Thursday, July 31, 2014

Specific, Not General, Jurisdiction Upheld Over Non-Residents' Claims Against Bristol-Myers

A recent opinion from the California Court of Appeals perhaps illustrates the extent to which defendants have been emboldened by the United States Supreme Court's decision striking down personal jurisdiction in Daimler AG v. Bauman.

In Bristol-Myers Squibb Co. v. Superior Court of San Francisco County, No. A140035 (Cal. App. July 30, 2014), BMS filed a petition for writ of mandate to reverse the trial court's ruling upholding personal jurisdiction.  The court set the scene:

Defendant Bristol-Myers Squibb Company (BMS) has been sued by dozens of California residents in a coordinated proceeding before the San Francisco Superior Court. They allege defects in Plavix, a drug BMS manufactures and sells throughout the country. Jurisdiction over BMS as to these plaintiffs is conceded. The question presented is whether California also has jurisdiction over BMS regarding identical Plavix defects claims brought by hundreds of non-resident co-plaintiffs, the real parties in interest here (RPI), in the same coordinated proceeding, consistent with the Due Process Clause of the Fourteenth Amendment.

The trial court had upheld general jurisdiction over the non-residents' claims against BMS because:

[I]t had sold in the state nearly $1 billion worth of Plavix between 2006 and 2012 and 196 million Plavix pills between 1998 and 2006, had been registered with the California Secretary of State to conduct business since 1936, maintained an agent for service of process in Los Angeles, operated five offices in California that employed approximately 164 people, employed approximately 250 in-state sales representatives, owned a facility in Milpitas employing 85 people that was used primarily for research, operated other facilities that were used primarily for research and laboratory activities in Aliso Viejo, San Diego and Sunnyvale, and had a small office in Sacramento that was used by the company’s Government Affairs group.

Despite these extensive contacts with California, the appellate court concluded that after Daimler, California could not exercise general jurisdiction over BMS because it was not "at home" in the forum.  

All was not lost for the non-resident plaintiffs, however.  Turning to specific jurisdiction, the court relied on Keeton v. Hustler Magazine to show that "the doctrine of specific jurisdiction can apply to the claims of a non-resident against a non-resident."  Further, the court noted that although the United States Supreme Court has not yet defined "what it means for a suit to 'arise out of' or 'relate' to a defendant’s contacts with the State," California has adopted the “'substantial connection' test, under which the relatedness requirement is satisfied if 'there is a substantial nexus or connection between the defendant’s forum activities and the plaintiff’s claim.'”

The court held that there was a "substantial connection" between BMS' extensive contacts with California and the non-residents' claims of injury involving Plavix:

BMS has “deliberately exploited” the relevant market in the State (Keeton, supra, 465 U.S. at p. 781) for many years, having sold over 196 million Plavix pills in California between 1998 and 2006 and nearly $1 billion worth of Plavix between 2006 and 2012.
Further, plaintiffs allege BMS’s Plavix sales in California have led to injuries to California residents that are the same as those suffered by the RPI.

Finally, the court held that BMS had not satisfied its burden of showing that California's exercise of specific jurisdiction was unreasonable. 

Hat tip: Levi Wilkes (St. Thomas J.D. Candidate 2015)

July 31, 2014 in Mass Torts, Recent Decisions, State Courts | Permalink | Comments (0)

Wednesday, July 30, 2014

Michalski and Wood on Twombly and Iqbal at the State Level

Roger Michalski (Brooklyn Law School) and Abby Wood (USC Gould School of Law) have posted Twombly and Iqbal at the State Level to SSRN.

This paper contributes to the empirical literature on pleading standards by studying the effect of Twombly and Iqbal at the state level. Studying pleading in the states is appealing for three reasons.

First, the findings of this paper are the first to address the empirical workings of pleading regimes where most litigation in the United States occurs. States account for the majority of civil litigation, yet they are understudied doctrinally and empirically. Here, we examine filing behavior, the content and length of complaints, the use of amended complaints, voluntary dismissals, motion to dismiss filed, and dismissal rates. 

Second, federal civil procedures only vary across time. There is only one pre-Iqbal federal pleading regime and one post-Iqbal regime. When we consider pleading at the state level, we can leverage differences across space and time. When some states change pleading standards while others do not (as here), we are presented with a natural experiment on the effects of pleading standards ripe for empirical study.

Third, our focus on the state level allows us to introduce synthetic controls to the study of pleading. Using synthetic controls frees us from one of the basic vulnerabilities of using one specific state (or group of states) as a comparison category – the threat that the states are fundamentally different, and we are instead comparing apples and oranges. Synthetic controls allows us to construct a composite of states as a control state, which, by construction, is a close match to the treatment state. 

