Monday, July 11, 2016
In a 4-3 decision, the Colorado Supreme Court has adopted for purposes of Colorado state procedure the approach to pleading that the U.S. Supreme Court employed in Twombly and Iqbal. From the majority opinion in Warne v. Hall:
¶2 Because our case law interpreting the Colorado Rules of Civil Procedure in general, and C.R.C.P. 8 and 12(b)(5) in particular, reflects first and foremost a preference to maintain uniformity in the interpretation of the federal and state rules of civil procedure and a willingness to be guided by the Supreme Court’s interpretation of corresponding federal rules whenever possible, rather than an intent to adhere to a particular federal interpretation prevalent at some fixed point in the past, the court of appeals too narrowly understood our existing precedent. Because the plaintiff’s complaint, when evaluated in light of the more recent and nuanced analysis of Twombly and Iqbal, fails to state a plausible claim for relief, the judgment of the court of appeals finding the complaint to be sufficient is reversed, and the matter is remanded with instruction to permit further proceedings consistent with this opinion.
From the dissent:
¶31 Today, the majority jettisons a rule that has stood the test of time for over fifty years, based largely on an asserted preference for maintaining uniformity with federal court interpretations of analogous federal rules of procedure. In reaching this result, the majority misperceives the existing state of the law in Colorado and grafts onto C.R.C.P. 8 a “plausibility” requirement that the rule does not contain and that other courts have correctly recognized results in a loss of clarity, stability, and predictability. Even more concerning, the majority’s preferred standard allows a single district judge, at the incipient stages of a case, to weigh what the judge speculates the plaintiff will plausibly be able to prove, based on the individual judge’s subjective experience and common sense, and then to decide whether the plaintiff’s action is viable.
¶32 I cannot subscribe to such a standard, which I believe will deny access to justice for innumerable plaintiffs with legitimate complaints. Indeed, the majority’s application of its newly adopted standard in this case demonstrates the overreaching nature and ultimate unfairness of that standard.
Friday, May 27, 2016
The Seventh Circuit Court of Appeals, in an opinion by Judge Diane Wood, held that forcing an employee to agree to bring any wage-and-hour claim through individual arbitration violated the National Labor Relations Act. Lewis v. Epic Systems Corp., No. 15-2997 (7th Cir. May 26, 2016).
Epic sent an email to some employees with an agreement requiring them to bring wage-and-hour claims only through individual arbitration and to waive the right to participate in any class, collective, or representative proceeding. The email said that employees were “deemed to have accepted this Agreement” if they continued to work at Epic.
Plaintiff agreed at the time, but later sued Epic in federal court for violations of the overtime requirements of the Fair Labor Standards Act and Wisconsin law. Epic moved to compel individual arbitration.
Section 7 of the NLRA provides that “[e]mployees shall have the right to self- organization, to form, join, or assist labor organizations, to bargain collectively through representatives of their own choosing, and to engage in other concerted activities for the purpose of collective bargaining or other mutual aid or protection.” 29 U.S.C. § 157. The Seventh Circuit stated, “Section 7’s ‘other concerted activities’ have long been held to include ‘resort to administrative and judicial forums.’” The court held that “the phrase ‘concerted activities’ in Section 7 should be read broadly to include resort to representative, joint, collective, or class legal remedies.” Thus, “insofar as it prohibits collective action, Epic’s arbitration provision violates Sections 7 and 8 of the NLRA.”
Further, the Federal Arbitration Act did not “save the ban on collective action.” The district court’s denial of the motion to compel arbitration was affirmed.
Tuesday, March 29, 2016
My latest article, The Rise and Fall of Plausibility Pleading?, has just been published in the Vanderbilt Law Review. It builds on some of my earlier work on pleading (here and here), focusing on the Supreme Court’s post-Iqbal decisions on pleading standards (e.g., Johnson v. City of Shelby; Wood v. Moss; Matrixx Initiatives, Inc. v. Siracusano). Here’s the abstract:
The Supreme Court's 2007 decision in Bell Atlantic Corp. v. Twombly and its 2009 decision in Ashcroft v. Iqbal unleashed a torrent of scholarly reaction. Commentators charged these decisions with adopting a new pleading regime, "plausibility pleading," that upended the notice-pleading approach that had long prevailed in federal court. Whether a complaint could survive a motion to dismiss — it was argued — now depends on whether the court found the complaint plausible, allowing courts to second-guess a complaint’s allegations without any opportunity for discovery or consideration of actual evidence. Lower courts began to cite Twombly and Iqbal at a remarkably high rate, and empirical work revealed their effect on both dismissal rates and litigant behavior.
