Thursday, October 1, 2015

Happy October! SCOTUS Cert Grants of Interest (Bank Markazi; Americold; MHN)

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.


October 1, 2015 in Federal Courts, Recent Decisions, Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0)

Wednesday, September 30, 2015

House Judiciary Committee Hearing on "Fraudulent Joinder Prevention Act"

The House Judiciary Committee held a hearing yesterday on a bill entitled “The Fraudulent Joinder Act of 2015.”  Minority witness, Professor Lonny Hoffman, testified against the bill.

The bill, H.R. 3624, provides:

Section 1447(c) of title 28, United States Code, is amended by adding at the end the following:

“A motion for remand, and any opposition thereto, may include affidavit or other evidence showing a plausible claim for relief against each nondiverse defendant, or the lack thereof, or indicating a good faith intention to prosecute the action against each nondiverse defendant or to seek a joint judgment, or the lack of such a good faith intent. The district court shall deny a motion to remand if it finds that the complaint does not state a plausible claim for relief against a nondiverse defendant under applicable state law or there is no good faith intention to prosecute the action against a nondiverse defendant or to seek a joint judgment.”

Professor Hoffman explains the bill’s effect: “The bill would replace the existing common law fraudulent joinder test with a statutory test that places the burden on the plaintiff to prove that her claims against the non-diverse defendant are ‘plausible’ and brought in ‘good faith.’ Overall, the bill would make proving fraudulent joinder much easier than it is under current law.”

One of the majority witnesses, Elizabeth Milito, Senior Executive Counsel of the National Federation of Independent Business Small Business Legal Center, asserted the need for the bill:

[F]or a small business owner being served with lawsuit generates significant trepidation, disgust, and yes, uncertainty.

Because litigation entails angst and great expense for small businesses, NFIB is pleased to see this Committee’s attention focused on the issue of fraudulent joinder. Fraudulent joinder remains a source of confusion and unnecessary litigation in our courts and impacts far too many innocent small businesses. The situation unfolds as follows: plaintiffs’ attorneys will name a small business – such as a local pharmacy or insurance agent – with little connection to the complaint in order to deny the federal courts of jurisdiction. In many instances, the plaintiff has no intention of imposing liability on the fraudulently joined party. With courts divided over the standard for finding that a defendant is fraudulently joined, the small business is forced to engage in protracted litigation when all they want is to be dismissed from the case entirely.


In opposition to the bill, Professor Hoffman’s introduction summarizes his testimony:

There is no warrant for amending 28 U.S.C. §1447. More than a century old, fraudulent joinder law is well-settled and strikes the proper balance among competing policies in how it evaluates the joinder of non-diverse defendants. With recognition that there are sound reasons for not trying to exhaustively examine the merits of the plaintiff’s claims immediately after removal, courts across the circuits uniformly impose a high burden on the defendant to demonstrate that a non-diverse defendant’s joinder was improper. That burden can only be met if the defendant establishes that the joinder of the diversity-destroying party in the state court action was made without a reasonable basis of proving any liability against that party. By greatly expanding the scope of the fraudulent joinder inquiry, this bill would displace the well-functioning law with wasteful adjudications that district courts are ill-equipped to undertake at the remand stage, burdening the judicial system and raising litigation costs for all parties, especially for plaintiffs on whom this bill imposes the burden of proof. Finally, by requiring that courts resolve merits inquiries that under current law are decided by state courts, the proposed amendments to §1447 raise federalism concerns.

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September 30, 2015 in Current Affairs, Federal Courts, Subject Matter Jurisdiction | Permalink | Comments (0)

Monday, September 14, 2015

Scholars File Amicus Brief in Spokeo Case Supporting Respondent Robins

On September 8, 2015, ten current or former law professors filed their Brief of Restitution and Remedies Scholars as Amici Curiae in Support of Respondent. 


The brief states (at pp. 1-2):


If this Court were to adopt petitioner’s proposed rule — that a plaintiff who suffers no harm beyond the loss of his legal rights has no standing to sue — it could wreak havoc with the law of restitution and unjust enrichment, barring many long-established causes of action from federal courts. This important body of law long predates the American founding and serves essential functions, especially in private law but in parts of public law as well.


These amici take no position on the underlying statutory claim.




