Civil Procedure & Federal Courts Blog

Actuarial Litigation Symposium at UConn

On Friday, April 15, the University of Connecticut Law School is hosting a conference on actuarial litigation.  If you are interesting in attending, please contact patricia.carbray@law.uconn.edu.

Schedule and list of speakers after the jump.

Agenda

 

Insurance Law Center Symposium

April 15, 2011

 

Actuarial Litigation: How Statistics Can Help Resolve Big Cases

 

 

8:00 to 9:00                        Continental Breakfast

 

9:00 to 10:00                         I. Class Actions and Regulatory Actions

 

Presenters

• Francis McGovern, Duke University School of Law
• Edward Brunet, Lewis & Clark Law School

 

Commentator

• Alex Stein, Benjamin N. Cardozo School of Law

 

Moderator

• Robin Effron, Brooklyn Law School
  
  

10:00 – 10:15                         Break

 

10:15 – 11:45                        II. Aggregate Litigation and Mass Torts

 

Presenters

• Samuel Issacharoff, New York University School of Law
• Howard Erichson, Fordham University School of Law

 

Commentators

• Deborah Hensler, Stanford Law School
• Adam Scales, Washington & Lee Law School

 

Moderator

• Peter Kochenburger, University of Connecticut School of Law

 

12:00 – 12:30                        Lunch

 

12:30 – 1:15                         Keynote Address

 

• Kenneth R. Feinberg, Founder, Managing Partner, Feinberg Rozen, LLP

 

1:15 – 1:30                        Break

 

 

1:30 – 3:30                         III.            Accuracy in Statistical Adjudication Techniques

 

Presenters

• Joseph B. Kadane, Carnegie Mellon University, Dep’t of Statistics
• Edward K. Cheng, Vanderbilt University Law School
• Robert G. Bone, Professor of Law, University of Texas School of Law

 

Commentator

• D. James Greiner, Harvard Law School

 

Moderator

• Peter Siegelman, University of Connecticut School of Law
  
  

RJE

N.Y. Times Editorial on Wal-Mart v. Dukes

This editorial about the Wal-Mart v. Dukes case, now pending in the Supreme Court, appeared in yesterday’s New York Times. From the text:

[D]uring oral argument last week, conservative justices and liberals to some degree expressed skepticism: Is there enough “cohesion” among the women to justify treating them as a single class? If so, how could a solo trial judge manage such an enormous class action?

A brief by 31 professors of civil procedure explains why the women are a suitable class. Their claims meet the core test: They have in common the question of whether Wal-Mart discriminated against them. Meanwhile, the high cost of litigation compared to the low likely individual recoveries would make it hard for the women to proceed any other way. …

If the court has doubts about whether the class is cohesive or manageable enough, it should ask the trial judge to explore whether there is a single class or more than one — say, salaried female employees and hourly employees or female store managers and other kinds of employees. That would be much fairer than dismissing the case and insisting that 1.5 million women fend for themselves.

--A

A Bridge Too Far?: Court Finds Car Crash On "Wisconsin Side" of MN/WI Bridge Supported Personal Jurisdiction in Minnesota

From my childhood, I remember the classic brain teaser, "If a plane crashes on the border between Canada and the Unites States, where do they bury the survivors?" This brain teaser was the first thing that came to my mind when I read the opinion of the Court of Appeals of Minnesota in Christian v. Birch, 763 N.W.2d (Minn.App. 2009), which raised the following question: "If cars crash on the bridge between Minnesota and Wisconsin, where do they hold the trial?" And, according to the court, the answer can be Minnesota, even if the crash is on the "Wisconsin side" of the bridge.

In Birch, a vehicle driven by Judith M. Birch, a Wisconsin resident, collided head-on with a vehicle driven by Genna L. Christian, a Minnesota resident. The collision occurred on the Blatnik Bridge, which spans the St. Louis River between Superior, Wisconsin and Duluth, Minnesota. Christian was driving toward Wisconsin while Birch, who was intoxicated, was driving toward Minnesota, but in the Wisconsin-bound lane. It was undisputed that the accident occurred  only feet from what is commonly referred to as the "arch" or center of the bridge. There is a white line at the center of the bridge, and the accident occurred on the "Wisconsin side" of the bridge.

