Saturday, June 25, 2011
From Professor Scott Dodson (William & Mary) comes the following commentary on this week’s Supreme Court decision in Stern v. Marshall:
Stern v. Marshall is notable for a number of reasons, not all of which are related to the law. As for the law, I suspect that the opinion will be read mostly for the holding (and the dissent to it) of the scope of Article III’s “judicial power.” But there’s a unanimous holding of interest to folks (like me) who watch the Court’s growing awareness of the nuances of jurisdictionality. The labels “jurisdictional” and “nonjurisdictional” are less than they purport to be. They purport to be dichotomous opposites, describing mutually exclusive sets of effects. And the Court has largely bought into the dichotomy, characterizing something as jurisdictional and therefore has all the effects of jurisdictionality (as in the maligned opinion Bowles v. Russell), or that something is nonjurisdictional and therefore has none of the effects of jurisdictionality (as in Henderson v. Shinseki). But, as I have argued elsewhere, that dichotomy is false—nonjurisdictional rules can have jurisdictional effects. Thus, characterizing a requirement “nonjurisdictional” says very little about its effects, and those effects (waivability, forfeitability, consentability, susceptibility to equitable discretion, etc.) are usually the key issues at stake in the dispute.
In a short section in Stern, the Court appeared to move closer to my position, indicating that perhaps the Court is starting to think more carefully about these nuances. At issue in Stern was whether Sec. 157(b)(5) of the Bankruptcy Code was jurisdictional such that it could not be forfeited. The Court concluded that the provision was not jurisdictional (see pages 12-14 of the slip opinion). I think the Court was correct on this question, though its analysis did not consider certain factors that I think important to the inquiry and that I have spelled out in detail elsewhere. The Court then made an interesting move. Ever so briefly, it then considered whether the nonjurisdictional rule was forfeitable (see pages 15-16). Although I wouldn’t characterize the Court’s analysis here as thorough, I do think the Court was correct to engage in it. And the Court’s willingness to do so suggests that the Court recognizes that a nonjurisdictional rule could be nonforfeitable. It’s hard to tell how deeply the Court is thinking about these issues (particularly because the Court ultimately found Sec. 157(b)(5) to be forfeitable and thus to have no jurisdictional effects), but I call it a step in the right direction toward recognizing that the labels “jurisdictional” and “nonjurisdictional” are often unhelpful and misleading.
As an aside, the case did not have occasion to consider the converse issue of how jurisdictional rules can hybridize with nonjurisdictional effects.
This past week was a busy one at the Supreme Court, but we wanted to note that Monday’s orders included a grant of certiorari in First American Financial Corp. v. Edwards (No. 10-708). The Court granted cert. only as to question 2, which involves Article III standing. From the cert. petition’s questions presented (with a little cutting and pasting to incorporate those parts of question 1 that were referenced in question 2)...
Section 8(a) of the Real Estate Settlement Procedures Act of 1974 ("RESPA" or "the Act") provides that "[n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding ... that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person." 12 U.S.C. § 2607(a). Section 8(d)(2) of the Act provides that any person "who violate[s]," inter alia, § 8(a) shall be liable "to the person or persons charged for the settlement service involved in the violation in an amount equal to three times the amount of any charge paid for such settlement service." Id. § 2607(d)(2).
2. Does [a private purchaser of real estate settlement services] have standing to sue under Article III, § 2 of the United States Constitution, which provides that the federal judicial power is limited to "Cases" and "Controversies" and which this Court has interpreted to require the plaintiff to "have suffered an 'injury in fact,'" Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992), [in the absence of any claim that the alleged violation affected the price, quality, or other characteristics of the settlement services provided]?
SCOTUSblog’s case file is available here, which contains links to the Ninth Circuit’s opinion below and the cert-stage briefs.
Friday, June 24, 2011
Yesterday the Supreme Court issued its decision in Stern v. Marshall (No. 10-179). Our earlier coverage of the case is here and here. Chief Justice Roberts writes the majority opinion, joined by Justices Scalia, Kennedy, Thomas and Alito. Justice Scalia also writes a separate concurring opinion. Justice Breyer writes a dissenting opinion, joined by Justices Ginsburg, Sotomayor, and Kagan. Chief Justice Roberts’ opinion opens in Dickensian fashion:
This “suit has, in course of time, become so complicated, that . . . no two . . . lawyers can talk about it for five minutes, without coming to a total disagreement as to all the premises. Innumerable children have been born into the cause: innumerable young people have married into it;” and, sadly, the original parties “have died out of it.” A “long procession of [judges] has come in and gone out” during that time, and still the suit “drags its weary length before the Court.”