Although Twombly and Iqbal were troubling on many levels, the rise of a newly restrictive form of plausibility pleading was not inevitable. There was — and still is — a path forward that would retain the notice-pleading approach set forth in the text of the Federal Rules themselves and confirmed by pre-Twombly case law. This Article describes this reading of Twombly and Iqbal, and explains how more recent Supreme Court pleading decisions are consistent with this understanding. It is crucial, however, that these post-Iqbal decisions and the approach to pleading they reflect receive the same attention that accompanied Twombly, Iqbal, and the rise of plausibility pleading. Otherwise the narrative that Twombly and Iqbal compel a more restrictive pleading standard may become further entrenched, compounding the adverse effects of those problematic decisions.
Friday, March 25, 2016
This week the Supreme Court issued its decision in Tyson Foods, Inc. v. Bouaphakeo, covered here, here, and here. Tyson Foods is one of several important class action cases on the Court’s docket this Term—and the second one decided so far. Like Campbell-Ewald back in January, the Tyson Foods decision is generally good news for proponents of class actions. By a 6-2 vote, the Court upheld class certification under Rule 23(b)(3).
Justice Kennedy wrote the majority opinion, joined by Chief Justice Roberts and Justices Ginsburg, Breyer, Sotomayor, and Kagan. Chief Justice Roberts wrote a separate concurring opinion, which was joined in part by Justice Alito. Justice Thomas wrote a dissenting opinion, which Justice Alito joined. All the opinions are worth a read, but below are a few highlights from Justice Kennedy’s majority opinion.
First, Justice Kennedy emphasized that the presence of some individualized issues is not fatal to Rule 23(b)(3)’s predominance requirement:
The predominance inquiry “asks whether the common, aggregation-enabling, issues in the case are more prevalent or important than the non-common, aggregation-defeating, individual issues.” [2 W. Rubenstein, Newberg on Class Actions], §4:49, at 195–196. When “one or more of the central issues in the action are common to the class and can be said to predominate, the action may be considered proper under Rule 23(b)(3) even though other important matters will have to be tried separately, such as damages or some affirmative defenses peculiar to some individual class members.” 7AA C. Wright, A. Miller, & M. Kane, Federal Practice and Procedure §1778, pp. 123–124 (3d ed. 2005) (footnotes omitted).
Justice Kennedy also provided some important guidance on the Supreme Court’s 2011 Wal-Mart decision, clarifying that “Wal-Mart does not stand for the broad proposition that a representative sample is an impermissible means of establishing class-wide liability.” He recognized the practical reality that “[i]n many cases, a representative sample is ‘the only practicable means to collect and present relevant data’ establishing a defendant’s liability. Manual of Complex Litigation §11.493, p. 102 (4th ed. 2004).” And:
In a case where representative evidence is relevant in proving a plaintiff’s individual claim, that evidence cannot be deemed improper merely because the claim is brought on behalf of a class. To so hold would ignore the Rules Enabling Act’s pellucid instruction that use of the class device cannot “abridge . . . any substantive right.” 28 U. S. C. §2072(b).
The Court ultimately did not resolve the second question in Tyson Foods, which was originally framed as “whether a class may be certified if it contains ‘members who were not injured and have no legal right to any damages.’” After noting that Tyson Foods had “reframe[d] this argument” in its merits brief, Justice Kennedy declined to address it “because the damages award has not yet been disbursed, nor does the record indicate how it will be disbursed.” The Court therefore remanded the case, recognizing that Tyson Foods “may raise a challenge to the proposed method of allocation when the case returns to the District Court for disbursal of the award.” In his final paragraph of analysis, however, Justice Kennedy noted that the potential for “uninjured class members” to recover from the class judgment appeared to be a problem “of [Tyson Foods’] own making,” because Tyson Foods had argued against having bifurcated liability and damages proceedings.
