Civil Procedure & Federal Courts Blog

Again with the 7th Circuit

Last week, in SEC v. Paul Jones, the Seventh Circuit affirmed the district court's decision to exercise personal jurisdiction over nonparties located outside the United States in a contempt hearing.  The Court held that the exercise of jurisdiction over such nonparties is proper in a contempt proceeding, even when the nonparty has no other contacts with the U.S., so long as the party had actual knowledge of the court's order.  The Court explained the reason for the rule.

This rule is simply an application of two basic principles that govern the application of in personam jurisdiction in the United States. It has been long-established that, when an individual undertakes activity designed to have a purpose and effect in the forum, the forum may exercise personal jurisdiction over that person with respect to those activities. There can be no doubt that Mr. Jones and Mr. Pollock undertook activities outside the    United States that were designed to have the purpose and effect within the United States of frustrating the district court’s freeze order. More important, as citizens of the United States, Mr. Jones and Mr. Pollock were required, once they had adequate notice, to obey the order of a United States court directed at them and their activities. (internal citations omitted).

This might be a good case to use in CivPro as a more recent example of the principle Calder v. Jones sets out.--Counseller 

More preclusion law from the 7th Circuit

A valid final judgment on the merits is claim preclusive, but does not bar claims that accrue after a previous suit was filed.   The italicized word is important.  For example, suppose the plaintiff's second suit involves claims that accrued after she filed the first suit but before judgment was rendered in the first suit.  Addressing this issue, Judge Posner teaches his second preclusion lesson of the week in Smith v. Potter:

It is true that some of the alleged harassment that occurred after the plaintiff filed her first suit occurred before she dismissed the suit, and so, the government argues, she could have amended her complaint to add an allegation of that harassment.  But ... there is no legal duty to amend rather than bring a fresh suit, especially since a plaintiff has a right to amend her complaint only once without leave of court.  Suppose that a year into the case, with trial about to begin, the plaintiff experienced a fresh act of harassment.  The judge might quite understandably not want to allow her to amend her complaint to add the new allegation, because that might require additional discovery and so force postponement of the trial.  On the government's view, the judge would have to either allow the amendment, in order to prevent the bar of res judicata from cutting off the plaintiff's access to a remedy for the fresh harassment, or deny it and by doing so deny her any remedy.  Neither alternative is attractive.

--RR

Worth a Read

You might want to take a look at Pritchett v. Cottrel, Inc from the Eighth Circuit.  The Court held that unanimity of consent to removal existed even though one of the attorneys who consented was not licensed to practice law in the state from whose court the case was removed.--Counseller

WSJ: Don't Use Work E-mail to Discuss your Case

Today's WSJ.com contains an article that begins: 

Allright, Civil Procedure students, today’s hypothetical: Plaintiff preparing to bring a lawsuit against his employer corresponds with his lawyer through his work email account. Defendant employer discovers the emails after litigation is filed, and forwards the messages to its in-house counsel. May the litigant rely on attorney-client privilege to keep the emails out of evidence?

Click here for the full article. --RR

No Such Court

In Nat'l Mining Association v. Kempthorne, the D.C. Circuit determined that 30 U.S.C. s 1276(a)(1) granted subject matter jurisdiction to "the United States District Court for the District of Columbia" despite the fact that the statute references "the United States District Court for the District of Columbia Circuit."  The D.C. Circuit noted that "there is no such court within the federal judiciary" and "excised" the word "Circuit" from the statute.  The Court said it had no qualms about the erasure because "both Congress's intent and the error impeding it are plain to see."--Counseller         

Declaratory Judgments and Compulsory Counterclaim

Do compulsory counterclaims exist in simple declaratory judgment suits?  Generally no, writes Judge Posner in Allan Block Corp. v. County Materials Corp.   It's really a nice opinion that delves deeper than does my summary below.