Christian thereafter brought a negligence action against Birch in Minnesota state court, and the trial court found that it lacked personal jurisdiction over Birch because it treated the white line as the boundary between Minnesota and Wisconsin, and there was no evidence of other contacts between Birch and Minnesota. Subsequently, Christian appealed, and the Court of Appeals of Minnesota reversed. It first found that there was "no evidence in the record...to support a conclusion that the "white line" is a legally recognized boundary between Minnesota and Wisconsin." 

Moreover, the court found that even if the white line were the legal boundary, this fact would be irrelevant because "Minnesota courts...have concurrent jurisdiction over events that occur on bridges spanning boundary waters" pursuant to Minn.Stat. Section 484.02, which provides that

For the purposes of exercising the concurrent jurisdiction of the courts of this state in civil and criminal cases arising upon rivers or other waters which constitute a common boundary to this and any adjoining state, the counties bordering upon such waters shall be deemed to include so much of the area thereof as would be included if the boundary lines of such counties were produced in the direction of their approach and extended to the opposite shore.

Thus, because the collision occurred on a bridge spanning a boundary water, Minnesota's long-arm statute, Minn.Stat. § 543.19, was satisfied because Birch "'commit[ed] an[] act in Minnesota causing injury or property damage.'" Because the court also found that Minnesota's exercise of personal jurisdiction would be consistent with federal due process, it reversed the trial court's ruling.

-Colin Miller

 

Erbsen on Constitutional Spaces

Professor Allan Erbsen (Minnesota) has posted on SSRN a draft of his article Constitutional Spaces, which is forthcoming in the Minnesota Law Review. Here’s the abstract:

This Article is the first to systematically consider the Constitution’s identification, definition, and integration of the physical spaces in which it applies.  Knowing how the Constitution addresses a particular problem often requires knowing where the problem arises.  Yet despite the importance and pervasiveness of spatial references in the Constitution, commentators have not analyzed these references collectively.  This Article fills that gap in the literature by examining each of the fourteen spaces that the Constitution identifies, as well as several that it overlooks, to reveal patterns in the text’s treatment of space and location.  Among the spaces that the Article considers are “the Land” referenced in the Supremacy Clause, the “United States,” “States,” “Territory,” “Property,” the District of Columbia, federal enclaves, vicinage “districts,” the “high Seas,” “admiralty and maritime Jurisdiction,” Indian lands, national airspace, and underground resource deposits.  The Article shows that many discrete problems on which scholars have focused—such as the rights of U.S. military detainees abroad, the role of federal law on Indian reservations, and the extraterritorial reach of state law—are manifestations of a broader phenomenon that exists because of indeterminacy in how the Constitution allocates power over different kinds of spaces.  Considering the many distinct kinds of constitutionally defined and constitutionally overlooked spaces together highlights this indeterminacy, provides new perspectives on commonly discussed problems, and exposes additional puzzles that have escaped scrutiny.

The Article makes four basic points on which future scholarship can build.  First, although the Constitution creates a typology of spaces that relies on formal categories, the categories often have little utility in resolving specific questions.  The text’s description of the physical contours of spaces and the legal significance of their borders is too imprecise to permit a jurisprudence of labels that converts lines on a map into “bright line” rules of decision.  Determining where in physical space a problem arises is therefore a necessary but insufficient prerequisite to determining which government entities can address the problem and how they may respond.  Second, constitutionally defined places routinely overlap, such that a point in physical space can map onto several points in constitutional space.  Drawing conclusions about how the Constitution regulates particular spaces in particular contexts therefore requires developing rules for allocating concurrent authority and resolving competing claims.  Third, even when spaces do not physically overlap, events in one space routinely have consequences in others, residents of a space routinely act in others, and agents of an entity that controls a particular space often operate in other spaces.  These spillovers raise questions about when entities (such as states, the United States, and tribes) can regulate beyond borders that would normally cabin their jurisdiction.  The parameters of a constitutionally defined place are thus not necessarily coextensive with the reach of an entity governing that place.  Finally, the same questions tend to recur in multiple spatial contexts.  For example, who decides the boundary of a space and by what standards, when can federal courts create common law governing a space, and when does the text’s explicit enumeration of a space’s attributes imply by negative implication the absence of other attributes?  Exposing how these questions arise in multiple contexts reveals subtle dimensions of problems that can go unnoticed when viewed in isolation.  The pervasive and overlooked “where” question in constitutional law therefore merits systemic scrutiny.

