Civil Procedure & Federal Courts Blog

Is Erie Among The Most Maligned Decisions In Supreme Court History?

Yes, according to a symposium going on today at Pepperdine University School of Law entitled Supreme Mistakes: Exploring the Most Maligned Decisions In Supreme Court History. From the symposium brochure:

This symposium will focus on notable United States Supreme Court decisions. However, rather than showcasing the Court’s best or most popularly acclaimed decisions, the symposium will spotlight the most widely criticized decisions the Court has handed down in its history.

Each symposium presenter will articulate exactly why he or she would nominate a particular case for the Supreme Court’s “Hall of Shame.” Another presenter will then have the opportunity to redeem the Court’s reasoning or at least put the case in its historical context.

The underlying goal of the symposium is not to criticize the failings of the Court over its history, but rather to take a serious and scholarly look at the limits of judicial power and discretion through a historical lens.

The symposium will address the following five decisions: Korematsu v. United States, Plessy v. Ferguson, Buck v. Bell, Dred Scott v. Sandford, and Erie Railroad v. Tompkins.

--A

(Hat Tip: Paul Caron)

Serving Dick Tracy: Warren Beatty vs. Tribune Media Services Lawsuit Raises Interesting Personal Jurisdiction, First-Filed Rule Issues

I would like to thank Robin, Cynthia, and Adam for having me as a guest blogger this month. My goal in teaching Civil Procedure has been to try to liven up the class with cases involving interesting fact patterns and interesting issues. This month, I will be blogging about some of these cases.    

You may have read recently that Warren Beatty won a lawsuit against Tribune Media Services (TMS) in the United States District Court for the Central District of California and retained the right to make movies and TV shows using the comic book crime fighter Dick Tracy. Specifically,

Beatty had sued Tribune Media, a unit of Tribune Co., back in 2008, claiming Tribune acted wrongly in trying to retrieve the character's rights, which it had assigned to Beatty.

Under the original 1985 agreement between Beatty and Tribune, the rights would revert to Tribune if "a certain period of time" lapsed without Beatty having produced another Dick Tracy movie, TV series or TV special.

Tribune sent Beatty a letter on November 17, 2006, that gave him two years to begin production on Dick Tracy programming. Beatty said he began a Dick Tracy TV special on November 8, 2008, and gave Tribune written notice.

But Tribune responded by asserting that it still had the right to terminate Beatty's rights, which sparked Beatty's lawsuit.

What you might not have heard is that after Beatty filed his lawsuit, TMS filed voluntary petitions for Chapter 11 bankruptcy in the United States Bankruptcy Court for the District of Delaware, which stayed the California action pursuant to Bankruptcy Code Section 362(a). This then led to interesting rulings relating to personal jurisdiction and the "first-filed" rule after Beatty moved to dismiss and for relief from the automatic stay.

The court's opinion can be found at In re Tribune Co., 418 B.R. 116 (Bkrtcy.D.Del. 2009).

Personal Jurisdiction

Beatty's motion to dismiss was partially based upon the argument that Delaware lacked personal jurisdiction over him. Specifically, he claimed that "the Court lack[ed] personal jurisdiction over him due to a lack of minimum contacts with this Court or the State of Delaware, and because he has not consented to personal jurisdiction in this Court." If Beatty indeed did lack minimum contacts with Delaware, the court ordinarily would have been required to dismiss for lack of personal jurisdiction pursuant to International Shoe and its progeny. The problem for Beatty, however, was that the case was governed by Part VII of the Federal Rules of Bankruptcy Procedure, and Rule 7004(d) of those Rules provides that "[t]he summons and complaint and all other process except a subpoena may be served anywhere in the United States." And, according to the court,

Under Bankruptcy Rule 7004, "a court has personal jurisdiction over a defendant if three requirements are met: (1) service of process has been made in accordance with Bankruptcy Rule 7004 or Civil Rule 4; (2) the court has subject matter jurisdiction under section 1334 of the [Judicial] Code [28 U.S.C. § 1334]; and (3) exercise of jurisdiction is consistent with the Constitution and the laws of the United States."

After finding that these first two requirements were satisfied, the court then noted that Federal Rule of Civil Procedure 4(k)(1)(C) provides that "[s]erving a summons or filing a waiver of service establishes personal jurisdiction over a defendant...when authorized by a federal statute." The court concluded that even though Rule 7004(d) is not a federal statute, its reasoning applied and that the exercise of jurisdiction was consistent with the Constitution because

The "forum" in bankruptcy cases is "the United States in general, not the particular forum state."...State minimum contacts are not dispositive; instead, the sufficiency of the defendant's contacts with the United States are reviewed to determine the fairness of a court's exercise of personal jurisdiction in a bankruptcy related proceeding....This reasoning has been followed consistently by bankruptcy courts in this district....I discern no reason to depart from the reasoning of those cases.

