Friday, February 14, 2014
The NBA starts its all-star break today. The U.S. Supreme Court is on break as well, and it too is right at the midpoint of the season. The Term has already been quite active on the civil procedure and federal courts front, with decisions on personal jurisdiction, Younger abstention, transfer of venue, the Class Action Fairness Act, and appellate jurisdiction. And there’s more on the horizon:
- Walden v. Fiore (venue and personal jurisdiction);
- Halliburton v. Erica P. John Fund (class actions);
- Wood v. Moss (on qualified immunity and, perhaps, pleading standards more generally);
- Highmark v. Allcare and Octane Fitness v. Icon Health (two cases on awarding attorneys’ fees in patent cases);
- Petrella v. MGM (laches in civil copyright claims)
- Executive Benefits Insurance Agency v. Arkison (Article III and bankruptcy proceedings);
- UBS Financial Services v. Union de Empleados de Muelles (Rule 23.1’s pre-suit demand requirement)
Why do we pay so much attention to these cases? For most court-watchers, it’s not because there is a strong interest in whether a Massachusetts gravel supply company underpaid its benefit fund obligations. Rather, it’s because of what the Supreme Court’s decisions mean going forward. Because of stare decisis, judicial decisions can prospectively bind future courts just as an Act of Congress or a Federal Rule of Civil Procedure can. In many areas of procedure, Supreme Court decisions may be the most significant lawmaking acts we’re going to see.
With that in mind, I thought I would share a link to my recent article, To Say What the Law Is: Rules, Results, and the Dangers of Inferential Stare Decisis, 99 Virginia L. Rev. 1737 (2013). The article was driven in part by the struggle to figure out the precedential effect of controversial Supreme Court decisions like Wal-Mart and Iqbal. But I try to tackle more generally the question of what parts of a judicial decision should actually create binding law, and in what way. Here’s the abstract:
Judicial decisions do more than resolve disputes. They are also crucial sources of prospective law, because stare decisis obligates future courts to follow those decisions. Yet there remains tremendous uncertainty about how we identify a judicial decision’s lawmaking content. Does stare decisis require future courts to follow the rules stated in a precedent-setting opinion? Or must future courts merely reconcile their decisions with the ultimate result of the precedent-setting case? Although it is widely assumed that a rule-based approach puts greater constraints on future courts, two recent Supreme Court decisions — Wal-Mart Stores, Inc. v. Dukes and Ashcroft v. Iqbal — turn this conventional wisdom on its head. In both cases, what the Court said about the governing rules was not inherently controversial, and would leave courts with considerable flexibility going forward. But what the Court did in applying those rules — the ultimate results in Wal-Mart and Iqbal — could be very destabilizing if stare decisis mandates consistency with those results in future cases.
This article assesses competing approaches to stare decisis, and argues that the lawmaking content of a judicial decision should be only the rules that the court states in deciding the case. While the end result may be instructive, enlightening, or valuable for any number of reasons, it should not create binding obligations on future courts as a matter of stare decisis. A rules-only approach is an unconventional position (even those who favor rule-based stare decisis typically presume that consistency with results is also required). But it strikes the optimal balance. To infer binding obligations from results alone creates a risk that — as with Wal-Mart and Iqbal — future courts will be forced to intuit more radical legal changes than the precedent-setting court actually embraced. Put simply, a judicial decision should create binding law only to the extent that it says what the law is. Unless and until new legal rules are declared (whether by the judiciary in later cases or by legislation), courts should be free to operate within the existing legal framework, without being required to reconcile their decisions with the mere results of earlier ones.
Thanks again to the editors at the Virginia Law Review, who did a fantastic job on the article, and to the many colleagues who gave me such terrific feedback and suggestions.