Until now, we simply did not know whether the existing literature at the federal level analyzed an outlier jurisdiction or whether pleading functions similarly in both state and federal courts. This paper fills that gap and lays the groundwork for future empirical research on national procedural uniformity and divergence.

July 30, 2014 | Permalink | Comments (0)

Saturday, July 26, 2014

Wiessner on Mass Claims in the Context of Argentina's Debt Defaults

My colleague Siegfried Wiessner, Professor of Law and the Director of St. Thomas' Graduate Program in Intercultural Human Rights, has posted on SSRN his article Democratizing International Arbitration? Mass Claims Proceedings in Abaclat v. Argentina.  This is a fascinating account of the decision of the International Center for the Settlement of Investment Disputes to allow some 60,000 individual Italian bondholders to proceed against Argentina for its default on those bonds – the first mass claim presented before an ICSID tribunal.  In support of the ICSID's decision, Professor Wiessner surveys US class action practice, the European Union's collective redress mechanisms (including representative collective actions, group actions, and test cases), and International Mass Claims Commissions.

Abstract:     

Mass claims have been accepted, in principle, in the landmark 2011 ICSID Decision on Jurisdiction and Admissibility of Abaclat v. Argentina. Welcoming this development as providing novel access for the common man and woman to international investment arbitration, the author explores related streamlined procedures in domestic and international law -- such as class actions and international mass claims commissions as well as vanguard use of technology and statistical methods -- that allow the processing of a high number of claims arising from common factual and/or legal issues with a view toward elaborating rules and mechanisms tailor-made for the context of international arbitration.

July 26, 2014 in Class Actions, International Courts, International/Comparative Law | Permalink | Comments (0)

Friday, July 25, 2014

Wisconsin Adopts Twombly's Plausibility Standard

In a 4-3 decision, the Wisconsin Supreme Court has adopted the plausibility pleading standard of the U.S. Supreme Court's opinion in Bell Atlantic Corp. v. Twombly.  Data Key Partners v. Permira Advisers LLC,  No. 2012AP1967 (Wis. July 23, 2014).

The court reversed the Wisconsin Court of Appeals' ruling that plaintiffs had alleged sufficient facts to show breach of fiduciary duty against the defendants.  Wisconsin's pleading rule requires a complaint to contain "[a] short and plain statement of the claim, identifying the transaction or occurrence or series of transactions or occurrences out of which the claim arises and showing that the pleader is entitled to relief."  Wis. Stat. § 802.02(1)(a).

The court held that "[p]laintiffs must allege facts that, if true, plausibly suggest a violation of applicable law," stating that "Twombly is consistent with our precedent."  The court also asserted that Twombly had overruled Conley v. Gibson.  (In my view, however, Twombly only overruled Conley's "no set of facts" standard, not the entire opinion.)

Justice Shirley Abramson, for two other justices, dissented.

I would follow Wisconsin law and conclude that as a general rule, parties need not plead specific facts at the motion-to-dismiss phase.  In the instant case, although the plaintiffs raised the business judgment rule in their complaint, the plaintiffs also set forth sufficient facts to plead around the rule and provide notice to the defendants of the claim being alleged.

. . . Under Twombly/Iqbal, federal district courts have increased the rate at which they grant motions to dismiss.  

No Wisconsin case has adopted the rule as stated in Twombly and Iqbal.  Twombly was not argued or briefed in the instant case.  The majority opinion relies on the Twombly heightened pleading standard without any briefing or argument. I have written before that this court should give counsel the opportunity to develop arguments before the court in the adversarial system. . . .

July 25, 2014 in Recent Decisions, State Courts, Twombly/Iqbal | Permalink | Comments (0)

Wednesday, July 23, 2014

Article III Standing and Yesterday's ACA Decisions (Halbig & King)

By now most folks have seen yesterday’s conflicting rulings over whether the Affordable Care Act authorizes subsidies for individuals who purchase insurance on a federal exchange (as opposed to exchanges run by the states). The D.C. Circuit found that such subsidies were not statutorily authorized (the Halbig case). And an hour later, the Fourth Circuit found that the subsidies were statutorily authorized (the King case).

The merits of these decisions, as a practical matter and in terms of statutory interpretation, have received tremendous attention. But Article III standing was also an issue in both Halbig and King. Who, after all, suffers the constitutionally required “injury in fact” by virtue of receiving a subsidy? The answer: People who would be subject to the individual mandate if they are entitled to the subsidy but would not be subject to the individual mandate (on income grounds) without the subsidy. Here’s how the Halbig majority explained it with respect to one of the plaintiffs in that case, David Klemencic:

Klemencic resides in West Virginia, a state that did not establish its own Exchange, and expects to earn approximately $20,000 this year. He avers that he does not wish to purchase health insurance and that, but for federal credits, he would be exempt from the individual mandate because the unsubsidized cost of coverage would exceed eight percent of his income. The availability of credits on West Virginia’s federal Exchange therefore confronts Klemencic with a choice he’d rather avoid: purchase health insurance at a subsidized cost of less than $21 per year or pay a somewhat greater tax penalty.

