Civil Procedure & Federal Courts Blog

Constitutional Litigation Structured as a Skills-and-Doctrine Course

Clinical Professor Sarah Ricks of Rutgers-Camden has published Current Issues in Constitutional Litigation. The book is part of the Context and Practice Casebook series and she uses it to teach a popular course of the same title.  You can read more about it here.

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On Stage at the Ciara Concert: She Got Served?

From NBC: Singer Ciara gets served legal papers in middle of concert (with video).

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(Hat Tip: Jack Preis)

Erie and Magic Words

Now available on the Florida Law Review Forum is my short piece, Magic Words and the Erie Doctrine. It’s a response to a recent article by Sergio Campos, Erie as a Choice of Enforcement Defaults.

It’s a quick read at <3 pages, where “<3” actually means “less than 3” as opposed to a sideways emoticon heart.

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Report Shows Link Between Judicial Campaign Contributions and Pro-Business Decisions

From the National Law Journal:

A study released on Tuesday by the American Constitution Society for Law and Policy identified a "statistically significant" relationship between ballooning campaign contributions by business interest to state supreme court candidates and pro-business decisions by those courts.

Researchers studied more than 2,345 business-related state high court opinions between 2010 and 2012 and campaign contributions during that same time to sitting state high court judges. As the percentage of contributions from business groups went up, the probability of a pro-business vote by judges — defined as any decision that made a business better off — went up as well.

The study's author was Joanna Shepherd, a professor at Emory University School of Law. During a teleconference, she said the findings demonstrated that state court elections were becoming increasingly politicized and expensive. She pointed to surveys showing concern within the judiciary and among the general public about the influence of outside dollars on the courts.

To read more of the article, click here.

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SCOTUS Decision on Class Arbitration: Oxford Health Plans v. Sutter

Today was arbitration day at the Supreme Court (well, that and raisins). In addition to granting certiorari in BG Group PLC v. Argentina, the Court issued a unanimous decision in Oxford Health Plans LLC v. Sutter (No. 12-135). Justice Kagan writes the Court’s opinion in Oxford, which begins:

Class arbitration is a matter of consent: An arbitrator may employ class procedures only if the parties have authorized them. See Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662, 684 (2010). In this case, an arbitrator found that the parties’ contract provided for class arbitration. The question presented is whether in doing so he “exceeded [his] powers” under §10(a)(4) of the Federal Arbitration Act (FAA or Act), 9 U. S. C. §1 et seq. We conclude that the arbitrator’s decision survives the limited judicial review §10(a)(4) allows.

Here’s more from Justice Kagan’s opinion on the relationship between Oxford and Stolt-Nielsen [Op. at 6-7]:

Continue reading "SCOTUS Decision on Class Arbitration: Oxford Health Plans v. Sutter"

SCOTUS Cert Grant on Arbitration: BG Group PLC v. Argentina

Today the Supreme Court granted certiorari in BG Group PLC v. Republic of Argentina (No. 12-138), which presents the question: “In disputes involving a multi-staged dispute resolution process, does a court or instead the arbitrator determine whether a precondition to arbitration has been satisfied?”

You can find links to the D.C. Circuit’s decision below and the cert-stage briefing at SCOTUSblog’s case file.

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Class Settlement of Plumbing Fittings Products Liability Litigation Upheld

     These class actions (consolidated in an MDL in Minnesota) are notable for the whimsical names of their subclasses, the Soggy Plaintiffs and the Cloggy Plaintiffs.  The Eighth Circuit upheld the settlement of several class actions alleging damage caused by defective brass plumbing fittings sold by defendants Radiant and Uponor.  The Soggy Plaintiffs have already experienced leaking (in some cases causing severe damage) and the Cloggy Plaintiffs have not yet experienced leaks but have the same fittings.
     "The proposed settlement agreement stipulated that after two leaks, soggy plaintiffs would be entitled to have their entire plumbing system replaced at Uponor and Radiant's expense. Cloggy plaintiffs who had demonstrated 'by way of a flow test that a differential in water flow . . . of more than 50% [exists] between the hot and cold lines' would also be entitled to replacement of their brass fittings, and if that proved insufficient, to a new plumbing system."
     After notice of the proposed settlement had been sent, Ortega, a California resident, moved to intervene as of right.  His motion was denied as untimely.  He and 26 other class members then objected to the settlement, arguing that notice had been deficient, that the scope of the release of defendants was overbroad, and that the settlement did not account for a cause of action available under California law.  All of these arguments were rejected and the district court's approval of the settlement was upheld.  In re Uponor, Inc., F1807 Plumbing Fittings Products Liability Litigation, No. 12-2761 (8th Cir. June 7, 2013).

