Civil Procedure & Federal Courts Blog

FRE 502 Progress

Over at Drug and Device Law , Jim Beck and Mark Herrmann provide the latest on proposed Federal Rule of Evidence 502, which addresses attorney-client privilege and work product. --RR

Not today ....

The two Supreme Court cases most likely to interest jurisdiction-and-procedure nerds are still undecided, as the Court issues but one opinion today.  Coverage of that decision can be found at SCOTUSblog.  The two cases I mentioned above are Hein v. Freedom From Religion Foundation (taxpayer standing) and Watson v. Philip Morris (federal-officer removal statute).  The links are to the Medill summaries. --RR

Even More Bell Atlantic

In a comment on Scott Dodson's Bell Atlantic post, Howard Wasserman dropped a link to a post on the decision by Randy Picker over at the University of Chicago's Faculty Blog.  I thought I'd bring the link to the main page.  Many thanks to Randy for his thoughts and to Howard for the heads-up.--Counseller 

No really ...

Not too long ago, I quoted Judge Easterbrook in a post titled No really, short and plain is enough.  Below are those quotes, which are worth revisiting in light of Bell Atlantic:

It is enough to name the plaintiff and the defendant, state the nature of the grievance, and give a few tidbits (such as the date) that will let the defendant investigate.  A full narrative is unnecessary. Kolupa v. Roselle Park Dist., 438 F.3d 713, 714 (2006).

This treatment went wrong at the first step: the belief that complaints must lay out facts corresponding to every “element” of a legal theory. That is a code-pleading approach, which the Federal Rules of Civil Procedure reject. One pleads “claims” (which is to say, grievances) rather than legal theories and factual specifics.  The Supreme Court drove the point home in Swierkiewicz v. Sorema N.A., holding that plaintiffs need not allege either the factual or legal “elements” of a prima facie case under the employment-discrimination laws. That conclusion is equally applicable to every other federal claim. It is why “[a]ny district judge (for that matter, any defendant) tempted to write ‘this complaint is deficient because it does not contain...’ should stop and think: What rule of law requires a complaint to contain that allegation?”  It is also why “[a]ny decision declaring ‘this complaint is deficient because it does not allege X’ is a candidate for summary reversal, unless X is on the list in Fed.R.Civ.P. 9(b).” *** Simpson's grievance was set out clearly enough to put the defendants on notice; no more is required. Simpson v. Nickel, 450 F.3d 303 (2006).

--RR

More Commentary on Bell Atlantic

Here is Mark Botti's commentary on the Bell Atlantic decision, posted by the fine folks at SCOTUS Blog.--Counseller

Prof. Scott Dodson on Bell Atlantic

We are delighted to announce that Prof. Scott Dodson of the University of Arkansas will be joining us later this summer as a guest blogger.  For now, Scott shares his thoughts on the Supreme Court's opinion in Bell Atlantic. --Counseller/RR

Today, the Supreme Court decided Bell Atlantic Corp. v. Twombly and, in the process, gutted the venerable language from Conley v. Gibson that every Civil Procedure professor and student can recite almost by heart: “that a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitled him to relief.”

In Bell Atlantic, representatives of a putative class of local telephone and internet services subscribers sued a group of incumbent local exchange carriers (“ILECs”) for antitrust violations under § 1 of the Sherman Act. The plaintiffs’ complaint alleged that the ILECs conspired to restrain trade by inflating charges for the services in “parallel conduct.” The plaintiffs also alleged that the conduct arose from an “agreement” between the ILECs.

Now, Section 1 of the Sherman Act does prohibit unlawful agreements to restrain trade. But, a critical element of § 1 is the existence of an “agreement”; independent conduct that results in a restraint of trade is not prohibited by § 1. In a series of cases interpreting the sufficiency of evidence in § 1 claims, the Court has stated that mere “parallel conduct” alone is perfectly lawful and does not give rise to an inference of an agreement that would survive a summary judgment or directed verdict motion.

Before today, however, the Court had never explained what role “parallel conduct” might play at the pleading stage. Generally, the Court had adhered to Rule 8’s requirement that the pleader make only “a short and plain statement of the claim showing that the pleader is entitled to relief.” In Conley v. Gibson (1957), the Court elaborated on Rule 8 with two explications that, arguably, were in tension.

