Civil Procedure & Federal Courts Blog

Sixth Circuit Joins Others in Holding 28 U.S.C. § 1332(a)(2) Limited to Suits with Aliens on One Side, State Citizens on the Other

The Sixth Circuit released an opinion in which it joined numerous other circuits in holding that 28 U.S.C. § 1332(a)(2) does not grant jurisdiction over a case in which there are foreign and domestic plaintiffs against a foreign defendant. 

We join our sister circuits that have held the presence of foreign parties on both sides of the dispute destroys the complete diversity required by § 1332(a)(2).

The whole opinion can be found here.

--Counseller/jtf

Fifth Circuit decides that 28 U.S.C. 1441(c) does not permit remand of removable federal questions

Last month the Fifth Circuit decided Poche v. Texas Air Corps, Inc., No. 07-20618, 2008 WL 4926740 (5th Cir. Nov. 19, 2008).  The question presented was "does 28 U.S.C. § 1441(c) permit a district court to remand federal claims conferring removal jurisdiction where those claims are part of a case 'predominated' by state law?"  Phrased as such, the statutory language seems clearly to demand the answer be "yes."

(c) Whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates.

28 U.S.C. § 1441.  However, the court took a narrow view of the word "matters" and, based on precedent, determined that a court "may not remand the component claims that are conclusively deemed to have arisen under federal law, absent a defect in the removal procedure or circumstances rendering the retention of jurisdiction 'inappropriate.'" (quoting Laurents v. Arcadian Corp., 69 F.3d 535 (5th Cir. 1995)).

Read the whole opinion here.

--Counseller/jtf

Offers of Judgment Under FRCP 68: A useful tool, but is this as good as it gets?

Professors Thomas Eaton and Harold S. Lewis, Jr. have posted a second report on the utility of offers of judgment under Federal Rule of Civil Procedure 68.  In this second report, the Professors discuss some ways in which the rule could be improved.

In very broad terms, we discuss (1) having a separately numbered subdivision of the Rule for cases arising under federal fee-shifting statutes; (2) modifying the terminology of Rule 68 to describe more explicitly the mechanics and sanctions of the Rule; (3) allowing plaintiffs, not just defendants, to initiate offers under a "two-way" rule; (4) devising a set of incentives and sanctions calculated to promote the timely and fair resolution of disputes without unduly threatening either party; and (5) incorporating time frames for making and responding to offers.

You can download the report here.

--Counseller/jtf

Another important venue decision

An article today on Law.com asks:  Will Famed Rocket Docket Fizzle Out in Wake of Federal Circuit's Ruling?  Texas court slapped down for holding onto case; ruling bolsters recent 5th Circuit order.  Click the case name to download the Federal Circuit's decision: In Re TS Tech USA Corporation. --RR

Whoops! My Computer Accidentally Deleted the Evidence!

Andrew Hebl, a law clerk for the Wisconsin Supreme Court, has posted a new article on SSRN discussing Federal Rule of Civil Procedure 37(e). The rule states that, generally, "a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system."  He takes the position that, since the Rules were amended in 2006, courts have been misapplying this "good faith" standard:

The Federal Rules of Civil Procedure were amended effective December 1, 2006 to address concerns about discovery of electronically stored information. One of these amendments, Rule 37(e), created a safe harbor for parties that destroy relevant information as a result of the good faith, routine operation of their electronic storage systems. The rule recognizes the enhanced difficulty of preserving relevant information in the electronic context due to the automatic operation of electronic storage systems and the necessary deletion and modification of such systems' contents from time to time due to storage constraints and other technological limitations. The rule's good faith requirement protects parties and addresses their concerns by precluding sanctions where conduct is not reckless or intentional, and applies after a duty to preserve relevant evidence has arisen. This Comment is the first to consider how courts have applied the rule since its adoption. In evaluating courts' performance, this Comment concludes that the rule has been misapplied and, in effect, rendered superfluous, in that courts have continued to impose sanctions for insufficiently culpable conduct, or alternatively, have essentially ignored the rule by holding parties to a strict liability standard. The end result is that problems created by electronically stored information in the destruction of evidence context have been left unaddressed. The article attempts to remedy this situation by proposing a framework for proper application of Rule 37(e).

Download the article here.