Does this reasoning make sense? I don't know, but I now have my go-to case for teaching Federal Rule of Civil Procedure 4(k)(1)(C) to students. And, for an argument claiming that Rule 7004(d) and the liberal venue provisions in bankruptcy cases are unconstitutional, you can check out Jeffrey T. Ferriell, The Perils of Nationwide Service of Process in a Bankruptcy Context, 48 Wash. & Lee L. Rev. 1199 (1991).

"First-Filed Rule"

Beatty's motion to dismiss was also partially based upon venue being improper, but the court found that this argument was "more appropriately considered as part of his argument for dismissal based on the 'first-filed rule,' rather than dismissal for improper venue." The court noted that "[t]he 'first-filed rule' gives a court discretion 'to enjoin the subsequent prosecution of proceedings involving the same parties and the same issues already before another district court.'" That said, the court chose not to exercise that discretion, instead citing to the Fourth Circuit's opinion in Gilchrist v. General Elec. Capital Corp., 262 F.3d 295, 303-04 (4th Cir. 2001), which held that:

Our examination of the Bankruptcy Code reveals that Congress intended that the bankruptcy process be favored in circumstances such as these. Section 1334(e) of title 28 is unequivocal in its grant of exclusive jurisdiction [of all the property, wherever located, of the debtor as of the commencement of such case, and of property of the estate] to the bankruptcy court, and § 362(a) imposes an automatic stay on all proceedings merely upon the filing of a bankruptcy petition. If we were to frustrate these express provisions to further a first-filed policy, we would have to deny bankruptcy jurisdiction to every bankruptcy court in which foreclosure proceedings had already commenced against the debtor's property, on the grounds that the in rem nature of the foreclosure proceeding precludes the bankruptcy court from taking custody of the res. Such a jurisdictional limitation on bankruptcy proceedings would severely limit the efficacy of bankruptcy. In the absence of express language suggesting that Congress intended for bankruptcy jurisdiction to be so limited, we believe it would frustrate Congressional intent to imply such a limitation based solely on consideration of a first-filed policy.

Relief from the Automatic Stay

Ultimately, however, the United States Bankruptcy Court for the District of Delaware granted Beatty relief from the automatic stay by applying a three-pronged balancing test to determine whether "cause" exists for granting relief from the stay to continue litigation:

(1) Whether any great prejudice to either the bankrupt estate or the debtor will result from continuation of the civil suit;

(2) Whether the hardship to the non-bankrupt party by maintenance of the stay considerably outweighs the hardship to the debtor, and

(3) Whether the creditor has a probability of prevailing on the merits.

Finding that these factors favored Beatty, the court granted him relief from the automatic stay, allowing Beatty's action to proceed in the United States District Court for the Central District of California.

-Colin Miller

SCOTUS Decision in Astra USA v. Santa Clara County

This week the Supreme Court issued a unanimous decision in Astra USA, Inc. v. Santa Clara County (covered earlier here). Justice Ginsburg’s opinion begins:

Section 340B of the Public Health Services Act imposes ceilings on prices drug manufacturers may charge for medications sold to specified health care facilities. Those facilities, here called “340B” or “covered” entities, include public hospitals and community health centers, many of them providers of safety-net services to the poor. . . . It is conceded that Congress authorized no private right of action under §340B for covered entities who claim they have been charged prices exceeding the statutory ceiling. This case presents the question whether 340B entities, though accorded no right to sue for overcharges under the statute itself, may nonetheless sue allegedly overcharging manufacturers as third-party beneficiaries of the PPAs to which the manufacturers subscribed. We hold that suits by 340B entities to enforce ceiling-price contracts running between drug manufacturers and the Secretary of HHS are incompatible with the statutory regime.

--A

Welcome Guest Blogger Colin Miller

We are pleased to welcome Professor Colin Miller as a guest blogger during the month of April. Colin is an Associate Professor at The John Marshall Law School in Chicago, where he teaches evidence, criminal procedure, criminal law, and civil procedure. He is a prolific scholar as well (check out his SSRN page).

Colin is also the creator and editor of EvidenceProf Blog, a sibling of ours in the Law Professor Blogs network.

Thanks for joining us, Colin!

Yesterday's SCOTUS Oral Argument in PLIVA, Inc. v. Mensing: Federal Preemption & Generic Drugs

The Supreme Court heard argument yesterday in three consolidated cases that raise the question of federal preemption of state-law tort liability in claims involving generic drugs. The oral argument transcript is available here.

The cases are PLIVA, Inc. v. Mensing (09-993), Actavis Elizabeth, L.L.C. v. Mensing (09-1039), and Actavis, Inc. v. Demahy (09-1501). (Links are to SCOTUSblog’s case files for each case, where you can find the docket, lower court opinions, and all the briefs.)

An amicus brief filed in the case by administrative law and civil procedure scholars is available here.

--A

Oral Argument Transcript in Wal-Mart v. Dukes

The transcript from yesterday's oral argument in Wal-Mart Stores, Inc. v. Dukes is available here.

For a sampling of the extensive commentary and stories about yesterday's argument, see the ABA Journal, How Appealing, the National Law Journal, and SCOTUSblog.

