Tuesday, December 30, 2008

Second Circuit Declines to Take Up Alternate Basis for Affirming Judgment, Remanding to Hear More from the DCT on the Issue

Per Fisher v. JPMorgan Chase & Co., Slip Copy, 2008 WL 5381269 (2d Cir. Dec. 24, 2008):

The defendants nonetheless ask that we affirm the judgment on alternative legal grounds that they presented to the district court in their application for summary judgment, but which the district court did not address in the order which is the basis for this appeal. We have the ability to affirm on grounds different from those relied upon by the district court where we find it appropriate to do so. See, e.g., Adirondack Transit Lines, Inc. v. United Transp. Union, Local 1582, 305 F.3d 82, 88 (2d Cir.2002).

In this case, however, the district court explicitly rejected the defendants' arguments in this regard in an oral opinion denying their earlier motion to dismiss, ruling that most of the arguments were not amenable to judgment on the pleadings. There being no final judgment at that time, the defendants could not seek our review of that order. They invite us now, in effect, to do just that by deciding in the first instance whether the litigation should be terminated in their favor “on the pleadings.”

We decline to do so. First, because the district court likely did not anticipate appellate review of its decision declining to dismiss, the oral decision may not reflect the court's entire consideration of the issues. Second, the district court's ruling occurred before the Supreme Court's decision in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007), which may have altered the applicable standard for the sufficiency of the pleadings here. Third, even though a decision on this issue may ultimately be reviewable by us de novo, we will likely benefit from the district court's further attention to it, and, if it deems it necessary or advisable, further discovery. See Beckford v. Portuondo, 234 F.3d 128 (2d Cir.2000) (per curiam) (court of appeals benefits from a complete and comprehensive decision by a district court granting a motion for summary judgment even though our standard of review is de novo ).

Friday, December 19, 2008

Second Circuit Reverses District Court's Conversion of 12(b)(6) Motion to Summary Judgment Motion

Per Sahu v. Union Carbide Corp., 548 F.3d 59 (2d Cir. Nov. 3, 2008):

When a district court converts a motion to dismiss into one for summary judgment, “[a]ll parties must be given a reasonable opportunity to present all the material that is pertinent to the motion.” Fed.R.Civ.P. 12(d). . . .

The district court did not explicitly notify the parties before converting the Rule 12(b)(6) motion into a motion for summary judgment. That was unnecessary, in the court's view, because the plaintiffs were “on notice of a possible conversion”: “[B]oth parties submitted matters outside the pleadings” and the plaintiffs entitled their opposition to the defendants' motion to dismiss “Memorandum of Law in Opposition to Motion to Dismiss and/or for Summary Judgment....” Sahu I, 418 F.Supp.2d at 411. In light of the particular complexities of this litigation, we disagree with the district court's conclusion that the plaintiffs received sufficient notice.

. . .

We think that the title of the defendants' memorandum in support of its motion as a motion to dismiss or for summary judgment . . . failed to provide the plaintiffs with adequate notice. A motion called a motion for summary judgment, whether or not stated as alternatively for dismissal, ordinarily will place a plaintiff on notice that the district court is being asked to look beyond the pleadings to the evidence in order to decide the motion. In this case, however, where the plaintiffs had filed a multi-count complaint and the supporting memoranda and evidence can fairly be read to seek only dismissal under Rule 12(b)(6) on some counts and summary judgment on others, the motion papers provided insufficient notice. The plaintiffs should have been made aware that all counts could or would be decided under the summary judgment standard in order to give them the opportunity to oppose the motion with evidence and a focused argument.

Wednesday, December 17, 2008

Prof. Robert Jones Posts Article on Historical Origins of Diversity Jurisdiction on SSRN

Professor Robert Jones (Northern Illinois) recently posted an Article entitled Finishing a Friendly Argument: The Jury and the Historical Origins of Diversity Jurisdiction on SSRN. Here is the Abstract:

This Article argues that diversity jurisdiction was intended to funnel politically significant litigation into the federal courts principally because federal officials would have the power to dictate the composition of federal juries. All existing accounts for the origins of diversity jurisdiction ultimately rely upon putative differences between the state and federal benches for their explanations of the jurisdiction's origin. This emphasis on the bench is anachronistic, however, because the jury possessed far more power than the bench to decide cases in eighteenth-century American courts. American juries during this period customarily had the right to decide issues of law as well as fact and were largely beyond the control of the bench. The Framers saw state court juries - independent bodies of citizens with almost unfettered power to resolve legal disputes -as one of the greatest dangers in allo wing ordinary citizens too much control over the governance of the nation. By wresting adjudicative power out of the hands of state court juries and bestowing it upon federal juries whose compositions could be tightly controlled by federal officials, diversity jurisdiction accomplished the Constitution's overarching purpose of checking the operation of "unrestrained" democracy in the states.