For additional coverage, check out:
- Perry Cooper (Bloomberg)
- Lyle Denniston (SCOTUSblog)
- Alexandra Lahav (Mass Tort Litigation Blog)
- Adam Liptak (New York Times)
Thursday, March 17, 2016
There’s a lot of attention right now on President Obama’s nomination of Merrick Garland to the U.S. Supreme Court. But I wanted to quickly flag last week’s unanimous decision on diversity jurisdiction. Justice Sotomayor’s opinion in Americold Realty Trust v. ConAgra Foods, Inc. begins:
This case asks how to determine the citizenship of a “real estate investment trust,” an inanimate creature of Maryland law. We answer: While humans and corporations can assert their own citizenship, other entities take the citizenship of their members.
The Court reaffirmed the “oft-repeated rule” that unincorporated entities take on the citizenship of all of their members (citing Carden v. Arkoma Associates, 494 U. S. 185 (1990)), and held that the “members” of this sort of Maryland-law entity included all of its shareholders:
In Maryland, a real estate investment trust is an “unincorporated business trust or association” in which property is held and managed “for the benefit and profit of any person who may become a shareholder.” Md. Corp. & Assns. Code Ann. §§8–101(c), 8–102 (2014). As with joint-stock companies or partnerships, shareholders have “ownership interests” and votes in the trust by virtue of their “shares of beneficial interest.” §§8–704(b)(5), 8–101(d). These shareholders appear to be in the same position as the shareholders of a joint-stock company or the partners of a limited partnership—both of whom we viewed as members of their relevant entities. See Carden, 494 U. S., at 192–196; see also §8–705(a) (linking the term “beneficial interests” with “membership interests” and “partnership interests”). We therefore conclude that for purposes of diversity jurisdiction, Americold’s members include its shareholders.
Justice Sotomayor concluded by recognizing—but rejecting—the argument that the citizenship of an unincorporated entity should be determined the same way as a corporation:
We also decline an amicus’ invitation to apply the same rule to an unincorporated entity that applies to a corporation—namely, to consider it a citizen only of its State of establishment and its principal place of business. See Brief for National Association of Real Estate Investment Trusts 11–21. When we last examined the “doctrinal wall” between corporate and unincorporated entities in 1990, we saw no reason to tear it down. Carden, 494 U. S., at 190. Then as now we reaffirm that it is up to Congress if it wishes to incorporate other entities into 28 U. S. C. §1332(c)’s special jurisdictional rule.
Monday, January 25, 2016
SCOTUS Decision in Montgomery v. Louisiana: Supreme Court Jurisdiction, State Courts, and Retroactivity
Today the Supreme Court issued a 6-3 decision in Montgomery v. Louisiana, which involves the retroactive effect of the Supreme Court’s 2012 decision in Miller v. Alabama (where the Court prohibited mandatory sentences of life without the possibility of parole for juveniles).
The case presented both an interesting question of Supreme Court jurisdiction in the context of state collateral review proceedings, and the perennial federal courts challenge of when a new constitutional right applies retroactively. The majority opinion authored by Justice Kennedy (joined by Chief Justice Roberts and Justices Ginsburg, Breyer, Kagan & Sotomayor) concluded:
(1) The Supreme Court had jurisdiction to review a state court’s failure to recognize, in the context of state collateral review, a federal constitutional right that applies retroactively;
(2) Miller did announce “a substantive rule of constitutional law” that applies retroactively; and
(3) A state may remedy a Miller violation by extending parole eligibility to juvenile offenders.
The three dissenters were Justices Scalia, Thomas, and Alito, who disagreed both on jurisdiction and on the merits. Justice Scalia wrote a dissenting opinion that was joined by both Thomas and Alito, and Justice Thomas wrote a separate dissent as well.
Check out Lyle Denniston’s analysis on SCOTUSblog.
Wednesday, January 20, 2016
The Supreme Court issued its decision today in Campbell-Ewald Co. v. Gomez, a closely watched case on class actions, Article III, and mootness (covered earlier here and here). Justice Ginsburg’s majority opinion begins:
Is an unaccepted offer to satisfy the named plaintiff ’s individual claim sufficient to render a case moot when the complaint seeks relief on behalf of the plaintiff and a class of persons similarly situated? This question, on which Courts of Appeals have divided, was reserved in Genesis HealthCare Corp. v. Symczyk, 569 U. S. ___, ___, ___, n. 4 (2013) (slip op., at 5, 6, n. 4). We hold today, in accord with Rule 68 of the Federal Rules of Civil Procedure, that an unaccepted settlement offer has no force. Like other unaccepted contract offers, it creates no lasting right or obligation. With the offer off the table, and the defendant’s continuing denial of liability, adversity between the parties persists.