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Third Circuit Holds GlaxoSmithKline Companies Delaware Citizens for Diversity Purposes

In an absurdly lengthy opinion, which I must admit to only skimming, the Third Circuit has held that a ten-by-ten foot subleased office makes Delaware the principal place of business of a GlaxoSmithKline holding company, and thus upheld diversity jurisdiction over a personal injury action involving thalilomide.  (Yes, thalilomide, the anti-nausea-in-pregnancy drug from the late 50's and early 60's that caused birth defects.)  Plaintiffs claim to have discovered new evidence showing that defendants were aware of the drug's defects while marketing it.  Johnson v. SmithKline Beecham Corp., No. 12-2561 (3d Cir. June 7, 2013.)

The plaintiffs are Pennsylvania citizens and they claimed that four defendants were also Pennsylvania citizens. So when defendants removed the action from Pennsylvania state court, plaintiffs moved to remand. That motion was denied and the issue certified for interlocutory appeal. Apparently the issue of these companies' citizenship for diversity purposes has come up in several other cases and the district court rulings have conflicted.

As a naive law student, I concluded that any corporate structure that I could not understand was up to no good, and I have found no reason to change my mind about this well into middle age.  Three of the four defendants that plaintiffs claimed were Pennsylvania citizens are entities affiliated with GlaxoSmithKline plc, the British entity that is the "global head" of the GlaxoSmithKline group of companies.  Defendant SmithKline Beecham Corp. was once a Pennsylvania corporation, but it converted in 2009 to a Delaware LLC.  As far as I understood, the purpose of the conversion was to avoid "unnecessary tax liability."  (Wish I could convert myself to a Delaware LLC!)  SmithKline Beecham then dissolved.  The court thus held that SmithKline Beecham was not a Pennsylvania citizen because it had converted itself into a new entity, defendant GSK LLC.

GSK LLC operates the US division of GlaxoSmithKline plc.  Its headquarters is still in Philadelphia, "where it occupies 650,000 square feet of office space and employs 1,800 people" – the same as when it was still SmithKline Beecham.  SmithKline Beecham's board of directors became GSK LLC's "board of managers."  Does that mean GSK LLC's principal place of business is still Pennsylvania? 

No.  As an LLC, GSK LLC's citizenship for diversity purposes is derivative of its owner's (or "member's") citizenship.  Its sole member is GSK Holdings, a Delaware corporation with its principal place of business in (according to the Third Circuit) Delaware.  GSK Holdings subleases a ten-by-ten foot office in Delaware.  It has one employee who works about 20 hours per year.  Its three directors hold quarterly 15-30 minute meetings in Delaware (at least one of the directors is usually physically present at the meetings) to discuss GSK Holdings' investments.   

As for the fourth defendant at issue, Avantor, it evidently moved its principal place of business to Pennsylvania five days after the removal, so the court held that it was still a New Jersey citizen at the time of removal.  

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Oklahoma Supreme Court Holds Entire "Tort Reform" Bill Void

In a stunning development, the Oklahoma Supreme Court has invalidated a sweeping tort reform bill passed in 2009.  The particular provision at issue in Douglas v. Cox Retirement Properties, Inc., 2013 OK 37, a wrongful death action against a nursing home, was the requirement of an expert's "affidavit of merit" to be filed with or shortly after the filing of the complaint in a professional negligence claim.  When the plaintiff failed to file the affidavit of merit, the trial court granted defendant's motion to dismiss.  The Oklahoma Supreme Court reversed.

The expert affidavit of merit requirement was just one portion of Oklahoma H.B. 1603, the so-called Comprehensive Lawsuit Reform Act of 2009. The bill has 90 separate sections encompassing such disparate topics as transfer of cases, limitations on noneconomic damages, suing fast food providers, and a host of other provisions.  The court held that H.B. 1603 violated Article 5, Section 57 of the Oklahoma Constitution ("Every act of the Legislature shall embrace but one subject, which shall be clearly expressed in its title"), commonly known as the single-subject rule.  "The purposes of the single-subject rule are to ensure the legialtors or voters of Oklahoma are adequately notified of the potential effect of the legislation and to prevent logrolling."