Petitioner’s sweeping and ill-defined argument that no plaintiff can have standing without proof of “concrete harm” is aimed at claims for statutory minimum damages. The Court should reject this frontal assault on statutory remedies. But whatever the Court does with respect to statutory damages, it should take care not to inadvertently sweep away much of the law of restitution.


The ten individual amici are Mark P. Gergen, Andrew Kull, Douglas Laycock, Colleen P. Murphy, Phil C. Neal, Doug Rendleman, Caprice Roberts, Chaim Saiman, Emily L. Sherwin, and Michael Traynor.  Nine of the ten amici participated in drafting the Restatement (Third) of Restitution and Unjust Enrichment as Reporter, Adviser, or on the Members Consultative Group.

September 14, 2015 in Standing, Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0)

Friday, September 4, 2015

Court Cites (but Does Not Rely on) FRCP Form 7, Holds Diversity Allegations Sufficient

            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.”

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September 4, 2015 in Recent Decisions, Subject Matter Jurisdiction | Permalink | Comments (0)

Monday, May 18, 2015

SCOTUS Cert Grant on Article III, Mootness, Class Actions & Sovereign Immunity

Today the Supreme Court granted certiorari in Campbell-Ewald Company v. Gomez, which presents the following questions:

1. Whether a case becomes moot, and thus beyond the judicial power of Article III, when the plaintiff receives an offer of complete relief on his claim.

2. Whether the answer to the first question is any different when the plaintiff has asserted a class claim under Federal Rule of Civil Procedure 23, but receives an offer of complete relief before any class is certified.

3. Whether the doctrine of derivative sovereign immunity recognized in Yearsley v. W.A. Ross Construction Co., 309 U.S. 18 (1940), for government contractors is restricted to claims arising out of property damage caused by public works projects.

You can see all of the cert-stage briefing, and keep track of the merits briefs as they come in, at SCOTUSblog.



May 18, 2015 in Class Actions, Federal Courts, Federal Rules of Civil Procedure, Recent Decisions, Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0)

Monday, April 27, 2015

Today’s SCOTUS Cert Grant on Article III Standing: Spokeo v. Robins

The Supreme Court granted certiorari 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.

The Court granted cert. notwithstanding an invited brief from the Solicitor General arguing against review. That brief explained:

The court of appeals held that respondent had established Article III standing to sue petitioner “for publishing inaccurate personal information about [respondent]” because petitioner allegedly had violated respondent’s “statutory rights” protecting his “personal interests in the handling of his credit information.” Pet. App. 1a, 8a. The court below correctly concluded that the publication of such false information is a cognizable Article III injury.

You can find all the cert-stage briefing—and follow the merits briefs as they come in—at SCOTUSblog.



April 27, 2015 in Federal Courts, Recent Decisions, Standing, Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0)

Wednesday, April 22, 2015

SCOTUS Decision in Wong (& June): Equitable Tolling & the Federal Tort Claims Act

Today the Supreme Court issued its decisions in United States v. Wong and United States v. June. As covered earlier, the cases address whether two time limits contained in the Federal Tort Claims Act are subject to equitable tolling. (Although Wong and June were not formally consolidated, the Court explains in footnote 1 that “we address them together because everyone agrees that the core arguments for and against equitable tolling apply equally to both of §2401(b)’s deadlines.”)

It’s a 5-4 split. Once again, the Justices examine—and disagree about—whether a statutory time limitation is “jurisdictional.” Justice Kagan writes the majority opinion, joined by Justices Kennedy, Ginsburg, Breyer and Sotomayor. Here’s the opening paragraph (emphasis added):

The Federal Tort Claims Act (FTCA or Act) provides that a tort claim against the United States “shall be forever barred” unless it is presented to the “appropriate Federal agency within two years after such claim accrues” and then brought to federal court “within six months” after the agency acts on the claim. 28 U. S. C. §2401(b). In each of the two cases we resolve here, the claimant missed one of those deadlines, but requested equitable tolling on the ground that she had a good reason for filing late. The Government responded that §2401(b)’s time limits are not subject to tolling because they are jurisdictional restrictions. Today, we reject the Government’s argument and conclude that courts may toll both of the FTCA’s limitations periods.

Justice Alito writes a dissenting opinion, joined by Chief Justice Roberts and Justices Scalia and Thomas. He argues that these limitations are jurisdictional and create an “absolute bar” that “is not subject to equitable tolling.”