--A

Judge Sentences Juror to More Jury Duty

From my home turf of Brooklyn, we have this stunning account of a woman's racist comments on jury duty.  When the judge sensed that she made "wildly racist" and anti-law enforcement comments simply for the purpose of being excused, he informed her that she will have to show up for jury duty...indefinitely.  He eventually excused her, but not before giving her a stern lecture.

RJE

Outside of My Jurisdiction: Sixth Circuit Reverses Prior Precedent, Finds 1 Year Deadline of Section 1446(b) to be Procedural

28 U.S.C. Section 1446(b) provides in relevant part that

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by section 1332 of this title more than 1 year after commencement of the action.

Meanwhile, 28 U.S.C. Section 1447(c) provides in relevant part that

A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under section 1446(a). 

So, assume that (1) a defendant removes an action to federal court based upon diversity jurisdiction more 1 year after the commencement of an action; and (2) the plaintiff moves to remand more than 30 days after the filing of the notice of removal. Was the untimely removal by the defendant a procedural defect that was waived by the plaintiff when it failed to file a timely motion for remand? Or, was the untimely removal by the defendant a jurisdictional defect that could not be waived by the plaintiff, meaning that the court should grant the motion to remand? In other words, is the 1 year deadline in 28 U.S.C. Section 1446(b) jurisdictional or procedural? This was the question addressed by the Sixth Circuit in its recent opinion in Music v. Arrowood Indem. Co., 632 F.3d 284 (6th Cir. 2011), with the court reversing its prior (unpublished) opinion on the issue.

The facts in Arrowood Indem. Co. were somewhat complicated, but the basics are that Larry Carpenter brought a negligence action against Donald Music after a car accident, and Arrowood's alleged predecessors in interest provided no defense to Music, resulting in a default judgment being entered against him to the tune of $392,310.06. Music later filed an action against Arrowood in state court, claiming that its predecessors acted in bad faith in refusing to defend him. Thereafter, Arrowood removed the action to federal court on July 20, 2009, (possibly) more than 1 year after the commencement of the action. Subsequently, on October 27, 2009, more than 30 days after Arrowood filed its notice of removal, Music moved to remand the action to state court. The district court denied the motion, finding that it was untimely, and ultimately granted summary judgment in favor of Arrowood.

Music thereafter appealed to the Sixth Circuit, which had to decide whether the 1 year deadline is procedural, meaning that Music forfeited any objection to removal based upon its untimely motion to remand, or jurisdictional, meaning that it could be raised anytime prior to final judgment. According to the Sixth Circuit,

Every circuit court to address the issue has held that the one-year limitation on the removal of diversity cases is a procedural requirement. Ariel Land Owners, Inc. v. Dring, 351 F.3d 611, 616 (3d Cir. 2003) (holding that the "failure to remove within the one-year time limit established by § 1446(b) is not a jurisdictional defect"); In re Uniroyal Goodrich Tire Co., 104 F.3d 322, 324 (11th Cir. 1997) (addressing the one-year limitation and holding that "[t]he untimeliness of a removal is a procedural, instead of a jurisdictional, defect"); Barnes v. Westinghouse Elec. Corp., 962 F.2d 513, 516 (5th Cir. 1992) (holding that plaintiff forfeited his opportunity to challenge the failure to remove within the one-year limitation period).

What the Sixth Circuit failed to mention is that several federal district courts have reached the opposite conclusion. As Scott Dodson, a professor at the William and Mary Law School, noted in his article, In Search of Removal Jurisdiction, 102 Nw. U. L. Rev. 55, 65 n.64 (2008), several federal district court opinions have found the 1 year deadline is jurisdictional, including

-Rashid v. Schenck Constr. Co., 843 F. Supp. 1081, 1086-88 (S.D.W. Va. 1993);

-Brock v. Syntex Labs, Inc., 791 F.Supp. 721, 723 (E.D. Tenn. 1992); aff'd, 7 F.3d 232 (6th Cir. 1993);

-Perez v. Gen. Packer Inc., 790 F. Supp. 1464, 1470-71 (C.D. Cal. 1992);

-Smith v. MBL Life Assurance Corp., 727 F. Supp. 601, 602-04 (N.D. Ala. 1989);

-Foiles by Foiles v. Merrell Nat'l Labs., 730 F. Supp. 108, 110 (N.D. Ill. 1989); and 

-Gray v. Moore Forms, Inc., 711 F. Supp. 543, 544-45 (N.D. Cal. 1989)

Of course, the Sixth Circuit did acknowledge that it affirmed the Brock case listed above. The court concluded, though, that because this opinion was unpublished (and cited no authority for its conclusion), it was not bound to honor it. 

