July 30, 2011
Note on Approval and Rejection of Non-Class Settlements
Alexandra Rothman (Fordham Law Review) has posted a draft of her note Bringing an End to the Trend: Cutting "Approval"and "Rejection" Out of Non-Class Mass Settlement to SSRN.
In March 2010, Judge Alvin K. Hellerstein of the U.S. District Court for the Southern District of New York rejected a mass settlement between the City of New York and the 9/11 first responders and rescue workers. The settlement was not a class action but some ten thousand cases aggregated for efficiency purposes. Nonetheless, Hellerstein, invoking the spirit of Rule 23(e) of the Federal Rules, which provides for judicial approval of settlement in class actions, decided that the settlement was not enough. Hellerstein’s actions inspired a debate over whether judges have the authority to approve or reject settlements absent class certification. This Note continues this discussion, and in doing so, contends that the 9/11 “rejection” was part of a larger trend of judges “approving” non-class mass settlements, even though the Federal Rules do not sanction such conduct. In presenting this trend, this Note discusses three examples of non-class action, multidistrict litigation before turning to the 9/11 settlement. This Note concludes that judicial “approval” and “rejection” of settlement, although a pragmatic response to the burdens of mass litigation, is inconsistent with the Federal Rules and adversarial system, and therefore, courts should bring an end to this practice.
New article argues for application of state summary judgment standards in diversity cases under Stevens’ view in Shady Grove
In Shady Grove, the Rules Enabling Act, and the Application of State Summary Judgment Standards in Federal Diversity Cases, forthcoming in St. John’s Law Review, Professor Matthew Lyon of Lincoln Memorial University Duncan School of Law argues:
that Justice Stevens’ concurring opinion in Shady Grove (which, following the “narrowest grounds” rule of Marks, is the controlling precedent on the section 2072(b) issue) has revived the possibility that a Federal Rule that otherwise controls the issue in dispute might be invalidated under the REA as abridging, enlarging, or modifying a substantive right. This is the view taken by a number of post-Shady Grove lower court decisions discussed in the article. The specific “substantive right” on which the article focuses is that conferred by states with more liberal summary judgment standards than the federal standard. Ultimately, it is plausible that Shady Grove may open the door to the application of state summary judgment standards by courts sitting in diversity.
The SSRN cite is here.
July 28, 2011
Ninth Circuit Minces No Words on Supreme Court’s Pleading Jurisprudence
Judge Fletcher of the Ninth Circuit recently upheld a pro se prisoner’s complaint for supervisory liability for deliberate indifference to the dangers of violent attack in county jail. Starr v. Baca, 2011 WL 2988827 (9th Cir. July 25, 2011).
The court traced the history of notice pleading from 1938, and then continued:
In several recent cases, without benefit of statute, the Supreme Court has applied what appears to be higher pleading standard under Rule 8(a) [citing Dura Pharmaceuticals, Twombly, and Iqbal]. . . . In two cases decided during roughly the same period, the Court appears to have applied the original, more lenient version of Rule 8(a) [citing Swiekiewicz and Erickson]. . . .
The juxtaposition of Swierkiewicz and Erickson, on the one hand, and Dura, Twombly, and Iqbal, on the other, is perplexing. Even though the Court stated in all five cases that it was applying Rule 8(a), it is hard to avoid the conclusion that, in fact, the Court applied a higher pleading standard in Dura, Twombly and Iqbal.
But whatever the difference between these cases, we can at least state the following two principles common to all of them. First, to be entitled to the presumption of truth, allegations in a complaint or counterclaim may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively. Second, the factual allegations that are taken as true must plausibly suggest an entitlement to relief, such that it is not unfair to require the opposing party to be subjected to the expense of discovery and continued litigation. . . .
Viewed in the light of all of the Supreme Court's recent cases, we hold that the allegations of Starr's complaint satisfy the standard of Rule 8(a). We do not so hold merely because Starr's complaint, like the complaint in Erickson, alleges deliberate indifference in violation of the Eighth and Fourteenth Amendments. Rather, we so hold because his complaint complies with the two principles just stated.
Judge Trott, relying primarily on Iqbal, dissented.
Do Your Students Think Discovery Is Boring?
