Saturday, November 7, 2009

Redish, Julian, & Zyontz on Cy Pres Relief and the Pathologies of the Modern Class Action

Martin Redish (Northwestern), Peter Julian (Northwestern), and Samantha Zyontz (Searle Civil Justice Institute) have posted "Cy Pres Relief and the Pathologies of the Modern Class Action:  A Normative and Empirical Analysis" on SSRN.  It will be published in the Florida Law Review. 


Since the mid 1970s, federal courts have taken the doctrine of cy pres relief from the venerable law of trusts and adapted it for use in the modern class action proceeding. In its original context, cy pres was utilized as a means of judicially designating a charitable recipient when, for whatever reason, it was no longer possible to fulfill the original goal of the maker of the trust. The purpose of cy pres was to provide “the next best relief” by finding a recipient who would resemble the original donor’s recipient as much as possible. In the context of class actions, courts have utilized the doctrine as a means of disposing of unclaimed class wide relief. Where a substantial portion of the fund is likely to go unclaimed by absent class members, courts either order or authorize the payment of all or part of the remaining funds to a charitable interest that has some connection - however loose - to the subject matter of the suit. In recent years, use of cy pres in federal class actions has increased dramatically.

Use of cy pres in class actions has largely escaped either judicial or scholarly scrutiny or critique. This is unfortunate, since the doctrine’s use distorts the class action in a manner that undermines the inherently adversary nature of the federal adjudicatory process and the inherently compensatory nature of the underlying substantive law being enforced in the class proceeding. At the same time, resort to cy pres threatens the due process rights of both defendants and absent class members. It achieves these pathological ends by creating an illusion of victim compensation through adversary adjudication when in reality it transforms the underlying law into the forced payment of the equivalent of a civil fine to an entity that has no legitimate interest in the proceeding and has suffered no injury at the hands of the defendants.

In this article, we initially explore the history and current use of cy pres relief in the modern class action. We then explain - for the first time ever in legal scholarship - why the doctrine’s use so seriously undermines norms that are central both to our constitutional system and to American democracy. We then conduct a detailed empirical examination of the available data concerning the use of cy pres relief in class actions. Our empirical analysis underscores our normative critique of the doctrine by highlighting both its rapid expansion and the manner in which it has been abused.


November 7, 2009 in Class Actions, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Friday, November 6, 2009

Hatamyar on the Empirical Impact of Twombly and Iqbal

Professor Patricia Hatamyar (St. Thomas, Florida) has a forthcoming article in the American University Law Review that may be of interest to our readers. The article is The Tao of Pleading: Do Twombly and Iqbal Matter Empirically?, and it's available on SSRN.

Here's the abstract:

This article is an empirical study of the effect of Bell Atlantic Corp. vs. Twombly, 550 U.S. 544 (2007), and Ashcroft vs. Iqbal, 129 S. Ct. 1937 (2009), two recent Supreme Court cases that portend the decline of "notice pleading" in federal civil practice.

The article analyzes how Twombly and Iqbal have begun to dismantle the regime of notice pleading by not only discarding the "no set of facts" standard of Conley vs. Gibson, 355 U.S. 41 (1957), but by changing or ignoring other principles that federal courts have followed for decades on 12(b)(6) motions. The statistical study then examines how Twombly and Iqbal may have affected federal district court rulings on 12(b)(6) motions in practice.

The statistical analysis of 1,039 cases shows that 49% of 12(b)(6) motions were granted (with or without leave to amend) in the cases selected (from May 2005 to August 2009). Further, the rate of granting such motions increased from 46% of motions decided under Conley, to 48% of motions decided under Twombly, to 56% of motions decided under Iqbal. A multinomial logistic regression indicates that under Twombly/Iqbal, the odds of a 12(b)(6) motion being granted rather than denied are 1.5 times greater than under Conley, holding all other variables constant.