April 22, 2015 in Recent Decisions, Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0)

Monday, February 23, 2015

Dodge on International Comity

Bill Dodge has posted on SSRN a draft of his article, International Comity in American Law, which will be published in the Columbia Law Review. Here’s the abstract:

International comity is one of the principal foundations of U.S. foreign relations law. The doctrines of American law that mediate the relationship between the U.S. legal system and those of other nations are nearly all manifestations of international comity — from the conflict of laws to the presumption against extraterritoriality; from the recognition of foreign judgments to doctrines limiting adjudicative jurisdiction in international cases; and from a foreign government’s privilege of bringing suit in the U.S. courts to the doctrines of foreign sovereign immunity. Yet international comity remains poorly understood. This article provides the first comprehensive account of international comity in American law. It has three goals: (1) to offer a better definition of international comity and an analytic framework for thinking about its manifestations in American law; (2) to explain the relationship between international comity and international law; and (3) to challenge two widespread myths — that international comity doctrines must take the form of standards rather than rules and that international comity determinations should be left to the executive branch. I show that international comity doctrines are frequently expressed as rules rather than standards, and that courts are usually in a better position to apply them than the executive branch.




February 23, 2015 in Federal Courts, International Courts, International/Comparative Law, Recent Scholarship, Subject Matter Jurisdiction | Permalink | Comments (0)

Friday, February 13, 2015

Ohio Supreme Court Decision on Standing & Jurisdiction

I have a guest post over at Legally Speaking Ohio about an interesting Ohio Supreme Court case on standing and jurisdiction. The decision is Bank of America v. Kuchta, which Marianna Bettman aptly called “a field day for civil procedure geeks.”



February 13, 2015 in Adam Steinman, Recent Decisions, Standing, State Courts, Subject Matter Jurisdiction, Weblogs | Permalink | Comments (0)

Monday, December 15, 2014

SCOTUS Decision in Dart Cherokee: What Must a Notice of Removal Contain? (And More!)

Today the Supreme Court issued a 5-4 decision in Dart Cherokee Basin Operating Co. v. Owens. It’s an interesting breakdown. Justice Ginsburg writes the majority opinion, joined by Roberts, Breyer, Alito, and Sotomayor. The dissenters are Scalia, Kennedy, Thomas, and Kagan. 

The question presented in Dart Cherokee involves what a party must include in a notice of removal. The answer, from Justice Ginsburg’s majority opinion:

To assert the amount in controversy adequately in the removal notice, does it suffice to allege the requisite amount plausibly, or must the defendant incorporate into the notice of removal evidence supporting the allegation? That is the single question argued here and below by the parties and the issue on which we granted review. The answer, we hold, is supplied by the removal statute itself. A statement “short and plain” need not contain evidentiary submissions.

And later:

In sum, as specified in §1446(a), a defendant’s notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. Evidence establishing the amount is required by §1446(c)(2)(B) only when the plaintiff contests, or the court questions, the defendant’s allegation.

The dissenters in Dart Cherokee don’t challenge the majority on this. The cause of the disagreement, rather, is an issue that received considerable attention during the oral argument—one that was first flagged by Public Citizen in an amicus brief questioning the proper standard of review and the extent to which the Supreme Court could review a Court of Appeals’ decision to deny permission to appeal under the Class Action Fairness Act (CAFA). Review of the Tenth Circuit’s decision was complicated by the fact that it issued only a short order that failed to explain why it denied permission to appeal the district court’s remand order.

Justice Ginsburg finds that these concerns did not prevent Supreme Court review in this case, noting that “[t]he case was ‘in’ the Court of Appeals because of Dart’s leave-to-appeal application, and we have jurisdiction to review what the Court of Appeals did with that application. See 28 U. S. C. §1254; Hohn v. United States, 524 U. S. 236, 248 (1998),” and that “[t]here are many signals that the Tenth Circuit relied on the legally erroneous premise that the District Court’s decision was correct” in denying permission to appeal. In remanding the case, however, Justice Ginsburg notes that “[o]ur disposition does not preclude the Tenth Circuit from asserting and explaining on remand that a permissible ground underlies its decision to decline Dart’s appeal.”

Justice Scalia writes the dissenting opinion, arguing that the Court should have dismissed the writ as improvidently granted.

