permanent injunction, noting that she intended to put on another Valentine’s Day production at MacArthur Beach, again involving nudity. After discovery, both sides moved for summary judgment. At a January 21, 2004 hearing, Wyner’s counsel acknowledged that the peace symbol display participants had set up in front of the barrier. The court denied plaintiff’s motion for summary judgment and granted defendants’ motion for summary final judgment. The deliberate failure of Wyner and her coparticipants to stay behind the screen at the 2003 Valentine’s Day display, the court concluded, demonstrated that the Bathing Suit Rule’s prohibition of nudity was essential to protect the visiting public. While Wyner ultimately failed to prevail on the merits, the court added, she did obtain a preliminary injunction, and therefore qualified as a prevailing party to that extent. Reasoning that the preliminary injunction could not be revisited at the second stage of the litigation because it had expired, the court awarded plaintiff counsel fees covering the first phase of the litigation. The Florida officials appealed, challenging both the preliminary injunction and the counsel fees award. The Eleventh Circuit held first that defendants’ challenges to the preliminary injunction were moot. The court then affirmed the counsel fees award, reasoning that the preliminary order allowed Wyner to present the peace symbol display unimpeded by adverse state action.

Held: Prevailing party status does not attend achievement of a preliminary injunction that is reversed, dissolved, or otherwise undone by the final decision in the same case. Pp. 6–11.

(a) “The touchstone of the prevailing party inquiry” this Court has stated, is “the material alteration of the legal relationship of the parties in a manner which Congress sought to promote in the fee statute.” Texas State Teachers Assn. v. Garland Independent School Dist., 489 U. S. 782 . At the preliminary injunction stage, the court is called upon to assess the probability of the plaintiff’s ultimate success on the merits. The foundation for that assessment will be more or less secure depending on the thoroughness of the exploration undertaken by the parties and the court. In this case, the preliminary injunction hearing was necessarily hasty and abbreviated. There was no time for discovery, nor for adequate review of documents or preparation and presentation of witnesses. The provisional relief granted expired before appellate review could be gained, and the court’s threshold ruling would have no preclusive effect in the continuing litigation, as both the District Court and the Court of Appeals considered the preliminary injunction moot once the display took place. The provisional relief’s tentative character, in view of the continuation of the litigation to definitively resolve the controversy, would have made a fee request at the initial stage premature. Of controlling importance, the eventual ruling on the merits for defendants, after both sides considered the case fit for final adjudication, superseded the preliminary ruling. Wyner’s temporary success rested on a premise—the understanding that a curtain or screen would adequately serve Florida’s interest in shielding the public from nudity—that the District Court, with the benefit of a fuller record, ultimately rejected. Wyner contends that the preliminary injunction was not undermined by the subsequent merits adjudication because the decision to grant preliminary relief was an “as applied” ruling based on the officials’ impermissible content-based administration of the Bathing Suit Rule. But the District Court assumed content neutrality for purposes of its preliminary order. The final decision in Wyner’s case rejected the same claim she advanced in her preliminary injunction motion: that the state law banning nudity in parks was unconstitutional as applied to expressive, nonerotic nudity. At the end of the fray, Florida’s Bathing Suit Rule remained intact. Wyner had gained no enduring “chang[e] [in] the legal relationship” between herself and the state officials she sued. See Texas State Teachers Assn., 489 U. S., at 792. Pp. 6–10.

(b) Wyner is not a prevailing party, for her initial victory was ephemeral. This Court expresses no view on whether, in the absence of a final decision on the merits of a claim for permanent injunctive relief, success in gaining a preliminary injunction may sometimes warrant an award of counsel fees. It decides only that a plaintiff who gains a preliminary injunction does not qualify for an award of counsel fees under §1988(b) if the merits of the case are ultimately decided against her. Pp. 10–11.

179 Fed. Appx. 566, reversed and remanded.

Ginsburg, J., delivered the opinion for a unanimous Court.