Once the federal courts were established, federal officials controlled the composition of federal juries in several ways. In most districts, federal marshals dictated the composition of federal juries by hand-selecting jurors of their choice. In addition, Congress ensured that the political, economic, and social characteristics of federal juries would differ dramatically from their state counterparts by providing that the federal courts would draw their juries overwhelmingly from the urban, commercial centers of the nation. The state courts, by contrast, drew their juries predominantly from the agrarian populations living outside those centers. It is highly unlikely that this pervasive control over the composition of federal juries was an unintended consequence of the Constitution. Instead, as this Article argues, the evidence strongly suggests that the federal officials' control over the composition of federal juries constituted the single most important impetus behind the creation of diversity jurisdiction and a significant rationale for the establishment of the lower federal courts.

This Article may be downloaded by visiting http://ssrn.com/abstract=1295043.

Monday, December 15, 2008

SCOTUS Decides Labeling Act Pre-emption Case

The Supreme Court issued a decision in ALTRIA GROUP, INC., et al. v. GOOD et al. (No. 07–562. Argued October 6, 2008—Decided December 15, 2008). Here is the Syllabus:

Respondents, smokers of petitioners’ “light” cigarettes, filed suit, alleging that petitioners violated the Maine Unfair Trade Practices Act (MUTPA) by fraudulently advertising that their “light” cigarettes delivered less tar and nicotine than regular brands. The District Court granted summary judgment for petitioners, finding the state-law claim pre-empted by the Federal Cigarette Labeling and Advertising Act (Labeling Act). The First Circuit reversed, holding that the Labeling Act neither expressly nor impliedly pre-empts respondents’ fraud claim.

Held: Neither the Labeling Act’s pre-emption provision nor the Federal Trade Commission’s actions in this field pre-empt respondents’ state-law fraud claim. Pp. 5–20.

(a) Congress may indicate pre-emptive intent through a statute’s express language or through its structure and purpose. See Jones v. Rath Packing Co., 430 U. S. 519 . When the text of an express pre-emption clause is susceptible of more than one plausible reading, courts ordinarily “accept the reading that disfavors pre-emption.” Bates v. Dow Agrosciences LLC, 544 U. S. 431 . The Labeling Act’s stated purposes are to inform the public of the health risks of smoking while protecting commerce and the economy from the ill effects of nonuniform requirements to the extent consistent with the first goal. Although fidelity to these purposes does not demand the pre-emption of state fraud rules, the principal question here is whether that result is nevertheless required by 15 U. S. C. §1334(b), which provides that “[n]o requirement or prohibition based on smoking and health shall be imposed under State law with respect to the advertising or promotion of any cigarettes the packages of which are labeled in conformity with the provisions of this chapter.” Pp. 5–9.

(b) Respondents’ claim is not expressly pre-empted by §1334(b). As determined in Cipollone v. Liggett Group, Inc., 505 U. S. 504 , and Lorillard Tobacco Co. v. Reilly, 533 U. S. 525 , the phrase “based on smoking and health” modifies the state-law rule at issue rather than a particular application of that rule. The Cipollone plurality concluded that “the phrase ‘based on smoking and health’ fairly but narrowly construed” did not pre-empt the Cipollone plaintiff’s common-law claim that cigarette manufacturers had fraudulently misrepresented and concealed a material fact, because the claim alleged a violation of a duty not to deceive—a duty that is not “based on” smoking and health. 505 U. S., at 528–529. Respondents here also allege a violation of the duty not to deceive as codified in the MUTPA, which, like the common-law duty in Cipollone, has nothing to do with smoking and health. Respondents’ claim is not analogous to the “warning neutralization” claim found to be pre-empted in Cipollone. Reilly is consistent with Cipollone’s analysis. This Court disagrees with petitioners’ alternative argument that the express pre-emption framework of Cipollone and Reilly should be rejected. American Airlines, Inc. v. Wolens, 513 U. S. 219 , and Riegel v. Medtronic, Inc., 552 U. S. ___, are distinguished. Pp. 9–16.

(c) Various Federal Trade Commission decisions with respect to statements of tar and nicotine content do not impliedly pre-empt state deceptive practices rules like the MUTPA. Pp. 17–20.