“Because we are reviewing the Tenth Circuit’s judgment, the only question before us is whether the Tenth Circuit abused its discretion in denying Dart permission to appeal the District Court’s remand order. Once we found out that the issue presented differed from the issue we granted certiorari to review, the responsible course would have been to confess error and to dismiss the case as improvidently granted.”

The most amusing part of the Dart Cherokee decision comes in Justice Scalia’s dissent, where he responds to Justice Ginsburg’s observation that a 2013 case, Standard Fire v. Knowles, came to the Court in a similar posture, yet Justice Scalia joined that decision without raising these concerns. Justice Scalia writes:

As for my own culpability in overlooking the issue, I must accept that and will take it with me to the grave. But its irrelevance to my vote in the present case has been well expressed by Justice Jackson, in a passage quoted by the author of today’s opinion: “I see no reason why I should be consciously wrong today because I was uncon­sciously wrong yesterday.” Massachusetts v. United States, 333 U. S. 611, 639–640 (1948) (dissenting opinion), quoted in Burwell v. Hobby Lobby Stores, Inc., 573 U. S. ___, ___, n. 11 (2014) (slip op., at 12, n. 11) (GINSBURG J., dissenting).

Finally, it’s worth noting that Justice Thomas does not join the final sentence of Justice Scalia’s dissenting opinion, where Justice Scalia writes that he would vote “to affirm” the Tenth Circuit if the writ were not dismissed as improvidently granted. This is because, as Justice Thomas explains in a separate dissenting opinion, he believes that the Supreme Court lacks jurisdiction even to review the Tenth Circuit’s decision under 28 U.S.C. § 1254. 




December 15, 2014 in Federal Courts, Recent Decisions, Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0)

Thursday, December 11, 2014

Mulligan on Preis on the Relationship Between Federal Causes of Action, Rights, Remedies, and Jurisdiction

Now available on the Courts Law section of JOTWELL is an essay by Lou Mulligan entitled Federal Causes of Action and Everything that Follows.

Lou reviews a recent article by Jack Preis, How Federal Causes of Action Relate to Rights, Remedies and Jurisdiction, which is forthcoming in the Florida Law Review.



December 11, 2014 in Federal Courts, Recent Scholarship, Subject Matter Jurisdiction, Weblogs | Permalink | Comments (0)

Friday, December 5, 2014

Standing & SCOTUS

A couple of interesting posts this week about standing issues in some high-profile pending and perhaps-soon-to-be-once-again-pending Supreme Court cases:



December 5, 2014 in Federal Courts, Standing, Subject Matter Jurisdiction, Supreme Court Cases, Weblogs | Permalink | Comments (0)

Tuesday, October 14, 2014

Standing, Subject Matter Jurisdiction, and Rule 60(b)

The Supreme Court of Ohio issued an interesting decision last week involving standing, subject matter jurisdiction, and whether they can be challenged via Ohio Rule 60(b) after the opportunity for a direct appeal has passed. The case is Bank of America, N.A. v. Kutcha.

Marianna Bettman has an analysis of the opinion, calling it a “Field Day for Civil Procedure Geeks.”



October 14, 2014 in Recent Decisions, Standing, State Courts, Subject Matter Jurisdiction | Permalink | Comments (0)

Thursday, October 9, 2014

GSK Loses Its Bid to Re-Remove

We've been following the diversity-jurisdiction saga of a GlaxoSmithKline holding company ("GSK").  Last year in Johnson v. SmithKline Beecham Corp., No. 12-2561 (3d Cir. June 7, 2013), the Third Circuit ruled that GSK's ten-by-ten foot subleased office in Delaware makes Delaware its principal place of business and thus a Delaware citizen for diversity purposes.

Since then, GSK has tried to use its newfound Delaware citizenship to forum-shop in several other diversity cases.  Before Johnson, GSK had removed one of these cases, A.S. v. SmithKlineBeecham Corp. d/b/a GlaxoSmithKline, a personal injury case alleging that GSK's drug Paxil caused birth defects, from Pennsylvania state court.  The district court remanded the case in 2012, holding that GSK was a Pennsylvania citizen.  After Johnson held in 2013 that GSK was a Delaware citizen, GSK removed the case a second time.  This time, the district court denied plaintiffs' motion to remand.