A separate opinion, Wall v. Marouk, 2013 OK 36 (June 4, 2013), also invalidated the affidavit of merit requirement in a medical malpractice action.  The court held that the requirement violated two other Oklahoma constitutional provisions, one prohibiting "special laws" (Okla. Const. art. 5, §46), and the other guaranteeing right of access to the courts (Okla. Const. art. 2, §6).

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Klausner, Heglund, and Goforth on Empirical Studies of Securities Class Actions

Michael Klausner, Jason Hegland, and Matthew Goforth, all of Stanford Law School, have published on SSRN the first of two updates to earlier empirical studies of securities class actions, entitled "When are Securities Class Actions Dismissed, When Do They Settle, and for How Much? — An Update."

Abstract:

In this article, we briefly present some basic statistics on the timing of dismissals and settlements in securities class actions. In contrast to the popular image of securities class actions, we find that over half of all cases are either dismissed or settle well before discovery begins. 38% of cases are either dismissed with prejudice on the first motion to dismiss or are dropped before a second complaint is filed. Another 15% of cases settle either before the first motion to dismiss was ruled on or after an initial dismissal without prejudice. The article provides additional descriptive statistics on how securities class actions are resolved and the timing of their resolution.

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Twelve Asbestos Plaintiffs' Claims Dismissed Under Rule 41(b) for Noncompliance with Administrative Order

The Third Circuit has upheld the dismissal of twelve plaintiffs' claims in the Asbestos MDL for failure to comply with an administrative order requiring them to include specific histories of their exposure to asbestos.  The first paragraph of the opinion is:

This appeal comes to us from Multidistict Litigtion case number 875 ("MDL 875"), otherwise known as the "Asbestos MDL," involving asbestos cases from around the country, pending before Judge Robreno in the United States District Court for the Eastern District of Pennsylvania.  The District Court, overseeing several thousand asbestos cases, dismissed the claims of twelve Plaintiffs pursuant to Rule 41(b) of the Federal Rules of Civil Procedure based on non-compliance with the District Court's Administrative Order No. 12 ("AO 12").  Specifically, Judge Robreno determinated that the Plaintiffs' submissions were fatally flawed in that they failed to include specific histories of Plaintiffs' exposure to asbestos.  Plaintiffs contend on appeal, as they did in the District Court, that AO 12 did not impose this requirement, and urge, alternatively, that even if it did, under a proper balancing of the factors we outlined in Poulis v. State Farm Fire and Casulaty Company, 747 F.2d 863 (3d Cir. 1984), dismissal with prejudice was not warranted.  For the reasons discussed below, we will affirm the District Court's dismissal of the twelve cases at issue.

In re: Asbestos Products Liability Litigation, No. 12-2061 (3d Cir. May 31, 2013).

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Meier on Probability, Confidence, and Twombly's Plausibility Standards

Luke Meier of Baylor University Law School has posted on SSRN a new article in his probability/confidence series, entitled "Probability, Confidence, and Twombly's Plausibility Standard."

Abstract:

This Article offers a fresh perspective on the pleading standard of plausibility. The consensus regarding plausibility is that it requires a judge to determine the probability of the plaintiff’s allegations. This perspective has led to much of the criticism of the plausibility standard. In reality, plausibility requires a judge to perform an analytically distinct inquiry, which I term a confidence analysis. Recognizing this fact does not immunize plausibility from all of the criticism it has received. It does, however, clarify the analysis required under the standard, which should alleviate many of the concerns associated with plausibility.

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Campos on Jones on Judicial Review and the Lost Constitution

Now available on the Courts Law section of JOTWELL is an essay by Sergio Campos (Miami) entitled Back to the Future. It reviews a recent article by Robert Jones (Northern Illinois), Lessons from a Lost Constitution, 27 J. L. & Politics 459 (2012).

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Hubbard on the Empirical Effect of Shady Grove on Forum Shopping

William H. J. Hubbard, of University of Chicago Law School, published "An Empirical Study of the Effect of Shady Grove v. Allstate on Forum Shopping in the New York Courts" as University of Chicago Coase-Sandor Institute for Law & Economics Research Paper No. 642 and U of Chicago, Public Law Working Paper No. 428.  It is posted on SSRN here. 

