Civil Procedure & Federal Courts Blog

$54 Million Pants--Update

Since we brought this issue to your attention here, I know you've all been waiting with bated breath to see if the judge/plaintiff would actually win the $54 million he sought from his dry cleaners for damaged pants.  Well, guess what?  He didn't win.--Counseller

Another Update:  Here's the opinion and judgment.  Thanks to Greg McNeal for finding it.   

Conference Announcements

A couple of conferences are on the horizon that may be of interest to CivPro Profs and practitioners.

Marquette University is hosting the First Annual Dispute Resolution Works in Progress Conference October 19-20.  Find registration and other information here.

We posted here in April about Charleston School of Law's symposium on punitive damages, but Sheila Scheuerman has organized a great symposium so we wanted to remind you that it begins on September 7.  Click on the link below to download the brochure.--Counseller

Download punitives_conf. Announc.pdf 

Powerex Corp. v. Reliant Energy Services

Prof. Scott Dodson offers his thoughts on today's Powerex decision:

Today, the Supreme Court decided Powerex Corp. v. Reliant Energy Services, Inc. and, in the process, discussed the implications of remanding for lack of subject-matter jurisdiction under 28 U.S.C. § 1447(c) and for appellate jurisdiction (or, more accurately,  the lack thereof) over such remand orders under § 1447(d).  Removal is a little hobby of  mine (see this post here on my article "In Search of Removal Jurisdiction," forthcoming in Northwestern University Law Review), so I thought I'd present the case and a few of its implications.

The state of California sued various energy companies for conspiring to fix energy prices in violation of California law.  Some of the defendants filed cross-claims seeking indemnity from Bonneville Power Administration ("BPA"), Western Area Power Administration ("WAPA"), British Columbia Hydro and Power Authority ("BC Hydro"), and Powerex.  BPA and WAPA are agencies of the U.S. government. BC Hydro is a crown corporation of British Columbia and a "foreign state" under the Foreign Sovereign Immunities Act.  Powerex is a wholly-owned subsidiary of BC Hydro. The cross-defendants removed the case to federal court.  BC Hydro and Powerex relied upon § 1441(d), which permits removal by a foreign state.  BPA and WAPA relied upon § 1442(a), authorizing removal by federal agencies.  California sought remand, arguing that Powerex was not a "foreign state" under the FSIA.

The district court concluded that BC Hydro's status as a foreign state and BPA's and WAPA's statuses as U.S. agencies entitled them to remove the entire case, irrespective of Powerex's status.  Thus, the district court held that the case was properly removed at the time of removal.  Nevertheless, it held that BC Hydro, BPA, and WAPA were all immune from suit in state court, and that that immunity deprived it of jurisdiction to hear the state claims against them.  In addition, it concluded that Powerex was not a "foreign state" under the FSIA and therefore had no authority to remove the case.  Therefore, the district court remanded the entire case for lack of subject-matter jurisdiction.

Powerex appealed, arguing that it was a foreign state.  BPA and WAPA also appealed, arguing that they should have been dismissed instead of remanded.  California opposed the appeal, arguing that the Ninth Circuit lacked appellate jurisdiction under § 1447(d).  The Ninth Circuit rejected California's jurisdictional argument and determined that Powerex was not a foreign state entitled to removal under § 1441(d), that BPA and WAPA were both entitled to immunity, and that BPA and WAPA should have been dismissed instead of remanded.  Accordingly, the Ninth Circuit affirmed the district court as to Powerex but ordered BPA and WAPA dismissed.

Powerex sought certiorari on the issue of whether it was a foreign state under the FSIA.  The Supreme Court granted certiorari but then asked the parties to brief whether the Ninth Circuit had jurisdiction to reach that question under § 1447(d).

