Civil Procedure & Federal Courts Blog

Wasserman on 'Drive-By Jurisdictional Rulings'

Professor Howard Wasserman (Florida International) has posted on SSRN his essay, The Demise of ‘Drive-By Jurisdictional Rulings’, 105 Northwestern University Law Review Colloquy 184 (2011). Here's the abstract:

This essay analyzes and comments on four decisions from the Supreme Court’s October 2009 Term considering the line and divide between jurisdictional and non-jurisdictional issues. of particular note are Reed Elsevier, Inc. v. Mushkin and Morrison v. Nat’l Australia Bank. In these and the other two cases, the Court unanimously rejected a jurisdictional characterization of the challenged legal rule, concluding that the rule either went to the substantive merits of the plaintiff’s claim of right or to ordinary procedure, without limiting the court’s root structural adjudicative authority. These are the latest cases in the justices’ consistent recent effort to eliminate “drive-by jurisdictional rulings,” in which a legal rule is labeled as jurisdictional only through “unrefined” analysis and without rigorous consideration of the label’s meaning or consequence. These four cases illustrate the Court continued, and welcome, retreat from its admitted “profligate” and “less than meticulous” use of the term. Instead, the Court has sought to define and maintain sharp and clean lines between judicial subject-matter jurisdiction and other, non-jurisdictional issues.

--A

Burbank & Subrin on Restoring Trials

Professors Stephen Burbank (Pennsylvania) and Stephen Subrin (Northeastern) have posted on SSRN their essay, Litigation and Democracy: Restoring a Realistic Prospect of Trial, which is forthcoming in the Harvard Civil Rights – Civil Liberties Law Review. Here’s the abstract:

In this essay we review some of the evidence confirming, and some of the reasons underlying, the phenomenon of the vanishing trial in federal civil cases and examine some of the costs of that phenomenon for democratic values, including in particular democratic values represented by the right to a jury trial under the Seventh Amendment. We discuss the Supreme Court’s recent pleading decisions in Twombly and Iqbal as examples of procedural attacks on democracy in four dimensions: (1) they put the right to jury trial in jeopardy; (2) they undercut the effectiveness of congressional statutes designed to compensate citizens for injury and/or to enable implementation of important social norms through private enforcement; (3) they side-step not only congressional review but the entire rulemaking process that Congress prescribed, including multiple steps designed to facilitate broad public participation, and (4) they reward the lawlessness of lower courts that had ignored prior Court precedent proscribing fact-pleading requirements imposed by judicial decision with comparable lawlessness (and reportedly have spurred another cycle of lawlessness in district courts that have ignored them). We then suggest some remedial measures that might restore a realistic prospect of trial, a number of which would depart from the norm of trans-substantive procedure. We propose that the rulemakers develop a separate track for simple cases – a category that would not include cases for which there is objective evidence of congressional reliance on private enforcement -- that would employ bright-line rules permitting very limited discovery and virtually no case management. Recognizing that document discovery presents the most difficult reform challenge, we suggest a rule requiring that document requests in simple cases be specific. For discovery in complex cases, we stress the need for empirical study, particularly in light of the recent Federal Rule amendments concerning electronic discovery. We also suggest the development of discovery protocols by the stakeholders in substantive law litigation areas believed (or, in the event of additional empirical work, found) to involve disproportionate discovery. Finally, doubting that rule amendments could fix what is wrong with summary judgment today, we argue that courts should be given the resources necessary to allow judges to do what judges used to do. Believing that the current state of destructive friction between civil litigation and democracy is a product not just of inadequate resources, but also of the triumph of institutional and professional self-interest and both legislative and judicial politics, we contend that our citizens deserve better. The aspirations of our founders for trials in open court and jury trials are not obsolete, and neither is the duty of the judiciary, within constitutional limits, to respect clearly articulated statutory norms and clearly articulated legislative policy.

--A 

Rep. Kucinich: My Lawsuit Allegations Are Private!

Representative Dennis Kucinich is suing the House of Representatives cafeteria over an olive pit in a sandwich.  He alleges that biting into the sandwich resulted in extensive dental damage.

Although it's not really a civ pro matter, I couldn't help but chuckle at the response of his spokesman: "It truly is a private matter."  That might have been the case, but perhaps he's learned a lesson in the joys of the public record.

