Civil Procedure & Federal Courts Blog

New choice of law article on the SSRN

Dean Symeonides has published another article on choice of law, and posted it on the SSRN.  In it, he analyzes how states have been dealing with the choice of law question over the past 40 years in "cross-border" torts (torts where "the injurious conduct and the resulting injury occur in different states or countries").  Here's a clip from the abstract:

This Article is the first comprehensive study of how American courts have resolved conflicts of laws arising from cross-border torts over the last four decades. This period coincides with the confluence of two independent forces: (1) a dramatic increase in the frequency and complexity of cross-border torts generated by the spectacular expansion of cross-border activity now known as globalization; and (2) the advent of the American choice-of-law revolution, which succeeded in demolishing the old regime in forty-two U.S. jurisdictions, but failed to replace it with anything resembling a unified system.

Download the whole article here.

--Counseller/jtf

5th Circuit holds district court's remand order under 1367(c) reviewable

In Brookshire Brothers Holding, Inc. v. Dayco Products, Inc., No. 07-31154, 2009 WL 22876 (5th Cir. January 6, 2009), the Fifth Circuit held that a district court's order of remand based on 28 USC § 1367(c) is reviewable. 

Section 1447(d) provides that an "order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise."  The Fifth Circuit acknowledged the Supreme Court's recent holding in Powerex two years ago.  As you may recall, Professor Dodson provided an examination of the Powerex case on this blog when it was first released.  As Professor Dodson pointed out at the time, the Supreme Court held that when the District Court relies upon a ground that is "colorably characterized" as subject-matter jurisdiction, appellate review is barred by § 1447(d).  In what is now a deepening circuit split, the Fifth Circuit found that declining supplemental jurisdiction is not "colorably characterized" as a remand based on a lack of subject matter jurisdiction: 

In this case, the district court’s order of remand was clearly based on 28 U.S.C. § 1367(c). The district court summarized Brookshire’s argument that remand was required under 28 U.S.C. § 1447(c) in the first paragraph of the order, but the court then went on to analyze the remand issue under the discretionary standard set out in 28 U.S.C. § 1367(c), finding that “[w]hile it is certainly within our discretion to retain this case for further proceedings, after examining the factors enumerated in § 1367(c), the Court finds that the suit before us contains only issues of State law, and in the interest of comity, these State law issues would be more properly decided by a State forum.”  The order of remand cannot be “colorably characterized” as being based on lack of subject matter jurisdiction under section 1447(c).

You can read the full opinion here.

-Counseller/ps

Using the Internet to Improve Class Actions

With two accomplices, Drug and Device Blogger and Curmudgeon Mark Herrmann recently published "Making Class Actions Work:  The Untapped Potential of the Internet" in the Pittsburgh Law Review. Download the article here.   A brief abstract follows:

In the article, Herrmann, his colleague Brad Harrison, and his former colleague (and now Dean of the Lewis & Clark Law School) Bob Klonoff first canvas the current uses of the internet in class action litigation. The authors go on to propose ways that the internet can be used to improve class action procedure in the future. Among other proposals, they suggest creating a centralized website that contains all information about pending federal class action lawsuits, webcasting certain class action proceedings, and using the internet to facilitate two-way communications between absent class members, counsel, and the court.

--RR

Funding for Civil Litigation Research

The ABA Section of Litigation invites applications to The Litigation Research Fund, which makes individual awards of between $5,000 and $20,000 to support original and practical scholarly work that significantly advances the understanding of civil litigation in the United States.  The Fund was established in 2007 to support research and writing projects relevant to litigation policy and practice, with preference given to works with an empirical foundation. The first two rounds of funding resulted in thirteen grants totaling approximately $140,000.  Priority will be given to applications received by February 28, 2009.  For additional information, see http://www.abanet.org/litigation/researchfund.

--RR

Federal Caseload Statistics

The Federal Judiciary Website has posted the federal caseload statistics. 

--Counseller/jtf

MBE may add civil procedure questions

Law.com reports that the National Conference of Bar Examiners is considering adding civil procedure questions to the Multistate Bar Exam.  You can read about it here.