Abstract:    

Given the considerable prominence of forum-shopping concerns in the jurisprudence and academic literature on the so-called Erie Doctrine, courts and commentators may benefit from data on whether, and to what extent, forum shopping in fact responds to choice-of-law decisions under the Erie Doctrine. Prior to this paper, however, no empirical study quantified the changes in forum shopping behavior caused by a court decision applying the Erie Doctrine. I study changes in filing patterns of cases likely to be affected by the Supreme Court’s recent decision in Shady Grove v. Allstate and find evidence of large shifts in the patterns of original filings and removals in federal courts in New York that are consistent with the predicted forum shopping response to Shady Grove. In addition to providing the first empirical evidence of vertical forum shopping induced by a decision applying the Erie doctrine, this paper seeks to serve as a proof of concept for empirical research in this area. While there are significant obstacles to empirical research on the effects of Erie and its progeny, this paper outlines a methodology that may be feasible for future projects in this area.

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SCOTUS Grants Cert in Another Class Action Fairness Act Case

Today the Supreme Court granted certiorari in Mississippi ex rel. Hood v. AU Optronics Corp. (No. 12-1036), which presents the question:

Whether a state’s parens patriae action is removable as a “mass action” under the Class Action Fairness Act when the state is the sole plaintiff, the claims arise under state law, and the state attorney general possesses statutory and common-law authority to assert all claims in the complaint.

You can find a link to the Fifth Circuit’s decision below and the cert-stage briefing at SCOTUSblog’s case file.

It will be the second Supreme Court case to interpret CAFA in as many Terms, following the decision this March in Standard Fire Insurance Co. v. Knowles.

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Pereyra and Sunshine on Settlement Rates After Twombly and Iqbal

Victor Abel Pereyra and Benjamin Sunshine, of University of Illinois College of Law, have posted on SSRN their paper Access-to-Justice v. Efficiency: An Empirical Study of Settlement Rates After Twombly and Iqbal.

Abstract:

A party’s decision to settle may be affected by the plausibility pleading standard required by Twombly. While previous empirical studies have focused on motions to dismiss, this study attempts to find a relationship between settlement rates and the pleading standard. Our data and analysis show that the probability of settling after Twombly has decreased while the rates of settlements themselves are increasing. In particular, IP and civil rights cases are especially likely to settle and "meritorious" claims settle at a higher rate than "non-meritorious" claims. These findings question the current arguments that the Twombly pleading standard may be inhibiting access to justice and/or improving efficiency. The goal of conserving judicial resources may have been circumvented by litigant behavior as more cases are going on to litigation rather than settling. The access to justice arguments may have also been challenged in that more cases are being adjudicated after Twombly instead of less.

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Coleman on Hoffman on Civil Rulemaking After Twombly and Iqbal

Now available on the Courts Law section of JOTWELL is an essay by Brooke Coleman (Seattle) entitled Celebrating Civil Rulemaking. It reviews a recent article by Lonny Hoffman (Houston), Rulemaking in the Age of Twombly and Iqbal, which will appear in the U.C. Davis Law Review.

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Meyn on Comparing Civil and Criminal Discovery

Prof. Ion Meyn (Wisconsin) has posted on SSRN a draft of his article Discovery and Darkness: The Information Deficit in Criminal Disputes, which will appear in the Brooklyn Law Review. Here’s the abstract:

Scholarship has long recognized a disparity between the discovery rights afforded to civil litigants and those afforded to criminal defendants. The consensus is that this disparity is caused by resource constraints and limited access to the prosecutorial file. This Article challenges that conception, contending that criminal defendants are in fact structurally precluded from conducting any formal investigation. Merely entitled to disclosures of the State's evidence, a criminal defendant must rely on the fruits of the opponent's investigation to somehow suggest a counter-narrative. This dynamic is inconsistent with the design of the adversarial system and results in a failure to engage in adequate pretrial testing. This Article recasts a criminal defendant as an essential party to a criminal investigation who should have the pretrial power to compel information from multiple sources. Certainly, greater access to the prosecutorial file and more resources will mitigate discovery deprivations that currently plague criminal defendants. But without extending a criminal defendant the power to direct an independent and formal investigation, adequate pretrial testing cannot occur. Evaluating the investigative tools that should be extended to a criminal defendant, the Article utilizes a case study to ascertain how the application of these tools might affect a pretrial investigation. Finally, the Article surveys and responds to policy arguments against permitting the participation of criminal defendants in criminal investigations.