The D.C. Circuit found that this was sufficient for purposes of Article III standing, and the Fourth Circuit reached the same conclusion. From the Halbig majority opinion (footnote omitted):

The government characterizes Klemencic’s injury as purely ideological and hence neither concrete nor particularized. But, although Klemencic admits to being at least partly motivated by opposition to “government handouts,” he has established that, by making subsidies available in West Virginia, the IRS Rule will have quantifiable economic consequences particular to him. See Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147 (2013) (explaining that a “threatened injury” that is “certainly impending” may “constitute injury in fact” (emphasis and internal quotation marks omitted)). Those consequences may be small, but even an “‘identifiable trifle’” of harm may establish standing. Chevron Natural Gas v. FERC, 199 F. App’x 2, 4 (D.C. Cir. 2006) (quoting United States v. Students Challenging Regulatory Agency Procedures, 412 U.S. 669, 689 n.14 (1973)); see Bob Jones Univ. v. United States, 461 U.S. 574, 581-82 (1983) (noting that Bob Jones University sued for a tax refund of $21.00). Klemencic thus satisfies the requirement of establishing an injury in fact, and because that injury is traceable to the IRS Rule and redressable through a judicial decision invalidating the rule, we find that he has standing to challenge the rule.

And from the King opinion:

We agree that this represents a concrete economic injury that is directly traceable to the IRS Rule. The IRS Rule forces the plaintiffs to purchase a product they otherwise would not, at an expense to them, or to pay the tax penalty for failing to comply with the individual mandate, also subjecting them to some financial cost. Although it is counterintuitive, the tax credits, working in tandem with the Act’s individual mandate, impose a financial burden on the plaintiffs.

The defendants’ argument against standing is premised on the claim that the plaintiffs want to purchase “catastrophic” insurance coverage, which in some cases is more expensive than subsidized comprehensive coverage required by the Act. The defendants thus claim that the plaintiffs have acknowledged they would actually expend more money on a separate policy even if they were eligible for the credits. Regardless of the viability of this argument, it rests on an incorrect premise. The defendants misread the plaintiffs’ complaint, which, while mentioning the possibility that several of the plaintiffs wish to purchase catastrophic coverage, also clearly alleges that each plaintiff does not want to buy comprehensive, ACA-compliant coverage and is harmed by having to do so or pay a penalty. The harm in this case is having to choose between ACA-compliant coverage and the penalty, both of which represent a financial cost to the plaintiffs. That harm is actual or imminent, and is directly traceable to the IRS Rule.

 

 

July 23, 2014 in Current Affairs, Federal Courts, Recent Decisions, Standing, Subject Matter Jurisdiction | Permalink | Comments (0)

Friday, July 18, 2014

Free CLE for ABA Members on the Legal Implications of Mobile Devices

The ABA is presenting a free (to members) Webinar called "The Mobile Transformation: The Extraordinary Legal Implications of Billions of Mobile Devices" on Monday, July 21, 2014 from 1:00-2:30 p.m.   

Information on the Webinar is here.

July 18, 2014 in Conferences/Symposia, Discovery | Permalink | Comments (0)

Monday, July 7, 2014

Call for Papers -- AALS Section on Civil Procedure

The Civil Procedure Section of the AALS will present a panel, “The Rising Bar to Federal Courts: Beyond Pleading and Discovery,” at the 2015 AALS Annual Meeting in Washington, D.C.  The panel will run from 10:30 a.m. to 12:15 p.m. on Saturday, January 3, 2015, at the Washington Marriott Wardman Park Hotel.  This panel brings together a group of people with different roles and perspectives to provide insights and commentary on the effects of civil procedure rules and doctrine on the current federal court docket.  Confirmed outside speakers include a United States District Court judge, an empirical researcher from the Federal Judicial Center, a plaintiffs’ side attorney, and a lawyer from the defense bar. 

The Section seeks 1-2 academic speakers/papers for further perspective on how developments in rules and case law are acting at the federal trial court level to affect and restrict the nature of the court docket.  While tremendous attention has been given to Twombly/Iqbal and discovery rules, our panel seeks to go beyond these two “usual suspects” to focus on other developments in doctrine and rulemaking that also alter the potential for court access, including, but not limited to, issues around personal jurisdiction, mandatory ADR, transnational litigation, and class actions.    