When a declaratory judgment plaintiff asserts no coercive claims, and the declaratory judgment defendant asserts no counterclaims, claim preclusion is not triggered.  In other words, a judgment granting or denying declaratory relief is not claim preclusive.  Easy enough for the plaintiff, who is free therefore to assert related claims in a later suit because a plain ol' declaratory request doesn't trigger the rules of merger and bar.  (The plaintiff would of course be constrained by issue preclusion).  Reaching the question of compulsory counterclaims requires an additional step.  The civil rules define certain counterclaims as compulsory, but it's actually claim preclusion that bars the counterclaims the rules define as compulsory.  That is when the plaintiff seeks coercive relief, claim preclusion--not the compulsory counterclaim rule alone--operates to bar defendants from asserting  counterclaims when they are defined as compulsory.  But since a pure declaratory judgment does not trigger claim preclusion, and since claim preclusion is what bars the later assertion of a compulsory counterclaim, there's generally no such thing as a compulsory counterclaim in a pure declaratory judgment suit.  Or perhaps more precisely, there's no bar against later asserting a counterclaim even when it's defined as compulsory.   --RR

Prof. Bone's New Article

As Ben Spencer points out over at the Federal Civil Practice Bulletin, Prof. Bone has posted a new article on SSRN titled To Encourage Settlement:  Rule 68, Offers of Judgment, and the History of the Federal Rules of Civil Procedure.  I was one of the many who attended this year's Civil Procedure Section meeting in NYC this year--The Revolution of 1938 Revisited-- and I enjoyed Prof. Bone's comments about the rulemaking process and, in particular, his thoughts on the politicization of the process.  I'm glad to see his new article offers more thoughts on the subject.--Counseller

Rich Rodriguez and Removal Updated

If you like Civil Procedure and college football, you might want to check out Howard Wasserman's post over at the Sports Law Blog about whether new Michigan football coach Rich Rodriguez properly removed the lawsuit against him brought by his former employer, West Virginia University.  Also, you might want to check out Frank DeFord's piece on what should happen when college football coaches leave a school before finishing out their contracts.--Counseller

UPDATE:  According to this ESPN article, Rich Rodriguez has made a $1.5 million settlement offer.  In response to the offer, an attorney for WVU said, "the University has lived up to all its obligations under the contract, and the university expects him to live up to the $4 million that is owed."  I suspect this case will be difficult to settle. 

Stroman Realty v. Wercinski

Last week's 5th Circuit Stroman decision is worth noting.  Stroman Reality was a large timeshare dealer headquartered in Texas.  Stroman received cease-and-desist letters from the Arizona Commissioner of the Department of Real Estate.  The letters ordered Stroman to cease Arizona-related brokerage activities.  Stroman sued the Commissioner in a Texas federal court under Ex Parte Young, alleging that "Arizona's attempted exercise of regulatory jurisdiction to license timeshare resales violated the Commerce Clause by discriminatorily and unduly burdening nonresident participation in the interstate timeshare market."  The Fifth Circuit held that personal jurisdiction did not exist.  Two of the key passages:

Arizona is simply trying to uniformly apply its laws.  If the court adopted the approach urged by Stroman, we would endorse an interpretation of personal jurisdiction under which ... any state official seeking to enforce her state's laws ... could potentially be subjected to suit in any state where the validity of her state's laws were in question.  We are unwilling to establish such a broad principle.   ***

Important questions of federalism are present here, and thus, for this case, "the shared interest of the several states" is the most significant reasonableness consideration outlined by the Supreme Court. *** The effect of holding that a federal district court in Texas had personal jurisdiction over a nonresident state official would create an avenue for challenging the validity of one state's laws in courts located in another state.  This practice would greatly diminish the independence of the states.

--RR

New CAFA Articles

Stephen Burbank and Howard Erichson both posted new CAFA articles on SSRN last week.  Prof. Burbank's article is The Class Action Fairness Act of 2005 in Historical Context:  A Preliminary View. The abstract follows. 