-Counseller/ps

2008 AALS Civil Procedure Section papers available online

The papers presented at the 2008 AALS Civil Procedure Section’s annual meeting were recently published in the Summer 2008 edition of the Oklahoma Law Review and are now available online.  The topic of the program was “The Revolution of 1938 Revisited:  The Role and Future of the Federal Rules.”  Papers are by Debra Bassett (Alabama) & Rex Perschbacher (UC Davis), Richard Marcus (UC Hastings), and Robert Bone (BU), with an introduction by Steven Gensler.

-Counseller

4th Circuit holds additional counter-defendant may not remove

Recently, a split panel of the 4th Circuit Court of Appeals found that a counter-defendant added to the suit by the original defendant could not remove the case to federal court under 28 U.S.C § 1441(a) or § 1453(b).  In Palisades Collections v. Shorts, a collection agency sought to recover $794.87 from Shorts for a cellular phone debt in West Virginia state court.  Shorts responded by filing a counter-claim against Palisades and joined AT&T as a counter-defendant.  Shorts filed for class certification to represent over 160,000 other citizens of West Virginia.  AT&T removed the case to the Northern District of West Virginia.  The district court granted Short's motion to remand.

On appeal, the 4th Circuit affirmed.  First, citing to authority from numerous other federal circuits the court "easily conclud[ed]" that an additional counter-defendant is not a "defendant" under 1441(a).  Next, the court turned to AT&T's argument that the broad language of 1453(b) permits an additional counter-defendant to remove a class action to federal court.  After analyzing the language of 1453(b), the court held that there was no indication that in 1453(b) Congress intended to alter the traditional rule that only an original defendant may remove.  The dissenting judge argued that CAFA authorizes removal even though AT&T is not an original defendant.

You can read the full opinion here.

-Counseller/ps

Federal Rule of Evidence 502

Over at law.com, John Summers and Michael Gadarian have posted a new article on Federal Rule of Evidence 502.  The article contains a discussion of some problematic aspects of the language in 502.

-Counseller/ps

Comparative Civil Procedure

Jeffrey Parker from George Mason University School of Law has posted a paper on SSRN that he presented at the 11th Travemunder Symposium on the Economic Analysis of Procedural Law.  The paper, Comparative Civil Procedure and Transnational 'Harmonization': A Law-and-Economics Perspective, discusses transnational harmonization of civil procedure law.  This abstract follows:

This paper presents a critical analysis of recent proposals for transnational harmonization of civil procedure law through the promotion of uniform principles of transnational civil procedure that would homogenize civil procedure law across national boundaries. A recent proposal of Principles of Transnational Civil Procedure for commercial disputes, by the American Law Institute jointly with UNIDROIT, is focused particularly on eliminating the distinctive features of American civil procedure, notably party control of procedure, expansive pretrial discovery, and jury trial. That proposal is criticized by this paper on the grounds that its normative objective of transnational uniformity in procedure is unexamined by its proposers and highly questionable as a matter of policy.

After reviewing the principal differences across national systems as a matter of comparative procedure, the paper presents a general economic analysis of civil procedure, and detailed applications to the distinctive features of the American system. The paper then examines the question of diversity versus uniformity in civil procedural law. Given that disputes subjected to litigation are unlikely to be homogeneous, the case for a uniform procedural law appears weak. Rather, and particularly in the context of transnational commercial disputes, it seems likely that procedural rules should vary with the dispute, and that the disputing parties themselves should be permitted to choose among those applicable. By definition, the disputing parties are sophisticated businesses who will internalize the results of the litigation. From this point of view, diversity among national systems of procedure would contribute positively to the efficient resolution of disputes, by enabling contracting parties to choose among disparate procedural rules.

In the context of transnational commercial disputes, contracting parties in fact have been choosing their own applicable substantive law, forum, and procedural rules (to some extent) for decades, and these choices have been respected in most countries. There is no ground for replacing this system with harmonized procedural law. The adoption of such a proposal would actually reduce the efficiency of the transnational procedural system.

