Seventh Circuit Rejects Government Argument that It May Decide Qualified Immunity Issue before the District Court Can Address the Issue

Per Khorrami v. Rolince, --- F.3d ----, 2008 WL 3917557 (7th Cir. Aug. 27, 2008):

In the event of a brief pretrial postponement of a qualified immunity argument at the same time as the court is considering a motion under Rule 12(b)(6), the district court is the only judicial tribunal that may revisit the issue. While this will embroil the defendant official for a brief time in the litigation, there is no way to avoid these burdens altogether and at the same time conduct the litigation in a way that is fair and orderly to both parties. The fact that the Supreme Court has recognized that more than one appeal from an order denying qualified immunity is permissible, see Behrens, 516 U.S. at 306-07, shows that the Court recognizes that a certain amount of pretrial activity, including the discovery necessary to prepare a motion for summary judgment (or defend against one), is inevitable.

All of what we have just said may have been true before the Supreme Court decided Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955 (2007), the Government concedes, but, in its view, Twombly changed everything. A complaint must now include “enough facts to state a claim to relief that is plausible on its face.” Id. at 1974. In an interlocutory appeal from a denial of qualified immunity, the first question is “whether or not certain given facts showed a violation of ‘clearly established law.’ “ Johnson, 515 U.S. at 311; see also Mitchell, 472 U.S. at 528 n. 9 (“We emphasize at this point that the appealable issue is a purely legal one: whether the facts alleged ... support a claim of violation of clearly established law.”). Whether or not the district court had anything to say about it, the Government asserts that we can look at the complaint for ourselves and decide whether Khorrami can make such a showing.

This is not an appropriate way to proceed. Taken as a general proposition, it would invite interlocutory appeals on qualified immunity issues before anyone even presented the argument to the district court. The fact that appellate review from decisions to dismiss cases under FED. R. CIV. P. 12(b)(6) is de novo does not mean that litigants are entitled to bypass the district court altogether. Even if this were permissible, moreover, nothing in Twombly suggests that Khorrami's complaint is inadequate for this purpose. Khorrami's allegations about Rolince's knowledge are plausible, and only discovery will show whether they are correct. Whether Rolince in fact was aware, unaware, or reckless has yet to be shown, but those facts need not be pleaded in the complaint. See Erickson v. Pardus, 127 S.Ct. at 2200. The Government suggests that perhaps a higher pleading standard is appropriate in a qualified immunity case, but the Supreme Court has squarely rejected that proposition. See Crawford-El v. Britton, 523 U.S. 574, 594-96 (1998).

Federal Circuit Finds Jurisdiction Lacking in Declaratory Judgment Action Seeking to Avoid Patent Infringement Suit

Per U.S. Law Week, Volume 77, Number 8, Tuesday, August 26, 2008:

A company's desire to determine whether its product infringed patents held by a competitor did not create a case or controversy sufficient to support the district court's exercising jurisdiction over the company's declaratory judgment action, the U.S. Court of Appeals for the Federal Circuit held Aug. 15 (Prasco LLC v. Medicis Pharmaceutical Corp., Fed. Cir., No. 2007-1524, 8/15/08).

Along the way, the opinion by Judge Arthur J. Gajarsa explored some of the contours of the U.S. Supreme Court's holding in MedImmune Inc. v. Genentech Inc., 549 U.S. 118, 75 U.S.L.W. 4034 (2007), that the proper test for subject matter jurisdiction in declaratory judgment actions is "whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between the parties having adverse legal interests, of sufficient immediacy and reality to warrant issuance of a declaratory judgment."

BNA subscribers may view the full article on the case here.

Seventh Circuit Discusses Split Re Whether a District Court's Order to Remand to Bankruptcy Court is Appealable

Per In re Holland, --- F.3d ----, 2008 WL 3844140 (7th Cir. Aug 19, 2008):