The Court, per Justice Scalia in a 7-2 decision, held that the Ninth Circuit lacked appellate jurisdiction.  Justice Scalia began by covering familiar territory: Section 1447(d) renders remand orders under § 1447(c) non-appealable.  After that, though, things get murky.  The Solicitor General argued that § 1447(d)'s bar applies only to defects in subject-matter jurisdiction that occur at the time of removal, not defects that arise after a jurisdictionally proper removal.  Under that construction, the bar would not have applied because the district court concluded that the defect in subject-matter jurisdiction arose after removal and that removal was, at the time, proper.

The SG's argument went like this.  The pre-1988 version of § 1447(c) mandated remand if "the case was removed improvidently and without jurisdiction."  By all accounts, that version limited § 1447(c) to defects in subject-matter jurisdiction that existed at the time of removal.  But the provision was amended in 1988 to read: "A motion to remand the case on the basis of any defect in removal procedure must be made within 30 days . . . . If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded."  The SG argued that the 1988 amendments meant only to impose time limits on non-jurisdictional defects and not to broaden the provision's scope on subject-matter jurisdiction defects.

The Court rejected that construction, holding that the current text of § 1447(c) does not distinguish between defects in subject-matter jurisdiction depending upon when they arise.  That seems true enough, and 1988 version's elimination of the pre-1988 limiting language restricting the provision to cases "removed . . . without jurisdiction" suggests that the SG's interpretation of the scope of § 1447(c) is wrong.  The text belies a solitary purpose of providing time limits for non-jurisdictional defects.

Justice Scalia also relied upon § 1447(e), which was added as part of the 1988 amendments.  Section 1447(e) requires remand if, after removal, the plaintiff joins additional defendants whose presence destroys subject-matter jurisdiction.  Justice Scalia reasoned that § 1447(e) describes a case in which removal is jurisdictionally proper at the time but which develops a defect in subject-matter jurisdiction later that requires remand.  Such a case explains why § 1447(c) is necessarily broader than the SG's reading.

Under this broader interpretation of § 1447(c), the Court then turned to discerning what the grounds for the remand were, for if the remand were under § 1447(c), the appeal was barred under § 1447(d).  Justice Scalia noted that he and Justice Thomas would rely simply upon the district court's purported grounds of § 1447(c) and be done with it, but because (presumably) he could not convince a majority of the Justices to join him on this point, he looked behind the district court's characterization and found only one plausible explanation for the remand-the district court's lack of power to adjudicate the claims.  Whether the district court actually lacked the power to adjudicate the claims was irrelevant; it was enough that its correctness was "debatable" and that the remand grounds were "colorably characterized as subject-matter jurisdiction." Under such conditions, the remand order was non-appealable under § 1447(d).

The Court also addressed the Ninth Circuit's practice of reviewing merits rulings issued prior to a remand order that would itself be barred by § 1447(d).  Relying prior precedent, the Court held that if the rulings are contained in separate orders, then the appellate bar of § 1447(d) may not apply to the non-remand orders.  But, if all of the rulings are encompassed in a single order that remands for lack of subject-matter jurisdiction, then § 1447(d) bars review of all rulings contained in that order.  Otherwise, the appellate court would either issue an advisory opinion or contravene § 1447(d).

Finally, the Court addressed the one point of disagreement among the Justices-whether § 1447(d) is inapplicable to FSIA removals.  I'll not go into much detail in this civil procedure forum because the issue has a more FSIA-substantive flavor.  In brief, the majority noted that § 1447(d) itself contains no such exception even though Congress has provided specific exceptions in other contexts, such as in civil rights lawsuits. Justice Breyer, joined by Justice Stevens, dissented from this portion and would have found an implicit FSIA exception to § 1447(d).  Justice Kennedy, joined by Justice Alito, joined Justice Scalia's majority opinion but noted the concerns raised by Justice Breyer and called for legislative action to address any inconsistencies between the Court's textual interpretation and the intent of Congress.