So, why did the Sixth Circuit find that the 1 year deadline is procedural? The court gave three reasons: First, it cited to Caterpillar, Inc. v. Lewis, 519 U.S. 61 (1996), in which a defendant moved to remove an action to federal court before a diversity-destroying defendant was properly dismissed from the action. While the Supreme Court found that the defendant could not have satisfied the 1 year deadline if it waited for this other defendant to be dismissed, it also noted that the respondent did not raise this issue on appeal and that "a nonjurisdictional argument not raised in a respondent's brief in opposition to a petition for writ of certiorari 'may be deemed waived.'" Therefore, according to the Sixth Circuit, "the Supreme Court has described the one-year limitation as 'nonjurisdictional' and waivable."

Second, the Sixth Circuit noted that it previously had found (1) "that the requirements of § 1446(b) are generally procedural; and (2) "that the thirty-day time requirement of § 1446(b) is procedural." The court then found that "[t]here is no reasoned basis to hold differently with regard to the one-year limitation."

So, why had the Sixth Circuit reached these conclusions, and why was it now reaching the same conclusion with regard to the 1 year deadline? According to the court, "We have previously held that where a statute limiting removal did not expressly restrict the jurisdiction of the federal courts, the requirements of the statute were procedural and thus waivable."

Is this argument entirely convincing? I think that Professor Dodson's answer would be "no" based upon his aforementioned article. In it, Professor Dodson noted that in Arbaugh v. Y & H Corp., 546 U.S. 500 (2006), the Supreme Court held that the employee-numerosity requirement of Title VII was part of the merits of the plaintiff's case and not jurisdictional because it did not speak in jurisdictional terms. According to the Court, "when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as nonjurisdictional in character." Professor Dodson, however, cautioned against applying such a "converse presumption" to removal because the Supreme Court in Bowles v. Russell, 551 U.S. 205 (2007), later found

that statutory time limits for filing a notice of appeal are jurisdictional despite the lack of specific jurisdictional words in the statute. The Court reasoned that the long historical treatment of appellate time limits as jurisdictional demanded a jurisdictional characterization despite the lack of a clear statement of jurisdictionality from Congress.

Professor Dodson also listed 5 other reasons for not applying this "converse presumption" to removal:

-First, jurisdiction and procedure are, in some respects, more closely aligned than jurisdiction and merits;

-Second, as Howard Wasserman has argued, because normal trial structure tends to cause jurisdictional issues to arise in separate contexts from and prior to merits questions, the two types of issues are more appropriately resolved at different times in the formal litigation;

-Third, as Wasserman also points out, the jurisdictional versus merits characterization problem implicates the identity of the proper decisionmaker;

-Fourth, also drawing upon Wasserman's arguments, the confusion between merits and jurisdiction is often grounded in a misconception of whose jurisdiction is at issue;

-Fifth, substantive statutes like Title VII implicate federalism values to a lesser degree than does removal.  

Yet, despite the seeming validity of these criticisms, the vast majority of cases that I have come across deeming the requirements of § 1446(b) to be procedural have focused on the same factor as the Sixth Circuit:  the absence of an express jurisdictional restriction in the language of § 1446(b). So, how do we solve this problem? According to Professor Dodson, we should replace this single-factor analysis with a four-factor analysis and consider:

(1) whether Congress has specifically designated a provision as jurisdictional; (2) whether the function of the particular provision supports a jurisdictional characterization; (3) whether the effects of a jurisdictional characterization are consistent with the purpose and function of the provision; and (4) whether a jurisdictional characterization is doctrinally consistent as a matter of historical treatment and cross-doctrinally consistent with the characterization of similar provisions.

In the end, I think that even if it applied Professor Dodson's analysis, the Sixth Circuit would have reached the same conclusion, but I think that its conclusion would have had a stronger foundation.