On an interlocutory appeal by permission, the Third Circuit reversed and remanded with instructions to remand to Pennsylvania state court.  The court held that the second removal was untimely under 28 U.S.C. §1446(b), both because it was filed more than 30 days after GSK's receipt of the complaint, and because in a diversity case, removal may not occur more than one year after the commencement of the action.  The court rejected both equitable tolling of the time period and the notion that the second notice of removal "related back" to the first notice of removal.  A.S. v. SmithKline Beecham Corp. d/b/a GlaxoSmithKline, No. 14-1229 (3d Cir. Oct. 9, 2014).

Hat tip: Howard Bashman of the How Appealing blog, who argued the successful appeal for the plaintiffs.

October 9, 2014 in Recent Decisions, Subject Matter Jurisdiction | Permalink | Comments (0)

Thursday, September 11, 2014

Third Circuit Oral Argument Held in GlaxoSmithKline Diversity Case

We've been following GlaxoSmithKline's re-removal, more than 12 months after filing, of several personal injury cases after the Third Circuit held that a ten-by-ten foot subleased office made Delaware the principal place of business of a GlaxoSmithKline holding company.  (See here and here.)

The Third Circuit, which previously allowed an interlocutory appeal, held oral argument in the case yesterday.  Howard Bashman, of the How Appealing blog, argued for the plaintiffs in the case.

Hat tip: Howard Bashman


September 11, 2014 in Subject Matter Jurisdiction | Permalink | Comments (0)

Saturday, August 2, 2014

No Federal Jurisdiction Over Deceptive Marketing Claims Against Credit Card Companies

From the summary prepared by court staff of the Ninth Circuit:

Reversing the district court’s denial of a motion for a remand to state court, the panel held that neither the federal question statute nor the Class Action Fairness Act provided the district court with subject matter jurisdiction over the Hawaii Attorney General’s complaints against six credit card providers, alleging that each violated state law by deceptively marketing and improperly enrolling cardholders in add-on credit card products.

Joining the Fifth Circuit, the panel held that the Attorney General’s claims were not preempted by National Bank Act provisions completely preempting state law claims challenging interest rates charged by national banks. . . . [T]he complaints’ state law claims were not preempted because they did not challenge the “rate of interest” that the card providers charged. Instead, . . . the complaints’ unfair and deceptive practice claims targeted alleged marketing misrepresentations, and their unjust enrichment claims arose from the purported failure to obtain consent before enrolling consumers in debt protection products.

Agreeing with the Second, Third, and Fourth Circuits, the panel held that CAFA did not provide an alternate basis for jurisdiction because the Attorney General brought civil enforcement actions or common law parens patriae suits, rather than class actions, and the complaints specifically disclaimed class status.

State of Hawaii ex rel. Louie v. HSBC Bank Nevada, N.A., No. 1:12-cv-00266-LEKKSC (Aug. 1, 2014).

August 2, 2014 in Class Actions, Recent Decisions, Subject Matter Jurisdiction | Permalink | Comments (0)

Wednesday, July 23, 2014

Article III Standing and Yesterday's ACA Decisions (Halbig & King)

By now most folks have seen yesterday’s conflicting rulings over whether the Affordable Care Act authorizes subsidies for individuals who purchase insurance on a federal exchange (as opposed to exchanges run by the states). The D.C. Circuit found that such subsidies were not statutorily authorized (the Halbig case). And an hour later, the Fourth Circuit found that the subsidies were statutorily authorized (the King case).

The merits of these decisions, as a practical matter and in terms of statutory interpretation, have received tremendous attention. But Article III standing was also an issue in both Halbig and King. Who, after all, suffers the constitutionally required “injury in fact” by virtue of receiving a subsidy? The answer: People who would be subject to the individual mandate if they are entitled to the subsidy but would not be subject to the individual mandate (on income grounds) without the subsidy. Here’s how the Halbig majority explained it with respect to one of the plaintiffs in that case, David Klemencic:

Klemencic resides in West Virginia, a state that did not establish its own Exchange, and expects to earn approximately $20,000 this year. He avers that he does not wish to purchase health insurance and that, but for federal credits, he would be exempt from the individual mandate because the unsubsidized cost of coverage would exceed eight percent of his income. The availability of credits on West Virginia’s federal Exchange therefore confronts Klemencic with a choice he’d rather avoid: purchase health insurance at a subsidized cost of less than $21 per year or pay a somewhat greater tax penalty.