Friday, February 7, 2014
This week, some colleagues and I submitted a joint comment opposing the recently proposed amendments to the Federal Rules of Civil Procedure. Our letter addresses the proposals regarding the scope of discovery as defined by Rule 26(b)(1), the reduced presumptive limits on discovery devices, and the elimination of Rule 84 and the Forms. From the introduction:
In our judgment, two key issues bear close consideration by the Committee as it considers how to proceed: (1) What problem does the Committee seek to solve? (2) On balance, how likely is it that the proposed amendments will improve the status quo? As in 1993 and 2000, the Committee is focused on addressing a perceived problem of excessive discovery costs. In supporting the current proposed amendments, the Committee recognizes that empirical data show no widespread problem, but nevertheless hopes that new across-the-board limits on discovery will lessen discovery costs in the small number of complex, contentious, high stakes cases where costs are high. The Committee is correct about the data: most critically, the Federal Judicial Center’s (“FJC”) 2009 closed-case study shows that in almost all cases discovery costs are modest and proportionate to stakes. As in 1993 and in 2000, evidence of system-wide, cost-multiplying abuse does not exist, and the proposed amendments are not designed to address the small subset of problematic cases that appear to be driving the Rule changes. We anticipate that, as with past Rule changes, untargeted amendments will fail to eliminate complaints about the small segment of high-cost litigation that elicits headlines about litigation gone wild; instead they will create unnecessary barriers to relief in meritorious cases, waste judicial resources, and drive up the cost of civil justice. The amendments are unnecessary, unwarranted, and counterproductive.*** In our view, the amendments are likely to spawn confusion and create incentives for wasteful discovery disputes. Even more troubling, by increasing costs and decreasing information flow, the proposed amendments are likely to undermine meaningful access to the courts and to impede enforcement of federal- and state-recognized substantive rights.
The comment was submitted on behalf of myself, Helen Hershkoff (NYU), Lonny Hoffman (Houston), Alexander Reinert (Cardozo), Elizabeth Schneider (Brooklyn), and David Shapiro (Harvard).
Wednesday, June 12, 2013
It’s a quick read at <3 pages, where “<3” actually means “less than 3” as opposed to a sideways emoticon heart.
Monday, April 22, 2013
Some early blog and twitter chatter casts the Supreme Court’s cert grant in DaimlerChrysler AG v. Bauman as a sequel to last week’s Kiobel decision on the Alien Tort Statute (ATS). Although Daimler is an ATS case, the Court does not seem poised to revisit its test (such as it is) for extraterritorial application of the ATS. The question presented in Daimler is about personal jurisdiction in general—actually, it’s about general personal jurisdiction in general. According to the defendant’s petition for certiorari, “[t]he question presented is whether it violates due process for a court to exercise general personal jurisdiction over a foreign corporation based solely on the fact that an indirect corporate subsidiary performs services on behalf of the defendant in the forum State.”
This question calls to mind an issue from the Court’s 2011 Goodyear decision—one that Justice Ginsburg’s unanimous opinion acknowledged but did not address. The petitioners in Goodyear were foreign subsidiaries of an American parent company, and they objected to personal jurisdiction in North Carolina state court. Here’s an excerpt from the end of the Court’s opinion [131 S. Ct. at 2857]:
Respondents belatedly assert a “single enterprise” theory, asking us to consolidate petitioners' ties to North Carolina with those of Goodyear USA and other Goodyear entities. See Brief for Respondents 44–50. In effect, respondents would have us pierce Goodyear corporate veils, at least for jurisdictional purposes. See Brilmayer & Paisley, Personal Jurisdiction and Substantive Legal Relations: Corporations, Conspiracies, and Agency, 74 Cal. L. Rev. 1, 14, 29–30 (1986) (merging parent and subsidiary for jurisdictional purposes requires an inquiry “comparable to the corporate law question of piercing the corporate veil”). But see 199 N.C.App., at 64, 681 S.E.2d, at 392 (North Carolina Court of Appeals understood that petitioners are “separate corporate entities ... not directly responsible for the presence in North Carolina of tires that they had manufactured”). Neither below nor in their brief in opposition to the petition for certiorari did respondents urge disregard of petitioners' discrete status as subsidiaries and treatment of all Goodyear entities as a “unitary business,” so that jurisdiction over the parent would draw in the subsidiaries as well.
One caveat, of course, is that the Supreme Court’s ultimate decisions do not always hew closely to the precise questions for which it has granted certiorari. But if the Court’s concern in Daimler is the extraterritorial application of the ATS, I suspect it would have GVR’d the case for reconsideration in light of Kiobel—as it did today with another Ninth Circuit ATS case (Rio Tinto v. Sarei).
Tuesday, September 25, 2012
When certiorari was granted in J. McIntyre Machinery, Ltd. v. Nicastro, 131 S. Ct. 2780 (2011), many hoped that the Supreme Court would provide much-needed clarification to the area of personal jurisdiction. It didn’t. The Court failed to generate a majority opinion, splitting into Justice Kennedy’s four-Justice plurality, Justice Breyer’s two-Justice concurrence, and Justice Ginsburg’s three-Justice dissent.
