January 18, 2008
Rich Rodriguez and Removal Updated
If you like Civil Procedure and college football, you might want to check out Howard Wasserman's post over at the Sports Law Blog about whether new Michigan football coach Rich Rodriguez properly removed the lawsuit against him brought by his former employer, West Virginia University. Also, you might want to check out Frank DeFord's piece on what should happen when college football coaches leave a school before finishing out their contracts.--Counseller
UPDATE: According to this ESPN article, Rich Rodriguez has made a $1.5 million settlement offer. In response to the offer, an attorney for WVU said, "the University has lived up to all its obligations under the contract, and the university expects him to live up to the $4 million that is owed." I suspect this case will be difficult to settle.
January 17, 2008
Stroman Realty v. Wercinski
Last week's 5th Circuit Stroman decision is worth noting. Stroman Reality was a large timeshare dealer headquartered in Texas. Stroman received cease-and-desist letters from the Arizona Commissioner of the Department of Real Estate. The letters ordered Stroman to cease Arizona-related brokerage activities. Stroman sued the Commissioner in a Texas federal court under Ex Parte Young, alleging that "Arizona's attempted exercise of regulatory jurisdiction to license timeshare resales violated the Commerce Clause by discriminatorily and unduly burdening nonresident participation in the interstate timeshare market." The Fifth Circuit held that personal jurisdiction did not exist. Two of the key passages:
Arizona is simply trying to uniformly apply its laws. If the court adopted the approach urged by Stroman, we would endorse an interpretation of personal jurisdiction under which ... any state official seeking to enforce her state's laws ... could potentially be subjected to suit in any state where the validity of her state's laws were in question. We are unwilling to establish such a broad principle. ***
Important questions of federalism are present here, and thus, for this case, "the shared interest of the several states" is the most significant reasonableness consideration outlined by the Supreme Court. *** The effect of holding that a federal district court in Texas had personal jurisdiction over a nonresident state official would create an avenue for challenging the validity of one state's laws in courts located in another state. This practice would greatly diminish the independence of the states.
January 16, 2008
New CAFA Articles
Stephen Burbank and Howard Erichson both posted new CAFA articles on SSRN last week. Prof. Burbank's article is The Class Action Fairness Act of 2005 in Historical Context: A Preliminary View. The abstract follows.
This article sets CAFA in the contexts of the history of federal diversity of citizenship litigation in general and, within that larger story, the history of diversity class actions in federal court. I consider whether changes in the litigation landscape since 1958, when Congress formally embraced corporate citizenship, might be thought to justify the changes in the balance of power in forum selection that CAFA brings about. Critical to my views in that regard are the failures of the Supreme Court effectively to police interstate forum shopping through constitutional control of personal jurisdiction or choice of law and the steroidal effect of the modern (post-1966) class action on the incentives that drive forum choice. I conclude that it was not unreasonable for Congress to assert a federal interest in regulating the process by which and the forums in which nationwide and multistate class action decisions are made. To be sure, the interest in question bears little relation to the historic account of diversity jurisdiction with which we are familiar. But, as Section IV demonstrates, it is consistent with the policy that the Supreme Court in fact pursued when umpiring ordinary diversity litigation in the late nineteenth and early twentieth centuries, and consistent as well with the policy that Congress pursued in its 1958 amendments to the diversity statute.
I reach a very different conclusion with respect to the numerous class actions within CAFA's reach that are not in any meaningful sense "multistate." The 1958 Congress left in place (if it did not enhance) the instruments of countervailing power for plaintiffs that had developed in the system and that made the fictions of corporate citizenship tolerable. The 2005 Congress dismantled those instruments in order to open federal courts to multistate class actions. It conveniently forgot them when it came time to fashion exceptions. In the process, Congress neglected the critical role they played in equilibrating not just plaintiffs' and defendants', but federal and state, interests. Ultimately, a combination of special interest overreaching, abetted by the fictions of corporate citizenship, and confusion about legislative aims, abetted by the institutional federal judiciary's schizophrenia regarding overlapping class actions, led Congress to lose sight of its duty, when fashioning CAFA's exceptions, to preserve the "happy relation of States to Nation."
Prof. Erichson's article is CAFA's Impact on Class Action Lawyers. Here's the abstract.--Counseller
The Class Action Fairness Act of 2005 (CAFA) reflected a profound mistrust of class action lawyers. Three years after its enactment, examination of lawyers' adaptation strategies offers an emerging picture of the statute's impact on class actions and class action lawyers. CAFA, like the Private Securities Litigation Reform Act a decade earlier, shifted class action practice in ways that appear likely to strengthen the upper tier of the plaintiff class action bar. CAFA has affected not only the division of labor between state and federal court, but also horizontal forum selection among federal courts and class action claim selection. Analysis of these effects suggests that CAFA is achieving some of its stated objectives but is unlikely to squelch class actions or to disempower leading members of the class action bar.
January 14, 2008
CA1 and Rule 19
Last week, the First Circuit addressed "the interrelationship of joinder and supplemental jurisdiction in a diversity case" in Picciotto v. Continental Cas. Co. The first few sentences of the opinion provide a good summary, but you can find the entire opinion at the First Circuit's website here--Counseller
The Picciotto family and their company, Foreign Car Center, Inc., ("the Picciottos"), appeal the dismissal of their complaint for failure to join an indispensable party. The district court found that Dana Casher, a citizen of Massachusetts, is a necessary and indispensable party in the Picciottos' suit against Casher's malpractice insurers and others for civil conspiracy. Because the Picciottos are also Massachusetts citizens, the district court dismissed the complaint, concluding that joinder of Casher would destroy its diversity jurisdiction.
On appeal, the Picciottos challenge the district court's determination that Casher is both necessary and indispensable. Alternatively, they argue that 28 U.S.C. § 1367 grants supplemental jurisdiction to the district court, allowing Casher to be joined as a defendant under Federal Rule of Civil Procedure 19 without destroying diversity, provided that the plaintiffs do not assert any claims against her. Finding no abuse of discretion in the district court's determination that Casher is a necessary and indispensable party, and rejecting the Picciottos' assertion that the supplemental jurisdiction statute permits joinder of nondiverse indispensable parties, we affirm the dismissal.