RJE

Decision of Interest: Seventh Circuit on Twombly/Iqbal & 1292(b) Appeals

Last month, the Seventh Circuit decided an appeal of a district court’s refusal to grant a defendant’s motion to dismiss an antitrust complaint. The case is In re Text Messaging Antitrust Litigation (No. 10-8037), ___ F.3d ___, 2010 WL 5367383, 2010 U.S. App. LEXIS 26299 (Dec. 29, 2010), and Judge Posner’s opinion addresses both pleading standards under Twombly/Iqbal, and whether 28 U.S.C. § 1292(b) allows an immediate appeal of a district court’s denial of a Twombly/Iqbal-based motion to dismiss. The court concludes that 1292(b) is a proper means for appellate review, and then affirms the district court’s conclusion that the complaint passed muster. Detailed excerpts from the opinion (which include a reference to Paradise Lost, a discussion of child-run lemonade stands, and a recognition that "pleading standards in federal litigation are in ferment after Twombly and Iqbal") follow after the jump.

On the 1292(b) issue, Judge Posner writes:

Section 1292(b) requires our permission to appeal as well as the district court’s. The defendants have asked our permission and the plaintiffs urge us to turn them down. They argue that the proposed appeal does not present a “controlling question of law,” as the statute requires. The question presented is whether the second amended complaint states a claim under the standard for pleading set forth in Twombly. It is a controlling question, because if the second amended complaint does not state a claim, the case is likely (though, as the district judge said, not certain) to be over; the plaintiffs are unlikely without discovery to be able to allege additional facts that would persuade the district court to allow them to file a third amended complaint if we held that the second should have been dismissed.

But is it a controlling question of law? It is not an abstract legal question such as whether the Sherman Act forbids price fixing; it is a question whether a particular complaint satisfies the pleading standard of Twombly. Yet the question’s narrowness should not disqualify it, at least in the rather special circumstances presented by the appeal. … [The defendants] are asking us to apply a legal standard—the pleading standard set forth in Twombly—to a set of factual allegations taken as true for purposes of the appeal.

A challenge to a trial court’s application of a legal standard to a set of facts is often described as presenting a “mixed question of fact and law” or an “ultimate question of fact,” but these are not helpful labels. The appellate court’s task in such a case is to determine the legal significance of a set of facts. . . . The main task of an appellate court, which is to maintain the coherence, uniformity, and predictability of the law, is not engaged by review of the application of a legal standard to a unique, nonrecurring set of particular facts. No matter; in this case we have neither factfindings nor the application of a legal standard to factfindings; the question presented by the appeal is the sufficiency of the allegations of a complaint; and, most important, that question requires the interpretation, and not merely the application, of a legal standard—that of Twombly.

Furthermore, when the question presented by an appeal is whether Twombly requires dismissal of a complaint, the concerns underlying that decision argue for empowering the district court and the court of appeals to authorize an interlocutory appeal. Twombly, even more clearly than its successor, Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), is designed to spare defendants the expense of responding to bulky, burdensome discovery unless the complaint provides enough information to enable an inference that the suit has sufficient merit to warrant putting the defendant to the burden of responding to at least a limited discovery demand. When a district court by misapplying the Twombly standard allows a complex case of extremely dubious merit to proceed, it bids fair to immerse the parties in the discovery swamp—“that Serbonian bog . . . where armies whole have sunk” (Paradise Lost ix 592-94)—and by doing so create irrevocable as well as unjustifiable harm to the defendant that only an immediate appeal can avert. Such appeals should not be routine, and won’t be, because as we said both district court and court of appeals must agree to allow an appeal under section 1292(b); but they should not be precluded altogether by a narrow interpretation of “question of law.” …

Twombly is a recent decision, and its scope unsettled (especially in light of its successor, Iqbal—from which the author of the majority opinion in Twombly dissented; and two of the Justices who participated in those cases have since retired). … Pleading standards in federal litigation are in ferment after Twombly and Iqbal, and therefore an appeal seeking a clarifying decision that might head off protracted litigation is within the scope of section 1292(b). The previous cases do not address the relation of Twombly to the standards for interlocutory appeals under that section, and that is a further novelty that justifies the conclusion that the appeal presents a genuine question of law.