A couple of thoughts.  First, the decision does shed some light on when a remand order purportedly issued pursuant to § 1447(c) is entitled to the appeal bar of § 1447(d).  Justice Scalia and Justice Thomas would impose a rule that the district court's characterization of the remand grounds-regardless of its plausibility-controls.  But, presumably, their view does not command a majority of the Court (at least not for now).  Thus, the Court adopts a more flexible (and less Scalia-esque) test: an appellate court can look behind the district court's characterization of the defect as one of subject-matter jurisdiction to determine whether that characterization is "colorable."  If so, then § 1447(d) bars review of the appropriateness of the characterization.  This should provide some clarity to the lower courts, which diverge in their interpretations of what level of review is permitted by § 1447(d).  I also note that the Court's standard is less like a jurisdictional bar to appellate review and more like an authorization of appellate review, albeit at a very high level of deference. 

Second, this case sets up a nice contrast between the jurisprudence of Justice Scalia and Justice Breyer.  Without going into too much detail on this civil procedure-based forum, I merely quote from Justice Breyer's dissent: "Were the Court to pay greater attention to statutory objectives and purposes and less attention to a technical parsing of language, it might agree [with me].  Were it to agree, we would exercise our interpretive obligation, not lawmaking power, with increased fidelity to the intention of those to whom our Constitution delegates that lawmaking power, namely the Congress of the United States.  And, law in this democracy would be all the better for it."

Bowles v. Russell

Today the Supreme Court affirmed the Sixth Circuit in Bowles v. Russell.  After Bowles was denied habeas relief, he failed to file a notice of appeal within the 30-day window.  He then moved to reopen the period to file his appeal under Federal Rule of Civil Procedure 4(a)(6).  That rule, which implements 28 U.S.C. s2107, allows a district court, under certain circumstances, to "reopen the time to file an appeal for a period of 14 days after the date when its order to reopen is entered."   The district court granted his motion, but extended the appeal period for 17 days instead of 14.   Bowles noticed his appeal 16 days later--consistent with the judge's order but more than 14 days after "the date when [the court's] order to reopen is entered.

The Court held that the notice was untimely, the time period was jurisdictional, and that no equitable exception applied:

Like the initial 30-day period for filing a  notice of appeal, the limit on how long a district court may reopen that period is set forth in a statute, 28 U. S. C. §2107(c). Because Congress specifically limited the amount of time by which district courts can extend the notice-of-appeal period in §2107(c), that limitation is more than a simple claim-processing rule.” As we have long held, when an “appeal has not been prosecuted in the manner directed, within the time limited by the acts of Congress, it must be dismissed for want of jurisdiction.” Curry, supra, at 113. Bowles’ failure to file his notice of appeal in accordance with the statute therefore deprived the Court of Appeals of jurisdiction. And because Bowles’ error is one of jurisdictional magnitude, he cannot rely on forfeiture or waiver to excuse his lack of compliance with the statute’s time limitations.   ***

Today we make clear that the timely filing of a notice of appeal in a civil case is a jurisdictional requirement. Because this Court has no authority to create equitable exceptions to jurisdictional requirements, use of the “unique circumstances” doctrine is illegitimate.

3 Justices joined Justice Souter's dissenting opinion, which begins:

The District Court told petitioner Keith Bowles that his notice of appeal was due on February 27, 2004. He filed a notice of appeal on February 26, only to be told that he was too late because his deadline had actually been February 24. It is intolerable for the judicial
system to treat people this way, and there is not even a technical justification for condoning this bait and switch. I respectfully dissent.