My final thought in summing up is that reading Arrowood Indem. Co. by itself might lead to the conclusion that construing the 1 year deadline of § 1446(b) as procedural is a windfall for (out-of-state) defendants, who get to keep cases in federal court if plaintiffs fail to move to remand within 30 days. But, the Sixth Circuit's prior opinion in Brock suggests how a construction of the 1 year deadline of § 1446(b) as jurisdictional can hurt (out-of-state) defendants.

In Brock, shortly more than a year after commencement of an action, the plaintiff amended its complaint, which initially sought $10,000 in damages (just below the then-existing amount in controversy requirement), so that it now sought $5 million in  damages. The defendants then moved to remove, but, as noted, the Eastern District of Tennessee and then the Sixth Circuit found that the 1 year deadline of § 1446(b) is jurisdictional. As a result, even though it appeared likely that the plaintiff acted in bad faith, these courts found that the defendants could not remove the action because of the jurisdictional nature of § 1446(b). Moreover, this conclusion seems consistent with other case law. See, e.g., Kinabrew v. Emco-Wheaton, Inc., 936 F.Supp. 351, 352 (M.D.La. 1996).

-Colin Miller

Commentary on Pleading and the Duke Lacrosse Litigation

Over at Prawfsblawg, Howard Wasserman has been examining the recent decisions by U.S. District Judge James Beaty in civil lawsuits brought by former members of the Duke lacrosse team against the City of Durham, District Attorney Michael Nifong, and numerous other defendants.

His most recent post (Pleading in the Duke lacrosse opinions) looks at what Judge Beaty's decisions have to say about pleading, including his application of Iqbal.

--A

But They Just Can't Kill The Beast: Seventh Circuit Makes Latest Attempt To Slay "Reasonable Probability" Test For Amount in Controversy Requirement

In the wake of Shaw v. Dow Brands, Inc., 994 F.2d 364, 366 (7th Cir. 1993), several courts in the Seventh Circuit held that defendants seeking to remove diversity actions from state to federal courts bore the burden or proving by a preponderance of the evidence that there was a "reasonable probability" that the amount in controversy requirement had been satisfied. In fact, by the time that the Seventh Circuit decided Meridian Sec. Ins. Co. v. Sadowski, 441 F.3d 536 (7th Cir. 2006), "[t]he 'reasonable probability' language...ha[d] been repeated in six other decisions of th[e Seventh] circuit plus more than 80 decisions of district judges within [the Seventh CIrcuit]-and, as far as we can ascertain, by no judge outside this circuit." The fact that courts in the Seventh Circuit were still using the "reasonable probability" test in connection with the amount in controversy requirement in 2006 was surprising to the court, which thought it had put it to rest in its 2005 opinion in Brill v. Countrywide Home Loans, Inc., 427 F.3d 446 (7th Cir. 2005). But like a movie monster, the test just wouldn't die. The Seventh Circuit thus sought to make its intentions clear in Sadowski by concluding

To recap: a proponent of federal jurisdiction must, if material factual allegations are contested, prove those jurisdictional facts by a preponderance of the evidence. Once the facts have been established, uncertainty about whether the plaintiff can prove its substantive claim, and whether damages (if the plaintiff prevails on the merits) will exceed the threshold, does not justify dismissal....Only if it is "legally certain" that the recovery (from plaintiff's perspective) or cost of complying with the judgment (from defendant's) will be less than the jurisdictional floor may the case be dismissed. 

But, despite this language, the "reasonable probability" test. just. wouldn't. die. The Seventh Circuit's latest attempt to drive a stake into the heart of the test was its opinion last Friday in Back Doctors Ltd. v. Metropolitan Property and Cas. Ins. Co., 2011 WL 1206184 (7th Cir. 2011). WIll this attempt be successful?

In Back Doctors, Back Doctors filed a class action suit in Illinois state court, contending that the defendant, an insurer, uses software that pays medical providers less than the policies require the insurer to pay. The action sought $2.9 million in damages, and the defendant removed the action to federal court under the Class Action Fairness Act of 2005. According to the defendant, the amount in controversy exceeded $5 million (as required by CAFA) because the plaintiffs could recover more than $2.1 million in punitive damages. The district court then remanded the action to state court because "Back Doctors did not expressly ask for a punitive award and did not include in the complaint allegations of wanton or egregious conduct." Indeed, Back Doctors declared in the district court that it did not “now” want punitive damages. Accordingly, the district court found that the defendant had not established a "reasonable probability" that the amount in controversy exceeded $5 million.