First, Conley said that the complaint must “give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.” Second, Conley provided the now-familiar language: “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitled him to relief.”

Arguing that the mere allegation of parallel conduct did not state sufficient “grounds” to entitle the plaintiffs to relief, the defendant ILECs moved to dismiss the complaint under Rule 12(b)(6) for failure to state a claim upon which relief could be granted. The district court granted the motion and dismissed the case. The Second Circuit reversed.

The Supreme Court, per Justice Souter (joined by the Chief Justice and Justices Alito, Breyer, Kennedy, Scalia, and Thomas), reversed the Second Circuit. The Court first explained that Conley’s requirement that the “grounds” of the claim be set forth is critical. It “requires more than labels and conclusions, and a formulaic recitation of the elements of a case of action will not do.” In short, some factual allegations must accompany the elements of a claim.

Here, the Court reasoned, because the plaintiffs only alleged parallel conduct and a bare assertion of a conspiracy, these facts, even if proved, would not entitle plaintiffs to relief. The plaintiffs must plead more, by, for example, placing the allegation of parallel conduct “in a context that raises a suggestion of a preceding agreement.”

The Court buttressed its holding by stating that the potential expense of discovery in antitrust cases (and in antitrust class actions, in particular) risked coercing settlement before the costs could be controlled by effective judicial supervision and case management. “Probably, then,” the Court mused, “it is only by taking care to require allegations that reach the level suggesting conspiracy that we can hope to avoid the potentially enormous expense of discovery in cases with no ‘“reasonably founded hope that the [discovery] process will reveal relevant evidence”’ to support a § 1 claim.”

The Court recognized the “no set of facts” language of Conley but said it has been “questioned, criticized, and explained away long enough,” and that “after puzzling the profession for 50 years, this famous observation has earned its retirement.” The Court said that the language instead means that “once a claim has been stated adequately, it may be supported by showing any set of facts consistent with the allegations in the complaint.”

Turning to the allegations, the Court found that they came up short. The allegations of parallel conduct were insufficient without more facts. And, the bare allegations of agreements and conspiracies were “legal conclusions resting on the prior allegations.” In short, the Court thought that “nothing contained in the complaint invests either the action or inaction alleged with a plausible suggestion of conspiracy.”

Justice Stevens, joined in relevant part by Justice Ginsburg, dissented. Justice Stevens reasoned Rule 8 requires only notice pleading, not fact pleading, and the contextual allegations of an unlawful agreement and conspiracy, naked though they may be, is all that is required. In his view, the purpose of notice pleading under Rule 8 was to keep plaintiffs from having to plead facts and instead allow factually insufficient claims to be weeded out in other phases of the pretrial process. Justice Stevens used Form 9 in the Federal Rules of Civil Procedure Appendix to illustrate that even the single allegation “On June 1, 1936, in a public highway called Boylston Street in Boston, Massachusetts, defendant negligently drove a motor vehicle against plaintiff who was then crossing said highway,” coupled with a statement of damages, was sufficient to state a claim for negligence. Consistent with this view, Justice Stevens decried the demise of the Conley “no set of facts” language.

Justice Stevens also addressed the Court’s pragmatic concerns. First, he said that Rule 8, notice pleading, and Conley already addressed them and decided in favor of allowing plaintiffs to have their shot at discovery, even at some cost to the defendant. Second, he noted the flexible powers of district courts to control discovery costs in light of the needs of the case under Rules 7(a), 12(e), 16, and 26.

Finally, Justice Stevens worried about erecting insurmountable bars to meritous cases. He noted that in antitrust cases, the proof is largely in the hands of the defendants, and dismissals prior to discovery are disfavored.

At first glance, I am deeply troubled by this decision. Let me note a few of my concerns here.

First, the Court does not respond adequately to Justice Stevens’s point that plaintiffs in antitrust claims often do not have in their possession circumstantial evidence of an agreement to conspire (to say nothing of direct evidence), and requiring such evidence prior to discovery (when they might be able to obtain it) may bar many meritous cases. In my view, the Court should have weighed this concern when it discussed the burden on defendants confronted with costly litigation.