--Counseller/jtf

Rules Enabling Act

Anthony Vitarelli recently posted A Blueprint for Applying the Rules Enabling Act's Supersession Clause on SSRN.  Click the article title to download.  This abstract follows:

When Congress passed the Rules Enabling Act (REA), it deferred to the Supreme Court's institutional expertise to enact guidelines for judicial procedure. In the REA, Congress included a provision - now known as the supersession clause - that declared existing statutes in conflict with new rules to "be of no further force or effect." This Comment examines a divergence between 18 U.S.C. 3731 and Federal Rule of Appellate Procedure 4(b)(1)(B) that implicates the supersession clause. Three circuits have adjudicated this conflict and reached different conclusions. The substance of the conflict concerns the timeliness of government appeals of district court decisions and orders in criminal cases. At present, Rule 4(b) permits a longer appellate time limit than 3731, but a 2007 Supreme Court case, Bowles v. Russell, may invalidate any limit longer than that in 3731. This Comment asserts that irrespective of Bowles, applying the supersession clause favors the primacy of Rule 4(b). Employing the supersession clause provides a blueprint for future rule-statute disputes concerning timeliness. In making these determinations, this Comment argues that courts should evaluate the rule versus the statute according to three metrics: the relative recency of enactment, the institutional competence of the respective authors to decide the issue, and the degree to which the rule affects substantive rights.

-Counseller/ps

Venue Selection, State or Federal?

When a contract contains a forum-selection clause that requires "exclusive venue" in a particular county of a State, might venue be proper in a Federal District Court that happens to be located in that county?  The Fifth Circuit answered "yes" this week in Alliance Health Group, Inc. v. Bridging Health Options LLC.  En route, the court disagreed with a 10th Circuit case and distinguished provisions that require venue in the courts of a county from provisions that require venue in the courts in a county.  Federal district courts are courts in a county, but they are not courts of a county.  Although controversial, Judge Barksdale's opinion is concise, well-written, and accessible.  --RR

Service via Certified Poke?

The AP reports:  Australia OKs Facebook for serving lien notice.--RR

Foreign Defendants and Service of Process under State Law

The New York Court of Appeals recently handed down an interesting opinion regarding service of process upon foreign defendants in their home country.  The suit involved a forfeiture proceeding initiated by the New York attorney general seeking to obtain the proceeds from a money transfer operation based in Brazil.  The plaintiff served the Brazilian defendants in Brazil in accordance with the NY service of process statute.  The trial court held that the service of process was invalid because it failed to comply with the Inter-American Convention on Letters Rogatory as well as the service requirements of Brazil.  Brazil requires that a foreign plaintiff serve a Brazilian party using letters rogatory or a letter of request sent through diplomatic channels.  The intermediate appeals court affirmed, holding that the service procedures were improper because "they did not comply with Brazilian law and failed to defer to principles of international comity." 

Arguing before the NY Court of Appeals the plaintiff asserted that because service was proper under the NY statute, the defendants were properly served.  As to the comity argument, the plaintiff argued that "principles of comity do not warrant the importation of another country's service of process rules."  The high court first made clear that the plain text of the statute did not require a NY plaintiff to comply with any foreign locale's service of process requirements.  The court then quickly dispensed of the comity argument:  "Thus, comity is not an additional hurdle for a plaintiff to overcome in serving a party in a foreign country, and defendant's claim that plaintiff should have complied with Brazilian law, which requires that service of process by a foreign party upon a party domiciled in Brazil must be made by letters rogatory, is without merit."

Read the full opinion here.

-Counseller/ps

Remanding "matters" in which State Law Predominates under 1441(c)

The Fifth Circuit recently reversed a district court's finding that even though a suit involved a federal question, the entire case should be remanded to state court because most of the plaintiff's claims arose under state law.  The plaintiff in the case asserted state law claims involving misrepresentation, fraud, and breach of contract.  Additionally, the plaintiff asserted a violation under the federal Fair Labor Standards Act ("FLSA").  The district court found that under 1441(c) all claims, including the federal question, should be decided in state court.  As framed by the Fifth Circuit panel, the appeal presented the following question:  "[D]oes 28 U.S.C. § 1441(c) permit a district court to remand federal claims conferring removal jurisdiction where those claims are part of a case 'predominated' by state law?" 

The court first pointed out that although other courts have interpreted the word "matters" in 1441(c) to refer to an entire action, the court's precedent required a different result.  The plaintiff argued that several Fifth Circuit cases permitted the district court to remand the entire action, including the federal claims, if the state law claims predominate.  The court declared most of the statements in the cited cases dicta, and further dispensed with the argument by stating it was not necessary to "navigate the murky waters between alternate holding and dicta..."  The court then utilized an older case than those relied upon by the plaintiff to declare that the district court had no authority to remand the plaintiff's FLSA claim.