The selected author(s) will present their papers at the AALS annual meeting in January 2015 in Washington, D.C.  Neither the AALS nor the Section is able to provide travel funding.  The selected authors and all panelists will have the opportunity to publish their papers in the Journal of Civil Rights and Economic Development (St. John’s Law School), subject to final approval by the journal editors. 

All draft papers must be submitted by Tuesday, September 2, 2014.  Please send submissions to Rebecca Hollander-Blumoff, Chair of the Section on Civil Procedure, by email to hollanderblumoff@wulaw.wustl.edu.  Respondents will be notified of the Section’s decision by the end of September.  

July 7, 2014 in Conferences/Symposia | Permalink | Comments (0)

Thursday, July 3, 2014

Cert Grant on Issue Preclusion in Trademark Case

The Supreme Court has granted cert in a trademark infringement case involving a collateral estoppel issue.  The questions presented in B&B Hardware, Inc. v. Hargis Industries, Inc., No. 13-352, are:

(1) Whether the Trademark Trial and Appeal Board’s finding of a likelihood of confusion precludes respondent from relitigating that issue in infringement litigation, in which likelihood of confusion is an element; and (2) whether, if issue preclusion does not apply, the district court was obliged to defer to the Board’s finding of a likelihood of confusion absent strong evidence to rebut it.

Hat tip: Professor Ira Nathenson, who also explained that the Trademark Trial and Appeal Board is not an Article III court, and that the nature of Likelihood-of-Confusion inquiries can vary between the TTAB and the District Court.

July 3, 2014 in Supreme Court Cases | Permalink | Comments (0)

Tuesday, July 1, 2014

Abu Ghraib Prisoners' Claim Allowed Under Alien Tort Statute

The opinion by Judge Keenan in Al Shimari v. CACI Premier Technology, Inc., No. 13-1937 (4th Cir. June 30, 2014) sums it up:

In this appeal, we consider whether a federal district court has subject matter jurisdiction to consider certain civil claims seeking damages against an American corporation for the torture and mistreatment of foreign nationals at the Abu Ghraib prison in Iraq.  The primary issue on appeal concerns whether the Alien Tort Statute, 28 U.S.C. § 1350, as interpreted by the Supreme Court in Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013), provides a jurisdictional basis for the plaintiffs’ alleged violations of international law, despite the presumption against extraterritorial application of acts of Congress.  We also address the defendants’ contention that the case presents a “political question” that is inappropriate for judicial resolution under our decision in Taylor v. Kellogg Brown & Root Services, Inc., 658 F.3d 402 (4th Cir. 2011). 

We conclude that the Supreme Court’s decision in Kiobel does not foreclose the plaintiffs’ claims under the Alien Tort Statute, and that the district court erred in reaching a contrary conclusion. Upon applying the fact-based inquiry articulated by the Supreme Court in Kiobel, we hold that the  plaintiffs’ claims “touch and concern” the territory of the United States with sufficient force to displace the presumption against extraterritorial application of the Alien Tort Statute.  See Kiobel, 133 S. Ct. at 1669. However, we are unable to determine from the present record whether the claims before us present nonjusticiable political questions.  Therefore, we do not reach the additional issue of the district court’s dismissal of the plaintiffs’ common law claims, and we vacate the district court’s judgment with respect to all the plaintiffs’ claims and remand the case to the district court. We direct that the district court undertake factual development of the record and analyze its subject matter jurisdiction in light of our decision in Taylor and the principles expressed in this opinion.

Congratulations to Civil Procedure Professors Erwin Chemerinsky, Helen Hershkoff, Allan Paul Ides, Stephen I. Vladeck, and Howard M. Wasserman, who submitted an amicus brief on behalf of the plaintiffs-appellants. 

July 1, 2014 in International/Comparative Law, Recent Decisions, Subject Matter Jurisdiction | Permalink | Comments (0)

Monday, June 30, 2014

SCOTUS Cert Grant on Appellate Jurisdiction: Gelboim v. Bank of America

While everyone waits with bated breath for the Supreme Court to wrap up the current Term with decisions in Hobby Lobby and Harris, the Court granted certiorari in Gelboim v. Bank of America (No. 13-1174). From the cert petition, here is the question presented (with the usual wind-up):

The question “whether consolidated cases retain their separate identity or become one case for purposes of appellate jurisdiction has divided the courts of appeals.” United States ex rel. Hampton v. Columbia/HCA Healthcare Corp., 318 F.3d 214, 216 (D.C. Cir. 2003). “Some circuits hold that consolidated cases remain separate actions and no Rule 54(b) certification is needed to appeal the dismissal of any one of them. Others treat consolidated cases as a single action, or presume that they are, allowing the presumption to be overcome in highly unusual circumstances. Still other circuits apply no hard and fast rule, but focus on the reasons for the consolidation to determine whether the actions are one or separate.” Id. (citations and alterations omitted). This Court granted certiorari to resolve the conflict in Erickson v. Maine Central Railroad Co., 111 S. Ct. 38 (1990) (mem.), but the petition was subsequently dismissed, 111 S. Ct. 662 (1990) (mem.).