The defendant thereafter appealed, and the Seventh Circuit resolved its appeal summarily. Judge Easterbrook wrote the opinion and expressed consternation at the fact that the "reasonable probability" test apparently has more lives than Jason Voorhees. He then made the court's latest attempt to slay thee beast, concluding that

There is no presumption against federal jurisdiction in general, or removal in particular. The Class Action Fairness Act must be implemented according to its terms, rather than in a manner that disfavors removal of large-stakes, multi-state class actions. When removing a suit, the defendant as proponent of federal jurisdiction is entitled to present its own estimate of the stakes; it is not bound by the plaintiff's estimate....Once this has been done, and supported by proof of any contested jurisdictional facts, the presumption is the one stated in St. Paul Mercury: the estimate of the dispute's stakes advanced by the proponent of federal jurisdiction controls unless a recovery that large islegally impossible. So the question here is not whether the class is more likely than not to recover punitive damages, but whether Illinois law disallows such a recovery. (If the class should be awarded punitive damages, even a one-to-one ratio of punitive to actual damages would result in a total award exceeding $5million, if the class's position about actual damages is right.) (emphasis added).

Judge Easterbrook thereafter found that recovery of more than $5 million by the plaintiffs was not an impossibility because the plaintiffs did not 

forswear[] any effort to collect more than the jurisdictional threshold....Back Doctors did not file in state court a complaint that disclaimed punitive damages or otherwise make a disavowal that is conclusive as a matter of state law.

Judge Easterbrook did note that Back Doctors claimed before the district court that it did not "now" want punitive damages, but he found this fact to be irrelevant because, inter alia, "events after the date of removal do not affect federal jurisdiction, and this means in particular that a declaration by the plaintiff following removal does not permit remand." The Seventh Circuit thus vacated the order returning the suit to state court is vacated and remanded the case to the district court for a decision on the merits. So, is the "reasonable probability" test finally dead, or should the Seventh Circuit start sharpening its knives for another sequel? Only time will tell.

(Hat tip to my student and research assistant Christopher Floss)

-Colin Miller

SCOTUS Decision on Standing: Arizona Christian School Tuition Organization v. Winn

Today the Supreme Court decided Arizona Christian School Tuition Organization v. Winn (09-987). Splitting 5-4, the Court holds that the plaintiffs lacked standing to bring an Establishment Clause challenge to an Arizona law providing “tax credits for contributions to school tuition organizations, or STOs,” which “use these contributions to provide scholarships to students attending private schools, many of which are religious.”

From Justice Kennedy’s majority opinion (joined by Chief Justice Roberts and Justices Scalia, Thomas, and Alito):

[R]espondents contend that they have standing to challenge Arizona’s STO tax credit for one and only one reason: because they are Arizona taxpayers. But the mere fact that a plaintiff is a taxpayer is not generally deemed sufficient to establish standing in federal court. To overcome that rule, respondents must rely on an exception created in Flast v. Cohen, 392 U. S. 83 (1968). For the reasons discussed below, respondents cannot take advantage of Flast’s narrow exception to the general rule against taxpayer standing.…

It is easy to see that tax credits and governmental expenditures can have similar economic consequences, at least for beneficiaries whose tax liability is sufficiently large to take full advantage of the credit. Yet tax credits and governmental expenditures do not both implicate individual taxpayers in sectarian activities. A dissenter whose tax dollars are “extracted and spent” knows that he has in some small measure been made to contribute to an establishment in violation of conscience. Flast, supra, at 106…. When the government declines to impose a tax, by contrast, there is no such connection between dissenting taxpayer and alleged establishment. Any financial injury remains speculative. And awarding some citizens a tax credit allows other citizens to retain control over their own funds in accordance with their own consciences.

The distinction between governmental expenditures and tax credits refutes respondents’ assertion of standing. When Arizona taxpayers choose to contribute to STOs, they spend their own money, not money the State has collected from respondents or from other taxpayers. Arizona’s §43–1089 does not “extrac[t] and spen[d]” a conscientious dissenter’s funds in service of an establishment, Flast, 392 U. S., at 106, or “‘force a citizen to contribute three pence only of his property’” to a sectarian organization, id., at 103 (quoting 2 Writings of James Madison, supra, at 186).

