Civil Procedure & Federal Courts Blog

Review of Arbitration Awards under the FAA

Last week the Supreme Court handed down its opinion in Hall Street Associates v. Mattel.  Mattel was Hall Street's tenant in a manufacturing facility.  Hall Street filed suit against Mattel for breach of the lease agreement and to indemnify it for environmental cleanup costs.  Following a bench trial at which Mattel prevailed on the lease termination issue, the parties agreed to arbitrate the indemnification claim.  The district court entered the parties arbitration agreement as an order.  The agreement/order granted the district court the power to vacate, modify, or correct the award "where the arbitrator's conclusions of law are erroneous."  This ground for vacatur, modification, or correction is not contained in the FAA.  The arbitrator decided for Mattel, but the district court vacated the award on the ground that the arbitrator based the decision on an erroneous legal conclusion.  The Supreme Court held that the grounds set out in the FAA for vacating and modifying an award are exclusive, even when the parties attempt to change the standard in their arbitration agreement.

The Supreme Court noticed an interesting wrinkle in the case and ordered supplemental briefing on the issue.  Should the agreement be treated as an exercise of the district court's authority to manage its cases under FRE 16 since the district court entered the agreement as an order?  The Supreme Court did not answer this question, instead remanding the case for the district court to determine whether its "authority to manage litigation independently warranted that court's order on the mode of resolving the indemnification issues remaining in the case."

Wouldn't an affirmative answer to the remaining question raise a number of other questions, especially in cases (unlike Hall Street) involving pre-dispute arbitration agreements?  For example, would parties resist arbitration in federal court only to gain sufficient leverage to convince the opposing party and the district court to enter a new, expanded arbitration agreement as an order in the case?  Would district courts simply refuse to enter such orders after Hall Street?  Would parties want such an order when they don't yet know if the award is favorable?  For discussion of these and other questions raised by Hall Street, click here.--Counseller      

New Trial Motions after Summary Judgment

Over at the California Blog of Appeal, Greg May asks:

Can you move for a new trial when your case was disposed of by summary judgment?  This question undoubtedly causes some degree of cognitive dissonance in many lawyers: a new trial when there was no trial?

Greg answers, Yes, of course. --RR

 

 

Revolving Trapdoors ... and Rule 50

Tulane Prof. Steven Childress has a forthcoming article in the Review of Litigation titled Revolving Trapdoors:  Preserving Sufficiency Review of the Civil Jury after Unitherm and Amended Rule 50.   Click here to download the latest draft from SSRN or read on for the abstract:

The article considers recent case law and an amendment to Rule 50 of the Federal Rules of Civil Procedure. Both change the possibilities and effect, on appeal in federal courts, of procedural lapses and waivers by litigants who wish to seek review of the sufficiency of the evidence to support a jury verdict, as by appeal of a decision on a motion for judgment as a matter of law. Both the timing and completeness of such motions and preservation of sufficiency error are discussed.
 
The U.S. Supreme Court in Unitherm enforced a very strict waiver review that found that such error, and even review for new trial, was fully waived and thus not preserved for any appellate review under the circumstances of the case. The newer Rule 50, on the other hand, more generously expands the timing for adequately making such a motion or raising and preserving the sufficiency issue. Together, these changes solve some common trapdoors for litigants and judges, but create new ones or maintain old ones that should still be considered at trial of civil cases in federal court.

--RR

 

Federal Question Jurisdiction and the Federal Arbitration Act

Click here to read "Federal Question Jurisdiction and the Federal Arbitration Act," posted on SSRN by Northern Kentucky Profs. Richard Bales and Jamie Ireland.   The article is forthcoming in the Colorado Law Review, and the abstract follows.  --RR

The Federal Arbitration Act gives signatories to an arbitration agreement the right to have that agreement specifically enforced. The FAA does not, however, confer federal subject matter jurisdiction. Absent federal jurisdiction, a party seeking enforcement under the FAA must sue in state court. State courts, however, are far more likely than federal courts to use state contract law doctrines to avoid enforcing arbitration agreements. This has led parties seeking enforcement to look for other ways into federal court. Some federal courts have found jurisdiction over enforcement actions when the underlying dispute involves a federal question, such as when an employer is seeking to enforce an arbitration agreement against an employee who has sued for employment discrimination under Title VII. These courts reason that the text and history of the FAA require courts to "look through" the dispute about enforceability to the underlying dispute. Other courts, however, have concluded that such a "look through" is inconsistent with the text and history of the FAA and with the well-pleaded complaint rule. Our article explains that the difficulty of choosing one approach over the other is exacerbated because the same interpretive tools can be marshaled in favor of each approach, and because the arguments made using each interpretive tool are not mutually exclusive. Our article argues that courts should adopt the "look through" approach.