--RR

Burford Abstention

In a recent case, Judge Garaufis declined to abstain under the Burford abstention doctrine, concluding that deciding the federal suit would not "disrupt New York's effort to establish a coherent eminent-domain policy." Goldstein v. Pataki, 2007 WL 1654009 (E.D.N.Y., June 6, 2007).  The case thoroughly reviews the Burford doctrine's origins and history and is a good resource for folks who want a primer or refresher.  --RR

Dodson on Erickson

Last week we reported on Erickson v. Pardus, the Court's first pleading decision since Bell Atlantic v. Twombly.  Below, Prof. Scott Dodson offers his thoughts on Erickson.  Dodson's original thoughts on Bell Atlantic can be found here. --RR
 

When the Supreme Court issued Bell Atlantic v. Twombly on May 21, there was much discussion about what the case means and how important it is.  I was one of the first to blog about it here (along with several others, including Randy Picker, Mike Dorf, Einer Elhauge, and Marty Lederman) and my initial reaction was that the Court changed the pleading landscape in important ways by repudiating the “no set of facts” language of Conley v. Gibson and instituting a “notice-plus” standard under Rule 8.

The debate was just beginning when the Supreme Court issued another pleading opinion on June 4, Erickson v. Pardus, a per curiam summary decision.  Now, a new wave of commentary is trying to reconcile the two cases (see here and here and here), and some have suggested that Erickson could be viewed as a “DGCA” (or “Don’t Get Carried Away”) opinion designed to caution against an over-expansive reading of Bell Atlantic.

That may or may not be, and I agree with Amy Howe that the timing of Erickson is suspicious.  But, I adhere to my initial view and believe that Bell Atlantic still means exactly what it did the day it was decided: mere notice pleading is no more.  And Erickson confirms, rather than questions, that reading.

There have been good summaries of Bell Atlantic in the posts listed above, and I will not repeat them in detail.  Suffice it to say that Bell Atlantic interred the familiar language from Conley “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 its place, Bell Atlantic requires that the complaint provide both notice of the claim and the “grounds” upon which it rests.  In the antitrust context of Bell Atlantic, that meant providing some showing to allow the complaint, read as a whole, to set forth a “plausible” claim for relief.

As I blogged in my initial post, Bell Atlantic sets a “notice-plus” pleading standard.  Mere notice is no longer sufficient.  In fact, in footnote 10, the Court implied that the complaint provided the requisite notice.  Where the complaint faltered was on the additional requirement of “grounds,” which require, in the words of Bell Atlantic, “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.”  Justice Stevens, in dissent, picked up on the significance of Bell Atlantic, contrasting its new standard with pure notice pleading.

Thus, I do not see how some can read Bell Atlantic as “not turn[ing] away from notice pleading” or “merely elaborate[ing] on the question what it means for a complaint to give ‘notice,’” or as “quite insignificant.”

Nor do I see how Erickson changes anything.  There, a prisoner asserted a § 1983 claim under the Eighth Amendment and alleged (1) that he had hepatitis C, (2) that he was on a one-year treatment program for it, (3) that shortly after the program began the prison officials started withholding the treatment, and (4) that his life was in danger as a result.  As Mike O’Shea noted, those allegations are sufficient under any Rule 8 standard.  Coupled with the fact that the plaintiff was proceeding pro se, the Court’s reversal of a dismissal for failure to state a claim was a no-brainer.  Erickson just doesn’t say much about complaints that approximate mere notice pleading the way the complaint in Bell Atlantic did. 

True, Erickson does say that “specific facts are not necessary,” but that was the case in Bell Atlantic, too, as pages 23-24 and note 14 of the slip opinion make clear.  “Specific facts” means the particularized pleading reserved for Rule 9 claims.  What Rule 8 requires after both Erickson and Bell Atlantic are not specific facts but sufficient facts such that the complaint as a whole makes a “showing” of entitlement to relief.

In short, if Erickson is a warning not to get so carried away as to read Bell Atlantic as authorizing dismissals of complaints like the one in Erickson, then Erickson is not much of a warning at all.

The importance of Erickson, in my view, is that it reaffirms Bell Atlantic’s notice-plus standard.  Erickson cites Bell Atlantic for the proposition that the complaint must “give the defendant fair notice of what the claim is and the grounds upon which it rests.”  Erickson reaffirms that the “no set of facts” language is no longer to be cited and that, instead, the notice-plus-grounds standard of Bell Atlantic controls.