Having assured itself that the appeal was proper, the Seventh Circuit found that the complaint was adequate. The court’s analysis is particularly interesting because the Text Messaging plaintiffs were pursuing the same kind of claim the Supreme Court considered (and rejected) in Twombly: a claim under section 1 of the Sherman Act, which requires an agreement or conspiracy among the defendants to engage in anticompetitive behavior. The Seventh Circuit reasoned:

The second amended complaint alleges a mixture of parallel behaviors, details of industry structure, and industry practices, that facilitate collusion. There is nothing incongruous about such a mixture. If parties agree to fix prices, one expects that as a result they will not compete in price—that’s the purpose of price fixing. Parallel behavior of a sort anomalous in a competitive market is thus a symptom of price fixing, though standing alone it is not proof of it; and an industry structure that facilitates collusion constitutes supporting evidence of collusion. An accusation that the thousands of children who set up makeshift lemonade stands all over the country on hot summer days were fixing prices would be laughed out of court because the retail sale of lemonade from lemonade stands constitutes so dispersed and heterogeneous and uncommercial a market as to make a nationwide conspiracy of the sellers utterly implausible. But the complaint in this case alleges that the four defendants sell 90 percent of U.S. text messaging services, and it would not be difficult for such a small group to agree on prices and to be able to detect “cheating” (underselling the agreed price by a member of the group) without having to create elaborate mechanisms, such as an exclusive sales agency, that could not escape discovery by the antitrust authorities.

Of note is the allegation in the complaint that the defendants belonged to a trade association and exchanged price information directly at association meetings. This allegation identifies a practice, not illegal in itself, that facilitates price fixing that would be difficult for the authorities to detect. The complaint further alleges  that the defendants, along with two other large sellers of text messaging services, constituted and met with each other in an elite “leadership council” within the association—and the leadership council’s stated mission was to urge its members to substitute “co-opetition” for competition.

The complaint also alleges that in the face of steeply falling costs, the defendants increased their prices. This is anomalous behavior because falling costs increase a seller’s profit margin at the existing price, motivating him, in the absence of agreement, to reduce his price slightly in order to take business from his competitors, and certainly not to increase his price. And there is more: there is an allegation that all at once the defendants changed their pricing structures, which were  heterogeneous and complex, to a uniform pricing structure, and then simultaneously jacked up their prices by a third. The change in the industry’s pricing structure was so rapid, the complaint suggests, that it could not have been accomplished without agreement on the details of the new structure, the timing of its adoption, and the specific uniform price increase that would ensue on its adoption. …

What is missing, as the defendants point out, is the smoking gun in a price-fixing case: direct evidence, which would usually take the form of an admission by an employee of one of the conspirators, that officials of the defendants had met and agreed explicitly on the terms of a conspiracy to raise price. . . . Direct evidence of conspiracy is not a sine qua non, however. Circumstantial evidence can establish an antitrust conspiracy. We need not decide whether the circumstantial evidence that we have summarized is sufficient to compel an inference of conspiracy; the case is just at the complaint stage and the test for whether to dismiss a case at that stage turns on the complaint’s “plausibility.”

The Court said in Iqbal that the “plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” 129 S. Ct. at 1949. This is a little unclear because plausibility, probability, and possibility overlap. Probability runs the gamut from a zero likelihood to a certainty. What is impossible has a zero likelihood of occurring and what is plausible has a moderately high likelihood of occurring. The fact that the allegations undergirding a claim could be true is no longer enough to save a complaint from being dismissed; the complaint must establish a nonnegligible probability that the claim is valid; but the probability need not be as great as such terms as “preponderance of the evidence” connote.

The plaintiffs have conducted no discovery. Discovery may reveal the smoking gun or bring to light additional circumstantial evidence that further tilts the balance in favor of liability. All that we conclude at this early stage in the litigation is that the district judge was right to rule that the second amended complaint provides a sufficiently plausible case of price fixing to warrant allowing the plaintiffs to proceed to discovery.

There’s additional coverage at BNA’s US Law Week (79 U.S.L.W. 1893)

--A

(Hat Tip: Brooke Coleman)

Decision of Interest: 5th Circuit Rejects Katrina Flood Settlement

The Fifth Circuit rejected the $21 million settlement of a class action over damage caused by the levee breaches on the grounds that it did not grapple with the fairness of dispersal of funds and instead "punted" that job to the special master.