-Counseller/ps

Personal Jurisdiction and Patent Litigation

A divided panel of the Federal Circuit recently affirmed a district court's finding that an international corporation did not submit itself to specific personal jurisdiction in Alabama by sending three letters asserting patent infringement.  Avocent Huntsville Corp. v. Aten International Co., No. 2007-1553, 2008 U.S. App. LEXIS 25477 (Fed. Cir. Dec. 16, 2008) involved a declaratory judgment action filed by a Delaware corporation located in Alabama (Avocent Huntsville) against a Taiwanese corporation (Aten International).  Both companies are involved in the manufacture and sale of keyboard-video-mouse switches.  After Aten International sent three letters seeking to enforce a patent, Avocent Huntsville sought a declaratory judgment of non-infringement in the Northern District of Alabama.  The district court granted the defendant's 12(b)(2) motion concluding that Aten International "did not purposefully submit itself to jurisdiction in Alabama by sending the three letters..." 

On appeal, the divided panel agreed with the district court's finding that specific jurisdiction was not proper.  First, the court easily dismissed of the argument that specific jurisdiction could be established by mere letters asserting patent infringement.  Next, the court examined the argument that specific jurisdiction was proper because some of the products subject to the patent were sold within the forum:

In short, a defendant patentee’s mere acts of making, using, offering to sell, selling, or importing products—whether covered by the relevant patent(s) or not—do not, in the jurisdictional sense, relate in any material way to the patent right that is at the center of any declaratory judgment claim for non-infringement, invalidity, and/or unenforceability. Thus, we hold that such sales do not constitute such "other activities" as will support a claim of specific personal jurisdiction over a defendant patentee.

In the twenty-eight page opinion the court provides an excellent overview of its personal jurisdiction jurisprudence in the patent context.  The dissenting justice argued that the majority's holding contravenes precedent and ignores all factors related to the relationship among plaintiff, defendant, and the forum.  You can read the full opinion here.

-Counseller/ps

7th Circuit Makes It Harder for Plaintiffs to Keep Securities Class Actions in State Court

The folks at Law.com have reported a new decision of the Seventh Circuit that holds that the grant of federal jurisdiction in CAFA trumps the anti-removal provisions of the Securities Act of 1933.  Read their report on the case, or the case itself.

--Counseller/jtf

Federal Rulemaking Website Adds "Quick Links"

For those of you that utilize the resources at the Federal Rulemaking Website of USCourt.gov, they're in the process of adding "Quick Links" to frequently used Rules Committee records and other information:

Our "Quick Links" are divided into two categories: (1) links relating to the Federal Rules, including current rules and forms in effect, proposed rules amendments that take effect in the future, and comments received on proposed rules amendments; and (2) links relating to the Rules Committees, such as the committee reports, committee minutes, committee agenda materials, and schedule of upcoming committee meetings and hearings.

They're only available for the Bankruptcy Rules at the moment, but there's a little more information about them here.

--Counseller/jtf

Is dispositive procedure "fatally flawed"?

Professor Suja Thomas from the University of Illinois has posted a new article to SSRN arguing the answer to that question is emphatically yes.  The new article, "The Fallacy of Dispositive Procedure" is forthcoming in Volume 50 of the Boston College Law Review.  Professor Thomas published an article two years ago arguing "Why Summary Judgment is Unconstitutional."  This abstract follows for her new article:

I have another seemingly heretical proposition - that dispositive procedure is fatally flawed. The Supreme Court has held that a judge can dismiss a case before, during, or after trial if he decides a reasonable jury could not find for the plaintiff. The Court has also held that a judge cannot dismiss a case based on his own view of the sufficiency of the evidence. I contend, however, that judges do exactly that. Judges dismiss cases based simply on their own views of the evidence, not based on how a reasonable jury could view the evidence. This phenomenon can be seen in the decisions dismissing cases. Judges describe how they perceive the evidence, interchangeably use the terminology of reasonable jury, reasonable juror, rational juror, and rational fact-finder among others although very different in meaning, and indeed, disagree among themselves on what the evidence shows. I further argue that the reasonable jury standard involves several layers of legal fiction. Those fictions include the current substitution of a judge's views for a reasonable jury's views, the speculative determination by a judge of whether a reasonable jury could find for the plaintiff, the assumption that disagreement among judges on the sufficiency of the evidence does not show a reasonable jury could find for the plaintiff, and the assumption that disagreement among judges on the sufficiency of the evidence demonstrates unreasonableness on the part of some of the judges. These legal fictions, which underlie the reasonable jury standard, show that the basis of dispositive procedure is fatally flawed.