Circuit courts remain split on which test to apply in determining whether a district court order that remands a case to a bankruptcy court is appealable. See, e.g., In re Lopez, 116 F.3d 1191, 1192 (7th Cir.1997) (cataloging cases). Most circuits have held that such an order is not final and appealable unless the remand is for "ministerial" proceedings. See, e.g., In re Pratt, 524 F.3d 580, 584-85 (5th Cir.2008), cert. denied, --- U.S. ----, 128 S.Ct. 2445, --- L.Ed.2d ---- (2008); In re Penn Traffic Co., 466 F.3d 75, 78-79 (2d Cir.2006) (per curiam); In re Torres, 432 F.3d 20, 22-23 (1st Cir.2005); In re Popkin & Stern, 289 F.3d 554, 556 (8th Cir.2002); In re Overland Park Fin. Corp., 236 F.3d 1246, 1251 (10th Cir.2001); In re Alvarez, 224 F.3d 1273, 1275 (11th Cir.2000); Jove Eng'g v. IRS, 92 F.3d 1539, 1547-48 (11th Cir.1996); In re St. Charles Preservation Investors, Ltd., 916 F.2d 727, 728-29 (D.C.Cir.1990) (per curiam); see also In re Wallace & Gale Co., 72 F.3d 21, 24 (4th Cir.1995) ("District court orders remanding cases to the bankruptcy court for further consideration are not, ordinarily, final orders."). The Sixth Circuit "will not deem final a district court's decision remanding to a bankruptcy court for further proceedings if the district court has not certified the decision pursuant to Fed.R.Civ.P. 54(b)." In re Brown, 248 F.3d 484, 485 (6th Cir.2001); see also In re Yousif, 201 F.3d 774, 781 (6th Cir.2000) (Moore, J., concurring). And the Third and Ninth Circuits apply multi-factor balancing tests to determine whether an order is final and appealable in this context. See In re Fowler, 394 F.3d 1208, 1211 (9th Cir.2005); In re Pransky, 318 F.3d 536, 540-41 (3d Cir.2003).

Our circuit precedent accords with the majority view: "[E]ven if the decision of the bankruptcy court is final, a decision by the district court on appeal remanding the bankruptcy court's decision for further proceedings in the bankruptcy court is not final, and so is not appealable to this court, unless the further proceedings contemplated are of a purely ministerial character...." In re Lopez, 116 F.3d at 1192. What remains to be decided here is hardly ministerial: the bankruptcy court still has to answer the $350,000 question whether Holland is entitled to an exemption under Florida law. See In re A.G. Fin. Serv. Ctr., Inc., 395 F.3d 410, 413 (7th Cir.2005) ("To say that the remand is for a ministerial act is to say that the district judge has fully resolved the litigation: there is no legal decision for a bankruptcy judge to make, no fact to find, no discretion to exercise."). Only then-after the bankruptcy court has made its final ruling, the district court has revisited the case, and a fresh notice of appeal to our court has been filed-can we exercise jurisdiction over the matter. See In re Fox, 762 F.2d 54, 55-56 (7th Cir.1985).

N.D. Fla. Notes Split Re Removal from State Administrative Agencies Under § 1441

Per Johnson v. Albertson's LLC, 2008 WL 3286988 (N.D. Fla. Aug 06, 2008):

The Eleventh Circuit has yet to decide whether cases may be removed from state administrative agencies pursuant to § 1441, and if so, under what circumstances. See Bellsouth Telecomm., Inc. v. Vartec Telecom, Inc., 185 F.Supp.2d 1280, 1281 (N.D.Fla.2002) (noting that "[t]he issue of removal of an administrative proceeding is one of first impression in this circuit."). The decisions from other circuits are split on how to approach the issue. Some circuits have applied a "functional" test, allowing removal in cases in which a state administrative agency essentially functions as a court. See Floeter v. C.W. Transport, Inc., 597 F.2d 1100, 1101-02 (7th Cir.1979); see also Volkswagen de Puerto Rico, Inc. v. Puerto Rico Labor Relations Bd., 454 F.2d 38, 44 (1st Cir.1966) (dictum). Other courts have rejected the "functional" approach as contrary to the plain language of the removal statute. Oregon Bureau of Labor & Indus. ex rel. Richardson v. U.S. West Communications, Inc., 288 F.3d 414, 419 (9th Cir.2002); Sun Buick, Inc. v. Saab Cars, USA, Inc., 26 F.3d 1259, 1263 (3rd Cir.1994); County of Nassau v. Cost of Living Council, 499 F.2d 1340 (Temp.Emer.Ct.App.1974) (disapproving the functional test and stating that § 1441(a) contemplates removal from other court proceedings rather than the "interruption of administrative proceedings").

Third Circuit Holds that Other Courts' Judgments May Be Vacated under Rule 60(b)'s Catch-All Provision

Per Budget Blinds, Inc. v. White, --- F.3d ----, 2008 WL 2875349 (3d Cir. July 28, 2008):

The power of a court to invoke Rule 60(b) to vacate its own earlier judgment is unquestioned. As we discuss below, however, it is unclear whether a court has the power to invoke Rule 60(b) to vacate a judgment when the court in which the judgment is registered (the “registering court”) is different from the court that entered the judgment (the “rendering court”). Nothing in the text of Rule 55(c) or Rule 60(b) suggests that a registering court lacks the power to vacate the judgment of a different rendering court. . . .