This article sets CAFA in the contexts of the history of federal diversity of citizenship litigation in general and, within that larger story, the history of diversity class actions in federal court. I consider whether changes in the litigation landscape since 1958, when Congress formally embraced corporate citizenship, might be thought to justify the changes in the balance of power in forum selection that CAFA brings about. Critical to my views in that regard are the failures of the Supreme Court effectively to police interstate forum shopping through constitutional control of personal jurisdiction or choice of law and the steroidal effect of the modern (post-1966) class action on the incentives that drive forum choice. I conclude that it was not unreasonable for Congress to assert a federal interest in regulating the process by which and the forums in which nationwide and multistate class action decisions are made. To be sure, the interest in question bears little relation to the historic account of diversity jurisdiction with which we are familiar. But, as Section IV demonstrates, it is consistent with the policy that the Supreme Court in fact pursued when umpiring ordinary diversity litigation in the late nineteenth and early twentieth centuries, and consistent as well with the policy that Congress pursued in its 1958 amendments to the diversity statute.

I reach a very different conclusion with respect to the numerous class actions within CAFA's reach that are not in any meaningful sense "multistate." The 1958 Congress left in place (if it did not enhance) the instruments of countervailing power for plaintiffs that had developed in the system and that made the fictions of corporate citizenship tolerable. The 2005 Congress dismantled those instruments in order to open federal courts to multistate class actions. It conveniently forgot them when it came time to fashion exceptions. In the process, Congress neglected the critical role they played in equilibrating not just plaintiffs' and defendants', but federal and state, interests. Ultimately, a combination of special interest overreaching, abetted by the fictions of corporate citizenship, and confusion about legislative aims, abetted by the institutional federal judiciary's schizophrenia regarding overlapping class actions, led Congress to lose sight of its duty, when fashioning CAFA's exceptions, to preserve the "happy relation of States to Nation."

Prof. Erichson's article is CAFA's Impact on Class Action Lawyers.  Here's the abstract.--Counseller   

The Class Action Fairness Act of 2005 (CAFA) reflected a profound mistrust of class action lawyers. Three years after its enactment, examination of lawyers' adaptation strategies offers an emerging picture of the statute's impact on class actions and class action lawyers. CAFA, like the Private Securities Litigation Reform Act a decade earlier, shifted class action practice in ways that appear likely to strengthen the upper tier of the plaintiff class action bar. CAFA has affected not only the division of labor between state and federal court, but also horizontal forum selection among federal courts and class action claim selection. Analysis of these effects suggests that CAFA is achieving some of its stated objectives but is unlikely to squelch class actions or to disempower leading members of the class action bar.

CA1 and Rule 19

Last week, the First Circuit addressed "the interrelationship of joinder and supplemental jurisdiction in a diversity case" in Picciotto v. Continental Cas. Co.  The first few sentences of the opinion provide a good summary, but you can find the entire opinion at the First Circuit's website here--Counseller

The Picciotto family and their company, Foreign Car Center, Inc., ("the Picciottos"), appeal the dismissal of their complaint for failure to join an indispensable party. The district court found that Dana Casher, a citizen of Massachusetts, is a necessary and indispensable party in the Picciottos' suit against Casher's malpractice insurers and others for civil conspiracy. Because the Picciottos are also Massachusetts citizens, the district court dismissed the complaint, concluding that joinder of Casher would destroy its diversity jurisdiction.

On appeal, the Picciottos challenge the district court's determination that Casher is both necessary and indispensable. Alternatively, they argue that 28 U.S.C. § 1367 grants supplemental jurisdiction to the district court, allowing Casher to be joined as a defendant under Federal Rule of Civil Procedure 19 without destroying diversity, provided that the plaintiffs do not assert any claims against her. Finding no abuse of discretion in the district court's determination that Casher is a necessary and indispensable party, and rejecting the Picciottos' assertion that the supplemental jurisdiction statute permits joinder of nondiverse indispensable parties, we affirm the dismissal.