Second, it seems to me that the Court was motivated by the merits of the claim, rather than the sufficiency of the pleading. Why else would the Court have constructed the odd requirement of pleading some facts supporting the existence of an agreement but then not limiting the plaintiff to those facts? The reason is that the Court thinks that a plaintiff that cannot muster at least some facts supporting the existence of an agreement at the pleading stage will not have any facts at trial, either. This sentiment is buttressed by the Court’s statement that this case has no “reasonably founded hope” of “reveal[ing] relevant evidence” in discovery. In my view, that is, at best, contrary to what Rule 8 has stood for for 50 years and, at worst, just plain wrong.

Third, it is not clear what distinguishes this case from, say, a negligence case pleaded like Form 9. If the Court is saying that Rule 8 requires “notice-plus” pleading, then I think we shall see a sharp increase in Rule 12(b)(6) litigation on the sufficiency of fact pleading (which we may see anyway) and many more plaintiffs thrown out of court. If, on the other hand, the Court is saying that the combination of the § 1 requirements and the burdens on the defendant in this case justify requiring “notice-plus” pleading, then it is a troubling slippery slope that the Court heads down. Many other kinds of cases are “sprawling, costly, and hugely time-consuming,” as the Court describes this one. Mass torts, discrimination class actions, and a host of other causes of action require involved showings of proof (yet fall under Rule 8 rather than Rule 9) and have the potential to impose enormous costs on a defendant. The Court does not justify adequately, in my view, why the line is drawn at this case and not others.

UPDATE: Professor Dodson has just published more extensive views on Bell Atlantic in an essay entitled "Pleading Standards after Bell Atlantic v. Twombly," 93 Va. L. Rev. In Brief 121 (July 9, 2007).

Bell Atlantic and Other Supreme Court Opinions

The Supreme Court handed down its decision in Bell Atlantic v. Twombly today.  The court held that to state a claim under section 1 of the Sherman Act the complaint must present enough factual matter to suggest that there was an agreement to engage in anticompetitive conduct as opposed to facts suggesting parallel courses of conduct that prevent competition.  I read this opinion and thought about Chris Fairman's article, The Myth of Notice Pleading.

Here is a list from SCOTUS blog of the other opinions issued today.  SCOTUS blog also has a roundup of news stories on the Bell Atlantic case here.      

--Counseller      

Judicial Elections and Money

We reported here about the ILR's ranking of each state's "lawsuit climate."  A new report from a group called Justice at Stake may help explain why a particular state's "lawsuit climate" is the way it is.  The report documents "the spread of special interest pressure" on judicial elections.  NPR's Nina Totenberg writes this story and says that "business interests spend twice as much money on state high-court elections as all other groups combined, including lawyers."  Here are the other key findings of the report and Sandra Day O'Connor's take on the trend.    

--Counseller

Parallel Patent Litigation and the S.D.N.Y.

Earlier this month, the Southern District of New York refused to abstain from its involvement in a patent dispute that has stretched nearly half a decade and half the globe. The original plaintiff sued in  New York.  About two years later that plaintiff filed a related suit in Israel regarding the same invention.   More recently, one of the defendants filed a declaratory-judgment action in Israel, consolidated the Israeli cases, and asked the federal court to stay its hand.   In balancing its "heavy obligation to exercise jurisdiction" with the need for "wise judicial administration," the court considered three factors:  international comity, judicial efficiency, and fairness.  Although several factors favored abstention, the court concluded that the disparity in issues among the pending suits as well as the first-filed ruled weighed too heavily against granting the stay.  Aerotel v. IDT, 20067 WL 1334547 (S.D.N.Y. May 4, 2007). --RR

Prof. Stephen Shapiro Publishes on the CAFA

Prof. Shapiro recently published an article titled Applying the Jurisdictional Provisions of the Class Action Fairness Act of 2005: In Search of a Sensible Judicial Approach, 59 Baylor L. Rev. 77.  The article discusses the "procedural issues involved in making the determination of whether a class action should be remanded to state court or remain in federal court" and argues that "to accomplish Congress's stated goal of allocating cases of an interstate nature to federal courts and truly local cases to state courts, the federal courts must not impose unreasonable or impossible standards of proof for plaintiffs to meet." --RR

Worth a Read

In the last 10 days, a couple of opinions have come down that might warrant your attention. 