We decline to establish a categorical rule stating that registering courts lack the power to use Rule 60(b)(6) to vacate the judgments of rendering courts, but we emphasize that registering courts should exercise this power only under very limited circumstances. Even when a court is considering its own judgment, “extraordinary circumstances” must be present to justify the use of the Rule 60(b)(6) catch-all provision to vacate the judgment. See, e.g., Gonzalez v. Crosby, 545 U.S. 524, 535-36, 125 S.Ct. 2641, 162 L.Ed.2d 480 (2005) (citing Ackermann v. United States, 340 U.S. 193, 199, 71 S.Ct. 209, 95 L.Ed. 207 (1950)). When a court is considering whether to vacate another court's judgment under Rule 60(b)(6), these circumstances must be even more “extraordinary” because of the additional interest in comity among the federal district courts. We need not decide exactly how “extraordinary” a circumstance must be to justify the vacatur of another court's judgment.

Second Circuit Determines that FSIA Protects an Individual Official of a Foreign Government Acting in His Official Capacity

Per In re Terrorist Attacks on September 11, 2001, --- F.3d ----, 2008 WL 3474167 (2d Cir. Aug. 14, 2008):

This Circuit has not yet decided whether the FSIA protects an individual official of a foreign government acting in his official capacity. . . .

We join our sister circuits in holding that an individual official of a foreign state acting in his official capacity is the “agency or instrumentality” of the state, and is thereby protected by the FSIA. See Velasco v. Gov't of Indonesia, 370 F.3d 392, 399 (4th Cir.2004) (“Claims against the individual in his official capacity are the practical equivalent of claims against the foreign state.”); Keller v. Cent. Bank of Nigeria, 277 F.3d 811, 815 (6th Cir.2002) (“[N]ormally foreign sovereign immunity extends to individuals acting in their official capacities as officers of corporations considered foreign sovereigns.”); Byrd v. Corporacion Forestal y Industrial de Olancho S.A., 182 F.3d 380, 388 (5th Cir.1999) (same); Jungquist v. Sheikh Sultan Bin Khalifa Al Nahyan, 115 F.3d 1020, 1027 (D.C.Cir.1997) ( “Individuals acting in their official capacities are considered ‘agenc[ies] or instrumentalit[ies] of a foreign state;’ these same individuals, however, are not entitled to immunity under the FSIA for acts that are not committed in an official capacity.”); Chuidian v. Philippine Nat'l Bank, 912 F.2d 1095, 1101-03 (9th Cir.1990) (“We thus join the majority of courts which have similarly concluded that section 1603(b) can fairly be read to include individuals sued in their official capacity.”). Several district judges in this Circuit have reached the same conclusion. See, e.g., Leutwyler v. Office of Her Majesty Queen Rania Al-Abdullah, 184 F.Supp.2d 277, 286-87 (S.D.N.Y.2001) (Lynch, J.); Tannenbaum v. Rabin, 1996 WL 75283, at *2 (E.D.N.Y. Feb. 13, 1996) (Glasser, J.); Bryks v. Canadian Broad. Corp., 906 F.Supp. 204, 210 (S.D.N.Y.1995) (Mukasey, J.); Kline v. Kaneko, 685 F.Supp. 386, 389 n. 1 (S.D.N.Y.1988) (Ward, J.).

The Seventh Circuit is an outlier. It has construed the FSIA's grant of immunity narrowly, to exclude individual government officials, reasoning that “[i]f Congress meant to include individuals acting in the official capacity in the scope of the FSIA, it would have done so in clear and unmistakable terms.” Enahoro v. Abubakar, 408 F.3d 877, 881-82 (7th Cir.2005).

Most Plaintiffs Who Reject Settlement Offers Do Worse at Trial

Here's a story from the ABA Journal Online (8/11/08):

By Debra Cassens Weiss

The gamble of going to trial doesn’t pay off for most plaintiffs, according to a study of more than 2,000 civil suits from 2002 to 2005.

Sixty-one percent of plaintiffs who turned down settlement offers ended up faring worse at trial, according to a New York Times story on the study. The average settlement offer was $48,700 and the average award at trial was $43,000, a difference of $5,700.