The D.C. Circuit found that this was sufficient for purposes of Article III standing, and the Fourth Circuit reached the same conclusion. From the Halbig majority opinion (footnote omitted):

The government characterizes Klemencic’s injury as purely ideological and hence neither concrete nor particularized. But, although Klemencic admits to being at least partly motivated by opposition to “government handouts,” he has established that, by making subsidies available in West Virginia, the IRS Rule will have quantifiable economic consequences particular to him. See Clapper v. Amnesty Int’l USA, 133 S. Ct. 1138, 1147 (2013) (explaining that a “threatened injury” that is “certainly impending” may “constitute injury in fact” (emphasis and internal quotation marks omitted)). Those consequences may be small, but even an “‘identifiable trifle’” of harm may establish standing. Chevron Natural Gas v. FERC, 199 F. App’x 2, 4 (D.C. Cir. 2006) (quoting United States v. Students Challenging Regulatory Agency Procedures, 412 U.S. 669, 689 n.14 (1973)); see Bob Jones Univ. v. United States, 461 U.S. 574, 581-82 (1983) (noting that Bob Jones University sued for a tax refund of $21.00). Klemencic thus satisfies the requirement of establishing an injury in fact, and because that injury is traceable to the IRS Rule and redressable through a judicial decision invalidating the rule, we find that he has standing to challenge the rule.

And from the King opinion:

We agree that this represents a concrete economic injury that is directly traceable to the IRS Rule. The IRS Rule forces the plaintiffs to purchase a product they otherwise would not, at an expense to them, or to pay the tax penalty for failing to comply with the individual mandate, also subjecting them to some financial cost. Although it is counterintuitive, the tax credits, working in tandem with the Act’s individual mandate, impose a financial burden on the plaintiffs.

The defendants’ argument against standing is premised on the claim that the plaintiffs want to purchase “catastrophic” insurance coverage, which in some cases is more expensive than subsidized comprehensive coverage required by the Act. The defendants thus claim that the plaintiffs have acknowledged they would actually expend more money on a separate policy even if they were eligible for the credits. Regardless of the viability of this argument, it rests on an incorrect premise. The defendants misread the plaintiffs’ complaint, which, while mentioning the possibility that several of the plaintiffs wish to purchase catastrophic coverage, also clearly alleges that each plaintiff does not want to buy comprehensive, ACA-compliant coverage and is harmed by having to do so or pay a penalty. The harm in this case is having to choose between ACA-compliant coverage and the penalty, both of which represent a financial cost to the plaintiffs. That harm is actual or imminent, and is directly traceable to the IRS Rule.



July 23, 2014 in Current Affairs, Federal Courts, Recent Decisions, Standing, Subject Matter Jurisdiction | Permalink | Comments (0)

Tuesday, July 1, 2014

Abu Ghraib Prisoners' Claim Allowed Under Alien Tort Statute

The opinion by Judge Keenan in Al Shimari v. CACI Premier Technology, Inc., No. 13-1937 (4th Cir. June 30, 2014) sums it up:

In this appeal, we consider whether a federal district court has subject matter jurisdiction to consider certain civil claims seeking damages against an American corporation for the torture and mistreatment of foreign nationals at the Abu Ghraib prison in Iraq.  The primary issue on appeal concerns whether the Alien Tort Statute, 28 U.S.C. § 1350, as interpreted by the Supreme Court in Kiobel v. Royal Dutch Petroleum Co., 133 S. Ct. 1659 (2013), provides a jurisdictional basis for the plaintiffs’ alleged violations of international law, despite the presumption against extraterritorial application of acts of Congress.  We also address the defendants’ contention that the case presents a “political question” that is inappropriate for judicial resolution under our decision in Taylor v. Kellogg Brown & Root Services, Inc., 658 F.3d 402 (4th Cir. 2011). 