Those words were not written about this case, see C. Dickens, Bleak House, in 1 Works of Charles Dickens 4–5 (1891), but they could have been. This is the second time we have had occasion to weigh in on this long-running dispute between Vickie Lynn Marshall and E. Pierce Marshall over the fortune of J. Howard Marshall II, a man believed to have been one of the richest people in Texas. The Marshalls’ litigation has worked its way through state and federal courts in Louisiana, Texas, and California, and two of those courts—a Texas state probate court and the Bankruptcy Court for the Central District of California—have reached contrary decisions on its merits. The Court of Appeals below held that the Texas state decision controlled, after concluding that the Bankruptcy Court lacked the authority to enter final judgment on a counterclaim that Vickie brought against Pierce in her bankruptcy proceeding. To determine whether the Court of Appeals was correct in that regard, we must resolve two issues: (1) whether the Bankruptcy Court had the statutory authority under 28 U. S. C. §157(b) to issue a final judgment on Vickie’s counterclaim; and (2) if so, whether conferring that authority on the Bankruptcy Court is constitutional.
Although the history of this litigation is complicated, its resolution ultimately turns on very basic principles. Article III, §1, of the Constitution commands that “[t]he judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish.” That Article further provides that the judges of those courts shall hold their offices during good behavior, without diminution of salary. Ibid. Those requirements of Article III were not honored here. The Bankruptcy Court in this case exercised the judicial power of the United States by entering final judgment on a common law tort claim, even though the judges of such courts enjoy neither tenure during good behavior nor salary protection. We conclude that, although the Bankruptcy Court had the statutory authority to enter judgment on Vickie’s counterclaim, it lacked the constitutional authority to do so.
Thursday, June 23, 2011
Today the Supreme Court issued its decision in PLIVA v. Mensing (No. 09-993), which is actually three consolidated cases about federal preemption of state-law tort liability in claims involving generic drugs. Justice Thomas writes the majority opinion, joined by Chief Justice Roberts and Justices Scalia, Kennedy (in part), and Alito. Justice Sotomayor writes a dissenting opinion, joined by Justices Ginsburg, Breyer, and Kagan. Justice Thomas’s majority opinion begins:
These consolidated lawsuits involve state tort-law claims based on certain drug manufacturers’ alleged failure to provide adequate warning labels for generic metoclopramide. The question presented is whether federal drug regulations applicable to generic drug manufacturers directly conflict with, and thus pre-empt, these state-law claims. We hold that they do.
Professors Alberto Cassone and Giovanni Battista Ramello (Universita del Piemonte Orientale) have posted on SSRN a draft of their article, The Simple Economics of Class Action: Private Provision of Club and Public Goods. Here’s the abstract:
This article uses economic categories to show how the reorganization of civil procedure in the case of class action is not merely aimed at providing a more efficient litigation technology, as hierarchies (and company law) might do for other productive activities, but that it also serves to create a well defined economic organization ultimately aimed at producing a set of goods, first and foremost among which are justice and efficiency.
Class action has the potential to recreate, in the judicial domain, the same effects that individual interests and motivations, governed by the perfect competition paradigm, bring to the market.
Moreover, through economic analysis it is possible to rediscover not only the productive function of this legal machinery, but also that partial compensation of victims and large profits for the class counsel, far from being a side-effect, are actually a necessary condition for reallocation of the costs and risks associated with the legal action.
Wednesday, June 22, 2011
In the ongoing lawsuit between Ross Perot, Jr. and Mark Cuban for mismanagement of the Dallas Mavericks, we have a new addition to fun motions to show our students. Cuban's lawyers amended their motion for summary judgment to include a large photo of the Mavericks celebrating after winning the NBA title.