From Elie Mystal (Above The Law) comes the story Beverly Hills Brawl: Escape From The Deposition Room! It begins:
Have you ever been to a deposition that got physical? Maybe some fisticuffs, or a little shoving? No? Well, obviously you’ve been hanging out in the wrong conference rooms. A complaint filed in Santa Monica Superior Court and reported on by Courthouse News Service accuses a Drinker Biddle partner of “robust, unlawful force” that resulted in opposing counsel breaking his wrist.
The story includes excerpts from the deposition transcript as well.
July 27, 2011
Buehler on Nicastro
Professor Dustin Buehler (Arkansas-Fayetteville) has posted on SSRN a draft of his article, Economic Evolution, Jurisdictional Revolution. Here’s the abstract:
In June 2011, the Supreme Court issued its first personal jurisdiction decision in two decades. In J.McIntyre Machinery, Ltd. v. Nicastro, the Court considered whether the placement of a product in the “stream of commerce” subjects a nonresident manufacturer to personal jurisdiction in states where the product is distributed. The Court issued a fractured opinion with no majority rule, with some justices expressing reluctance to “refashion basic jurisdictional rules” without additional information on “modern-day consequences.” This Article explores the consequences of these rules by providing the first law-and-economics analysis of personal jurisdiction. A descriptive analysis of the effect that jurisdictional rules have on litigation incentives demonstrates that rules restricting personal jurisdiction decrease the number of lawsuits, and increase the likelihood that injurers will escape liability and be inadequately deterred. Additionally, a normative analysis of the stream of commerce doctrine shows that a broad version of that doctrine best aligns the private and social incentives of litigation. Based on these conclusions, the Article argues that it is time for a revolution in personal jurisdiction: the Supreme Court should allow expansive jurisdiction over nonresident manufacturers in product liability cases.
July 25, 2011
NPR's Take on Patents: Politicizing Litigation
I don't usually use this forum for editorializing, but I posted the following to Prawfsblawg, and I thought that the radio program might be of interest to our readers:
I absolutely adore the NPR program This American Life. I wait for the new episode every weekend. I laugh. I cry. I congratulate myself for donating to WBEZ Chicago. But I must say that I was disappointed by this week's episode, When Patents Attack. Perhaps disappointed is the wrong word, but definitely puzzled.
The episode was reported by Laura Sydell and Alex Blumberg who is also a co-host of Planet Money -- an NPR podcast I like so much that I have assigned several episodes to my International Business Transactions students. The hour-long episode is devoted to the evils of patent trolls and the destructive litigation that they bring.
Now, I'm not an IP attorney, so I'll try to steer clear of commenting on the story from a patents perspective. But what I found interesting about the reporting was the political take. The reporters begin and end from an unapologetic stance that patent litigation is destructive (and believe me, there is no love for lawyers in this story). They are entirely dismissive of the idea that patents in the high-tech world promote and protect innovation. This is a perfectly reasonable position to take -- I've seen it done plenty in scholarly commentary and the mainstream press. I've also seen the opposing position defended.
What bothered me was the very hostile take on litigation. The talking points about meritless litigation and nuisance lawsuits could have been taken word for word from the tort reform lobby. If this had been a story about the ability of plaintiffs to stand on their rights to sue big corporations for just about anything else (antitrust, employment discrimination, personal injury, consumer rights), my guess is that it would have been a story about how bad, bad corporate defendants work to keep plaintiffs out of court.
I was also unimpressed by the tone of the reporting. Sydell and Blumberg purported to uncover a massive chain of shady deals and holding companies, which appeared to me to just be normal ways of conducting transactions, not a reason to indict (or approve) the underlying asset being transferred. They also cited statistics such as "80% of software engineers surveyed believe that the patent system hinders innovation rather than promotes it." But this doesn't prove much -- it simply reflects what software engineers believe, and tells us nothing about how they actually behave. Good economists and social scientists can answer that question with much better data. The use of such figures again harkens back to the talking points of the tort reform folks who will tell you that surveys of judges and lawyers reveal massive discovery abuse. In fact, studies of actual discovery practices show a very different picture. For those interested in more about these facts, Linda Mullenix has several great articles about this.