Defendants were wrong in just 24 percent of the cases, but for them the cost of a bad gamble was must larger. The average plaintiff’s settlement demand in those cases was $770,900 and the average verdict was $1.9 million, a difference of more than $1.1 million.

Plaintiffs were more likely to make poor choices about going to trial in contingency fee cases. On the defense side, defendants were more likely to make poor choices when there was no insurance coverage.

The study will be published in September in the Journal of Empirical Legal Studies

Standing Committee Requests Comments on Proposed Amendments to the Federal Civil Rules

The Committee on Rules of Practice and Procedure of the Judicial Conference of the United States (the Standing Committee) has published proposed amendments to the Federal Rules of Civil Procedure for comment. The proposed amendments are to Rule 26 (discovery) and Rule 56 (summary judgment).

Hearings on the proposed changes to the civil rules will be held in Washington, D.C., on November 17, 2008, in San Antonio, Texas, on January 14, 2009, and in San Francisco, California, on February 2, 2009. All comments are due by February 17, 2009.

Links to information about the proposed amendments appear below:

• Brochure Summarizing Proposed Amendments to the Federal Rules August 2008 (PDF)
• Report of the Advisory Committee on Civil Rules May 2008 (PDF)

Northwestern University Law Review Publishes Special Edition on Preemption

The Northwestern University Law Review recently published a special edition for a symposium entitled Ordering State-Federal Relations Through Federal Preemption Doctrine. Here are the articles included in the symposium:

Nury Raquel Agudo & Alison E. Buckley, Foreward: Symposium on Ordering State-Federal Relations Through Federal Preemption Doctrine

David A. Danam Democratizing the Law of Federal Preemption

Richard A. Epstein, Federal Preemption, and Federal Common Law, in Nuisance Cases

Robert L. Glickman & Richard E. Levy, A Collective Action Perspective on Ceiling Preemption By Federal Environmental Regulation: The Case of Global Climate Change

Howard A. Learner, Restraining Federal Preemption When There Is An "Emerging Consensus" Of State Environmental Laws and Policies

Raymond B. Ludwiszewski & Charles H. Haake, Cars, Carbon, and Climate Change

Nina A. Mendelson, A Presumption Against Agency Preemption

Thomas W. Merrill, Preemption and Institutional Choice

Mark D. Rosen, Contextualizing Preemption

Robert A. Schapiro, Monophonic Preemption

Catherine M. Sharkey, The Fraud Caveat to Agency Preemption

Ernest A. Young, Executive Preemption

Ninth Circuit Reverses Dismissal of Securities Fraud Claim

Per In re Gilead Sciences Securities Litigation, --- F.3d ----, 2008 WL 3271039 (9th Cir. Aug. 11, 2008):

Based on our own review, we find the complaint sufficiently alleges a causal relationship between (1) the increase in sales resulting from the off-label marketing, (2) the Warning Letter's effect on Viread orders, and (3) the Warning Letter's effect on Gilead's stock price.

Perhaps what truly motivated the dismissal was the district court's incredulity. The court expressly identified two allegations it was unwilling to accept. First, it could not make “the unreasonable inference that a public revelation on August 8 caused a price drop three months later on October 28.” Order Granting Defs.' Mot. to Dismiss at 11. Second, with respect to the Warning Letter's impact on Viread sales, the court found “a slowing increase in demand, alone, too speculative to adequately demonstrate loss causation.” Id. at 12 n. 10.

As an initial matter, we note that a district court ruling on a motion to dismiss is not sitting as a trier of fact. It is true that the court need not accept as true conclusory allegations, nor make unwarranted deductions or unreasonable inferences. Sprewell, 266 F.3d at 988. But so long as the plaintiff alleges facts to support a theory that is not facially implausible, the court's skepticism is best reserved for later stages of the proceedings when the plaintiff's case can be rejected on evidentiary grounds. “[A] well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.” Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007) (internal quotation marks omitted).

There is no exception to this rule for the element of loss causation. The Third Circuit has stated that “loss causation becomes most critical at the proof stage,” and has cited scholarly authority stating that it is normally inappropriate to rule on loss causation at the pleading stage. McCabe v. Ernst & Young, LLP, 494 F.3d 418, 427 n. 4 (3rd Cir.2007) (internal quotation marks omitted). Similarly, the Second Circuit has held that loss causation “is a matter of proof at trial and not to be decided on a Rule 12(b)(6) motion to dismiss.” Emergent Capital Inv. Mgmt., LLC. v. Stonepath Group, Inc., 343 F.3d 189, 197 (2d Cir.2003). But see Lentell v. Merrill Lynch & Co., 396 F.3d 161, 172-77 (2d Cir.2005) (failure to plead any facts supporting loss causation warranted 12(b)(6) dismissal of complaint).