Justice Ginsburg’s opinion is joined by Justices Kennedy, Breyer, Sotomayor, and Kagan. Justice Thomas adds a sixth vote, but writes a separate concurring opinion. Chief Justice Roberts writes a dissenting opinion, joined by Justices Scalia and Alito, and Justice Alito writes a dissenting opinion as well.
Friday, January 15, 2016
Whether a federal court of appeals has jurisdiction under both Article III and 28 U.S.C. § 1291 to review an order denying class certification after the named plaintiffs voluntarily dismiss their individual claims with prejudice.
You can find all the cert-stage briefing—and follow the merits briefs as they come in—at SCOTUSblog.
Tuesday, January 12, 2016
The Ninth Circuit yesterday overturned an order to seal court records in a case involving an alleged automobile safety defect. The Center for Auto Safety v. Chrysler Group, LLC, No. 15-55084 (9th Cir. Jan. 11, 2016).
From the summary prepared by the court’s staff:
The panel vacated the district court’s order denying The Center for Auto Safety’s motions to intervene and unseal documents filed to support and oppose a motion for preliminary injunction in a putative class action between Chrysler Group, LLC and certain named plaintiffs, and remanded for further proceedings.
. . .
The panel presumed that the instant motion for preliminary injunction was technically nondispositive. The panel held that public access to filed motions and their attachments did not depend on whether the motion was technically “dispositive;” but rather, public access turned on whether the motion was more than tangentially related to the merits of the case. The panel concluded that plaintiffs’ motion for preliminary injunction was more than tangentially related to the merits. The panel remanded for the district court to consider the documents under the compelling reasons standard.
The case is discussed on the Public Justice blog in a post by Jennifer Bennett, who argued the case for the intervenor, The Center for Auto Safety.
Hat tip: Paul Bland, Shawn Shaughnessy
Wednesday, December 16, 2015
An interesting opinion by U.S. District Judge William G. Young:
- provides a definition of “coupons” as used in the Class Action Fairness Act;
- makes sense of the “poorly drafted” CAFA provision regulating attorneys’ fees in so-called coupon settlements; and
- incidentally speculates on the relationship between MDL case assignment, the potential loss of judgeships in a district, and the strictness of a district judge’s scrutiny of attorneys’ fees in class action settlements.
Tyler v. Michaels Stores, Inc., No. CV 11-10920-WGY, 2015 WL 8484421 (D. Mass. Dec. 9, 2015).
This class action, based on Massachusetts consumer law, alleged that Michaels “asked customers for their zip codes as part of credit card transactions to reverse engineer those customers' addresses using commercially available databases, and then used those addresses to carry out aggressive and unwanted marketing campaigns.” [Internal quotation marks omitted.] After Michaels moved to dismiss, the federal court certified legal questions to the Supreme Judicial Court of Massachusetts, which held plaintiffs’ allegations sufficient under state law.
After discovery, the parties settled and the court approved the settlement, reserving a ruling on class counsel’s request for fees. Under the settlement, class members were to receive a $10.00 or $25.00 “voucher” to be used on any merchandise in Michaels’ physical stores, with certain restrictions on use. The face value of the vouchers was $418,000.00. The value of the vouchers actually redeemed by class members was $138,620.00.
Class counsel requested fees and costs of $425,000.00, asserting that Massachusetts law, not CAFA, governed the fees request because the vouchers were not “coupons” as used in CAFA, 28 U.S.C. § 1712, which applies to settlements that “provide for a recovery of coupons to a class member.” Surprisingly, CAFA does not define “coupon.” Surveying other cases, the Court “essay[ed] such a definition: when class members must transact business with the defendant to obtain the benefit of the settlement, the settlement ‘provides for a recovery of coupons’ under section 1712. In other words, coupons must be redeemed; conversely, if an award must be redeemed, it is a coupon.” Under that definition, the Michaels vouchers were coupons, and section 1712 applied to the fees request.