Moreover, the largest category of cases in which 12(b)(6) motions are filed was constitutional civil rights. Motions to dismiss in constitutional civil rights cases were granted at a higher rate (53%) than in cases overall (49%), and the rate of granting 12(b)(6) motions in constitutional civil rights cases increased in the cases selected from Conley (50%) to Twombly (55%) to Iqbal (60%).

The article concludes that Twombly and Iqbal have resulted in a noticeable increase in the granting of 12(b)(6) motions by district courts, and suggests that such a result, if desirable, should be accomplished by the normal rule-amendment process.


November 6, 2009 in Recent Scholarship, Twombly/Iqbal | Permalink | Comments (0) | TrackBack (0)

Thursday, November 5, 2009

Upcoming Supreme Court Argument: Hertz Corp. v. Friend (Tuesday 11/10)

The march of Supreme Court arguments in the civil procedure & federal courts area continues next week in Hertz Corp. v. Friend (No. 08-1107). (For our coverage of other arguments of interest this Term, see here, here, and here.)

This case presents the long-simmering question of how to determine a corporation's "principal place of business" for purposes of diversity jurisdiction. Section 1332(c), of course, deems a corporation to be a citizen of both the state where it has its principal place of business and its state of incorporation.

The Supreme Court's docket is here. For the parties' merits briefs (courtesy of the ABA), see...

There are also two amicus briefs, one on each side:

For additional information, see SCOTUSblog's preview and wiki for the case.


November 5, 2009 in Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0) | TrackBack (0)

Henderson on the role of Twombly and Iqbal in mutual fund compensation actions

Continuing the trend of scholars from inside and outside of the civil procedure realm to study the possible ramifications of Twombly and Iqbal, M. Todd Henderson (University of Chicago) has posted an essay entitled Justifying Jones to SSRN.

This essay considers Judge Easterbrook's opinion in Jones v. Harris Associates in celebration of his 25th anniversary on the bench. The case, currently pending at the Supreme Court, is being billed as the most important mutual fund case in decades, if not ever. This is part because it addresses the question of whether investors are overpaying for the services of their investment advisors, and the current political climate is quite hostile to highly compensated managers and sympathetic to investors. Judge Easterbrook's opinion makes the case even more interesting because it was not expected or wanted by any of the parties, and everyone involved wants the Supreme Court to reject its reasoning. Easterbrook believes that litigation against advisors claiming excessive compensation is socially wasteful, and his opinion tries to do away with these cases in all but the most extreme cases. This Essay uses theory and some ballpark estimates of the costs and benefits of this type of litigation to justify what Judge Easterbrook did. It shows how despite being billed as a case about executive compensation, the relevant precedents are not the Supreme Court's cases on pay (e.g., Rogers v. Hill) but rather its recent civil procedure cases (e.g., Bell Atlantic Corp. v. Twombly). It also exposes the reasons why none of the parties nor the mutual fund industry agree with Judge Easterbrook. Obviously the lawyers on both sides benefit from litigation, which he is trying to end, but more interestingly the mutual fund industry rationally prefers the small tax on its profits that the current regime generates over the risk that the Supreme Court or, worse, the Congress might make matters much worse. This case is therefore a classic example where the narrow interests of the parties are not informative of the right result. This Essay shows why the Supreme Court should consider the interests of investors over the lawyers and the funds before reinstating a legal regime under which the plaintiffs have never won and that serves no deterrent function.


November 5, 2009 in Recent Scholarship, Twombly/Iqbal | Permalink | Comments (0) | TrackBack (0)

Tarkington on Impugning Judicial Integrity in Court Proceedings

Margaret Tarkington (BYU J. Reuben Clark Law School) has posted "A Free Speech Right to Impugn Judicial Integrity in Court Proceedings" on SSRN.  It is forthcoming in the Boston College Law Review. The abstract states:

Throughout the United States, state and federal courts discipline and sanction attorneys who make disparaging remarks about the judiciary and thereby impugn judicial integrity. In so doing, courts have almost universally rejected the constitutional standard established in New York Times v. Sullivan for punishing speech regarding government officials. While courts have imposed severe sanctions regardless of the forum where the speech has occurred, many of the cases involve speech made by attorneys in court proceedings. The existing scholarly literature generally supports the denial of First Amendment protection in such cases, indicating that attorney speech when made in court proceedings is entitled to little, if any, constitutional protection.