501 F. 3d 29, affirmed and remanded.

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

Wednesday, December 10, 2008

Prof. Bone Posts Article on the Need for Procedure Theory

Professor Robert Bone (Boston U.) has recently posted an article entitled Making Effective Rules: The Need for Procedure Theory (which will be published in the Oklahoma Law Review) on SSRN. Here is the Abstract:

This essay is the published and somewhat expanded version of a presentation to the meeting of the AALS Section on Civil Procedure at the January 2008 AALS annual meeting. The essay argues that effective rulemaking in civil procedure requires not only more empirical work on how procedural rules actually operate in practice, but also more rigorous normative work on how rule choices can be justified in theory. The essay begins with a brief overview of the history of procedural reform, focusing on the Field Code reforms, the 1938 Federal Rule reforms, and the current reform movement that began roughly in the late 1970s. The essay argues that the current movement, in sharp contrast to the two earlier ones, lacks a sense of shared mission and common purpose, and that this normative gap adversely affects the quality of the rule reforms that are implemented. The essay then briefly discusses three fundamental normative issues that are in need of much more careful analysis: (1) the proper way to conceive the relationship between procedure and substantive law; (2) the proper role of settlement in civil adjudication, and (3) the proper way to value individual participation and the participation right.

The full version of the Article may be downloaded by visiting http://ssrn.com/abstract=1307774.

Wednesday, December 03, 2008

Prof. Bone Post Article on Twombly and Access to Courts

Professor Robert G. Bone (Boston University) has recently posted his forthcoming Article, Twombly, Pleading Rules, and the Regulation of Court Access. Here is the Abstract:

In Bell Atlantic Corp. v. Twombly, the Supreme Court reconsidered Conley v. Gibson's very liberal notice pleading standard and held that the plaintiff must allege enough to support a plausibility of wrongdoing. This Article considers the Twombly decision within the broader framework of court access regulation and sketches a normative roadmap for designing optimal pleading and merits-based case-screening rules. The Article begins with an analysis of Twombly itself. It argues, contrary to much criticism of the decision, that the Court's plausibility standard represents only a modest departure from traditional notice pleading and that its interpretation of Rule 8(a)(2) is consistent with the text and history of the Rule and in line with the pragmatic vision of the original Federal Rule drafters. The Article then addresses the broader normative issues involved in regulating court access through stricter pleading and other case-screening devices. It argues that a pleading requirement along the lines of Twombly's thin plausibility standard might be justified by a process-based theory of fairness as reason-giving, but that anything stronger must be evaluated on outcome-based grounds. Applying utilitarian and rights-based metrics of outcome quality, the Article then explores various methods of screening meritless suits. It highlights several issues that are often ignored or misunderstood, including the importance of carefully defining the undesirable lawsuits to be screened, correctly identifying the causes of the problem, and proceeding cautiously in the absence of empirical information by designing regulatory responses to fit the most probable causes. It argues that information asymmetry is likely to be a more important cause of meritless litigation than the commonly assumed cost asymmetry, and it outlines a hybrid approach to handle the information-asymmetry cases. The Article concludes by emphasizing the importance of using formal rulemaking or the legislative process to design case-screening rules and making those rules substance-specific rather than trans-substantive.

The full-text version of the Article may be downloaded by visiting http://ssrn.com/abstract=1307881.

Monday, December 01, 2008

S.D. Ill. Holds that Denial of Multistate Class Action Certification Ends Subject Matter Jurisdiction under CAFA

Per BNA's Class Action Litigation Report, Nov. 28, 2008:

Citing the disfavor of multistate class actions, and finding the denial of class status ended federal jurisdiction, a federal judge refused Nov. 12 to certify a class of purchasers of allegedly spontaneously-shattering glass-top patio tables (Ronat v. Martha Stewart Living Omnimedia Inc., S.D. Ill., No. 3:05-cv-00520, 11/12/08).

The multistate claims, asserted through the use of six subclasses, fell short of the requirement that a class action be manageable, Judge G. Patrick Murphy of the U.S. District Court for the Southern District of Illinois said.

Murphy drew on a recent decision by the U.S. Court of Appeals for the Seventh Circuit, Thorogood v. Sears, Roebuck & Co., No. 08-1590, 2008 WL 4709500 (7th Cir. Oct. 28, 2008) (9 CLASS 902, 11/14/08), which rejected class certification for “half a million claims wrested from the control of the courts of 29 jurisdictions.”

Murphy joined those federal courts that found no subject-matter jurisdiction after the denial of class certification, and dismissed the case. Seven other district courts, Murphy observed, have determined they did not retain jurisdiction under the Class Action Fairness Act after denying class certification; three district courts have made the opposite ruling.