Of course, only time will tell what the two cases actually mean, but we at least can be confident that it will take, in Justice Souter’s words, “sprawling, costly, and hugely time-consuming” litigation to find out.

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

More on Watson

Today the Supreme Court unanimously reversed and remanded (as expected), holding that Philip Morris improperly removed under the Federal Officer Removal Act, 28 U.S.C. s1442(a)(1).

Plaintiffs sued Philip Morris in Arkansas state court, alleging that Philip Morris manipulated cigarette testing in violation of Arkansas business laws.  How did a state-law suit against a cigarette manufacturer end up before the Supreme Court pursuant to the Federal Officer Removal Act?   Philip Morris tested cigarettes like the rest of cigarette manufacturers--pursuant to a testing method developed by the FTC, known as the Cambridge Filter method.   Plaintiffs alleged that Philip Morris manipulated this test so that the cigarettes could register low on the Cambridge test, be labeled as light, but then deliver a higher level of tar and nicotine.  Philip Morris removed under the Act, arguing that it was "acting under" a federal officer or agency primarily because it was using the FTC-designed testing method and was subject to intense regulation by the FTC.

The issue was one of statutory construction.  Under the Act, a defendant can remove if the defendant is the United States, a federal agency, a federal officer, or any person acting under a federal officer or agency.  The issue here was the meaning of the words "acting under."  The Act obviously contemplates some private persons within its scope.  Writing for the Court, Justice Breyer clarifies what "triggering relationship" is needed to authorize a private person to remove under the acting-under language.

The Court started with the Act's history and purpose, tracing its variations from the War of 1812 to the present.  The Act's basic purposes are to protect the Federal Government from undue interference with its operations, to avoid state-court bias against enforcement of unpopular federal laws, and to give federal officers a federal forum in which to litigate immunity defenses.  The Court  provided several examples for when these purposes are served by allowing private individuals to use the Act.  For example, in one case, a group of prohibition agents hired a private driver.  That driver was prosecuted in state court for acts taken during a distillery raid.  The Court noted that allowing a private person to remove furthers these basic purposes "when a private person acts as an assistant to federal officials in helping that official enforce federal law."

Consistent with the purpose and history, the Court determined that a private person acts under a federal officer or agency only when he engages in an "effort to assist, or help carry out, the federal tasks.  Mere compliance with law does not constitute assistance or help.  Thus,

A highly regulated firm cannot find a statutory basis for removal in the fact of federal regulation alone.   A private firm's compliance (or noncompliance) with federal laws, rules, or regulations does not by itself fall within the scope of the statutory phrase "acting under" a federal official.  And that is so even if the regulation is highly detailed and even if the private firm's activities are highly supervised and monitored.  A contrary determination would expand the scope of the statute considerably, potentially bringing within its scope state-court actions filed against private firms in many highly regulated industries.

The Court then rejected two of Philip Morris's arguments.  First, Philip Morris analogized this case to the cases involving government contractors that have been allowed to remove when there is a close monitoring and supervisory relationship between the contractor and the government.  The Court rejected this argument via the compliance-versus-assistance distinction, noting that the contractors were helping the government perform a function and produce an item that it needs, rather than just complying with detailed regulations.  And second, based on a lack of record evidence, the Court rejected Philip Morris's argument that the FTC had "delegated" testing responsibilities.

This reversal was as unsurprising as the Eighth Circuit's unanimous ruling below was surprising.  What's important?  The case is important because it clarifies the "triggering relationship" needed before a private person can remove under the "acting under" language.   A link to the full decision is here. --RR

9-0 reversal in Watson v. Philip Morris

SCOTUSblog reports:

The Supreme Court ruled unanimously on Monday that a lawsuit against a private company cannot be shifted to federal court from state court merely because the company was acting under federal agency regulations. The ruling came in Watson v. Philip Morris (05-1284).

