Civil Procedure & Federal Courts Blog

Claim Preclusion

We posted here about the Texas Supreme Court's recent holding that claim preclusion barred a wage claim.  Our colleague Ron Beal filed an amicus letter with the court today urging it to reconsider its decision.  You can download the amicus letter by clicking the link below.--Counseller

Download amicus_letter_brief.doc 

Thomson v. Novartis

We've been following the coverage of Thomson v. Novartis over at Drug & Device Law.   Today, Herrmann and Beck detail another case from last week, noting that this Judge "didn't like the Thomson playbook." --RR

Uncivil Litigation

Check out this article in Litigation News Online from the ABA Litigation Section.  The Board of Governors of the California Bar Association has decided that new rules are needed to reduce incivility in litigation.  Has litigation always been a nasty affair (assuming it is now)?  Or is the decrease in civility a new phenomenon (i.e., more evidence of the rise of the "abysmal tide")?--Counseller   

Certification of Largest Class in History--Affirmed

As you may know, a group of plaintiffs filed a class action lawsuit against Wal-Mart alleging sexual discrimination against Wal-Mart employees in violation of Title VII.  The district court certified the plaintiffs' proposed class (with some modifications).  Yesterday, the Ninth Circuit Court of Appeals issued its opinion in Dukes v. Wal-Mart and affirmed the district court's decision to certify the class.  What is remarkable about this decision is the size of the class it creates.  This class action is the largest certified in U.S history, consisting of more than 1.5 million members.  Many thanks to Scott Dodson for keeping an eye on this case for us.--Counseller 

9(b) Particularity and the Passive Voice

On Friday, the Southern District of Florida dismissed a group of plaintiffs' fraud case case against brokerage and financial services firms. The court held that the plaintiffs had failed to allege fraud with particularity under Rule 9(b) in part because they pled in the passive voice.

Also, a plaintiff's use of the passive voice in alleging a fraud can impermissibly obscure allegations such that the allegations fail to satisfy the particularity requirements of Rule 9(b). Strategic Income Fund, L.L.C. v. Spear, Leeds & Kellogg Corp., 305 F.3d 1293, 1297 (11th Cir.2002); Pension Committee of University of Montreal Pension Plan v. Banc of America Securities, L.L.C., 446 F.Supp.2d 163, 186 n. 153 (S.D.N.Y.2006) (“Plaintiffs must allege the speaker of a misrepresentation with particularity and may not obscure pleading deficiencies by casting allegations in the passive voice.”); In re Keithley Instruments, Inc. Securities Litigation, 268 F.Supp.2d 887, 898 (N.D.Ohio 2002). Plaintiffs' repeated use of the passive voice when describing misrepresentations or fraudulent acts obscures exactly who made the statements or committed the fraudulent acts. In many instances, it appears that the representations or fraudulent acts are properly attributable to PFA but, by using the passive voice (e.g., stating that misrepresentations “were made” to investors), Plaintiffs attempt to broaden responsibility and make it appear that each Defendant is responsible for each of PFA's and/or another Defendants' statements, misrepresentations, and fraudulent acts or omissions.

For more information, you can find the entire opinion with this citation (2007 WL 4287729) or by reading Ben Spencer's post on the subject here.--Counseller

Claim Preclusion in the Texas Supreme Court

A closely divided Texas Supreme Court held today that claim preclusion barred a wage claim.  The dissent has the better of the argument. 

The context is pretty simple.  Plaintiff had a wage claim against his former employer.  The legislature created a quick administrative process to file such wage claims, but plaintiffs seeking to use this process had to file within 180 days of when the wages were due.  This process is not exclusive--plaintiffs are free to pursue breach-of-contract actions, which are governed by a four-year statute of limitations.  Plaintiff filed an administrative claim.  It was too late for the 180-day period but well within the four years to file a private civil suit.  The Commission dismissed his claim as untimely, and the plaintiff filed a civil suit.  The majority concluded that the Commission's dismissal was claim preclusive.  Writing for four in his dissent, Justice Brister concisely, but persuasively, provides several reasons why the Texas Workforce Commission’s order is not a claim-preclusive judgment on the merits, including:

First, the Commission itself says so. In its amicus brief supporting Plaintiff's right to file suit in court, the Commission says “res judicata does not apply . . . because TWC’s order was not a judgment on the merits but a procedural dismissal for untimeliness.” How can the Court hold the Commission intended a merits dismissal when the Commission itself stipulates that it did not? *** 

Fifth, judgments based on limitations are usually considered rulings on the merits because a late claim can never be refiled any earlier (barring time travel). But an important exception applies here because there are two different limitations periods. As the First Restatement of Judgments stated in a comment:

Thus, if the plaintiff brings an action to enforce a claim in one State and the defendant sets up the defense that the action is barred by the Statute of Limitations in that State, the plaintiff is precluded from thereafter maintaining an action to enforce the claim in that State. He is not, however, precluded from maintaining an action to enforce the claim in another State if it is not barred by the Statute of Limitations in that State.