--A

While you were thinking about Dukes v. Wal-Mart...

The 11th Circuit recently decided Fitzpatrick v. General Mills, ordering a distrct court to broaden the class it certified.  Fitzpatrick is a class action brought by plaintiffs who believe that General Mills overcharged them for "probiotic yogurts" such as Yo Plus and misled them as to any existing health benefits.  

The 11th Circuit not only approved of the class action, but suggested that the class does not need to be limited to consumers who relied on statements concerning the yogurt's health benefits.

RJE

SCOTUS Oral Argument in Wal-Mart v. Dukes

The Supreme Court hears argument today in Wal-Mart Stores, Inc. v. Dukes. The questions presented are:

Whether claims for monetary relief can be certified under Federal Rule of Civil Procedure 23(b)(2)—which by its terms is limited to injunctive or corresponding declaratory relief—and, if so, under what circumstances.

Whether the class certification ordered under Rule 23(b)(2) was consistent with Rule 23(a).

SCOTUSblog’s case file is available here, which contains links to the Ninth Circuit opinion below and the briefing in the case.

There is a ton of coverage on the case and the upcoming argument, including:

• ABA Journal
• Associated Press
• The Atlantic
• Chicago Tribune
• CNN
• How Appealing
• New York Times
• SCOTUSblog
• Washington Post

 An amicus brief filed in the case by thirty-one civil procedure professors is available here.

 --A

Federal Judicial Center Report on the Impact of Twombly/Iqbal

The Federal Judicial Center has released a Report to the Advisory Committee on Civil Rules entitled Motions to Dismiss for Failure to State a Claim After Iqbal, authored by Joe S. Cecil, George W. Cort, Margaret S. Williams & Jared J. Bataillon. Here’s the executive summary:

This report presents the findings of a Federal Judicial Center study on the filing and resolution of motions to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The study was requested by the Judicial Conference Advisory Committee on Civil Rules. The study compared motion activity in 23 federal district courts in 2006 and 2010 and included an assessment of the outcome of motions in orders that do not appear in the computerized legal reference systems such as Westlaw. Statistical models were used to control for such factors as differences in levels of motion activity in individual federal district courts and types of cases.

After excluding cases filed by prisoners and pro se parties, and after controlling for differences in motion activity across federal district courts and across types of cases and for the presence of an amended complaint, we found the following:

• There was a general increase from 2006 to 2010 in the rate of filing of motions to dismiss for failure to state a claim (see infra section III.A).

• In general, there was no increase in the rate of grants of motions to dismiss without leave to amend. There was, in particular, no increase in the rate of grants of motions to dismiss without leave to amend in civil rights cases and employment discrimination cases (see infra section III.B.1).

• Only in cases challenging mortgage loans on both federal and state law grounds did we find an increase in the rate of grants of motions to dismiss without leave to amend. Many of these cases were removed from state to federal court. This category of cases tripled in number during the relevant period in response to events in the housing market (see infra section III.B.1). There is no reason to believe that the rate of dismissals without leave to amend would have been lower in 2006 had such cases existed then.

• There was no increase from 2006 to 2010 in the rate at which a grant of a motion to dismiss terminated the case (see infra section III.B.1).

--A

(Hat Tip: Lonny Hoffman)

Green on Erie's Suppressed Premise

Michael Steven Green (William and Mary Law School) has posted Erie's Suppressed Premise to SSRN.

Abstract:      
The Erie doctrine is usually understood as a limitation on federal courts’ power. This Article concerns the unexplored role that the Erie doctrine has in limiting the power of state courts. 

According to Erie Railroad Co. v. Tompkins, a federal court must follow state supreme court decisions when interpreting state law. But at the time that Erie was decided, some state supreme courts were still committed to Swift v. Tyson. They considered the content of their common law to be a factual matter, concerning which federal (and sister state) courts could make an independent judgment. Indeed, the Georgia Supreme Court still views its common law this way. In order to explain Brandeis’s conclusion in Erie that state supreme court decisions bind federal courts, even when the state supreme court does not want them to be binding, a premise must be added to his argument - one that limits state supreme court power in this area. 

The missing premise is a non-discrimination principle that is a hitherto unrecognized - but essential - part of the Erie doctrine. A state supreme court can free federal courts of the duty to follow its decisions only if it is willing to free domestic courts of the same duty. It cannot discriminate concerning the binding effect of its decisions on the basis of whether the effect is in domestic or federal court.

A similar puzzle arises when a federal court interprets unsettled state law. The Supreme Court has suggested that a federal court should predict how the relevant state supreme court would decide. But many state supreme courts - including the New York Court of Appeals - have indicated that they do not care if federal (or sister state) courts use the predictive method concerning their unsettled law. Here, too, the non-discrimination principle latent in Erie explains how the Supreme Court can demand that federal courts adopt the predictive method, whatever a state supreme court has said about the matter.

The Article ends by briefly discussing the transformative effect that Erie’s non-discrimination principle should have for choice of law, where Swift v. Tyson remains ubiquitous.

RJE