This essay – for the Southwestern Journal of International Law’s 2012 symposium “Our Courts and the World: Transnational Litigation and Procedure” – examines how state and federal courts have been using the McIntyre decision. Some lower court opinions have mistakenly interpreted McIntyre as establishing new constitutional restraints on state court exercises of personal jurisdiction, or as resolving previously open questions in favor of a more restrictive approach. These opinions misread the Justices’ opinions in McIntyre. In particular, there has been confusion about Justice Breyer’s concurrence, which explicitly disagreed with Justice Kennedy’s reasoning and was premised on a narrow understanding of the factual record in McIntyre. Many lower court decisions, however, correctly recognize that the fractured McIntyre decision does not mandate new constitutional restrictions on personal jurisdiction.
Here are some of the things lower courts have been up to since McIntyre came down:
(1) addressing the extent to which McIntyre has any binding
holding at all, either via the Marks rule (under which “the holding of the
Court may be viewed as that position taken by those Members who concurred in
the judgments on the narrowest grounds”), or by attempting to aggregate the
views of enough Justices to reach a majority on certain issues;
(2) embracing controversial aspects of Justice Kennedy’s plurality opinion that are in significant tension with earlier Supreme Court majority decisions;
(3) reading McIntyre as calling into question the “reasonableness” prong of the prevailing two-step jurisdictional framework;
(4) assessing McIntyre’s impact on the role that foreseeability plays in determining jurisdiction over defendants whose products reach a state through the “stream of commerce”; and
(5) discussing whether McIntyre has declared a winner in the disagreement between Justice O'Connor and Justice Brennan in Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987).
Many thanks to everyone at Southwestern for doing such a great job with the symposium. I was glad to be a part of it.
Monday, May 7, 2012
Now on SSRN is my article, The Lay of the Land: Examining the Three Opinions in J. McIntyre Machinery, Ltd. v. Nicastro, which was part of a recent symposium on the Supreme Court’s two personal jurisdiction decisions from last Term. Here’s the abstract:
It was a long time coming. The Supreme Court's decisions last Term in J. McIntyre Machinery, Ltd. v. Nicastro and Goodyear Dunlop Tires Operations, S.A. v. Brown ended a two-decade high-court hiatus from the subject of personal jurisdiction. In McIntyre, the more controversial of the two, the Court concludes that New Jersey state courts lacked jurisdiction over a British manufacturer in a suit by a New Jersey plaintiff who was injured in New Jersey by a machine purchased by his New Jersey employer. McIntyre lacks a majority opinion, however. Instead we have a four-Justice plurality authored by Justice Kennedy, a three-Justice dissent authored by Justice Ginsburg, and a scale-tipping concurrence written by Justice Breyer and joined by Justice Alito.
This article for the South Carolina Law Review's symposium on McIntyre and Goodyear examines the three McIntyre opinions. It argues that McIntyre should not be read to impose significant new restraints on jurisdiction. Although there are aspects of Justice Kennedy's plurality that suggest a more restrictive approach, Justice Breyer's concurrence explicitly rejects Justice Kennedy's reasoning. Justice Breyer does agree that jurisdiction was not proper in McIntyre, but that conclusion is premised on a very narrow understanding of the factual record. Correctly understood, Justice Breyer's approach would allow jurisdiction in a similar case -- even one where only a single sale is ultimately made to an in-state purchaser -- provided the record is slightly more developed on the presence of potential customers in the forum state. In terms of the overarching legal principles, Justice Breyer's concurrence has more in common with Justice Ginsburg's dissent than Justice Kennedy's plurality.
Thanks again to the folks at South Carolina, who did an excellent job with the symposium. It was a pleasure to be a part of it.
Wednesday, September 15, 2010
Earlier this year, we covered the Supreme Court’s much-anticipated decision in Shady Grove Orthopedic Associates v. Allstate Insurance Co., 130 S. Ct. 1431 (2010), which examined the role of state class-action law in federal court under the Erie doctrine and the Rules Enabling Act (REA). In a 5-4 decision, Shady Grove held that New York state law did not displace Federal Rule of Civil Procedure 23’s framework for deciding whether a class action should be certified. Beyond this basic holding, however, Shady Grove leaves many significant questions unanswered (as I argue in this forthcoming article).