The Question Presented is:

Whether and in what circumstances is the dismissal of an action that has been consolidated with other suits immediately appealable?

Here is SCOTUSblog’s Gelboim case file, and here is the link to the Supreme Court docket

 

 

 

June 30, 2014 in Recent Decisions, Supreme Court Cases | Permalink | Comments (0)

Saturday, June 28, 2014

KBR Internal Investigation Documents Are Privileged, D.C. Circuit Says

Plaintiff Barko worked for Kellogg Brown & Root, a defense contractor and former subsidiary of Halliburton.  He filed a False Claims Act claim against KBR:

In essence, Barko alleged that KBR and certain subcontractors defrauded the U.S. Government by inflating costs and accepting kickbacks while administering military contracts in wartime Iraq. During discovery, Barko sought documents related to KBR’s prior internal investigation into the alleged fraud.  KBR had conducted that internal investigation pursuant to its Code of Business Conduct, which is overseen by the company’s Law Department.

KBR argued that the internal investigation had been conducted for the purpose of obtaining legal advice and that the internal investigation documents therefore were protected by the attorney-client privilege. . . .

After reviewing the disputed documents in camera, the District Court determined that the attorney-client privilege protection did not apply because, among other reasons, KBR had not shown that “the communication would not have been made ‘but for’ the fact that legal advice was sought.” . . . KBR’s internal investigation, the court concluded, was “undertaken pursuant to regulatory law and corporate policy rather than for the purpose of obtaining legal advice.”

. . . The District Court . . . ordered KBR to produce the disputed documents to Barko . . .

The D.C. Circuit granted KBR's petition for writ of mandamus, holding that the District Court's privilege ruling was clearly legally erroneous under Upjohn v. United States, and that it was otherwise appropriate to grant the writ: 

[T]he District Court also distinguished Upjohn on the ground that KBR’s internal investigation was undertaken to comply with Department of Defense regulations that require defense contractors such as KBR to maintain compliance programs and conduct internal investigations into allegations of potential wrongdoing. The District Court therefore concluded that the purpose of KBR’s internal investigation was to comply with those regulatory requirements rather than to obtain or provide legal advice. In our view, the District Court’s analysis rested on a false dichotomy. So long as obtaining or providing legal advice was one of the significant purposes of the internal investigation, the attorney-client privilege applies, even if there were also other purposes for the investigation and even if the investigation was mandated by regulation rather than simply an exercise of company discretion.

The D.C. Circuit rejected KBR's request to reassign the case to a different District Judge.  In re Kellogg Brown & Root, Inc., No. 14-5055 (D.C. Cir. June 27, 2014).

 

 

 

June 28, 2014 in Discovery, Recent Decisions | Permalink | Comments (0)

Tuesday, June 24, 2014

SCOTUS Upholds Basic v. Levinson, But Gives Halliburton A Partial Victory

In the latest Supreme Court round of Halliburton Co. v. Erica P. John Fund, Inc., the Court declined Halliburton's invitation to overrule Basic v. Levinson,  but remanded to allow Halliburton, at the class certification stage, to attempt to rebut the presumption that the alleged misrepresentations actually affected the price of the stock.  The Court's final two paragraphs:

More than 25 years ago [in Basic], we held that plaintiffs could satisfy the reliance element of the Rule 10b–5 cause of action by invoking a presumption that a public, material misrepresentation will distort the price of stock traded in an efficient market, and that anyone who purchases the stock at the market price may be considered to have done so in reliance on the misrepresentation. We adhere to that decision and decline to modify the prerequisites for invoking the presumption of reliance. But to maintain the consistency of the presumption with the class certificationrequirements of Federal Rule of Civil Procedure 23, defendants must be afforded an opportunity before class certification to defeat the presumption through evidencethat an alleged misrepresentation did not actually affect the market price of the stock.


Because the courts below denied Halliburton that opportunity, we vacate the judgment of the Court of Appeals for the Fifth Circuit and remand the case for further proceedings consistent with this opinion.

Some coverage of the case:

New York Times

Wall Street Journal

June 24, 2014 in Class Actions, Recent Decisions, Supreme Court Cases | Permalink | Comments (0)

Monday, June 23, 2014

Schaefer on Professionalism for Doctrinal Professors

Paula Schaefer of the University of Tennessee College of Law has posted on SSRN her article, A Primer on Professionalism for Doctrinal Professors, forthcoming in Tennessee Law Review.