The 11th Cir., in Grupo Televisa v. Telemundo Comm., discusses the Restatement's "most significant relationship test" and finds that the trial court erred by applying Mexican law rather than Florida law to a tortious interference suit between Mexican and U.S. telenovela producers. 

The 7th Cir., in In re Factor VIII or IX Concentrate Blood Products Litigation, affirmed the trial court's forum non conveniens dismissal of the claims of a group of plaintiffs from the United Kingdom against a group of major drug companies.  The UK plaintiffs alleged that blood transfusions infected them with HIV/AIDS and that the drug companies had failed to properly screen the blood used in the transfusions and had recruited blood donors with a high risk of HIV/AIDS infection.   

--Counseller

Choosing a Civil Procedure Casebook

The folks over at Prawfsblawg are discussing casebook choices.  The link to the CivPro discussion is here --RR

The Thursday Interview Hiatus

The Thursday Interview is going on summer hiatus.  With everyone going their different ways, it has become quite difficult to schedule an interview every week.  Instead, we'll just try for a few interviews over the course of the summer.  Please do continue to let us know about the projects you're working on this summer so that we can make them the subject of a post or interview. 

--Counseller   

Timesheet, Anyone?

Do you know how many times I've caught myself missing my timesheet since I left private practice four years ago?  Zero-point-zero-zero  (nod to Maya Rudolph).  There are a few things about the practice of law I miss, but, on the whole, teaching beats practice all to hell.  The vast majority of the tens of thousands of law students in this country will practice law in some capacity immediately upon graduation.  I've often wondered what my choice to teach says to my students about the practice of law and the life that awaits them.   

Recently, US News & World Report issued its List of Best Careers 2007.  University professor is one of the best careers while attorney is one of the "most overrated" careers.  Here's why USNWR thinks being an attorney is overrated:

Most lawyers' lives bear little resemblance to those of the hotshots on Law and Order. Even litigators spend lots of time drafting or poring over sheaves of detailed information and negotiating with other lawyers prone to contentiousness and chicanery. And most lawyers rarely go to trials, working instead as transactional attorneys who need to bill 2,000 hours a year or more to meet the firm's targets. That can mean long evenings drafting lengthy, airtight contracts or other documents. In the corporate world, many lawyers find little fulfillment and burn out.

Sound familiar?  This description of the profession stands in stark contrast to what drew students to the profession in the first place.

Many college students decide to go to law school by default. After all, a legal career promises prestige, money, and the chance to use the law to make a difference in society. Many aspiring attorneys also picture themselves as the lawyers on TV, making scintillating closing arguments in an expensive suit before a rapt jury.

Are USNWR's descriptions of the practice and students' reasons for wanting to become attorneys accurate?  If so, what, if anything, should/can we as law professors do about this disconnect?

--Counseller 

A second bite under Parsons

Under the Anti-Injunction Act's relitigation exception, a federal court can enjoin a pending state-court proceeding if that proceeding involves an issue that the federal court has previously resolved.  In Parsons Steel, the Supreme Court invoked the Full Faith and Credit Act to sensibly prevent two bites at the preclusion/injunction apple.

For example, suppose A sues B in federal court.  The federal court favorably resolves an issue for B.  A then sues B again in state court.  Under Parsons, B has two options, not three, for giving teeth to the federal court's prior ruling.   Of course B can raise a preclusion defense in state court.  Or, under the relitigation exception, B can ask the rendering federal court to enjoin the state-court proceeding, to the extent A relies upon issues actually resolved by the federal court.  But what B cannot do is raise the preclusion defense in state court, lose, and then ask for the federal court to enjoin the state court proceeding.  This is because the state-court ruling on the preclusion issue is itself an issue-preclusive ruling that binds the federal court.