-Counseller/ps

More commentary on the Voluntary-Involuntary Rule

The next issue of the Baylor Law Review will contain a comment written by Jeff Fisher.  Jeff's comment clearly outlines and predicts the questions created and answered by the Morgan decision (see today's earlier post), though it went to press before the decision.  Click below to download the comment, which is titled Everybody Plays the Fool:  Sometimes There's No Exception to the Rule:  Procedural Misjoinder is Not An Exception to the Voluntary-Involuntary Rule. Download Fisher.Pdf  

Fradulent Joinder and the Voluntary-Involuntary Rule

In Morgan v. Chase Home Finance, the 5th Circuit issued an unpublished decision that will likely surprise many readers.  It requires practitioners (and my students) to be agile with the concept of fraudulent joinder and its interplay with the voluntary-involuntary rule. And it's conceptually wrong.

The voluntary-involuntary (V-I) rule is familiar:  if diversity is not present at the time the plaintiff files the state-court action, a change in parties that creates diversity does not authorize removal unless the change resulted from the voluntary act of a plaintiff.  Take the two textbook examples:  (1)If the plaintiff nonsuits the spoiler, the defendant can remove because the nonsuit is a voluntary act; (2) if the spoiler wins summary judgment, though, the other defendants cannot remove because diversity was created against the plaintiff's wishes. 

Fraudulent joinder allows a defendant to remove the case, despite a spoiler, when the defendant can prove that the spoiler was "fraudulently joined."  In the typical fraudulent-joinder case (indeed, in just about any reported case you can find), the defendant sees the state-court pleading or other document, realizes the spoiler has been fraudulently joined and removes NOW, arguing that the court should disregard the citizenship of the spoiler. The defendant does NOT wait for the spoiler to be dismissed ... because of the V-I rule.

Recently, in the Crockett case (cited below), the 5th circuit quoted without critical analysis an old not-often-cited headnote that fraudulent joinder is an exception to the voluntary-involuntary rule.  The Crockett case involved improper procedural joinder and contained several puzzling errors.  I didn't think the court would extend the principle to the situation in the Morgan case.  I was wrong.  In Morgan, the court stated and applied the "rule:"

Generally, "a case nonremovable on the initial pleadings [can] become removable only pursuant to a voluntary act of the plaintiff"; this is the "voluntary-involuntary" rule. Weems v. Louis Dreyfus Corp., 380 F.2d 545, 547 (1967). We have long recognized an exception to this rule, however, "where a claim against a nondiverse or in-state defendant is dismissed on account of fraudulent joinder. Fraudulent joinder can be established by demonstrating either '(1) actual fraud in the pleading of jurisdictional facts, or (2) inability of the plaintiff to establish a cause of action against the non-diverse party in state court.' "Crockett v. R.J. Reynolds Tobacco Co., 436 F.3d 529, 532 (5th Cir.2006) (quoting Travis v. Irby, 326 F.3d 644, 646- 47 (5th Cir .2003)).

Morgan's suit did not become removable until the probate court dismissed Alexander. [FN4] Because her dismissal was not a voluntary act by the plaintiff, Morgan believes that the voluntary-involuntary rule should have barred removal. The district court, on the other hand, found that Alexander had been fraudulently joined, because Morgan could not establish a cause of action against her. We agree.

Morgan's complaint alleged a single cause of action against Alexander: breach of fiduciary duty. As the district court correctly noted, under Texas law "the trustee ... does not owe a fiduciary duty to the mortgagor." Stephenson v.LeBoeuf, 16 S.W.3d 829, 838 (Tex.App.-Houston [14th Dist.] 2000, pet. denied). The only cause of action alleged against Alexander was therefore invalid. . . . Accordingly, because Morgan failed to establish a cause of action against Alexander, we agree with the finding that she was fraudulently joined. [FN5]

There are several questions far too important to be glossed over in an unpublished opinion.