The Second Restatement of Conflict of Laws now makes the same point:

Thus, the plaintiff’s suit may be dismissed in state X on the ground that it is barred by the X statute of limitations. This judgment will preclude the plaintiff from thereafter maintaining an action to enforce the claim in state X. This judgment, however, binds the parties only with respect to the issue that was decided. It will preclude the plaintiff from maintaining an action to enforce the claim in another state only if the courts of the other state would apply the X statute of limitations . . .

The First, Second, Fifth, Seventh, and Tenth federal circuit courts all agree that while dismissals based on limitations are usually preclusive, they are not preclusive when a case is filed in two different systems that apply two different limitations periods. In such cases, as Wright and Miller state: “[i]f the second forum would decide independently to apply a longer period of limitations . . . the traditional rule has been that it is free to proceed with the second action.” While dismissal of an untimely claim may be preclusive if based on the substantive law governing the claim (Texas contract law’s four years), it is not preclusive if based on a shorter period designed as a procedural protection for the first forum (the Commission’s 180 days):   

Dismissal based on the limitations period established by the law that governs the claim is a judgment on the merits that precludes application of a different limitations period by another court. Dismissal based on application of the forum’s own shorter period for purposes of protecting the forum is not a judgment on the merits and does not preclude an action on the same claim in a court that would apply a longer limitations period.

Formatted without notation for readability.  The case name is  Igal v. Brightstar Information Technology Group. -- RR

The Law Firm Holiday Party, Texas Style

Check out this article in the ABA Journal.  Apparently the going rate for law firm holiday parties is $100k in Houston, Texas.  The defense firms' clients aren't happy, believing that $100k for party favors like, oh, I don't know, acrobats is a $100k in attorney fees they didn't need to pay.  The plaintiff's firms' "clients" (i.e., the lawyers who refer them cases) don't seem upset by extravagant spending on parties.  For more on that angle, read this article.--Counseller   

Claims, Civil Actions, Congress and the Courts

Chicago-Kent Prof. Joan E. Steinman recently posted on SSRN an article tentatively titled Claims, Civil Actions, Congress and the Courts.  The abstract follows:

In Exxon Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546 (2005), the Supreme Court took its first stab at construing the supplemental jurisdiction statute, 28 U.S.C. § 1367 - a statute that has provoked a great outpouring of scholarly criticism and debate since its enactment in 1990, and generated several conflicts among the lower federal courts. This Article focuses on important features of the Court's reasoning in Exxon Mobil v. Allapattah, including the Court's conflation of a "civil action" with a "claim."

Part I discusses the reasoning in Allapattah and Rosario Ortega in detail, showing among other things when and why the Court conflated a "civil action" with a "claim." As part of that discussion, Part I addresses the Court's treatment of "indivisibility theory" and "contamination theory" and how that treatment influenced the Court's view of civil actions. It also considers the relevance of the Supreme Court's decision in City of Chicago v. International College of Surgeons, 522 U.S.156 (1997), to its reasoning and conclusions in Allapattah. Finally, Part I compares the reasoning and ultimate holdings of Allapattah and Rosario Ortega - and the views of the dissent - with the recommendations in the American Law Institutes Federal Judicial Code Revision Project, published in 2004, and with my own thoughts on the issues raised. While my views are more similar to those of the dissent than to those of the majority, I believe that the outcome in Allapattah (but not in del Rosario) is correct because of the presence of a civil action within the original jurisdiction of the federal courts before any class is certified.

Part II provides many illustrations of how, if the lower federal courts were to accept the Court's redefinition of "civil action" and "claim," and carry it into other contexts in which the terms have long been understood to share the meanings of those words and phrases as they are used in the federal question and diversity subject-matter jurisdiction statutes, significant and undesirable changes in doctrine would result - particularly in cases removed from state court. Part III then ponders why the federal courts nonetheless have forgone the opportunity to extend the redefinition or conflation into such other statutory contexts, despite some reasons to do so. It considers the jurisprudential question of the propriety of eschewing the precedent set by Allapattah and Rosario Ortega in their treatment of "claim" and "civil action," and argues that the courts are wise to ignore - but would do better to distinguish and limit - the reasoning of Allapattah and Rosario Ortega and to decline to extend it into the interpretation of other jurisdictional statutes. Finally, Part III urges better drafting by Congress, to avoid strained interpretations invited by poor legislative drafting.

--RR

Worth a Read

Late last month, in In re: Literary Works, the Second Circuit decided that the registration requirement of section 411(a) of the Copyright Act is jurisdictional and that, in a class action wherein the representative plaintiffs' claims concerned registered copyrights but the class members' claims concerned primarily unregistered copyrights, the court could not exercise supplemental jurisdiction under 28 U.S.C. s1367 over the unregistered copyright claims of the class members.--Counseller 

Restyling Complete

Yesterday, FIU's Howard Wasserman wished us a Happy Restyling Day over at Prawfsblawg.   It's true, December 1 has passed, and the restyled FRCPs are now effective.  Howard is probably right that the results will not be particularly tragic, but in the spirit of the season, a "bah, humbug" is probably warranted.  --RR