Cert. Granted

On Monday, the Supreme Court granted Certiorari in Vaden v. Discover Bank.  The case presents two interesting jurisdictional issues, which I plan to write more about as the case approaches:

1. Whether a suit seeking to enforce a state-law arbitration obligation brought under Section 4 of the Federal Arbitration Act, 9 U.S.C. § 4, “aris[es] under” federal law, see 28 U.S.C. § 1331, when the petition to compel itself raises no federal question but the dispute sought to be arbitrated—a dispute that the federal court is not asked to and cannot reach— involves federal law.

2. If so, whether a “completely preempted” state law counterclaim in an underlying state-court dispute can supply subject matter jurisdiction.

--RR

Cyberspace Jurisdiction (From an Alien's Point of View)

If you're into 431-page books on cyberspace jurisdiction, check out this SSRN link.   -RR

The Problem of the Expert Juror

Prof. Paul Kirgis recently posted an article on SSRN titled "The Problem of the Expert Juror."  The article will appear in volume 75 of the Temple Law Review.  The link and abstract appear below:

A fundamental principle of the Anglo-American adjudicative system is that cases must be decided based solely on evidence formally admitted through trial procedures. A jury may not base its decision on information received outside of those formal procedures. Yet jurors bring to the jury room a wealth of education and experience received prior to their service and not subject to the formal rules of proof. That kind of worldly knowledge is a prerequisite to jury service; without a basic level of common knowledge, jurors could not understand the evidence put before them. Problems can arise, however, when jurors bring expertise that exceeds the common knowledge that we expect, and need, them to have. This prospect raises the problem of the expert juror. Especially today, in an evidentiary system remade to require greater scrutiny of expert testimony, courts must be aware of the possibility that jurors will inject unexamined expertise into deliberations, thus subverting the adversarial model of proof we depend on for decisional accuracy and legitimacy. This article examines the problem of juror expertise and suggests an approach for addressing the problem that focuses first on jury selection and second, in extreme cases, on post-verdict review.

Link --RR

Collins v. D.R. Horton, Inc.

This Supreme Court term hasn't yielded many noteworthy decisions in the areas of jurisdiction and procedure.   Nor have the petitions to watch at SCOTUSblog provided much to get excited about.  The most recent edition describes a petition from a 9th Circuit decision that might interest our readers.  The question presented in Collins v. D.R. Horton, Inc. is:  Whether a court or an arbitrator should determine the preclusive effect of a prior court judgment on an arbitration?"

Petitioner's Statement of the case begins:

This petition raises a long-standing inter-circuit conflict on an important question under the Federal Arbitration Act: Whether the court or the arbitrator determines the preclusive effect on the arbitration of a prior court judgment. Preclusion doctrines reflect fundamental principles of common-law adjudication that command respect for the decisions of courts in conclusively resolving issues and claims. The effect of court decisions should be determined by courts, not arbitrators whose philosophical or economic interests may favor retrying settled matters. This split among the circuits under a statute of nationwide importance should be resolved by this Court.

You can access links to the 9th Circuit opinion, the cert. petition, and the opposition brief here. --RR

445,450 free opinions

It's probably time to bookmark precydent.com.  It provides free, searchable access to law and currently advertises that its database contains 445,450 opinions and 2501 statutes.   I'll be interested to get feedback on the site from our non-professor readers (who don't have free access to Westlaw and Lexis).
--RR

Wasserman Article: Video Evidence and Summary Judgment

On SSRN, Howard Wasserman recently posted Video Evidence and Summary Judgment:  The Procedure of Scott v. Harris.  The article now appears in Vol. 91 of Judicature, and the abstract follows:

In Scott v. Harris (2007), the Supreme Court granted summary judgment on a Fourth Amendment excessive-force claim brought by a motorist injured when a pursuing law-enforcement officer terminated a high-speed pursuit by bumping the plaintiff's car. The Court relied almost exclusively on a video of the chase captured from the officer's dash-mounted camera and disregarded witness testimony that contradicted the video. In granting summary judgment in this circumstance, the Court fell sway to the myth of video evidence as able to speak for itself, as an objective, unambiguous, and singularly accurate depiction of real-world events, not subject to any interpretation or subjective analysis. For the majority, there was no need for a fact-finder to review the video or to compare the video with the competing testimony of eyewitnesses, because what the majority saw in the video was true. The reality, however, is that video evidence is not so singularly objective or definitive in its meaning and message; instead, video presents one perspective on events and is subject to the interpretation and close analysis reserved for the jury at trial. This essay critiques the Court's approach in Scott, both the immediate decision and with an eye on the increasing use of video recording of encounters between police and the likelihood that video will be an increasingly common element of civil rights litigation.