That didn’t settle the matter, however, because section 1712 is bewilderingly drafted. (I won’t reprint it here: just read subsections (a), (b), and (c), if you dare, and see if you can decipher them.) Again after surveying other cases, the Court held that even in a coupon-only settlement, section 1712 “vests the Court with the discretion to choose between using a percentage-of-coupons-redeemed method, or the lodestar method.”
Here, the Court chose the lodestar method (attorney hours worked times hourly fee) for two reasons: “[f]irst, class counsel vindicated the important public policy goals of Massachusetts' consumer protection statute,” and “[s]econd, and most importantly, they obtained binding precedent from the Supreme Judicial Court that will influence conduct far beyond that of Michaels.” However, the Court warned:
Given the hostility to disproportionately large fee awards to class counsel evident in the legislative history -- at least insofar as fees generated from obtaining coupon settlements were concerned -- counsel may reasonably expect that this Court will generally award attorneys' fees based on a percentage of the actual value of the coupons redeemed by class members, absent the groundbreaking nature of this case.
The Court found that the requested hourly fee of $650.00 for partners was unreasonable, and cut it to $350.00. This yielded a lodestar of $312,895.00 in attorneys’ fees, which was awarded along with $14,005.30 in costs.
In other words, the fees award, even though reduced from what was requested, still ended up being more than twice as much as the value of the vouchers actually redeemed by class members. Personally, I have no problem with that: in my opinion, the primary purpose of the consumer class action is not to compensate the plaintiff class, but to hold the defendant accountable for violating the law. Others obviously disagree.
Here’s where the Court’s two-page footnote 29 comes in. The Court’s point appears to be this: at least one pro-business advocacy group has argued to the Judicial Panel on Multidistrict Litigation that the Panel’s decision where to send an MDL should “rest on a district judge’s strict scrutiny of claims for attorneys’ fees in class action settlements.” In other words, business interests have argued that the more strictly a district judge scrutinizes fees requests, the more that judge should be favored as the transferee court in an MDL. But why should judges want to be the transferee court in an MDL? Because all of those transferred cases will now be counted as part of that judge’s, and that district’s, civil caseload. (When a civil case is filed in one district, and transferred to another district for whatever reason, including MDL, it is counted as a filing in both the transferor and the transferee court. So, for example, if the Panel transfers 5,000 MDL cases to another district, the transferee district gets 5,000 cases added to its total filings.) This accrual of cases “tend[s] to immunize that court against the potential loss of a judgeship,” because recommendations by the Judicial Conference to add or subtract authorized district court judgeships are based in part on the number of case filings that district has.
So the Court in Tyler candidly “confess[ed] that, when awarding attorneys' fees in this case, it contemplated -- but rejected as wholly inappropriate -- an additional consideration: the views of the Judicial Panel on Multidistrict Litigation.”
Monday, December 14, 2015
SCOTUS Decision in DIRECTV v. Imburgia: Federal Arbitration Act Overrides State Contract Law (Again)
Today the Supreme Court issued its decision in DIRECTV, Inc. v. Imburgia. The vote was 6-3, with Justice Breyer writing the majority opinion. Justice Thomas writes a dissenting opinion, and Justice Ginsburg writes a dissenting opinion joined by Justice Sotomayor.
As covered earlier here and here, Imburgia is another case involving the Federal Arbitration Act (FAA). The particular issue is whether the FAA allows California to construe an arbitration provision referring to California state law (the “law of your state”) to mean state law as it existed prior to the U.S. Supreme Court invalidating certain aspects of California contract law in its 2011 decision in AT&T Mobility LLC v. Concepcion. That was how the California Court of Appeal construed the arbitration agreement in Imburgia, but Justice Breyer’s majority opinion disagrees, concluding instead that such a construction itself violates the FAA by failing to “place arbitration contracts on equal footing with all other contracts.”