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Brescia and Ohanian on the Politics of Procedure

Raymond H. Brescia and Edward J. Ohanian, both of Albany Law School, have posted on SSRN their new paper, "The Politics of Procedure: An Empirical Analysis of Motion Practice in Civil Rights Litigation Under the New Plausibility Standard." 

Abstract:

Is civil procedure political? In May of 2009, the Supreme Court issued its decision in Ashcroft v. Iqbal, which explicitly extended the “plausibility standard,” first articulated in Bell Atlantic v. Twombly two years earlier, to all civil pleadings. That standard requires that pleadings, in order to satisfy Rule 8(a) of the Federal Rules of Civil Procedure, must state a plausible claim for relief. For many, these rulings represented a sea change in civil pleading standards. Where prior Supreme Court precedent had provided that a pleading should not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim,” the new standard requires that judges utilize their own “judicial experience and common sense” to determine whether claimants have set forth facts sufficient to “nudge their claims across the line from conceivable to plausible.” In the years since their issuance, this standard has provoked many questions. One such question, which lurks behind all otherwise neutral rules of procedure is the following: could this apparently neutral principle of procedure be subject to political manipulation?

After Twombly, and again after Iqbal, many expressed fears that the new plausibility standard offered judges too much discretion; a judge could dismiss a case where a plaintiff’s claims did not comport with that judge’s experience and common sense. There was a particular fear that this discretion would have a disparate and adverse impact on civil rights cases: i.e., if members of the federal bench were predisposed to disfavor such claims, they might use these precedents to dismiss civil rights cases too readily. Several years have now passed since the Court issued these decisions, and the district courts have compiled a body of thousands of decisions citing these precedents. As a result, it is now possible to assess the impact of these decisions on practice in the lower courts, particularly their effect on civil rights cases. The study described here attempted to do just that by looking at outcomes and trends in motions challenging the specificity of the pleadings in over 500 employment and housing discrimination cases over a period of six years (including decisions issued both before and after Twombly and Iqbal). This research reviewed the outcomes in such cases based on a number of metrics, including, most importantly, the political affiliation of the president who appointed the judge issuing each decision reviewed.

The study revealed a statistically significant relationship between the outcomes in civil rights cases and time period (i.e. pre-Twombly, post-Twombly but pre-Iqbal, and post-Iqbal) where the political affiliation of the president who appointed the judge reaching the decision in each case was Republican. For cases decided by judges appointed by Democrat-affiliated presidents, no such relationship was observed. This paper reports on the findings of this study and discusses their implications.

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Sequel to the Fifth Circuit’s Quorum Conundrum: Comer v. Murphy Oil II

Two years ago we covered the strange set of developments in Comer v. Murphy Oil USA, a class action lawsuit against a number of chemical and energy companies based on their alleged contribution to climate conditions that exacerbated the force and effect of Hurricane Katrina. The district court had dismissed the case on political question grounds, but a Fifth Circuit panel reversed — rejecting the political question argument and finding that the plaintiffs had standing. See 585 F.3d 855 (2009).

The en banc Fifth Circuit granted rehearing, although due to several recusals only nine of the sixteen Fifth Circuit judges were able to vote. Then one of those nine judges recused, thus depriving the en banc court of its quorum. However, the quorum-less en banc court chose not to revert to the Fifth Circuit panel’s decision, which would have reversed the district court’s dismissal and remanded the case for further proceedings. Rather, the quorum-less en banc court (per five of the remaining eight judges) dismissed the appeal in its entirety, thereby reinstating a district court ruling that had already been unanimously reversed by a three-judge Fifth Circuit panel. See 607 F.3d 1049 (2010).

In 2011, the plaintiffs filed a new lawsuit alleging many of the same claims. This week, a Fifth Circuit panel affirms the dismissal of that lawsuit, finding it barred by res judicata. In Comer II (No. 12-60291, May 14, 2013), the panel concludes that — despite the unusual chain of events at the Fifth Circuit two years ago — the first lawsuit satisfied all the elements of res judicata: “(1) the parties are identical or in privity; (2) the judgment in the prior action was rendered by a court of competent jurisdiction; (3) the prior action was concluded by a final judgment on the merits; and (4) the same claim or cause of action was involved in both actions.” [Slip Op. 7]

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(Hat Tip: David Coale)