Read the full opinion here.

-Counseller/ps

Haywood v. Drown

The Supreme Court heard arguments on last Thursday in Haywood v Drown.  The bulk of the argument focused on the jurisdictional issue.  As SCOTUSblog pointed out, at one point Justice Alito asked whether there was some "Platonic ideal of jurisdiction versus non-jurisdiction.”  You can read the full argument transcript here.  Also of interest is the amicus brief filed by a group of constitutional law and civil procedure professors arguing for reversal of the New York Court of Appeals decision.  You can read that here.

-Counseller/ps

Forum Non Conveniens and the "American" Presumption

Judge Posner, writing for a panel of the Seventh Circuit Court of Appeals recently affirmed a district court's dismissal on forum non conveniens of a diversity suit brought under 28 U.S.C. § 1332(d)(2)(C).  The plaintiff was a wholly owned subsidiary of a Japanese company incorporated in Delaware that invested in a limited partnership which bought a building in Chicago.  The limited partnership was also incorporated in Delaware with a principal place of business in Japan, and all the partners had Japanese addresses.  The bulk of the opinion is dedicated to the plaintiff's argument that there is a strong presumption in favor of the plaintiff's choice of forum, "especially if the plaintiff is an American and the forum is an American court."  The court quickly dismissed that argument and seemed to scold the plaintiff's counsel declaring that "the plaintiff's lawyers refuse to acknowledge that their client is 'American' in only the most artificial sense."  Judge Posner then went on to explain that "Courts need to look behind an assertion that the plaintiff is 'American,' moreover, to determine whether the party has the sort of ties with the United States that make the American judicial forum convenient."  So there would be no confusion as to the relevance of the presumption following this opinion, the court declared "the presumption is fine, but it is not to be treated, as the plaintiff would have us do, as a nigh-insurmountable obstacle to dismissal."

Read the full opinion here.

-Counseller/ps

Converting a 12(b)(6) Motion to Dismiss into a Motion for Summary Judgment under FRCP 56

A panel of the Second Circuit Court of Appeals recently reinstated a suit arising out of the 1984 Bhopal, India factory explosion.  The district court dismissed all of plaintiff's claims except for one after converting the defendants' motion to dismiss under FRCP 12(b)(6) into a Rule 56 motion for summary judgment.  The plaintiffs argued on appeal that the district court gave inadequate notice of conversion prior to granting the motion.  The appeals panel agreed and found that the conversion was in error, or at the least premature.  Citing the language of FRCP 12(d), the panel explained that "this means that a district court must give notice to the parties before converting a motion to dismiss pursuant to Rule 12(b)(6)."  The district court had found notice was unnecessary because the plaintiffs were already on notice to a possible conversion.  Citing to a previous Second Circuit case the court emphasized that "care should, of course, be taken by the district court to determine that the party against whom summary judgment is rendered has had a full and fair opportunity to meet the proposition that there is no genuine issue of material fact...”

Read the full opinion here.

-Counseller/ps

Generalized Grievances & Hein v. Freedom from Religion Foundation, Inc.

Regent University Professor Craig Stern recently posted Another Sign from Hein: Does the Generalized Grievance Fail a Constitutional or a Prudential Test of Federal Standing to Sue? on SSRN.  Click the article title to download it.  The abstract follows:

The Supreme Court seems to have shuttled the federal rule against hearing generalized grievances back and forth between a home in the Constitution and a home in the Court's prudence. Hein v. Freedom from Religion Foundation, Inc., 127 S. Ct. 2553 (2007), stamped the latest forwarding address.
Where the generalized grievance finds its home orients the whole map to justiciability. The much controverted question of the sort of injury required for standing to sue may find answers in the location of the generalized grievance test. The prudential tests of standing focus upon the legal theory a party argues. The constitutional test of standing focuses upon the harm a party suffers. If the generalized grievance test retains its focus upon legal theory even as the test is drawn into constitutional standing doctrine, the injury-in-fact of that doctrine moves from simple harm towards the old invasion-of-legal-interest reminiscent of standing as a test of merits and not of justiciability.
This Article tracks the generalized grievance, exploring along the way the whole terrain of standing, ripeness, and mootness. (And in so doing, the Article finds that constitutional standing has more to do with the meaning of "judicial Power" than with the meaning of "Cases" and "Controversies.")