Tuesday, December 1, 2015
Today the Supreme Court issued its first opinion in an argued case this Term: OBB Personenverkehr AG v. Sachs. In an opinion by Chief Justice Roberts, the Court unanimously held that a lawsuit against the Austrian state-owned railway was barred by Foreign Sovereign Immunities Act. From the opinion:
Respondent Carol Sachs is a resident of California who purchased in the United States a Eurail pass for rail travel in Europe. She suffered traumatic personal injuries when she fell onto the tracks at the Innsbruck, Austria, train station while attempting to board a train operated by the Austrian state-owned railway. She sued the railway in Federal District Court, arguing that her suit was not barred by sovereign immunity because it is “based upon” the railway’s sale of the pass to her in the United States. We disagree and conclude that her action is instead “based upon” the railway’s conduct in Innsbruck. We therefore hold that her suit falls outside the commercial activity exception and is barred by sovereign immunity.
Our earlier coverage is here.
Tuesday, November 10, 2015
The Supreme Court heard oral argument today in Tyson Foods, Inc. v. Bouaphakeo, which presents the questions:
(I) Whether differences among individual class members may be ignored and a class action certified under Federal Rule of Civil Procedure 23(b)(3), or a collective action certified under the Fair Labor Standards Act, where liability and damages will be determined with statistical techniques that presume all class members are identical to the average observed in a sample.
(II) Whether a class action may be certified or maintained under Rule 23(b)(3), or a collective action certified or maintained under the Fair Labor Standards Act, when the class contains hundreds of members who were not injured and have no legal right to any damages.
Monday, November 2, 2015
The Supreme Court hears oral argument today in Spokeo, Inc. v. Robins, which presents the question:
Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute.
For our earlier coverage, see here, here, and here. You should also check out Amy Howe’s preview of the argument for SCOTUSblog and the Vanderbilt Law Review’s En Banc Roundtable on the case, available here.
UPDATE: The transcript of the oral argument has now been posted.
Saturday, October 17, 2015
Mark Leyse filed a putative class action against Bank of America after a telemarketer seeking to advertise BoA’s credit cards left a message on the landline shared by Leyse and his roommate. The message allegedly violated the Telephone Consumer Protection Act of 1991, 47 U.S.C. § 227(b)(1)(B), which prohibits any person from “initiat[ing] any telephone call to any residential telephone line using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party, unless the call is initiated for emergency purposes or is exempted by rule or order by the [Federal Communications] Commission.”
Bank of America filed an initial Rule 12(b)(6) motion to dismiss on grounds of collateral estoppel. The district court agreed, but the Third Circuit reversed.
Bank of America then filed a second 12(b)(6) motion to dismiss on the ground that Leyse lacked statutory standing to sue because his roommate, not he, is the telephone subscriber “and intended recipient of the call, as the number was associated with [his roommate’s] name in the telemarketing company’s records.” Again, the district court dismissed, and the Third Circuit reversed.
The court first held that it was error for the district court to have considered BoA’s second 12(b)(6) motion. A dismissal for lack of statutory standing is not jurisdictional, but “is effectively the same as a dismissal for failure to state a claim” pursuant to Rule 12(b)(6). Rule 12(h)(2) provides that a second motion to dismiss for failure to state a claim “may be raised (A) in any pleading allowed or ordered under Rule 7(a); (B) by a motion under Rule 12(c); or (C) at trial” – none of which had occurred. However, the court held that the error did not require reversal:
A district court’s decision to consider a successive Rule 12(b)(6) motion to dismiss is usually harmless, even if it technically violates Rule 12(g)(2). So long as the district court accepts all of the allegations in the complaint as true, the result is the same as if the defendant had filed an answer admitting these allegations and then filed a Rule 12(c) motion for judgment on the pleadings, which Rule 12(h)(2)(B) expressly permits.
Thus, the court continued to the merits of the motion. The TCPA “was intended to combat, among other things, the proliferation of automated telemarketing calls (known as “robocalls”) to private residences, which Congress viewed as a nuisance and an invasion of privacy.”
As was forcefully stated by Senator Hollings, the Act’s sponsor, “Computerized calls are the scourge of modern civilization. They wake us up in the morning; they interrupt our dinner at night; they force the sick and elderly out of bed; they hound us until we want to rip the telephone right out of the wall.”
Accordingly, the Act “provides that a ‘person or entity’ may bring an action to enjoin violations of the statute and recover actual damages or $500 in statutory damages per violation.”
Noting a split among courts in interpreting the statutory standing to sue under this section, the Third Circuit found that Leyse fell “within the class of plaintiffs Congress has authorized to sue.”
