Friday, July 22, 2011
Yesterday, the Supreme Court of Tennessee refused to adopt Twombly and Iqbal for Tennessee state court pleading, and upheld an amended complaint for retaliatory discharge against a motion to dismiss for failure to state a claim. Webb v. Nashville Area Habitat for Humanity, Inc., 2011 WL 2905584 (Tenn. No. M2009-01552, July 21, 2011).
After reviewing much of the law review literature on Twombly and Iqbal, the court concluded:
In summary, it must be remembered that we are addressing the standard in assessing the sufficiency of a single document filed at the very beginning of a case—the complaint. Our motion-to-dismiss jurisprudence reflects the principle that this stage of the proceedings is particularly ill-suited for an evaluation of the likelihood of success on the merits or of the weight of the facts pleaded, or as a docket-clearing mechanism. Rule 8.01 has not been amended and still only requires “(1) a short and plain statement of the claim showing that the pleader is entitled to relief, and (2) a demand for judgment for the relief the pleader seeks.” We decline to reinterpret Rule 8 to require a pleader to demonstrate “plausibility” and continue to adhere to the well established standards set forth in section 1 of this opinion [which cited Tennessee’s policy of “liberal notice pleading” and its adherence to the “no set of facts” standard].
Professors Eyal Zamir (Hebrew University) and Ilana Ritov (Hebrew University) have posted on SSRN a copy of their article, Loss Aversion, Omission Bias, and the Burden of Proof in Civil Litigation. Here is the abstract:
The basic rule in civil litigation is that the plaintiff carries the burden of proof and the general standard of proof is preponderance of the evidence. The plaintiff prevails if she establishes her case with a probability exceeding 0.5. Drawing on insights from behavioral economics and new experimental findings, this paper makes the following arguments: 1. Since litigants tend to take the status quo as the pertinent reference point, erroneous dismissal of a claim is likely to be perceived as denying the plaintiff deserved gains, and erroneous acceptance of a claim perceived as inflicting undeserved losses on the defendant. Loss aversion thus provides a powerful justification for placing the burden of proof on the plaintiff; 2. Ceteris paribus, inasmuch as the law strives to minimize the total costs of erroneous judicial decisions, loss aversion calls for setting the standard of proof considerably higher than 51%; 3. Notwithstanding the formal rule of 51%, behavioral insights and experimental findings lend support to the hypothesis that the actual standard of proof in civil litigation is higher than 51%. This phenomenon is likely due to factfinders’ omission bias. Burden of proof is not a mere tiebreaker; it sets a reference point and creates a default effect.
Thursday, July 21, 2011
Chimene Keitner (Hastings College of the Law) has posted The Politics of Alien Tort Cases to SSRN.
This very brief symposium contribution considers recent developments relating to corporate liability for international law violations under the Alien Tort Statute, including the Second Circuit's decisions in Presbyterian Church of Sudan v. Talisman and Kiobel v. Royal Dutch Petroleum. Ultimately, the political branches bear responsibility for weighing competing considerations and developing a regulatory framework for corporate liability that takes into account multiple intersecting policy goals. In the meantime, federal judges will continue to grapple with the implications of corporate ATS cases in their courtrooms. In so doing, they should be wary of modifying doctrine in response to policy considerations in corporate ATS cases that could have unintended negative consequences for ATS cases against individuals, or for other cases involving the interpretation and application of international law.
Wednesday, July 20, 2011
Professor Linda Silberman (NYU) has posted on SSRN a copy of her article, Morrison v. National Australia Bank: Implications for Global Securities Class Actions, which appears in the Swiss Yearbook of Private International Law. The article concludes:
The bright-line rule in Morrison is the right proxy for application of the securities laws and best accommodates the regulatory interests of the U.S. and other countries. In a class-action lawsuit, a significant U.S. investor presence generates necessary incentives for private plaintiffs’ attorneys to bring a class-action lawsuit, irrespective of the presence of foreign investors in the class. Indeed, an exchange-based rule aligns the appropriate incentives for plaintiffs’ lawyers that will allocate litigation resources to fraud most likely to harm U.S. investors. Under this approach, plaintiffs’ lawyers will pursue suits where there is a significant U.S. trading presence rather than one where there is only limited U.S. trading but a large global class. It is also consistent with the expectations of the parties.
Whether this result should be mirrored globally is less clear. Perhaps transnational global classes that are able to take into account the substantive standards of different regulatory regimes are workable internationally, perhaps on a regional basis where greater harmonization and consensus about procedures exist. What is undoubtedly called for, however, is greater international cooperation, which could take the form of increased regulatory cooperation or perhaps even an international treaty.
Tuesday, July 19, 2011
In one of the first federal Court of Appeals cases to cite both Goodyear and Nicastro, the First Circuit has upheld the exercise of personal jurisdiction by the District of Massachusetts over an Israeli business manager formerly employed by the plaintiff, who was the U.S. owner of a company with an office in Massachusetts. Adelson v. Hananel, 2011 WL 2698330 (1st Cir. July 13, 2011).
The parties disputed the compensation terms of an oral contract. After a full trial on the merits resulting in a judgment for the plaintiff employer, defendant appealed the lower court’s finding of specific personal jurisdiction as well as the merits rulings.
Defendant was “a native, citizen, and resident of Israel,” and was based in the employer’s Israel office. He had visited Massachusetts only twice (once before entering into the employment contract), but had frequent communications with a Massachusetts company related to his employer, and funding for the Israeli office came through Massachusetts. Defendant’s budgets were “routinely faxed to the office in Massachusetts.” He “sought this employment contract with a company whose key officers were all located in Massachusetts,” according to the court, and hence demonstrated purposeful availment of the privilege of conducting business in Massachusetts.
The case is factually distinct from either Goodyear or Nicastro, as it involves neither “stream of commerce” nor general jurisdiction. The court cited the two recent Supreme Court cases, but apparently did not think they merited a reexamination of the personal jurisdiction analysis in an international contract case.
Monday, July 18, 2011
Professor David Shapiro (Harvard) has posted on SSRN his article, Ex Parte Young and the Uses of History, which appears in the NYU Annual Survey of American Law. Here is the abstract:
Ex parte Young, an iconic decision that recently celebrated its centennial, was not very well-received at birth but most scholars, now and in the recent past, agree that the case was correctly decided. Yet the range of justifications for the result, and the analyses of its implications, are strikingly diverse. (The disagreements about its significance are exemplified by the three opinions in the Supreme Court’s recent decision in Va. Office for Prot. & Advocacy v. Stewart.)
How can such a range of views exist about so famous and esteemed a decision – a debate that extends to such matters as its rationale, its novelty, and even the proper characterization of its holding, the lessons it teaches about state-federal relations, and the proper role of the federal courts? And what, if anything, does this tell us about the nature of legal scholarship? These are the questions addressed in this article. Briefly stated, the conclusions reached are that over-reading of the case by scholars and courts has led to a backlash in which the case has been undervalued, and that arguments about what the case “really” stands for tend to mask more important questions about both the substance and the process of constitutional interpretation.