Saturday, July 31, 2010
Professor Thomas V. Burch (Florida State University College of Law) has posted "Manifest Disregard and the Imperfect Procedural Justice of Arbitration" on SSRN. It will be published in the Kansas Law Review.
The abstract states:
Friday, July 30, 2010
Yesterday the U.S. Judicial Panel on Multidistrict Litigation (JPML) heard argument on various motions to centralize litigation relating to the BP Oil Spill. Orders relevant to the hearing are available on the JPML website here.
Thursday, July 29, 2010
The National Law Journal reports a decision from the Seventh Circuit holding that the insurers of sellers of baby products had no duty to defend the insured in a class action lawsuit that sought only economic damages.
Wednesday, July 28, 2010
Tuesday, July 27, 2010
Howard Wasserman (Florida International) has posted on SSRN his paper, Civil Rights and Federal Courts: Creating a Two-Course Sequence, 54 St. Louis Univ. L.J. 821 (2010). Here’s the abstract:
This paper discusses the details of an independent course on § 1983/constitutional litigation as an off-shoot of the traditional Federal Courts course and how to create a two-court upper-level course sequence. The paper was published as part of the St. Louis University Law Journal's symposium on "Teaching Civil Rights."
Monday, July 26, 2010
Courtesy of the Drug and Device Law Blog comes this post about Franklin v. Medtronic, Inc., 2010 U.S. Dist. LEXIS 71069 (D. Col. May 12, 2010). The court dismissed a claim that an implantable defibrillator malfunctioned and caused an injury using Twombly, and preemption and causation doctrines. The post reflects the delight of our honorable Drug and Device Law Blog colleague, but also provides a good summary of the opinion.
Last week the Eleventh Circuit issued a very significant (though a bit puzzling) decision on the 2005 Class Action Fairness Act (CAFA). The case is Cappuccitti v. DirecTV, Inc., No. 09-14107, ___ F.3d ___, 2010 U.S. App. LEXIS 14724, 2010 WL 2803093 (11th Cir. July 19, 2010), covered earlier here. One of CAFA’s most significant changes was an amendment to the diversity jurisdiction statute, codified at 28 U.S.C. § 1332(d), to authorize federal diversity jurisdiction over class actions for which there is (a) minimal diversity between the parties, and (b) an aggregate amount in controversy in excess of $5,000,000. Neither party in Cappuccitti disputed that federal subject matter jurisdiction was proper under § 1332(d); DirecTV's appeal challenged only the district court’s refusal to compel arbitration. But the Eleventh Circuit raised the jurisdictional issue sua sponte and dismissed the case entirely. It held that even if a class action’s aggregate amount-in-controversy exceeds $5,000,000, CAFA jurisdiction applies only if at least one class member’s claim exceeds the $75,000 threshold that applies for ordinary diversity jurisdiction under 28 U.S.C. § 1332(a).
It is difficult to see how this result follows from CAFA’s text. CAFA’s § 1332(d) created a new category of diversity jurisdiction over class actions that is distinct from the general form of diversity jurisdiction set forth in § 1332(a). The only situation where the two overlap is for so-called “mass actions” -- cases that are not class actions but nonetheless include more than 100 plaintiffs with related claims. Section 1332(d)(11) provides that such “mass actions” can trigger CAFA jurisdiction, but only for plaintiffs whose claims exceed § 1332(a)’s $75,000 threshold. See 28 U.S.C. § 1332(d)(11)(B)(i). Cappuccitti, however, is a true class action brought pursuant to Federal Rule of Civil Procedure 23. So § 1332(d)(11)’s provisions for “mass actions” don’t apply, leaving no textual basis for incorporating § 1332(a)’s $75,000 threshold into § 1332(d).