In the recent Duffy case, two bites were available.  There B successfully moved to dismiss the federal suit based on a forum-selection clause that selected England.  A refiled in  state court, not England.  Generally, then, B would have two options.  First, B can move to dismiss the state-court suit on grounds that the federal dismissal is issue preclusive.  Or second, B can return to federal court and seek an injunction to prevent relitigation of that particular issue.  In effect, the relitigation exception allows B to choose which court will resolve the preclusion issue.  But B did both.  After the state court denied the motion to dismiss, B returned to federal court.  The Fifth Circuit held that, because the denial in state court was not a final judgment under state law, there was no Parsons bar to the return to federal court. 

This result surprises me, as does the rigid analysis. Even if the judgment was not "final" under Texas law, the exceptions to the Anti-Injunction Act are supplemented by the equitable principles that govern injunctive relief and the principles of comity surrounding the Anti-Injunction Act.  Even if an injunction may issue, that's not to say it must.   B can obtain federal review in the first instance by seeking an injunction from the federal court when A files the second suit.  B can obtain federal review by seeking Supreme Court review, the federal issue being the preclusive effect of a federal judgment.  But even where the state-court judgment does not trigger the formal Parsons bar, the appropriate balance of comity and efficiency does not favor allowing B to try twice.  The lesson for litigators, I suppose, is that if you time things right, you can get two bites at the apple.  Raise your preclusion defense in state court, but when you lose be sure to ask the federal court to overrule that ruling before the state ruling becomes technically "final" under state law.  -RR

More CAFA

For the latest on CAFA, check out the Fifth Circuit's opinion last week in Preston v. Tenet Healthsystem, addressing the local controversy exception, and Prof. Marcus's article, Erie, the Class Action Fairness Act, and Some Federalism Implications of Diversity Jurisdiction, which you can access here thanks to Benjamin Spencer. 

--Counseller

The "Thursday" Interview

Click the link at the bottom of this post to listen to this week's Friday installment of the Thursday interview.  This week's interview is with Anthony J. Bellia Jr. of Notre Dame Law School about his new article The Origins of Article III "Arising Under" Jurisdiction.  Thanks to A.J. for a great interview. 

--Counseller

Download a.J. Bellia Interview.mp3

$65 Million Pants--UPDATED

Where one ought to begin a CivPro course is one of the recurring topics on this blog.  I've decided to replace my "anatomy of a lawsuit" lecture with $65 million pants.  Many thanks to Greg McNeal who blogs over at AIDP for bringing this lawsuit about some extraordinarily valuable pants (at least according to the plaintiff) to our attention.  I think this lawsuit is a great springboard for introducing a number of topics many of us cover in the first few CivPro classes, such as ADR, remedies, and why some people hate lawyers.  Greg and I are on the hunt for the pleadings in this case.  If you happen to find them first, please send them here so that we can make them available to all.  Enjoy the article, and, again, many thanks to Greg. 

--Counseller

UPDATE:  This morning Good Morning America ran a story on this lawsuit .  You can see it here.  According to GMA, the plaintiff is seeking $67 million, not the $65 million reported here and elsewhere.  Sixty-seven million?  Now we're getting a bit ridiculous.   

FRCP Amendments Approved

On April 30, the Supreme Court approved amendments to:

Civil Rules 4, 5.1, 9, 11, 14, 16, 26, 30, 31, 33, 34, 37, 40, 45, 50, 71.1, and 78; Comprehensive Restyle Civil Rules 1-86; Restyle Illustrative Civil Forms; and new Civil Rule 5.2.

At this link, you can find a document prepared by the Advisory Committee regarding the restyling.  In dual-column form, it displays the text of the old rule on the left and of the restyled rule on the right.  Dial-up users beware; it's a 255-page .pdf file. (Benjamin Spencer reports Here)    --RR 

Prof. Lubet in the American Lawyer

Prof. Steven Lubet has an essay today in the American Lawyer, discussing the Seventh Circuit's censure of a lawyer's deposition conduct.  Rather than instructing the client not to answer the question, according to the Seventh Circuit, the lawyer should have "called off the deposition and applied for a protective order" from the trial court.  Lubet concludes that "there is more than a bit of unreality in this aspect of the Seventh Circuit's analysis."  (Hat tip to How Appealing) --RR