[I]t is clear that the Act’s zone of interests encompasses more than just the intended recipients of prerecorded telemarketing calls. It is the actual recipient, intended or not, who suffers the nuisance and invasion of privacy. This does not mean that all those within earshot of an unwanted robocall are entitled to make a federal case out of it. Congress’s repeated references to privacy convince us that a mere houseguest or visitor who picks up the phone would likely fall outside the protected zone of interests. On the other hand, a regular user of the phone line who occupies the residence being called undoubtedly has the sort of interest in privacy, peace, and quiet that Congress intended to protect.
Leyse v. Bank of America Nat'l Ass'n, No. 14-4073 (3d Cir. Oct. 14, 2015).
Wednesday, October 14, 2015
Thursday, October 1, 2015
Today the Supreme Court issued its much-anticipated order list from the end-of-summer “long conference.” It granted certiorari in a few cases that folks interested in civil procedure and federal courts will want to keep an eye on:
Bank Markazi v. Peterson (No. 14-770), from the Second Circuit, is a separation-of-powers challenge to a congressional statute involving the execution of a judgment against bonds held by the Central Bank of Iran. Here is the question presented by the petitioner:
This case concerns nearly $2 billion of bonds in which Bank Markazi, the Central Bank of Iran, held an interest in Europe as part of its foreign currency reserves. Plaintiffs, who hold default judgments against Iran, tried to seize the assets. While the case was pending, Congress enacted § 502 of the Iran Threat Reduction and Syria Human Rights Act of 2012, 22 U.S.C. § 8772. By its terms, that statute applies only to this one case: to “the financial assets that are identified in and the subject of proceedings in the United States District Court for the Southern District of New York in Peterson et al. v. Islamic Republic of Iran et al., Case No. 10 Civ. 4518 (BSJ) (GWG).” Id. § 8772(b). “In order to ensure that Iran is held accountable for paying the judgments,” it provides that, notwithstanding any other state or federal law, the assets “shall be subject to execution” upon only two findings—essentially, that Bank Markazi has a beneficial interest in them and that no one else does. Id. § 8772(a)(1), (2). The question presented is:
Whether § 8772—a statute that effectively directs a particular result in a single pending case—violates the separation of powers.
Americold Logistics, LLC v. ConAgra Foods, Inc. (No. 14-1382), from the Tenth Circuit, involves how to determine the citizenship of a trust for purposes of diversity jurisdiction:
Petitioners Americold Logistics, LLC and Americold Realty Trust – a corporation and real estate investment trust, respectively – removed a case from Kansas state court to the United States District Court for the District of Kansas, asserting the parties were diverse. No party challenged the removal, and the District Court ruled on the merits of that litigation without addressing any issue relating to diversity jurisdiction. Likewise, neither party raised any jurisdictional challenge on appeal to the Tenth Circuit Court of Appeals.
The Tenth Circuit, however, sua sponte queried whether there was full diversity of citizenship among the parties. In particular, the judges challenged whether the citizenship of Americold Realty Trust, a business trust, should be determined by reference to its trustees’ citizenship, or instead by reference to some broader set of factors. This issue has deeply split courts across the country. Joining the minority of courts, the Tenth Circuit held the jurisdictional inquiry extends, at a minimum, to the citizenship of a trust’s beneficiaries in addition to its trustees’ citizenship. In this case, doing so destroyed diversity of citizenship among the parties.
The question presented by this petition is: Whether the Tenth Circuit wrongly deepened a pervasive circuit split among the federal circuits regarding whether the citizenship of a trust for purposes of diversity jurisdiction is based on the citizenship of the controlling trustees, the trust beneficiaries, or some combination of both.
MHN Government Services, Inc. v. Zaborowski (No. 14-1458), from the Ninth Circuit, is another case involving the relationship between the Federal Arbitration Act and state contract law. Here is the question presented by the petitioners:
The Federal Arbitration Act (“FAA”) provides that an arbitration agreement shall be enforced “save upon such grounds as exist at law or in equity for the revocation of any contract,” 9 U.S.C. § 2. California law applies one rule of contract severability to contracts in general, and a separate rule of contract severability to agreements to arbitrate. The arbitration-only rule disfavors arbitration and applies even when the agreement contains an express severability clause. Its application in this case conflicts with binding precedent of this Court and with opinions of four other courts of appeals.
The question presented is whether California’s arbitration-only severability rule is preempted by the FAA.