We conclude that the Supreme Court’s decision in Kiobel does not foreclose the plaintiffs’ claims under the Alien Tort Statute, and that the district court erred in reaching a contrary conclusion. Upon applying the fact-based inquiry articulated by the Supreme Court in Kiobel, we hold that the  plaintiffs’ claims “touch and concern” the territory of the United States with sufficient force to displace the presumption against extraterritorial application of the Alien Tort Statute.  See Kiobel, 133 S. Ct. at 1669. However, we are unable to determine from the present record whether the claims before us present nonjusticiable political questions.  Therefore, we do not reach the additional issue of the district court’s dismissal of the plaintiffs’ common law claims, and we vacate the district court’s judgment with respect to all the plaintiffs’ claims and remand the case to the district court. We direct that the district court undertake factual development of the record and analyze its subject matter jurisdiction in light of our decision in Taylor and the principles expressed in this opinion.

Congratulations to Civil Procedure Professors Erwin Chemerinsky, Helen Hershkoff, Allan Paul Ides, Stephen I. Vladeck, and Howard M. Wasserman, who submitted an amicus brief on behalf of the plaintiffs-appellants. 

July 1, 2014 in International/Comparative Law, Recent Decisions, Subject Matter Jurisdiction | Permalink | Comments (0)

Tuesday, June 3, 2014

Appeals Court Lacks Jurisdiction Over District Court's Third Order Remanding to State Court

            Some people really, really want to be in federal court instead of state court.  In Arnold Crossroads v. Gander Mountain, No. 13-2020 (8th Cir. Jun. 2, 2014), defendant Gander tried and failed to remove the case three times.  Plaintiff filed this breach-of-lease case on February 24, 2009 in Missouri state court, seeking one month's damages of $40,000.  Defendant's first attempt at removal on the basis of diversity failed for lack of the amount-in-controversy requirement.  Defendant then filed a declaratory judgment action in federal court, which was dismissed on abstention grounds in light of the pending state case.


            Plaintiff eventually amended its complaint to seek millions of dollars in damages for breach of the lease's entire 15-year period, and defendant attempted to remove again, but this time failed because the effort to remove was untimely under 28 U.S.C. §1446 (one year for diversity actions). 


A year later, the City where the lease was to have operated intervened as a plaintiff, seeking $750,000 from defendant.  Defendant attempted a third time to remove, purporting to remove only the City.  The federal district court once again remanded, and defendant appealed. 


The Eighth Circuit dismissed the appeal for lack of appellate jurisdiction under 28 U.S.C. §1447(d) (an order remanding a case to the state court from which it has been removed "is not reviewable on appeal or otherwise"), because the district court's remand order was based on the "§1447(c) procedural flaw of untimely removal."  Judge Smith dissented: "I would reach the primary issue in this case and hold that Gander can remove the City's claim because that civil action involved a new party who asserted a new and original claim."

June 3, 2014 in Federal Courts, Recent Decisions, Subject Matter Jurisdiction | Permalink | Comments (0)

Monday, April 7, 2014

SCOTUS Cert Grant in Dart Cherokee v. Owens: What Must a Notice of Removal Include?

Today the Supreme Court granted certiorari in Dart Cherokee Basin Operating Co. v. Owens (No. 13-719). Here is the question presented that appears in the cert. petition (like many cert. petitions these days, it includes a few paragraphs of prologue before the “question” is “presented”)…

A defendant seeking removal of a case to federal court must file a notice of removal containing “a short and plain statement of the grounds for removal” and attach only the state court filings served on such defendant. 28 U.S.C. § 1446(a). Consistent with that statutory pleading requirement, the First, Fourth, Fifth, Seventh, Eighth, Ninth, and Eleventh Circuits require only that a notice of removal contain allegations of the jurisdictional facts supporting removal; those courts do not require the defendant to attach evidence supporting federal jurisdiction to the notice of removal. District courts in those Circuits may consider evidence supporting removal even if it comes later in response to a motion to remand.

Here, in a clean break from Section 1446(a)’s language and its sister Circuits’ decisions, the Tenth Circuit let stand an order remanding a class action to state court based upon the district court’s refusal to consider evidence establishing federal jurisdiction under the Class Action Fairness Act (CAFA) because that evidence was not attached to the notice of removal. (That evidence, which was not disputed, came later in response to the motion to remand.)

The question presented is:

Whether a defendant seeking removal to federal court is required to include evidence supporting federal jurisdiction in the notice of removal, or is alleging the required “short and plain statement of the grounds for removal” enough?

More information about the case is available at SCOTUSblog.




April 7, 2014 in Federal Courts, Recent Decisions, Subject Matter Jurisdiction, Supreme Court Cases | Permalink | Comments (0)