Finally, the story didn't do much in the way of discussing the issues of ex ante or ex post patent enforcement. They mention the number of redundant patents and hammer home the idea of a litigation-heavy environment, but did very little to explore the idea that the U.S. has made a regulatory choice to have a relatively relaxed patent approval regime reliant on ex post private enforcement. Would an approach which requires vigorous and expensive prosecution of patents ex ante have more or less of a chill on innovation? We would never know from this story that this is even a question that one should ask about a regulatory and adjudicatory system.
It is an interesting topic and an interesting story, but falls short of some of the better reporting that I expect from the TAL and Planet Money teams. It also reinforces that pursuit of a political agenda or conclusion in one arena (high tech innovation) might not suit your tastes in another, namely larger issues of court access, litigant behavior, agency design, and regulatory enforcement.
Faculty Hiring Announcement: University of Oxford
From SSRN's Legal Scholarship Network comes the following announcement:
University of Oxford, Faculty of Law
Fixed - Term Three-Year Departmental Lecturership in Civil Procedure
Salary is British Pound 36,862 - 44,016 per annum
Applications are invited for a Fixed-Term Three-Year Departmental Lecturership in Civil Procedure. The post is available from 1st October 2011 or as soon as possible thereafter. The post will be based at the Faculty of Law, University of Oxford.
JOB DESCRIPTION/QUALIFICATIONS: The successful applicant will be required to undertake graduate teaching in the field of Civil Procedure and to pursue research in that field. Applicants should hold a doctorate in Civil Procedure or in a related field of law, have a proven record of high quality research and possess relevant teaching experience.
APPLICATIONS/FURTHER INFORMATION: Further particulars, which include details of how to apply, are available on the Law Faculty website or from:
Emma Gascoigne, Personnel Officer
Faculty of Law
St Cross Building
St Cross Road
Oxford, OX1 3UL
Tel: 01865 281622
Informal enquiries are welcome and should be directed to Professor Adrian Zuckerman:
The closing date for applications is 31st August 2011; it is planned to hold interviews in late August or early September 2011. The University of Oxford is an equal opportunities employer.
July 24, 2011
SDNY Dismisses Class Action Claim under Illinois State Law, Distinguishing Shady Grove
The SDNY recently considered a motion to dismiss the third amended class-action complaint alleging federal and state antitrust violations by major record labels in selling music over the internet. In re Digital Music Antritrust Litigation, 2011 WL 2848195 (S.D.N.Y. July 18, 2011, No. 06 MD 1780).
Plaintiffs had added a claim under Illinois antitrust law on behalf of all Illinois-resident indirect purchasers. The Illinois statute at issue authorized a suit for damages by an injured private party, but provided that only the State Attorney General, not a private party, could “maintain a class action in any court of this State for indirect purchasers asserting claims under this Act.”
Applying Shady Grove Orthopedic Assoc. v. Allstate Ins. Co., 130 S. Ct. 1431 (2010), the court first concluded that Rule 23 applied to the situation, but reached a different conclusion from Shady Grove on whether Rule 23 in this instance “abridge[d], enlarge[d], or modif[ied] a substantive right.” As to that question, the court held that Justice Stevens’ concurrence in Shady Grove formed the “narrowest grounds” and was therefore controlling over Justice Scalia’s plurality opinion.
Under Justice Stevens’ analysis of §2072(b), then, the court held:
[The Illinois indirect-purchaser] statute provides a procedure that is “so bound up with the state-created right or remedy that it defines the scope of that substantive right or remedy.” Shady Grove, 130 S.Ct. at 1450 (Stevens, J., concurring in part and concurring in the judgment). Therefore, applying the federal rule to override this process would be “an application of a federal rule that effectively abridges, enlarges, or modifies a state-created right or remedy” and is disallowed. Id. at 1451. Unlike the New York law at issue in Shady Grove, its limitation is not contained in a generally applicable procedural rule but, rather, in the same paragraph of the same statute that creates the underlying substantive right. In re Wellbutrin, 756 F.Supp.2d at 677. It applies only to that statute. Id. “Furthermore, courts have observed that the Illinois statute represents a policy judgment as to the feasibility of managing duplicative recovery, which the legislature has entrusted to the Attorney General but not to individual indirect purchasers.” Id. That policy judgment is substantive.
Thus, the court dismissed plaintiffs’ claim on behalf of indirect purchasers under Illinois law. (Numerous other claims, however, remain pending.)