Abstract:

Legal education reform advocates agree that law schools should integrate “professionalism” throughout the curriculum. Ultimately, it falls to individual professors to decide how to incorporate professionalism into each course. This can be an especially difficult task for doctrinal professors. The law — and not the practice of law — is the focus of most doctrinal casebooks. Law students typically do not act in role as lawyers in these classes, so they are not compelled to resolve professional dilemmas in class, as students would be in a clinic or simulation-based course. As a result, it takes some additional preparation and thought to introduce professionalism issues into these courses. Some professors may resist making this change — not knowing which aspect or aspects of professionalism should be the focus, fearing that time spent on professionalism will detract from the real subject matter of the class, or believing professionalism is adequately covered elsewhere in the curriculum.

This Article considers how and why doctrinal professors should address the challenge of integrating professionalism into the classroom. Part I briefly discusses the multitude of meanings ascribed to attorney professionalism and argues that the lack of a clear, concise, and shared definition is a substantial barrier to effectively incorporating professionalism into the law school curriculum. Next, Part II provides a more coherent, streamlined definition of attorney professionalism. This Part also identifies and describes three primary aspects of lawyer professionalism: fulfilling duties to clients, satisfying duties to the bar, and possessing core personal values essential to being a good lawyer. This simplified conception of professionalism should begin to address the concerns of professors who do not know where to begin to incorporate professionalism into their classes. It is also intended to persuade skeptics that professionalism is something they can and should teach as part of their doctrinal classes.

Thereafter, Part III provides guidance for developing course outcomes that connect course subject matter and professionalism. Questions prompt doctrinal professors to look for the natural connections between their course subject matter and issues of professionalism. Then, Part IV considers various methods doctrinal professors can use to introduce professionalism topics into their courses. Integrating professionalism into the classroom does not require professors to abandon their casebooks; using case law can be an effective method. This Part also considers other teaching methods and materials for combining doctrine, skills, and professionalism. Finally, Part V concludes with thoughts on how students benefit when professors make the effort to incorporate professionalism into every law school classroom.

June 23, 2014 in Recent Scholarship | Permalink | Comments (0)

Friday, June 20, 2014

SCOTUS: IRS Summons Challenger Must Show Facts Giving Rise to Plausible Inference of Improper IRS Motive

The IRS examined the tax returns of Dynamo Holdings Limited Partnership, and issued summonses to the respondents, "four individuals associated with Dynamo whom the Service believed had information and records relevant to Dynamo’s tax obligations.  None of the respondents complied with those summonses."  

The IRS instituted proceedings in District Court to compel the respondents to comply with the summonses.  The IRS submitted an investigating agent’s declaration that the testimony and records sought were necessary to “properly investigate the correctness of [Dynamo’s] federal tax reporting” and that the summonses were “not issued to harass or for any other improper purpose.”  In reply, the respondents pointed to circumstantial evidence suggesting that the IRS had “ulterior motives” for issuing the summonses: to “punish[] [Dynamo] for refusing to agree to a further extension of the applicable statute of limitations,” and to “evad[e] the Tax Court[’s] limitations on discovery.”  Accordingly, the respondents asked for an opportunity to question the agents about their motives.

The District Court ordered the respondents to comply with the summonses.  The Court of Appeals for the Eleventh Circuit reversed, holding that a simple “allegation of improper purpose,” even if lacking any “factual support,” entitles a taxpayer to “question IRS officials concerning the Service’s reasons for issuing the summons.”

The Supreme Court, in a unanimous opinion authored by Justice Kagan, vacated the Eleventh Circuit's opinion and remanded, holding that the Eleventh Circuit had applied an incorrect legal standard:

A person receiving an IRS summons is . . . entitled to contest it in an enforcement proceeding. . .  .  As part of the adversarial process concerning a summons’s validity, the taxpayer is entitled to examine an IRS agent when he can point to specific facts or circumstances plausibly raising an inference of bad faith.  Naked allegations of improper purpose are not enough: The taxpayer must offer some credible evidence supporting his charge.  But circumstantial evidence can suffice to meet that burden; after all, direct evidence of another person’s bad faith, at this threshold stage, will rarely if ever be available.  And although bare assertion or conjecture is not enough, neither is a fleshed out case demanded: The taxpayer need only make a showing of facts that give rise to a plausible inference of improper motive.  That standard will ensure inquiry where the facts and circumstances make inquiry appropriate, without turning every summons dispute into a fishing expedition for official wrongdoing. . . .  But that is not the standard the Eleventh Circuit applied. . . .  [T]he Court of Appeals viewed even bare allegations of improper purpose as entitling a summons objector to question IRS agents.

United States v. Clarke, No. 13-301 (U.S. June 19, 2014).