Thus, § 1332(d)’s plain text provides that as long as a class action’s aggregate amount in controversy exceeds $5 million, it doesn’t matter whether any individual class member’s claim exceeds $75,000 (or any other amount). CAFA’s legislative history confirms that this was exactly what Congress intended. According to the Senate Judiciary Committee’s report (S. Rep. 109-14), CAFA responded to “the nonsensical result under which a citizen can bring a ‘federal case’ by claiming $75,001 in damages for a simple slip-and-fall case against a party from another state, while a class action involving 25 million people living in all fifty states and alleging claims against a manufacturer that are collectively worth $15 billion must usually be heard in state court (because each individual class member's claim is for less than $75,000).” [S. Rep. 109-14, at p.11 (emphasis added)]. In further critiquing the pre-CAFA approach to diversity jurisdiction over class actions, the Senate Report explained [at p.69]:
[T]he process of assessing whether a class action complies with the current jurisdictional amount requirement is also often “an expensive and time consuming process,” requiring discovery on the nature and value of the named plaintiffs' claims. As noted previously, in some federal Circuits, the jurisdictional amount requirement in a class action is satisfied by showing that any member of the proposed class is asserting damages in excess of $75,000, and in other Circuits, the question is whether each and every member of the putative class has individually an amount in controversy exceeding $75,000. Again, this time-consuming issue, often requiring significant amounts of record review and fact-finding, is litigated very frequently in the many class actions that are removed to federal court under current law. [CAFA] will make the resolution of class action jurisdictional issues easier -- not harder. . . . [I]t will be much easier to determine whether the amount in controversy presented by a purported class as a whole (that is, in the aggregate) exceeds $5 million than it is to assess the value of the claim presented by each and every individual class member, as is required by the current diversity jurisdictional statute.
[S. Rep. 109-14, at p.11 (emphasis added)].
My purpose here is not to defend CAFA. One can certainly question whether, as a policy matter, federal diversity jurisdiction should have been expanded to cover these kinds of class actions. And CAFA does contain several instances of problematic drafting (see, e.g., here and here). But the issue addressed in Cappuccitti is not one of them. The court’s holding is very hard to square with CAFA’s text and purpose.
Sunday, July 25, 2010
Ronen Perry (University of Haifa) has posted Economic Loss, Punitive Damages, and the Exxon Valdez Litigation to SSRN.
On March 24, 1989, an Exxon supertanker ran aground on Bligh Reef off the Alaskan coast, spilling millions of gallons of crude oil into Prince William Sound. The spill was probably the worst environmental disaster in American history, and sparked unusually extensive and complex litigation, as well as a vast academic literature. But the natural focus on concrete legal and procedural questions has left at least one abstract juridical puzzle unsolved - one that goes to the very foundation of tort liability.
The article uncovers a fundamental yet unnoticed inconsistency in American land-based and maritime tort law that surfaced following the unprecedented spill. The understandable emphasis on the award of punitive damages in recent literature has overshadowed an extremely important part of the Exxon Valdez litigation, namely the wholesale rejection of numerous claims for purely economic loss by the federal district court in the early 1990s. Thus, on the one hand, liability for economic loss was strictly limited under the renowned Robins Dry Dock v. Flint, leaving dozens of thousands of victims uncompensated. On the other hand, liability was expanded through an award of punitive damages to relatively few successful claimants. While these two components of the legal saga might not seem incompatible from a simple doctrinal perspective, they are inconsistent on a deeper - justificatory - level. This inconsistency transcends the Exxon Valdez litigation: It is a troubling trait of land-based and maritime tort law, which happened to surface when the Exxon oil submerged.
The first two parts introduce the clashing rules and their underlying rationales: Part I discusses the origins of the exclusionary (economic loss) rule, its scope of application, and most importantly - its main justifications in American case law and academic literature. Part II provides a short history of punitive damages, and discusses the common justifications for this private law anomaly. Next, Part III shows how the two rules were applied through the Exxon Valdez litigation, and explains why their in tandem application gives rise to incoherence on the justificatory level. After delineating the contours of the stark incongruity, the article proposes a conceptual framework for resolution. Generally, it holds that if courts believe liability must be expanded beyond the limits set by the exclusionary rule in order to obtain certain levels of deterrence and retribution, relaxing the exclusionary rule and allowing more victims to recover is a more defensible path than awarding punitive damages to the already compensated few. The former simply extends the application of two general principles of tort law, whereas the latter is based on problematic exceptions to these universal principles and generates severe distributive injustice.
Through this analysis, the article not only sheds new light on the particular proceedings and on the common law of torts, but also lays the foundation for a more holistic approach to legal reasoning: a transition from fragmentation to integration. “Can two walk together, except they be agreed?” the biblical prophet rhetorically inquires. The Exxon Valdez litigation shows that they can, but this article concludes that they should not.