You can find coverage of today’s cert. grants from SCOTUSblog’s Lyle Denniston here.
Friday, September 4, 2015
The Third Circuit has held that a plaintiff may survive a facial attack on diversity jurisdiction in a suit against an LLC without specifically alleging the state of citizenship of each member of the LLC. Lincoln Benefit Life Co. v. AEI Life, LLC, No. 14-2660 (3d Cir. Sept. 2, 2015). The plaintiff life insurance company (incorporated and with its principal place of business in Nebraska) sought a declaratory judgment voiding two policies that it alleged were procured by fraud. Among the defendants were two LLCs.
An LLC’s citizenship for purposes of diversity jurisdiction is determined by the citizenship of its members. Not able to ascertain the citizenship of these two LLCs’ members through publicly-available sources, the plaintiff alleged “upon information and belief” that the two defendants were citizens of New York and New Jersey, respectively, based on their mailing addresses.
The defendants moved to dismiss for lack of subject matter jurisdiction, arguing that plaintiff was required to allege the citizenship of each member of the LLC defendants. The district court granted the motion to dismiss and denied plaintiff’s request for jurisdictional discovery.
The Third Circuit reversed. It distinguished between a facial attack and a factual attack when made in a 12(b)(1) motion: “A facial attack ‘concerns an alleged pleading deficiency’ whereas a factual attack concerns ‘the actual failure of [a plaintiff’s] claims to comport [factually] with the jurisdictional prerequisites.’” (some internal quotation marks omitted)
The defendants here had mounted a “facial challenge to the adequacy of the jurisdictional allegations in [the] complaint.” None of the defendants had actually alleged that it was a citizen of Nebraska (which would have destroyed diversity).
Turning to Rule 8(a)(1), which requires a complaint to make a “short and plain statement of the grounds for the court’s jurisdiction,” the court “found it useful to consider” FRCP Form 7, which illustrates the “simplicity and brevity” of pleading jurisdiction. (Rule 84.) The court recognized that Rule 84 and all the forms would be abrogated as of December 1 absent congressional action, however, and stated that it was not relying on them “in reaching our ultimate conclusion.”
Monday, August 31, 2015
Remember Edwards v. First American Corp., the putative class action under RESPA filed in 2007? The Supreme Court granted cert in 2011 on the issue (as slightly expanded on this blog at the time): “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]?”
After full briefing and oral argument, the Supreme Court issued a one-sentence order in 2012 dismissing the writ as improvidently granted. (Another case, Spokeo v. Robins, is currently pending before the Court for the October 2015 term and supposedly involves somewhat the same issue.)
Anyway, after the Supreme Court dismissed the writ in Edwards, the case trundled along in the district court. Plaintiffs moved for class certification of a “nationwide class consisting of all home buyers who entered into a federally-related mortgage transaction using one of thirty-eight title agencies that sold a minority ownership interest to First American and, in the same transaction, agreed to refer future title insurance business to First American.” The district court denied class certification (again).
The Ninth Circuit just reversed in part (again). First, the court disagreed with the district court’s holding that “individual inquiries were required to determine whether First American overpaid for its ownership interests in each title agency.”
Wednesday, August 19, 2015
A recent Eleventh Circuit opinion is interesting on a number of levels. Glock v. Glock, Inc., No. 14-15701 (11th Cir. Aug. 17, 2015). Helga Glock, the wife of the inventor of the Glock handgun, initiated a proceeding in the United States (under 28 U.S.C. §1782) against the Glock entities to discover documents relating to her divorce proceedings back in Austria. She obtained the documents, subject to a protective order that restricted their use in other proceedings unless she obtained court leave.
About a year and a half later, Helga filed a RICO action against Mr. Glock and the Glock entities in the U.S. She sought and obtained, in the Section 1782 proceeding, the magistrate's permission to use the documents she had obtained in that proceeding in the subsequent RICO action.
The district court reversed, but the Eleventh Circuit upheld the magistrate.
First, the court held that Section 1782 did not prohibit the later use of evidence that had been lawfully obtained in a Section 1782 proceeding, including in subsequent U.S. litigation. Second, the court held that the protective order in Helga’s Section 1782 proceeding had required her to obtain court permission before using the documents in another proceeding, but that she had done that.