From Justice Kagan’s dissenting opinion (joined by Justices Ginsburg, Breyer, and Sotomayor):

For almost half a century, litigants like the Plaintiffs have obtained judicial review of claims that the government has used its taxing and spending power in violation of the Establishment Clause. Beginning in Flast v. Cohen, 392 U. S. 83 (1968), and continuing in case after case for jurisdiction to decide taxpayer-initiated challenges not materially different from this one. Not every suit has succeeded on the merits, or should have. But every taxpayer-plaintiff has had her day in court to contest the government’s financing of religious activity.

Today, the Court breaks from this precedent by refusing to hear taxpayers’ claims that the government has unconstitutionally subsidized religion through its tax system. These litigants lack standing, the majority holds, because the funding of religion they challenge comes from a tax credit, rather than an appropriation. A tax credit, the Court asserts, does not injure objecting taxpayers, because it “does not extract and spend [their] funds in service of an establishment.” Ante, at 15 (internal quotation marks and alterations omitted). This novel distinction in standing law between appropriations and tax expenditures has as little basis in principle as it has in our precedent.

Justice Scalia wrote a concurring opinion, joined by Justice Thomas, arguing that the Flast exception should be eliminated entirely:

Today’s majority and dissent struggle with whether respondents’ challenge to the Arizona tuition tax credit falls within that narrow exception. Under a principled reading of Article III, their struggles are unnecessary. Flast is an anomaly in our jurisprudence, irreconcilable with the Article III restrictions on federal judicial power that our opinions have established. I would repudiate that misguided decision and enforce the Constitution.

--A

SCOTUS Habeas Decision

Today, the Supreme Court handed down yet another habeas decision.  

 Cullen v. Pinholster, No. 09-1088. A federal court conducting review of a state prisoner's habeas corpus petition under 28 U.S.C. §2254(d)(1), which authorizes relief if the decision of a state court that adjudicated the claim on the merits was "contrary to, or involved an unreasonable application of, clearly established Federal law," is limited to the record that was before the state court.

More details are available at the ever-reliable SCOTUSBlog.

RJE

 

First is the Worst: Northern District of California Rejects First-Served Rule, Adopts Last-Served Rule For Removal Under § 1446(b)

In relevant part 28 U.S.C. Section 1446(b) provides that

The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

Section 1446(b) is easy to apply in single defendant cases and multiple defendant cases in which all defendants are served on the same date. But how does it apply in multiple defendant cases in which defendants are served on different dates? That was the question addressed by the United States District Court for the Northern District of California in its recent opinion in Toyz, Inc. v. Wireless Toyz, Inc., 2010 WL 334475 (N.D.Cal. 2010).

In Wireless Toyz, the plaintiff was Wireless Toyz, which provides consumers with a retail store at which they can purchase cellular phones from a variety of major carriers such as AT & T, Verizon, and Sprint. Wireless Toyz entered into franchise agreements with various defendants and later brought an action against them in state court, claiming that the defendants intentionally made oral and written misrepresentations and omissions and that it relied upon these misrepresentations and omissions in entering into the franchise agreements. Wireless Toyz served the first of these defendants on September 7, 2009 and the least of these defendants on September 30, 2009. On October 26, 2009, the defendants filed a notice of removal with the United States District Court for the Northern District of California.

Wireless Toyz thereafter moved to remand the action to state court, claiming that the notice of removal was not timely filed under 28 U.S.C. Section 1446(b). This led to the Northern District of California having to decide whether to apply (1) the "first-served" rule and calculate the thirty-days from September 7, 2009, the date the first defendant was served, or (2) the "last-served" rule and calculate the thirty-day period from September 30, the date the last defendant was served. According to the court, the Ninth Circuit had not yet resolved this issue, and district courts within the Ninth Circuit were split (Note: As the commenters on this post indicate below, the Ninth Circuit later adopted the last served rule in Destfino v. Reiswig, 2011 WL 182241 (9th Cir. Jan. 21, 2011)). Some had

adopted the first-served rule, "[relying] primarily upon three reasons...1) that it follows logically from the unanimity rule, 2) that forum selection should be resolved as early as possible, and 3) that removal statutes must be construed narrowly."