June 20, 2014 in Discovery, Recent Decisions, Supreme Court Cases, Twombly/Iqbal | Permalink | Comments (0)

Wednesday, June 18, 2014

ABA Pretrial Practice and Discovery Committee Spring Newsletter

The Pretrial Practice and Discovery Committee of the Section of Litigation of the American Bar Association has issued its
 
Spring 2014, Vol. 22 No. 2
TABLE OF CONTENTS
______________________________________________________________________
___________________________________
Articles »
The Changing Landscape of General Jurisdiction Post-Bauman
By Adam W. Braveman
This decision will have an immense impact on a foreign corporation's amenability to bring suit in U.S
courts.
 
"Self-Serving Testimony" and Summary Judgment Standards
By Jeffrey G. Close
Is there a split between the Fifth and Seventh Circuits?
 
The Problem of the Old Deposition and a New Party at Trial
By Michael Lowry
A deposition needs to be admissible, and that may depend on who is a party at the time of trial.
 
Supreme Court's CAFA Decision Changes Law in Fifth Circuit
By Paul Thibodeaux and Danny Dysart
The Court's decision on CAFA removal of parens patriae mass-action suits and how it impacts future
mass-tort litigation.
 
News & Developments
»
NV Court Expands Mandate of Production of Memory-Refreshing Documents
The mandate now applies to depositions as well as in-court hearings.
 
Considering a 30(b)(6) Deposition to Explore E-Discovery Methods?
A couple of recent decisions address a party's ability to use a Rule 30(b)(6) deposition to inquire about an
opponent's e-discovery methodology.
 

June 18, 2014 in Discovery, Weblogs | Permalink | Comments (0)

Tuesday, June 17, 2014

Supreme Court Allows Subpoenas on Banks With Argentina's Accounts

In the continuing worldwide drama over Argentina's 2001 debt default, Argentina loses another round.  Republic of Argentina v. NML Capital, Ltd., No. 12-842 (U.S. June 16, 2014).  Its creditor, NML Capital, which Argentina owes about $2.5 billion, has pursued postjudgment execution on Argentina's property since 2003.  In 2010, NML subpoenaed two nonparty banks, Bank of America and an Argentinian bank with a branch in New York City.  The subpoenas sought documents relating to accounts maintained by Argentina. 

Argentina and BoA moved to quash the BoA subpoena (the Argentinian bank just didn't comply), and NML moved to compel.  The district court granted the motion to compel, and the Second Circuit affirmed.

The Supreme Court also affirmed, rejecting Argentina's argument that the Foreign Sovereign Immunities Act prohibited discovery of Argentina's extraterritorial assets.  Before its discussion of the FSIA, the Court discussed a Federal Rule of Civil Procedure -- Rule 69 -- that is rarely, if ever, mentioned in first-year civil procedure casebooks.  (Hint, hint, casebook authors!)  The Court noted that "[t]he rules governing discovery in postjudgment execution proceedings are quite permissive," citing Rule 69(a)(2), which allows a judgment creditor to take discovery "from any person -- including the judgment debtor -- as provided in the rules or by the procedure of the state where the court is located."  The Court assumed without deciding that "in a run-of-the-mill execution proceeding [one where the judgment debtor is not a foreign state] . . . the district court would have been within its discretion to order the discovery from third-party banks about the judgment debtor's assets located outside the United States."

The question was thus whether the FSIA required a different result when the judgment debtor was, in fact, a foreign state.  The FSIA, passed in 1976, confers two kinds of immunity on foreign states, jurisdictional (which Argentina waived) and execution immunity, which immunizes property in the United States of a foreign state from attachment and execution, with some exceptions.  

"There is no third provision forbidding or limiting disocvery in aid of execution of a foreign-sovereign judgment debtor's assets," notes Justice Scalia for the majority.  "[T]he reason for these subpoenas is that NML does not yet know what property Argentina has and where it is, let alone whether it is executable under the relevant jurisiction's law."   The Court also dismissed concerns about international relations, suggesting that such an argument was better addressed to Congress.

Justice Ginsburg dissented.  Justice Sotomayor took no part.      

   

June 17, 2014 in Discovery, Federal Rules of Civil Procedure, International/Comparative Law, Recent Decisions, Supreme Court Cases | Permalink | Comments (0)

Monday, June 16, 2014

Reminder: Call for Papers for Fed Cts Jr Faculty Workshop at Georgia

The University of Georgia School of Law will host the Seventh Annual Junior Faculty Federal Courts Workshop on October 10-11, 2014.  The workshop pairs a senior scholar with a panel of junior scholars presenting works-in-progress.  Confirmed senior scholars include, at this time, Janet Alexander (Stanford), A.J. Bellia (Notre Dame), Heather Elliott (Alabama), Evan Lee (UC-Hastings), Gillian Metzger (Columbia), Jim Pfander (Northwestern), Amanda Tyler (UC-Berkeley), and Steve Vladeck (American).