Now pending before the Supreme Court is a petition for certiorari that may be a vehicle for the Supreme Court to confront some of the unresolved issues surrounding Erie and the REA. The case is Medison America, Inc. v. Preferred Medical Systems, LLC (09-1372), and the first question presented is:
“Must a federal court, sitting in diversity and hearing a summary judgment motion, apply state law when state law imposes a higher burden of proof on a movant and preserves the constitutional rights of a nonmovant to a state-created remedy via trial by jury?”
The petitioner in Medison argues that Tennessee law makes it harder for a defendant to obtain summary judgment than the federal summary-judgment standard. The role of state summary-judgment standards in federal court is a classic Erie/REA issue, and it targets two important aspects of Erie/REA that Shady Grove failed to resolve: (1) the proper interpretation of the REA’s requirement that the Federal Rules “shall not abridge, enlarge or modify any substantive right”; and (2) the extent to which a Federal Rule must be read to accommodate state law when its text reasonably allows such a reading, such as when the Rule's text employs an ambiguous standard that can be applied in a manner consistent with state law.
As for the first question, Shady Grove yielded no majority view because Justice Stevens (the tie-breaking fifth vote) wrote separately on the REA, although he ultimately agreed with Justice Scalia’s conclusion that applying Rule 23 in Shady Grove did not violate the REA. Medison would be a particularly interesting vehicle for exploring the REA’s substantive-rights provision, because summary-judgment standards are closely analogous to burdens of proof. Justice Stevens’ Shady Grove concurrence explicitly identified burdens of proof as implicating the kind of substantive rights that the REA protects from interference by the Federal Rules [130 S Ct. at 1450 n.4, 1453 n.9]. Even Justice Scalia recognized that burdens of proof present a “difficult” question under the REA [130 S. Ct. at 1446 n.13].
The second issue is best illustrated by the Supreme Court’s decision in Gasperini v. Center for Humanities, Inc., 518 U.S. 415 (1996). Gasperini held that although Rule 59 governed a post-trial motion to set aside a damage award as excessive, the Erie doctrine required a federal court to apply New York’s standard of review for damage awards, rather than the federal judiciary’s traditional “shocks-the-conscience” test. In Erie parlance, Gasperini indicates that a Federal Rule does not truly “collide” with state law if the Federal Rule’s text is open-ended enough to accommodate state law. Colliding with the federal judiciary’s gloss on a Federal Rule (in Gasperini, the shocks-the-conscience test) is not the same thing as colliding with the Federal Rule itself. Because that judicial gloss is essentially federal common law, the choice between state and federal law is what Hanna called a “relatively unguided Erie choice” that is more likely to opt for state law.
A similar argument could be made in the context of class-certification standards, but it was neither presented nor considered in Shady Grove. That is, even if we accept Shady Grove’s holding that Rule 23 governs class certification in federal court, state law might still displace the federal judiciary’s “common law” on, say, Rule 23(b)(3)’s superiority requirement. Thus a federal court applying Rule 23 in a case like Shady Grove might have to incorporate New York’s view that the danger of remedial overkill makes statutory-damages class actions a bad idea. And federal courts might also have to incorporate state law that is more permissive of class actions; where the class asserts claims arising under such a state’s law, the state’s view that a class action is superior to individual adjudication could legitimately displace the federal judiciary’s more hostile approach.
Medison presents an opportunity for the Supreme Court to squarely confront this issue, because the Erie-meets-summary-judgment question implicates this same line of argument. Even if Rule 56 governs whether summary judgment is appropriate in federal court, the Gasperini argument remains: state law should determine whether a summary-judgment movant has indeed “show[n] that there is no genuine issue as to any material fact.” (If readers are interested, this article addresses this argument in more detail, although it’s from before Shady Grove.)
For more information on Medison, see the Supreme Court’s docket here. Some of the cert. filings are available on Westlaw (the petition is at 2010 WL 1900678 and the petitioner’s reply brief is at 2010 WL 3375619). Medison has been distributed for the Court’s so-called “long Conference” on September 27th.
PS: The second question presented in Medison is also an interesting one:
“Whether the United States Court of Appeals for the Sixth Circuit, applying the holding in Street v. J.C. Bradford & Co., 886 F.2d 1472 (6th Cir. 1989), misinterpreted this Court's decision in Celotex Corp. v. Catrett, 477 U.S. 317 (1986) as authorizing entry of a summary judgment in favor of a party who merely asserts that the nonmovant lacks admissible evidence on an essential element of its claim, i.e. allowing the Respondent to prevail under a ‘put up or shut up’ theory.”
