January 2, 2009
A Summary Judgment is Not a Dismissal!
Click here to download Prof. Bradley Scott Shannon's recent article A Summary Judgment is Not a Dismissal! (exclamation point in original.) The article will appear in Vol. 56 of the Drake Law Review. The abstract follows:
Many lawyers think that the granting of a motion for summary judgment results in the dismissal of the underlying claim or action. They are wrong. Though summary judgments and dismissals share some characteristics, they are distinct procedures. Accordingly, the failure to distinguish these concepts can lead to problems. In particular, the confusion of summary judgments with dismissals arguably has resulted in a widespread misapplication of the federal supplemental jurisdiction statute.
January 1, 2009
Chief Justice's 2008 Year-End Report
The Chief Justice's year-end report is now available at the Federal Judiciary website.
Recently, a split panel of the Sixth Circuit Court of Appeals reversed a district court's remand order in a nuisance suit brought by three-hundred landowners who own property downriver from a Blue Ridge paper mill in North Carolina. In Freeman v. Blue Ridge Paper Products, Inc., the plaintiff's attorney attempted to avoid federal jurisdiction by dividing the suit into five separate suits covering six distinct time periods. The plaintiffs limited total damages in each suit to just below the $5 million requirement contained in 1332(d)(2). The complaint stated the following:
The amount in controversy as to the Plaintiff and each member of the Proposed Class does not exceed Seventy-four Thousand Dollars ($74,000.00) each, exclusive of interest and costs. The Plaintiff, therefore, disclaims any compensatory damages, punitive damages, declaratory, injunctive, or equitable relief greater than seventy-four thousand dollars ($74,000.00) per individual Class member, and Plaintiff and the Proposed Class limit their individual compensatory damage claims to Seventy-four Thousand Dollars ($74,000.00) per Class member, and limit their total class wide claims to less than Four Million Nine Hundred Thousand Dollars ($4,900,000.00).
The district court remanded the case to state court because the defendant "failed to show that it was 'more likely than not the plaintiff's claims meet the amount in controversy requirement for each suit." The Court of Appeals held that the $5 million CAFA requirement was met because the $4.9 million sought in each suit requires aggregation. The court explained that "the complaints are identical in all respects except for the artificially broken up time periods. Plaintiffs put forth no colorable reason for breaking up the lawsuits in this fashion, other than to avoid federal jurisdiction." The dissenting justice argued that multiple actions filed in state court with firm limits on the amount of damages in controversy should not be subject to removal under CAFA.
Read the full opinion here.
December 31, 2008
Sixth Circuit Joins Others in Holding 28 U.S.C. § 1332(a)(2) Limited to Suits with Aliens on One Side, State Citizens on the Other
The Sixth Circuit released an opinion in which it joined numerous other circuits in holding that 28 U.S.C. § 1332(a)(2) does not grant jurisdiction over a case in which there are foreign and domestic plaintiffs against a foreign defendant.
We join our sister circuits that have held the presence of foreign parties on both sides of the dispute destroys the complete diversity required by § 1332(a)(2).
The whole opinion can be found here.
Fifth Circuit decides that 28 U.S.C. 1441(c) does not permit remand of removable federal questions
Last month the Fifth Circuit decided Poche v. Texas Air Corps, Inc., No. 07-20618, 2008 WL 4926740 (5th Cir. Nov. 19, 2008). The question presented was "does 28 U.S.C. § 1441(c) permit a district court to remand federal claims conferring removal jurisdiction where those claims are part of a case 'predominated' by state law?" Phrased as such, the statutory language seems clearly to demand the answer be "yes."
(c) Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates.
28 U.S.C. § 1441. However, the court took a narrow view of the word "matters" and, based on precedent, determined that a court "may not remand the component claims that are conclusively deemed to have arisen under federal law, absent a defect in the removal procedure or circumstances rendering the retention of jurisdiction 'inappropriate.'" (quoting Laurents v. Arcadian Corp., 69 F.3d 535 (5th Cir. 1995)).
Read the whole opinion here.
Offers of Judgment Under FRCP 68: A useful tool, but is this as good as it gets?
Professors Thomas Eaton and Harold S. Lewis, Jr. have posted a second report on the utility of offers of judgment under Federal Rule of Civil Procedure 68. In this second report, the Professors discuss some ways in which the rule could be improved.
In very broad terms, we discuss (1) having a separately numbered subdivision of the Rule for cases arising under federal fee-shifting statutes; (2) modifying the terminology of Rule 68 to describe more explicitly the mechanics and sanctions of the Rule; (3) allowing plaintiffs, not just defendants, to initiate offers under a "two-way" rule; (4) devising a set of incentives and sanctions calculated to promote the timely and fair resolution of disputes without unduly threatening either party; and (5) incorporating time frames for making and responding to offers.
You can download the report here.
December 30, 2008
Another important venue decision
An article today on Law.com asks: Will Famed Rocket Docket Fizzle Out in Wake of Federal Circuit's Ruling? Texas court slapped down for holding onto case; ruling bolsters recent 5th Circuit order. Click the case name to download the Federal Circuit's decision: In Re TS Tech USA Corporation. --RR
December 29, 2008
Whoops! My Computer Accidentally Deleted the Evidence!
Andrew Hebl, a law clerk for the Wisconsin Supreme Court, has posted a new article on SSRN discussing Federal Rule of Civil Procedure 37(e). The rule states that, generally, "a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system." He takes the position that, since the Rules were amended in 2006, courts have been misapplying this "good faith" standard:
The Federal Rules of Civil Procedure were amended effective December 1, 2006 to address concerns about discovery of electronically stored information. One of these amendments, Rule 37(e), created a safe harbor for parties that destroy relevant information as a result of the good faith, routine operation of their electronic storage systems. The rule recognizes the enhanced difficulty of preserving relevant information in the electronic context due to the automatic operation of electronic storage systems and the necessary deletion and modification of such systems' contents from time to time due to storage constraints and other technological limitations. The rule's good faith requirement protects parties and addresses their concerns by precluding sanctions where conduct is not reckless or intentional, and applies after a duty to preserve relevant evidence has arisen. This Comment is the first to consider how courts have applied the rule since its adoption. In evaluating courts' performance, this Comment concludes that the rule has been misapplied and, in effect, rendered superfluous, in that courts have continued to impose sanctions for insufficiently culpable conduct, or alternatively, have essentially ignored the rule by holding parties to a strict liability standard. The end result is that problems created by electronically stored information in the destruction of evidence context have been left unaddressed. The article attempts to remedy this situation by proposing a framework for proper application of Rule 37(e).