We agree. So long as the complaint alleges facts that, if taken as true, plausibly establish loss causation, a Rule 12(b)(6) dismissal is inappropriate. This is not “a probability requirement ... it simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of” loss causation. Bell Atl., 127 S.Ct. at 1965.

D. Colorado Notes Improper Prolixity of Pro Se Complaint but Addresses Substance Issues of Motion to Dismiss Instead

Per Tassio v. Mullarkey, Slip Copy, 2008 WL 3166149 (D. Colo. Aug. 05, 2008):

Mr. Tassio's complaint takes the term prolix to new heights. In spite of his efforts to provide an outline of his claims, it is redundant and tedious to the extreme and pleonastic to the point of being indecipherable. For instance, the Sixth Claim for Relief begins on page 32 and continues through page 64, going through Colorado's admission to the Union, congressional statements from 1861, the governor's early duties, and on and on ad nauseam for thirty-two pages, many of them containing large blocks of single spaced quotations. The complaint “contains frivolous and groundless tax protester rhetoric that has been rejected repeatedly by this and every other court that has considered it.” Scheckel v. United States, 2005 WL 3434149, 2 (N.D.Iowa, 2005).

It would be utterly impossible for the state defendants to respond to such a tome. For this reason alone, the plaintiff's complaint should be dismissed pursuant to Fed.R.Civ.P. 8. However, since there is a high risk that plaintiff will simply trim his complaint of “some” superfluous verbage, this court chooses to address the other substantive issues presented in the state defendants Motion to Dismiss. . . .

ABA Litigation Research Fund Seeking Grant Applicants

The ABA Section of Litigation invites applications to The Litigation
Research Fund which makes individual awards of between $5,000 and
$20,000 to support original and practical scholarly work that
significantly advances the understanding of civil litigation in the
United States. The Fund was established in 2007 to support research and
writing projects relevant to litigation policy and practice, with
preference given to works with an empirical foundation. The first round
of funding in early 2008 resulted in seven grants totaling approximately
$70,000. Priority will be given to applications received by August 31,
2008. For additional information, see
http://www.abanet.org/litigation/researchfund.

Prof. Nash Posts Article on Transjurisdictional Adjudication

Professor Jonathan Remy Nash (Tulane) has recently posted an article entitled The Uneasy Case for Transjurisdictional Adjudication on SSRN. Here is the Abstract:

Federal courts often decide cases that include matters of state law, while state courts often decide cases that raise matters of federal law. Most of these cases are decided within the court system in which they originate. Recent commentary advocates more transjurisdictional adjudication through the expanded use of existing procedural devices, and development of new devices. Some commentators endorse greater use of certification by federal courts, while others advocate greater use of transjurisdictional procedural devices to increase the availability of a federal forum to resolve federal legal issues. In this Article, I call for refinement of this approach and argue that commentators have overlooked several looming obstacles. First, the ability of state courts to resolve issues of state law and federal courts issues of federal law relies upon the erroneous assumption that issues of federal and state law are readily separable. Second, the use of transjurisdictional procedural devices that send back to state court state law issues that federal courts otherwise would decide run the risk of admitting state court bias, or the appearance of bias, against out-of-state litigants. Third, commentators underestimate the extent to which transjurisdictional adjudication relies upon cooperation between court systems. Identifying these obstacles leads to a fuller recognition of the costs and benefits of transjurisdictional adjudication, which in turn is useful as a metric against which to measure existing and proposed transjurisdictional procedural devices and as an aid in refining existing devices.

The full-text version of the Article may be downloaded by visiting http://ssrn.com/abstract=1142984.

Chase College of Law Northern Kentucky University Law Review Call for Papers (E-Discovery)

Chase College of Law’s Northern Kentucky University Law Review welcomes proposals of both articles and panel presentations for its spring 2009 symposium on E-discovery. The symposium will be held Saturday, February 28, 2009. CLE approval will be sought for Kentucky, Ohio and Indiana. Drafts of the articles would need to be submitted by January 1, 2009, with an expected publication date of spring 2009. Travel expenses for panelists will be covered. Please contact Associate Professor Jennifer Anglim Kreder at krederj1@nku.edu to apply. Applications are due by Friday, September 26, 2008.