In A Free Speech Right to Impugn Judicial Integrity in Court Proceedings, Professor Tarkington examines why a free speech right to impugn judicial integrity must be recognized for attorneys - even, and perhaps especially, when acting as officers of the court and making statements in court proceedings. Such a right is necessary to protect the constitutional and other rights of litigants to an unbiased and competent judiciary. Further, the recognition of such a right in the attorney preserves litigants’ access to courts and due process rights. These rights belonging to litigants are all but lost where attorneys are punished for or chilled from asserting them in court proceedings. Previous scholarly arguments - which are based on analogies to other areas of limited First Amendment protection - fail to account for the protection of the underlying rights of litigants, the role of attorneys in our adversary system, and the constitutionally-required role of the judicial branch. Importantly, the judiciary does not need to punish attorney speech impugning judicial integrity in order to protect its legitimate interests in the just adjudication of cases. In fact, by curbing speech in the presentation of claims, the judiciary undermines its own role and responsibility in remedying constitutional violations and providing fair proceedings.

H/T First Amendment Law Prof Blog.


November 5, 2009 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Wednesday, November 4, 2009

Lahav on lawyering in unjust circumstances

Alexandra Lahav (University of Connecticut) has posted Portraits of Resistance: Lawyer Responses to Unjust Proceedings on SSRN.

This Article considers a question rarely addressed: what is the role of the lawyer in a manifestly unjust procedural regime? Many excellent studies have considered the role of the judge in unjust regimes, but the lawyer’s role has been largely ignored. This Article draws on two case studies: that of lawyers representing civil rights leaders during protests in Birmingham, Alabama in 1963 and that of lawyers representing detainees facing military commission proceedings in Guantánamo Bay, Cuba. These portraits illuminate the role of the lawyer in a procedurally unjust tribunal operating within a larger liberal legal regime such as our own.

The purpose of the Article is to paint a landscape of lawyer resistance to procedural injustice that can be used as a basis for further inquiry. The Article considers hard questions about lawyer participation in unjust tribunals such as whether lawyers who participate in unjust tribunals are complicit in injustice and what lawyers can do in the face of an unjust procedural regime. It presents a new way of understanding the forms of lawyer resistance to injustice. The Article demonstrates that complicity and resistance are not on opposite poles of human behavior within organizational systems. Rather, there is a dualistic interplay between complicity and resistance. Acts that appear to be resistance can be perceived as complicit, and acts that appear to be complicit can result in powerful forms of resistance. The Article also explores some questions raised by this analysis, such as what are the lawyer’s responsibilities to society and to his or her client and whether lawyers can know when a tribunal is so unjust as to merit resistance. It concludes by considering avenues for further research.


November 4, 2009 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Schauer on the Supreme Court's Case Selection Process

Frederick Schauer has posted "Is it Important to Be Important? Evaluating the Supreme Court's Case Selection Process," to be published in the Yale Law Journal.


The Supreme Court has been criticized for taking and deciding too few cases, with its current full opinion output down to 70 cases a year from 150 or more as recently as the middle of the 1980s. Much of the criticism has centered around the Court’s reluctance to decide important cases, but sorting out the criticism depends on an understanding of what we mean by “important.” It is true that the Court decides very few of the important issues of our time, and the distance between the Court’s docket and current concerns about health care, jobs, the economy in general, bank bailouts, auto company bailouts, executive compensation, wars in Iraq and Afghanistan, and the nuclear capability of Iran and North Korea underscore this gap. Current public opinion polling updating Schauer, “Foreword: The Court’s Agenda - and the Nation’s,” 120 Harv. L. Rev. 4 (2006), confirms that there is no change in the gap between the two agendas, and little suggests that there is anything wrong with this. But if we turn from the question of social and political importance to legal importance, it appears that the Court is failing to resolve many of the issues that appear with great frequency in the lower courts, and as to which the law is highly uncertain. The Court’s increasing failure to adequately perform the function of guiding the lower courts is indeed a problem, a problem caused in part by the lack of a way for the Court systematically to obtain accurate information about the array of often-litigated issues in need of resolution. The Essay concludes with possible suggestions on how the informational deficit and informational distortion might be corrected.