The workshop is open to untenured and recently tenured academics who teach and write in federal courts, civil rights litigation, civil procedure, and other associated topics. Those who do not currently hold a faculty appointment but expect to do so beginning in fall 2014 are welcome. The program is also open to scholars wanting to attend, read, and comment on papers but not present.  There is no registration fee.

The conference will begin with a dinner on Thursday, October 9, then panels on Friday, October 10 and Saturday, October 11. Each panel will consist of approximately 4 junior scholars, with a senior scholar serving as moderator and commenter and leading a group discussion on the papers.  Georgia Law will provide all lunches and dinners for those attending the workshop, but attendees must cover their own travel and lodging costs.

Those wishing to present a paper must submit an abstract by June 20, 2014. Papers will be selected by a committee of past participants, and presenters will be notified by early July. Those planning to attend must register by August 29, 2014. 

Please send abstracts to federalcourtsworkshop@gmail.com. Please contact Matt Hall or Kent Barnett with questions.

June 16, 2014 | Permalink | Comments (0)

Monday, June 9, 2014

Appeals Court Reverses Denial of Sanctions Motion Against Merrill Lynch's Law Firm

The opinion of the Massachusetts Appeals Court begins:

The plaintiffs appeal from the denial of their motion for sanctions against Bingham McCutchen LLP (Bingham), intervener, the law firm that defended Merrill Lynch, Pierce, Fenner & Smith, Inc. (Merrill), in the 2002 jury trial of this action. The plaintiffs claim that in that litigation Bingham wrongfully withheld documents relevant to the issue whether Merrill, in handling the accounts of Benistar Property Exchange Trust Company, Inc. (Benistar), knew that Benistar was trading with money belonging to third parties. We hold that Bingham lacked an adequate legal basis, under the guise of the work product doctrine, for its decisions to withhold information that Merrill employees had viewed certain Benistar Web pages describing its business as an intermediary for third-party funds and then to present a defense claiming that no Merrill employees had viewed the very same Web pages.  As a result, we vacate that portion of the final judgment entering judgment in favor of Bingham on the plaintiffs' motion for sanctions.  As explained below, there remain certain issues that require resolution by a fact finder, and thus, we remand for further proceedings consistent with this opinion.

Cahaly v. Benistar Property Exchange Trust Co., Inc. No. 12-P-956 (Mass. Ct. App. June 6, 2014).

Hat tip: The American Lawyer

June 9, 2014 in Discovery, Recent Decisions, State Courts | Permalink | Comments (0)

AALS Section on Federal Courts: Annual Award for Best Untenured Article on the Law of Federal Jurisdiction

Announcement below...

The AALS Section on Federal Courts is pleased to announce the third annual award for the best article on the law of federal jurisdiction by a full-time, untenured faculty member at an AALS member or affiliate school ­and to solicit nominations (including self-nominations) for the prize to be awarded at the 2015 AALS Annual Meeting in Washington, D.C.
 
The purpose of the award program is to recognize outstanding scholarship in the field of federal courts by untenured faculty members. To that end, eligible articles are those specifically in the field of Federal Courts that were published by a recognized journal during the twelve-month period ending on September 1, 2014 (date of actual publication determines eligibility). Eligible authors are those who, at the close of nominations (i.e., as of September 15, 2014), are untenured, full-time faculty members at AALS member or affiliate schools, and have not previously won the award.
 
Nominations (or questions about the award) should be directed to Tara Leigh Grove at William and Mary Law School (tlgrove@wm.edu), Chair of the AALS Section on Federal Courts. Without exception, all nominations must be received by 11:59 p.m. (EDT) on September 15, 2014. Nominations will be reviewed by a prize committee comprised of Professors Janet Cooper Alexander (Stanford), Allan Erbsen (Minnesota), Tara Leigh Grove (William & Mary), James Pfander (Northwestern), and Judith Resnik (Yale), with the result announced at the Federal Courts section program at the 2015 AALS Annual Meeting. 

 

 

June 9, 2014 in Conferences/Symposia, Federal Courts | Permalink | Comments (0)

Saturday, June 7, 2014

Standing Committee Approves Proposed FRCP Amendments

We've been covering (see here and here, among others) the path of the controversial proposed amendments to the FRCP as they (inexorably, in my view) wend their way toward final approval.

The Standing Committee met on May 29-30, 2014 in D.C. and unanimously approved the amendments as they were modified by the Advisory Committee at its meeting in April. 

Hat tip: Center for Constitutional Litigation

June 7, 2014 in Discovery, Federal Courts, Federal Rules of Civil Procedure | Permalink | Comments (0)