"Ancillary" Jurisdiction Cert Petition

I thought you might be interested in reading the cert petition in PT Pertamina v. Karaha Bodas Co. out of the Second Circuit.  One of the questions presented is "whether a federal district court has 'ancillary' subject matter jurisdiction, after a judgment for money damages has been fully satisfied, to issue an anti-suit injunction barring foreign litigation."  Click the link to at the bottom of this post to read the entire petition.  Thanks to Dustin Benham at Carrington & Coleman for the heads up.--Counseller

Download ancillary_jur_cert_pet.pdf   

Getting stuck in Southern California Traffic is not excusable neglect

Not long ago, a California district court denied as untimely a motion for about a million dollars worth of attorneys' fees.  The prevailing party had 14 days from entry of judgment to file its motion.  The deadline was 4pm on the 14th day.  On the 14th day, at 3:14 pm, the lawyer for TAIS, the prevailing party, delivered the motion to the courier service.  The courier got stuck in traffic and missed the deadline (reportedly by one minute).  The court denied the motion as untimely.  The court reasoned, in part:

[E]ven a good faith mistake that does not result in prejudice to the other side is not a sufficient reason to enlarge the time period for requesting fees, absent some other evidence of 'compelling circumstances.'

[T]he reason for the delay was entirely within the TAIS' control and TAIS has not offered a good reason for the delay.  Given that the Ninth Circuit has held that a good faith misunderstanding of local rules is not sufficient to rise to the standard of excusable neglect, the entirely foreseeable obstacle of traffic in Southern California in the late afternoon cannot justify an enlargement of time. ... Because [the lawyer] made a conscious decision to wait until the final hour to file his motion, he assumed the risk that ... his risk would run out. 

--RR

 

Dodson: Three Muted Cheers for John R. Sand & Gravel

(Prof. Scott Dodson frequently contributes to our blog.  He summarized Bowles v. Russell here, Twombly here, and today he again provides a timely and thoughtful summary of a Supreme Court decision. --RR)

Three Muted Cheers for John R. Sand & Gravel

This morning, the Court decided John R. Sand & Gravel Co. v. U.S. and, relying principally on stare decisis, held that the Court of Appeals properly raised and applied the Tucker Act’s six-year limitations period on its own motion and despite an earlier concession by the United States that the claim was timely.

There are many good arguments against the Court’s result, and the opinion is hardly satisfying.  In particular, its heavy reliance on stare decisis is a disappointing sidestep of a more nuanced and thoughtful approach to the difficult characterization issue before it.

But let me point to a few bright spots that I see in the Court’s reasoning.

First, the Court finally seems cognizant of the difficult nature and nuanced features of jurisdictional characterization inquiries.  The question presented by the Petitioner was, in a nutshell, whether the Tucker Act’s limitations period was “jurisdictional.”  Nowhere does the Court answer that question.  Notably, its opinion reframes the question presented into the following nonjurisdictional issue: “whether a court must raise on its own the timeliness of a lawsuit filed in the Court of Federal Claims, despite the Government’s
waiver of the issue.”  (This phrasing closely tracks the Government’s phrasing of the question presented.)  The Court also backtracks away from the “jurisdictional” ruling of Bowles v. Russell, which almost certainly was incorrect (even if the ultimate result of Bowles was not). 

Second, and relatedly, the Court has signaled its willingness to look to middle paths – that a rule might be nonjurisdictional yet nevertheless have jurisdictional features such as being unsusceptible to the kind of waiver that took place.  The Court framed the issue in this case (and, retrospectively, in cases like Bowles) as whether the limits are “more absolute” rather than whether they are “jurisdictional.”  Implicitly, the Court is
suggesting that it need not reach the question of whether the rule is jurisdictional or not because even nonjurisdictional rules might nevertheless have some jurisdictional attributes, such as a judicial obligation to raise and police them sua sponte.

Third, it decides the case on the very narrow grounds presented by the facts, rather than the broader jurisdictional grounds.  Thus, it avoids the problem that Bowles fell into – overdeciding the case.  Had it held the limitation to be jurisdictional, the Court would have ended up deciding a host of other questions never presented (may the rule be forfeited, is it susceptible to equitable excuses, etc.).

Ultimately, the Court fails to truly wrestle with even the difficult question of whether the limitations period is “more absolute” or not and what that moniker might mean in particular cases (jurisdiction-lite?).  And, it remains to be seen whether “more absolute” is a broad category encompassing a variety of nonjurisdictional rules having jurisdictional-like features or is just a euphemism for “jurisdictional.”  But, in the spirit of
optimism that accompanies those last few days before classes begin, I’ll give the Court three muted cheers for being more careful than it was in Bowles.