November 4, 2009 in Federal Courts, Recent Scholarship | Permalink | Comments (0) | TrackBack (0)

Tuesday, November 3, 2009

Yesterday's SCOTUS Argument in Shady Grove Orthopedic Assocs. v. Allstate Ins. Co.

As previewed earlier here, Shady Grove Orthopedic Assocs. v. Allstate Ins. Co. considers whether New York's bar on class actions for certain statutory-damages claims (N.Y. C.P.L.R. 901(b)) precludes class certification in a federal court diversity action. Among the relevant issues are whether the Erie doctrine requires federal courts to follow state class action law, and whether allowing FRCP 23 to displace New York law on the availability of a class action would run afoul of the Rules Enabling Act's command that the FRCPs "shall not abridge, enlarge or modify any substantive right." (28 U.S.C. 2072(b))

The transcript from yesterday's oral argument is available here.


November 3, 2009 in Class Actions, Federal Courts, Federal Rules of Civil Procedure, Supreme Court Cases | Permalink | Comments (0) | TrackBack (0)

Monday, November 2, 2009

Cert. Grant Today: Federal Jurisdiction over Constitutional Challenge to Ohio's Tax Benefits for Local Natural Gas Distributors (Levin v. Commerce Energy Inc.)

Today the Supreme Court granted certiorari in Levin v. Commerce Energy Inc. (09-223). The questions presented are:

(1) Did Hibbs v. Winn, which addressed the scope of the Tax Injunction Act's bar against federal cases seeking to enjoin the assessment and collection of state taxes, eliminate or narrow the doctrine of comity--applied in Fair Assessment in Real Estate Association v. McNary--which more broadly precludes federal jurisdiction over cases that intrude on the administration of state taxation?

(2) Do either comity principles or the Tax Injunction Act bar federal jurisdiction over a case in which taxpayers allege, on equal protection and dormant commerce clause grounds, that their tax assessments are discriminatory relative to other taxpayers' assessments?

The docket is here, and the Sixth Circuit’s decision is at 554 F.3d 1094.

(Hat Tip: BNA’s Supreme Court Today)


November 2, 2009 in Federal Courts, Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0) | TrackBack (0)

Kansas Supreme Court Considers Constitutionality of Damages Caps

Last week the Kansas Supreme Court heard oral argument in Miller v. Johnson, a medical malpractice case challenging the constitutionality of a Kansas statute that caps damages for noneconomic loss at $250,000.

The docket is available here. For additional coverage, see here and here.

(Hat Tip: How Appealing)


November 2, 2009 in In the News, State Courts | Permalink | Comments (0) | TrackBack (0)

Monday morning humor

Courtesy of Courtoons:



November 2, 2009 in Twombly/Iqbal | Permalink | Comments (0) | TrackBack (0)

Maxeiner on Litigation Cost and Fee Allocation in the U.S.

James R. Maxeiner (University of Baltimore School of Law) has posted "Cost and Fee Allocation in Civil Procedure: United States of America National Report," which will be published in the American Journal of Comparative Law.


This report summarizes critically the American practice of providing indemnity for court costs in litigation but not for attorneys' fees. It considers the basics, who pays, the rationals, exceptions,and modifications. It challenges the suggestion that the American no-indemnity practice reflects American values and debunks the assertion that it is used to promote access to justice. The report show that American jurists, just as their non-American counterparts, have pointed to a rational of full realization of rights to support complete indemnity. The reports notes the role of the bar in promoting no indemnity and the importance of viewing litigation as an event separate from the rights that it is to enforce.


November 2, 2009 in Recent Scholarship | Permalink | Comments (0) | TrackBack (0)