Conversely,

other courts have held that the first-served rule is "unfair [because it] deprive[s] later-served defendants an equal opportunity to remove" and noted that the last-served rule represents the current national trend.

The Northern District of California ultimately adopted the last-served rule for four reasons:

First, the last-served rule is more consistent with the Supreme Court's holding in Murphy Brothers....In Murphy Bros., the Supreme Court held that "a named defendant's time to remove is triggered by simultaneous service of the summons and complaint, or receipt of the complaint, 'through service or otherwise,' after and apart from service of the summons, but not by mere receipt of the complaint unattended by any formal service."...Murphy Bros. "read Congress' provisions for removal in light of a bedrock principle: An individual or entity named as a defendant is not obliged to engage in litigation unless notified of the action, and brought under a court's authority, by formal process."...It follows logically from Murphy Bros that if a defendant is not obliged to engage in litigation unless notified of the action by formal process, that defendant cannot be deprived of its right to file a notice of removal within the thirty-day period provided by § 1446(b) before it has been served. 

Second, the rule prevents "opportunistic pleading by the plaintiff."...A plaintiff may alleviate any uncertainty as to the forum in which litigation will take place simply by serving defendants contemporaneously. Third, this Court agrees with the district court in Glacier Water Company that "statutory construction mandates adoption of the 'last-served' rule...[I]f Congress intended the removal period to commence upon service of the first defendant, it could have easily so provided."....Finally, the Court finds the most commonly cited reason for adopting the first-served rule-the unanimity requirement-unpersuasive. It is entirely possible that a first-served defendant might not remove a case, not because it necessarily would refuse a request to do so from a latter-served co-defendant, but because it is equally amenable to appearing in either state or federal court. Because the last-served defendant in the instant case was not served until September 30, 2009, Defendants' notice of removal was timely. The motion to remand will be denied.

I think that the Wireless Toys opinion does a nice job of laying out the arguments in favor of the first- and last-served rules and would be a good tool for teaching them in class. The only thing that the opinion leaves out is the "Intermediate Rule" adopted by the United States Court of Appeals for the Fourth Circuit in McKinney v. Board of Trustees of Maryland Community College, 955 F.2d 924 (4th Cir. 1992). I found out about this Rule from the terrific article, Recocking the Removal Trigger, 53 S.C. L. Rev. 185 (2002), by Professor Howard B. Stravitz of the University of South Carolina School of Law. As Professor Stravitz notes, under this intermediate approach, § 1446(b)'s removal clock runs separately for each defendant. Thus if defendant A is served on December 1st and defendant B is served on December 10th, defendant A has 30 days from the date he was served to remove, and defendant B has 30 days from the date that he was served to join in A's removal. If, however, defendant A fails to remove within 30 days after being served, defendant B's right to remove would be eliminated.

After reading Professor Stravitz's article, I decided to check on McKinney's status in the Fourth Circuit, and it turns out that the Fourth Circuit recently reaffirmed it in Barbour v. International Union, 2011 WL 242131 (4th Cir. 2011). Like Wireless Toys, Barbour also has a nice discussion of the first- and last-served rules and would be a good teaching tool. The same can be said about Professor Stravitz's article, which contains a collection of hypotheticals to explain the different approaches. And, like the Northern District of California, Professor Stravitz argued for a last-served defendant approach for four reasons:

First, the current statutory language is perverted by the...first-served defendant rule, which potentially thwarts the procedural rights of later-served defendants. Second, although the Fourth Circuit's individual-served defendant rule in McKinney is less troublesome, it may nevertheless permit abridgement of later-served defendants' procedural rights. When a plaintiff first serves an unsophisticated defendant not likely to remove and waits until that defendant's thirty-day period is almost expired to serve a sophisticated defendant who is likely to remove, the latter-served defendant's removal right is vitiated if the earlier-served defendant fails to remove. 

Third, a true last-served defendant rule provides opportunities for consultation by all served defendants, which would allow a later-served defendant an opportunity to persuade an earlier-served defendant whose thirty-day period expired to join in the removal. Fourth, only a true last-served defendant rule adequately protects a later-served defendant's procedural rights from abridgement prior to service of process and receipt of the complaint.

I agree with both the Northern District of California and Professor Stravitz and hope that more courts follow the "national trend," by adopting the last-served rule.

-Colin Miller