Details will follow once the opinion is released.  For more info on the case, see our previous posts here and here--RR 

The promised follow-up appears here.

Privilege Waiver and Inadvertent Disclosure

David B. Alden has a nice piece on The Clash of Privilege Waiver and Inadvertent Disclosure Rules over at the Drug and Device Law Blog that's worth a CivPro Prof's read.  Thanks to Mark Herrmann for the heads-up.--Counseller

Specific Jurisdiction in a Virtual World

Bragg v. Linden Research, most interesting for its property-law implications, presents a straightforward TJ issue in an interesting context.  The case involved a plaintiff's claim that the owner of a role-playing game, Second Life, unlawfully confiscated his virtual property and denied him access to the virtual world.  According to the court, "while the property and the world where it is found are 'virtual', the dispute is real."  Ultimately, the court rejected the owner's challenge and exercised specific jurisdiction, concluding that "the owner's representations-which were made as part of a national campaign to induce persons, including Bragg, to visit Second Life and purchase virtual property-constitute sufficient contacts to exercise specific personal jurisdiction over Rosedale" and that the exercise of jurisdiction did not offend traditional notions of fair play and substantial justice.    Thanks to Rick Bales of the Workplace Prof Blog for the heads up. --RR

 

USSCT Action

The Supreme Court decided several cases today.  See SCOTUSblog for more details.

In a per curiam decision, the Court issued its first pleadings decision since Twombly.  In that case, Erickson v. Pardus, the Court summarily reversed a dismissal of a pro se prisoner's complaint.  The Court's analysis, including the Court's first cite to Twombly, appears below:   

It may in the final analysis be shown that the District Court was correct to grant respondents’ motion to dismiss. That is not the issue here, however. It was error for the Court of Appeals to  conclude that the allegations in question, concerning harm caused petitioner by the termination of his medication, were too conclusory to establish for pleading purposes that petitioner had suffered “a cognizable independent harm” as a result of his removal from the hepatitis C treatment program. Id., at 698. Federal Rule of Civil Procedure 8(a)(2) requires only “a short and plain statement of the claim showing that the pleader is entitled to relief.” Specific facts are notnecessary; the statement need only “ ‘give the defendant fair notice of what the . . . claim is and the grounds upon which it rests.’ ” Bell Atlantic Corp. v. Twombly, 550 U. S. ___, ___ (2007) (slip op., at 7-8) (quoting Conley v. Gibson, 355 U. S. 41, 47 (1957)). In addition, when ruling on a defendant’s motion to dismiss, a judge must accept as true all of the factual allegations contained in the complaint. Bell Atlantic Corp***

The complaint stated that Dr. Bloor’s decision to remove petitioner from his prescribed hepatitis C medication was “endangering [his] life.” Petitioner’s Complaint 2. It alleged this medication was withheld “shortly after” petitioner had commenced a treatment program that would take one year, that he was “still in need of treatment for this disease,” and that the prison officials were in the meantime refusing to provide treatment. Id., at 3, 4. This alone was enough to satisfy Rule 8(a)(2). Petitioner, in addition, bolstered his claim by making more specific  allegations in documents attached to the complaint and in later filings. The Court of Appeals’ departure from the liberal pleading standards set forth by Rule 8(a)(2) is even more pronounced in this particular case because petitioner has been proceeding, from the litigation’s outset, without counsel. A document filed pro se is “to be liberally construed,” Estelle, 429 U. S., at 106, and “a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers,” ibid. ***

Whether petitioner’s complaint is sufficient in all respects is a matter yet to be determined, for respondents raised multiple arguments in their motion to dismiss. In particular, the proper application of the controlling legal principles to the facts is yet to be determined. The case cannot, however, be dismissed on the ground that petitioner’s allegations of harm were too conclusory to put these matters in issue.

--RR