This week, the Supreme Court issued its decision in Turner v. Rogers (No. 10-10), which addresses the procedures required for civil contempt proceedings leading to incarceration. Justice Breyer writes the majority opinion, joined by Justices Kennedy, Ginsburg, Sotomayor, and Kagan. Justice Thomas writes a dissenting opinion, joined by Justice Scalia and partially joined by Chief Justice Roberts and Justice Alito. Justice Breyer’s majority opinion begins:
South Carolina’s Family Court enforces its child support orders by threatening with incarceration for civil contempt those who are (1) subject to a child support order, (2) able to comply with that order, but (3) fail to do so. We must decide whether the Fourteenth Amendment’s Due Process Clause requires the State to provide counsel (at a civil contempt hearing) to an indigent person potentially faced with such incarceration. We conclude that where as here the custodial parent (entitled to receive the support) is unrepresented by counsel, the State need not provide counsel to the noncustodial parent (required to provide the support). But we attach an important caveat, namely, that the State must nonetheless have in place alternative procedures that assure a fundamentally fair determination of the critical incarceration-related question, whether the supporting parent is able to comply with the support order.
The Court based its conclusion on “the ‘distinct factors’ that this Court has previously found useful in deciding what specific safeguards the Constitution’s Due Process Clause requires in order to make a civil proceeding fundamentally fair. Mathews v. Eldridge, 424 U. S. 319, 335 (1976) (considering fairness of an administrative proceeding).”
Yesterday’s New York Times contains a discussion entitled A Death Blow to Class Action?, with contributions by:
- Suzette Malveaux
- Matthew Bodie
- Ralph Richard Banks
- John Elwood
- Tanya Hernandez
- Richard Primus
- Melissa Hart
Tuesday, June 21, 2011
Professor Jennifer Johnson (Lewis & Clark) has posted on SSRN a draft of her article, Securities Class Actions in State Court, which is forthcoming in the University of Cincinnati Law Review. Here’s the abstract:
Over the past two decades, Congress has gradually usurped the power of state regulators to enforce state securities laws and the power of state courts to adjudicate securities disputes. This Paper evaluates the impact of Congressional preemption and preclusion upon state court securities class actions. Utilizing a proprietary database, the Paper presents and analyzes a comprehensive dataset of 1500 class actions filed in state courts from 1996-2010. The Paper first examines the permissible space for state securities class actions in light of Congressional preclusion and preemption embodied in the 1998 Securities Litigation Uniform Standards Act (SLUSA) and Class Action Fairness Act of 2005 (CAFA). The Paper then presents the state class action filing data detailing the numbers, classifications, and jurisdictions of state class action cases that now occupy the state forums. First, as expected, the data indicates that there are few traditional stock-drop securities class actions litigated in state court today. Second, in spite of the debate over the impact of SLUSA and CAFA on 1933 Act claims, very few plaintiffs attempt to litigate these matters in state court. Finally, the number of state court class actions involving merger and acquisition (M&A) transactions is skyrocketing and now surpasses such claims filed in federal court. Moreover, various class counsel file their M & A complaints in multiple jurisdictions. The increasingly large number of multi-forum M&A class action suits burden the defendants and their counsel, the judiciary and even plaintiffs’ lawyers themselves. The paper concludes that absent effective state co-ordination, further Congressional preemption is possible, if not likely.
Tons of coverage of yesterday’s Supreme Court decision in Wal-Mart Stores, Inc. v. Dukes. Here’s a sample:
- ABA Journal (Debra Cassens Weiss)
- Above the Law (David Lat)
- Concurring Opinions (Josh Blackman)
- Concurring Opinions (Sergio Campos)
- How Appealing (Howard Bashman)
- National Law Journal (Tony Mauro)
- New York Times (Adam Liptak)
- NPR (Nina Totenberg)
- Point of Law (James Copland)
- PrawfsBlawg (Matt Bodie)
- San Francisco Chronicle (Bob Egelko)
- SCOTUSblog (Lyle Denniston)
- USA Today (Joan Biskupic)
- The Volokh Conspiracy (Jonathan Adler)
- Wall Street Journal (Jess Bravin and Ann Zimmerman)
- Washington Post (Robert Barnes)
Monday, June 20, 2011
As covered earlier here, the Supreme Court decided Wal-Mart Stores, Inc. v. Dukes today. The opinions cover two distinct issues: (1) whether the class action satisfied Rule 23(a)(2)’s requirement that “there are questions of law or fact common to the class”; and (2) whether the class members’ claims for backpay were properly certified under Rule 23(b)(2). This post recaps the decision on the first issue, on which the Court splits 5-4. Justice Scalia, joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito, concludes in Part II of the opinion that the plaintiffs “have not established the existence of any common question.” [Slip Op. 19]. Justice Ginsburg writes a dissenting opinion on this issue, joined by Justices Breyer, Sotomayor, and Kagan. There’s a lot going on with respect to the commonality issue in both opinions, so these excerpts (by definition) won’t be able to cover everything.