-Counseller/ps

FRE 502: Attorney-Client Privilege And Work-Product Doctrine

New FRE 502 concerns the attorney-client privilege and the work-product doctrine.  It became effective September 19, 2008. Federal Evidence Review provides a reference sheet to navigating this new legislation. Click Here

The attorney-client privilege and work-product act is explored more thoroughly in Understanding New FRE 502 (Attorney-Client Privilege And Work-Product Doctrine). This article also includes key links and is a great resource for learning more about this new legislation.--Counseller

Should Federal Court Workload Guide Development of Procedural Doctrines?

Nancy Levitt at the University of Missouri School of Law has authored a new article questioning whether we should let administrative concerns, like docket overcrowding, guide the use of doctrines like abstention, preclusion, and summary judgment, which let our federal courts avoid making decisions.

The abstract explains:

The quantity of litigation in the federal courts has reached unprecedented heights. While this 'crisis of volume' has attracted the attention of legislators and scholars, the judiciary has been left to divine self-help measures to reduce litigants' use of the federal courts. The federal bench that must manage this caseload explosion includes a cadre of recently appointed federal judges. Many of these judges embrace the New Federalism, an initiative to shift governmental power and responsibility back to the states.

This article posits that the combination of judicial overload and injudicious federalism is operating to shunt certain classes of litigants away from federal courts. New procedural and substantive theories are being created to restrict federal jurisdiction. Federal courts are increasingly using the doctrines of preclusion, preemption, abstention and remand to shuttle cases or decision-making authority back to state courts. Complementing this procedural routing of cases is an expansion of summary procedures and a dramatic reduction in the scope of substantive constitutional rights.

This article questions the propriety of the judiciary's use of administrability concerns in the formulation of jurisdictional theories. While court efficiency appears to be a deserving goal, the current method of its implementation is through a reduction of court access to particular classes of litigants. The article analyzes the concept of administrability and posits that administrative efficiency is actually a value-laden argument for selecting which litigants should be permitted access to federal courts.

. . .

You can download the whole article here.--Counseller

You're not a procedure nerd if ...

You're not a procedure nerd if you don't find this transcript to be a compelling page-turner.  It's the oral-argument transcript from the Vaden case, which involves the nature of federal-question jurisdiction and the Federal Arbitration Act, and which is up on Cert. to the Supreme Court. --RR

Twombly and Communication

Prof. William H. Page recently posted Twombly and Communication:  The Emerging Definition of Concerted Action Under the New Pleading Standards.   Click the article title to download the article; the abstract follows:

After the Supreme Court's 2007 decision in Bell Atlantic Corp. v. Twombly, an antitrust plaintiff who tries to plead an agreement in restraint of trade under Section 1 of the Sherman Act must allege more than parallel conduct and an undefined "conspiracy." Now, the complaint must include "enough factual matter (taken as true) to suggest that an agreement was made." Although the Court insisted it was not imposing a heightened pleading standard, it did require antitrust plaintiffs to provide enough detail to make the claimed agreement plausible. In this article, I examine an important substantive consequence of Twombly's pleading regime. In nineteen reported cases, federal courts have applied the new pleading standard to complaints alleging concerted action under Section 1 of the Sherman Act. In doing so, the courts have had to address a crucial defect in the substantive law of agreement: the Supreme Court's traditional definitions of agreement, which Twombly itself simply repeated, are too vague to help litigants and courts distinguish between consciously parallel conduct and concerted action. In the course of applying Twombly, however, the lower courts have adopted a more meaningful definition, one that requires that the parties have communicated to each other their intentions to act in a certain way, and their reliance on each other to do the same. This clarification of the standard has important implications for the role of discovery in pleading and resolving claims of concerted action.

--RR

Podcasts of Advisory Committee Proceedings Regarding Proposed Changes to Rules 26 and 56

The Advisory Committee is recommending changes to Rule 26 (Duty to Disclose; General Provisions Governing Discovery) and 56 (Summary Judgment). They summarize their proposed changes in this brochure requesting comment. Watch out, though, because the beginning of the summary is at the end of the brochure and the end of the summary is at the beginning--I'm not sure how they must fold the thing.

The Committee held the public hearing to receive comments on the proposal on November 17-18. Click here for the audio from that hearing, and here for other information.--Counseller/jf