-- Scott Dodson

Supreme Court decision

The question presented in John R. Sand & Gravel v. United States was stated as follows: 

The statute of limitations in the Tucker Act, 28 U.S.C. §2501, provides: “Every claim of which the United States Court of Federal Claims has jurisdiction shall be barred unless the petition thereon is filed within six years after such claim first accrues.” The question presented is:
Whether the statute of limitations in the Tucker Act limits the subject matter  jurisdiction of the Court of Federal Claims.

Lyle Denniston at SCOTUSblog reports here that:

The Supreme Court, in the only ruling on the merits Tuesday, decided that the U.S. Court of Appeals for the Federal Circuit must always consider whether cases making claims against thefederal government were filed on time, even if the federal government has waived that issue. The 7-2 ruling came in the case of John R. Sand & Gravel v. U.S. (06-1164).

We'll follow up with a summary if there's anything noteworthy. --RR

A slight breach of etiquette...

You may recall the scene in the Christmas Story where one kid challenges another to stick his tongue to a frozen pole:

Schwartz: Well I double-DOG-dare ya!

Ralphie as Adult: [narrating] NOW it was serious. A double-dog-dare. What else was there but a "triple dare ya"? And then, the coup de grace of all dares, the sinister triple-dog-dare.

Schwartz: I TRIPLE-dog-dare ya!

Ralphie as Adult: [narrating] Schwartz created a slight breach of etiquette by skipping the triple dare and going right for the throat!

We, too, today, were victims of a slight breach of etiquette.  Today the folks at Drug and Device Law started off properly, merely "daring" us to link to their post,  An Idiot's Guide to Litigation.  But being the shifty lawyers that they are, they then constructively skipped the dare and went straight to the double dare, just one line later, without allowing a response to the initial dare.    Alas, having been publicly double-dared, how can we not oblige?

Just read the start and end of their post, and you'll understand the dare:

Lawyers: Stop reading now!

No! Really! We mean it!

This post is a very -- as in very -- basic guide to the litigation process, meant only to help the press (and interested others) under the next post that we're putting up. And you'll understand that next post without reading this one.

***

Remarkably, lay people who read this post may well now have a better grasp of the litigation process than first year law students two months into class. Professors simply don't speak these words in a way that people can understand.

(Hey, Civil Procedure Profs Blog! We dare you to link to this one. Double dare you.)

Of course the bolded phrase isn't true of all profs.  For example,  Bill Underwood taught me procedure, and used words that were both clearer and more accurate than those in the linked post--and context was always important.  But aside from the exaggeration, the post provides a provocative reminder that the forest-and-trees problem so common in first-year courses is mostly our fault.

Happy New Year to our mischievous friends at DDL.  (Oh, and fellas, I remind you that the post title "An idiot's Guide to Litigation" is susceptible to two interpretations, as being for or belonging to an idiot.") --RR

 

Federal Civil Practice Bulletin

For those who want to catch up on procedure-related decisions and commentary released during break, check out Prof. Ben Spencer's blog here. --RR

Back to blogging

There's no better tool for tracking the Supreme Court's docket than the StatPack posted over at SCOTUSblog.  Looking at the cert-granted cases, am I correct in concluding that this will be a slow year for procedure and jurisdiction decisions?  While I'm sure the Court will resolve some intertwined procedural and jurisdictional issues, the main issues suggest that this year's annual casebook $upplements will be light.  Here are a few issues as framed in the StatPack that might interest our readers:

• Gonzalez v. US:  Waiver of right to Art. III judge to preside over jury selection when counsel agreed to have a U.S. magistrate instead.

• Sprint v. Mendelsohn:  Admissibility of "me,too" testimony in age discrimination suits

• Boumediene v. Bush:  Constitutional jurisdiction over habeas petitions from Guantanamo detainees

• Addition from the comments (thanks, Jeff):  John R. Sand & Gravel v. US:  Whether 28 U.S.C. s2501 limits the subject-matter jurisdiction of the Court of Federal Claims.

--RR