--RR

A Must Read

If you haven't read this order yet from the Eastern District of Pennsylvania, do it now.--Counseller

Warner-Lambert

Over at Drug and Device Law, Beck and Herrmann have an interesting post about the Supreme Court's recent (non)decision in Warner-Lambert v. Kent.  It begins:

As the whole drug and device world knows by now, Warner-Lambert v. Kent played to a 4 to 4 tie on Monday.

The Supreme Court decision thus "lacks a precedential effect,"Plaut v. Spendthrift Farm, 514 U.S. 211, 215 n.1 (1995), and the case law remains where it was two weeks ago.

Thus, if Michigan residents sue drug companies in a federal court in the Sixth Circuit (which covers Michigan, Ohio, Kentucky, and Tennessee), the plaintiffs automatically lose -- their claims are statutorily barred. See Garcia v. Wyeth-Ayerst Labs. 385 F.3d 961 (6th Cir. 2004).

But if those same plaintiffs sue those same drug companies in a federal court in the Second Circuit (which covers New York, Connecticut, and Vermont), the plaintiffs do not automatically lose.  Under the Second Circuit's decision in Desiano v. Warner-Lambert (now affirmed by the 4 to 4 tie in the Supreme Court under the name Warner-Lambert v. Kent), the Michigan immunity statute is subject to a fraud-on-the-FDA exception. The plaintiffs have some chance that their cases will go forward. ...

...

--RR

A Renaissance

Prof. John Sonsteng recently published A Legal Education Renaissance.  You can download the paper and join a conversation about the project and its recommendations here.  The abstract follows.--Counseller

A Legal Education Renaissance suggests a model for change and provides answers to criticism of the current system by addressing curriculum, teaching, faculty, and costs. It offers a realistic, achievable solution that fits within the guidelines that govern legal education institutions. The perspectives and recommendations are presented with the intent of encouraging discussion about the future of modern legal education.

The proposed legal education model dramatically changes the structure and content of the curriculum, uses modern learning and teaching techniques, changes the makeup of the faculty and reduces costs while addressing the diverse needs of today’s students.

Welcome Mats and Kaleidoscopes

If anyone is interested in my recent article, It's Just Not Worth Searching for Welcome Mats with a Kaleidoscope and a Broken Compass, you can download it below.  Please do e-mail me any comments or suggestions.  The abstract follows:

 
Justice Holmes construed the words “arising under” to mean something simple and ascertainable – a case arises under the law that creates the cause of action.  By rejecting the bright-line Holmes test as the exclusive test, the Supreme Court created a second branch of federal-question jurisdiction, which applies to state-created claims with embedded federal issues, and which is governed by a flexible and elusive standard.   While eschewing the bright-line Holmes rule as too rigid, champions of the second branch have both praised its flexibility and predicted that clear-enough boundaries will develop.  They have not and will not.  Long ago, Justice Cardozo acknowledged that the second branch requires an “accommodation of judgment to … kaleidoscopic situations.” Then armed with kaleidoscopes, the Court and Academy tried to locate the boundaries.   Professor Cohen then informed us, in his landmark article, that the “arising under” compass was still broken.   The Court tried to fix the compass in the Merrell-Dow case, but that just created a 3-way circuit split.  Finally, in the recent Grable case, the Court explained that Merrell-Dow caused confusion because we should have had our kaleidoscopes and compasses set on finding welcome mats.  85 years of trying is enough.

I make three assertions in the article: (1) The second branch should be eliminated (2) by Congress (3) by defining “arising under”  solely for purposes of 28 U.S.C. §  1331.  Simple may not always, or even often, be better.  But in this context it is.  Viewed in light of the state, federal, and systemic interests, the costs of retaining the second branch outweigh the benefits.  A limited sample group of opinion-generating second-branch removal cases indicates that for every removed case that satisfies Grable about eight more are remanded after an average delay of about six months—cases remanded without opinion almost surely skew the numbers more.  The class of delay-prone cases will remain large because most colorably removable cases are removed, and the nature of the second-branch casts a wide net of colorability.   As for the change coming by amendment, Justice Thomas recently invited original-intent arguments to justify returning to the Holmes test, and I agree with him in part.  We should look for the Holmes test, but to today’s Congress, not the Congress of 1875.   The article concludes by considering issues surrounding the amendment of a major general grant of jurisdiction and ultimately recommending that Congress should define “arising under” solely for purposes of § 1331.  This approach will allow Congress to retain the second branch in areas of exclusive jurisdiction, will eliminate Grable’s new disruptiveness prong, and will ultimately facilitate a transition where once again cases construing the jurisdictional statute will resemble statutory-construction cases.

Updated SSRN Link

--RR