The BNA reports here at U.S. Law Week.  The opinion is available here.

RJE

Today's SCOTUS Decision in Ortiz v. Jordan

The Supreme Court issued a unanimous decision today in Ortiz v. Jordan (covered earlier here and here). Justice Ginsburg delivered the opinion of the Court. From the opinion:

We granted review to decide a threshold question on which the Circuits are split: May a party, as the Sixth Circuit believed, appeal an order denying summary judgment after a full trial on the merits? Our answer is no. The order retains its interlocutory character as simply a step along the route to final judgment. See Cohen v. Beneficial Industrial Loan Corp., 337 U. S. 541, 546 (1949). Once the case proceeds to trial, the full record developed in court supersedes the record existing at the time of the summary judgment motion. …

When summary judgment is sought on a qualified immunity defense, the court inquires whether the party opposing the motion has raised any triable issue barring summary adjudication. “[O]nce trial has been had,” however, “the availability of official immunity should be determined by the trial record, not the pleadings nor the summary judgment record.” 15A C. Wright, A. Miller, & E. Cooper, Federal Practice & Procedure §3914.10, p. 684 (2d ed. 1992 and Supp. 2010). After trial, if defendants continue to urge qualified immunity, the decisive question, ordinarily, is whether the evidence favoring the party seeking relief is legally sufficient to overcome the defense. See Fed. Rule Civ. Proc. 50(a), (b) (stating conditions on which judgment may be granted as a matter of law).

In the case before us, the Court of Appeals, although purporting to review the District Court’s denial of the prison officials’ pretrial summary-judgment motion, several times pointed to evidence presented only at the trial stage of the proceedings, The appeals court erred, but not fatally, by incorrectly placing its ruling under a summary judgment headline. Its judgment was infirm, however, because Jordan's and Bright's failure to renew their motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b) left the appellate forum with no warrant to reject the appraisal of the evidence by “the judge who saw and heard the witnesses and ha[d] the feel of the case which no appellate printed transcript can impart.” Cone v. West Virginia Pulp & Paper Co., 330 U. S. 212, 216 (1947).

As Justice Ginsburg writes later in the opinion:

Nor did [defendants] avail themselves of Rule 50(b), which permits the entry, postverdict, of judgment for the verdict loser if the court finds that the evidence was legally insufficient to sustain the verdict. See Fed. Rule Civ. Proc. 50(a), (b). Absent such a motion, we have repeatedly held, an appellate court is "powerless" to review the sufficiency of the evidence after trial. Unitherm Food Systems, Inc. v. Swift-Eckrich, Inc., 546 U. S. 394, 405 (2006).

Justice Thomas authored a concurring opinion, joined by Justices Scalia and Kennedy:

We granted certiorari to decide the narrow question whether a party may appeal an order denying summary judgment after a full trial on the merits. I agree with the Court that the answer is no. The Court also reaches beyond that question, however, to address the effect of Jordan and Bright’s failure to renew their motion for judgment as a matter of law under Federal Rule of Civil Procedure 50(b). I would limit our decision to the question presented and remand for consideration of any additional issues.

--A

Strong on Jurisdictional Discovery in Transnational Litigation

Professor S.I. Strong (Missouri) has posted on SSRN her article, Jurisdictional Discovery in Transnational Litigation: Extraterritorial Effects of United States Federal Practice, which is forthcoming in the Journal of Private International Law. Here’s the abstract:

Jurisdictional discovery is a largely unknown, uniquely American device that combines two of the more internationally problematic aspects of United States civil procedure, namely an exceptionally broad view of extraterritorial jurisdiction and an expansive approach to pre-trial discovery. The mechanism – which is widely available and often used in cases where the defendant challenges the jurisdiction of the court – comes into play before the court’s jurisdiction over the defendant is even established and allows plaintiffs to ask defendants to produce a vast array of documents and information that can be used to justify the plaintiff’s claim that jurisdiction in this court is proper. This article describes the device in detail, distinguishing it both practically and theoretically from methods used in other common law systems to establish jurisdiction, and discusses how recent US Supreme Court precedent provides international actors with the means of limiting or avoiding this potentially burdensome procedure.

--A