I argue in an earlier article (available here) that the summary-judgment approach exemplified by Street is not a correct reading of Celotex.
Monday, July 26, 2010
Last week the Eleventh Circuit issued a very significant (though a bit puzzling) decision on the 2005 Class Action Fairness Act (CAFA). The case is Cappuccitti v. DirecTV, Inc., No. 09-14107, ___ F.3d ___, 2010 U.S. App. LEXIS 14724, 2010 WL 2803093 (11th Cir. July 19, 2010), covered earlier here. One of CAFA’s most significant changes was an amendment to the diversity jurisdiction statute, codified at 28 U.S.C. § 1332(d), to authorize federal diversity jurisdiction over class actions for which there is (a) minimal diversity between the parties, and (b) an aggregate amount in controversy in excess of $5,000,000. Neither party in Cappuccitti disputed that federal subject matter jurisdiction was proper under § 1332(d); DirecTV's appeal challenged only the district court’s refusal to compel arbitration. But the Eleventh Circuit raised the jurisdictional issue sua sponte and dismissed the case entirely. It held that even if a class action’s aggregate amount-in-controversy exceeds $5,000,000, CAFA jurisdiction applies only if at least one class member’s claim exceeds the $75,000 threshold that applies for ordinary diversity jurisdiction under 28 U.S.C. § 1332(a).
It is difficult to see how this result follows from CAFA’s text. CAFA’s § 1332(d) created a new category of diversity jurisdiction over class actions that is distinct from the general form of diversity jurisdiction set forth in § 1332(a). The only situation where the two overlap is for so-called “mass actions” -- cases that are not class actions but nonetheless include more than 100 plaintiffs with related claims. Section 1332(d)(11) provides that such “mass actions” can trigger CAFA jurisdiction, but only for plaintiffs whose claims exceed § 1332(a)’s $75,000 threshold. See 28 U.S.C. § 1332(d)(11)(B)(i). Cappuccitti, however, is a true class action brought pursuant to Federal Rule of Civil Procedure 23. So § 1332(d)(11)’s provisions for “mass actions” don’t apply, leaving no textual basis for incorporating § 1332(a)’s $75,000 threshold into § 1332(d).
Thus, § 1332(d)’s plain text provides that as long as a class action’s aggregate amount in controversy exceeds $5 million, it doesn’t matter whether any individual class member’s claim exceeds $75,000 (or any other amount). CAFA’s legislative history confirms that this was exactly what Congress intended. According to the Senate Judiciary Committee’s report (S. Rep. 109-14), CAFA responded to “the nonsensical result under which a citizen can bring a ‘federal case’ by claiming $75,001 in damages for a simple slip-and-fall case against a party from another state, while a class action involving 25 million people living in all fifty states and alleging claims against a manufacturer that are collectively worth $15 billion must usually be heard in state court (because each individual class member's claim is for less than $75,000).” [S. Rep. 109-14, at p.11 (emphasis added)]. In further critiquing the pre-CAFA approach to diversity jurisdiction over class actions, the Senate Report explained [at p.69]:
[T]he process of assessing whether a class action complies with the current jurisdictional amount requirement is also often “an expensive and time consuming process,” requiring discovery on the nature and value of the named plaintiffs' claims. As noted previously, in some federal Circuits, the jurisdictional amount requirement in a class action is satisfied by showing that any member of the proposed class is asserting damages in excess of $75,000, and in other Circuits, the question is whether each and every member of the putative class has individually an amount in controversy exceeding $75,000. Again, this time-consuming issue, often requiring significant amounts of record review and fact-finding, is litigated very frequently in the many class actions that are removed to federal court under current law. [CAFA] will make the resolution of class action jurisdictional issues easier -- not harder. . . . [I]t will be much easier to determine whether the amount in controversy presented by a purported class as a whole (that is, in the aggregate) exceeds $5 million than it is to assess the value of the claim presented by each and every individual class member, as is required by the current diversity jurisdictional statute.
[S. Rep. 109-14, at p.11 (emphasis added)].
My purpose here is not to defend CAFA. One can certainly question whether, as a policy matter, federal diversity jurisdiction should have been expanded to cover these kinds of class actions. And CAFA does contain several instances of problematic drafting (see, e.g., here and here). But the issue addressed in Cappuccitti is not one of them. The court’s holding is very hard to square with CAFA’s text and purpose.