It might get lost in the Wal-Mart shuffle, but don't ignore another federal courts case from today, American Electric Power v. Connecticut. As usual, SCOTUSblog has good links to the opinion, lower court opinions, and commentary.
"Holding: The Clean Air Act and Environmental Protection Agency actions displace federal common law public nuisance claims brought by several states, the city of New York, and three private land trusts against four private power companies and the federal Tennessee Valley Authority over global warming and carbon dioxide emissions."
As covered earlier here, the Supreme Court decided Wal-Mart Stores, Inc. v. Dukes today. The opinions cover two distinct issues: (1) whether the class action satisfied Rule 23(a)(2)’s requirement that “there are questions of law or fact common to the class”; and (2) whether the class members’ claims for backpay were properly certified under Rule 23(b)(2).
This post recaps the decision on the 23(b)(2) issue, on which Justice Scalia writes for a unanimous Court (Part III of the opinion) and concludes: “[Plaintiffs’] claims for backpay were improperly certified under Federal Rule of Civil Procedure 23(b)(2). Our opinion in Ticor Title Ins. Co. v. Brown, 511 U. S. 117, 121 (1994) (per curiam) expressed serious doubt about whether claims for monetary relief may be certified under that provision. We now hold that they may not, at least where (as here) the monetary relief is not incidental to the injunctive or declaratory relief.” [Slip Op. 20]
The Supreme Court issued its decision today in Wal-Mart Stores, Inc. v. Dukes (No. 10-277), reversing the Ninth Circuit's certification of the class action. Justice Scalia writes the Opinion of the Court, which is joined in its entirety by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito. Justice Ginsburg writes an opinion concurring in part and dissenting in part, which is joined by Justices Breyer, Sotomayor, and Kagan. Those four Justices join the majority opinion only with respect to Parts I and III.
The opinions break down as follows:
Part II of Justice Scalia’s majority opinion concludes that the class action does not satisfy the “commonality” requirement of Rule 23(a). See FRCP 23(a)(2) (requiring that “there are questions of law or fact common to the class”). Justice Ginsburg's opinion disagrees with the majority on this issue. (Recap here.)
Part III of Justice Scalia’s opinion, which is joined by all nine Justices, concludes that the class members’ claims for backpay were not properly certified under Rule 23(b)(2), which allows class treatment “when the party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole.” (Recap here.)
Professor Henry Noyes (Chapman University) has posted on SSRN a draft of his article, The Rise of the Common Law of Federal Pleading: Iqbal, Twombly and the Application of Judicial Experience, which is forthcoming in the Villanova Law Review. Here’s the abstract:
With its decisions in Twombly and Iqbal, the Supreme Court established a new federal pleading standard: a complaint must state a plausible claim for relief. Many commentators have written about the meaning of plausibility. None has focused on the Court’s statement that “[d]etermining whether a complaint states a plausible claim for relief...will be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” In this article, I make and support several claims about the meaning and application of judicial experience. First, in order to understand and define the plausibility standard, one must understand the meaning and application of judicial experience. The requirement that district courts apply judicial experience to resolve a motion to dismiss is a new part of the federal pleading regime, just like the new plausibility standard. Second, the application of judicial experience – as intended by the Supreme Court – requires district courts to consider information and evidence beyond that alleged in the complaint when resolving a motion to dismiss. Third, and contrary to conventional wisdom, the Supreme Court does not intend the application of judicial experience to involve a subjective analysis of the plausibility of a claim. Instead, the Supreme Court intends district courts to consider a larger, objective body of experience – beyond the subjective experience of any particular district court – with similar factual scenarios. Fourth, the Supreme Court anticipates that the application of judicial experience will require district courts to develop a common law of pleading standards that will vary with the type of claim, the type of claimant, the type of defendant and the alleged factual scenario. The Court has expressly denied that plausibility “require[s] heightened fact pleading of specifics,” but what plausibility means is informed by judicial experience. Sometimes plausibility requires more convincing facts (not more specific facts). Finally, I argue that this new pleading regime that requires the application of judicial experience at the pleading stage – even where it is based on objective information – is inappropriate and inconsistent with the adversarial nature of litigation.