First, In both the Crockett case and the Morgan case, the court treated state-court dismissals as "tantamount to findings of fraudulent joinder."  I'm not sure why.  When a defendant removes arguing fraudulent joinder, the defendant must prove that there is no reasonable basis to predict the plaintiff might recover against the spoiler under state law.  State courts dismissing for misjoinder, or summary judgment, or on the pleadings, will not be applying this standard.  Indeed, those rulings may indeed all involve "close calls;" that is, just because there is no "genuine issue of material fact" does not mean a defendant can remove initially based on fraudulent joinder -- otherwise, fraudulent joinder would federalize summary judgment in a strange way in close cases.   Surely not every summary judgment or severance is "tantamount to a finding" by the state court of fraudulent joinder.  So which ones are?  Does the defendant, upon removal, have to argue that the misjoinder or merits were so obviously deficient as to make the obviously appropriate dismissal equivalent to fraudulent joinder? ..... 

If so, then what about the time limits?  It is clear that the defendant can remove NOW if fraudulent joinder is present.  If the joinder is so fraudulent that a state-court dismissal is tantamount to the conclusion that there is "no reasonable basis to predict that the plaintiff might recover ..." then why doesn't the 30-day clock for removal begin to run from the time the defendant receives the pleading? 

Before these two decisions, a defendant spotting a spoiler needed to remove BEFORE the spoiler was dismissed by the state court, because the spoiler's dismissal would be an involuntary act.  Now, it appears that the defendant need not, so long as the dismissal is "tantamount" to a finding of fraudulent joinder.   If all dismissals are "tantamount," then the vol-involuntary rule is dead.  If only some rulings are tantamount, which ones?  Is there that second layer of whether the dismissal also meets the no-reasonable-basis standard?   If so, if it's only the obvious dismissals, then why doesn't the 30-day clock start to tick before there is the state-court dismissal?   

I suspect the en banc court will eventually reverse course and clarify the conceptual distinction between the doctrines.  For defendants, this means heads up.  Don't rely upon being allowed to wait for an involuntary dismissal.   --RR

Rule 23 class action status denied to hurricane victims

As WSJ.com recently reported, District Judge Kurt Engelhardt denied class action status on December 29, 2008 to Hurricane Katrina & Rita victims in an action concerning those allegedly toxic trailers.  In a 50 page order, the judge concluded that the requirements for class certification under FRCP 23(a) and (b)(3) were not met. 

-Counseller/ps

Choice of Law in the American Courts in 2008: Twenty-Second Annual Survey

Dean Symeonides of Willamette University College of Law has posted his twenty-second annual survey of choice of law cases on SSRN.  You can download it here, but here's a preview from the abstract:

The following are among the cases discussed in this Survey: Two U.S. Supreme Court cases and several intermediate court cases delineating the extraterritorial reach of the Constitution and federal statutes, and one Supreme Court case on the domestic effect of a judgment of the International Court of Justice; A New Jersey Supreme Court case abandoning Currie's interest analysis in tort conflicts in favor of the Restatement (Second), and a New Mexico Supreme Court case abandoning the traditional approach in contract conflicts (but only in class actions) and adopting the "false conflict doctrine" of the Restatement (Second); Several cases applying (and one not applying) the law of the parties' common domicile to torts occurring in another state; Cases involving cross-border torts and applying the law of whichever of the two states (conduct or injury) favors the plaintiff; Product liability cases granting forum non conveniens dismissals in favor of alternative fora in foreign countries and those countries' responses by enacting "blocking" statutes; Cases refusing to enforce clauses precluding class-action or class-arbitration; Cases illustrating the race to the courthouse between insurers and their insureds; Cases recognizing Canadian or Massachusetts same-sex marriages, and a case refusing to recognize a Pakistani talaq (unilateral, non-judicial divorce); and a case refusing to recognize a foreign judgment that conflicted with a previous judgment from another country.

--Counseller/jtf

Federal Rulemaking Podcasts Update

Last month we posted links to the podcast related to the proposed changes to Federal Rules of Civil Procedure 26 and 56.  All federal rulemaking proceedings will now be available at the court's website.  Since our last post, there is a new podcast on Amendments to the Federal Rules of Bankruptcy, Civil, and Criminal Procedure that took effect December 1, 2008. 

-Counseller/ps

A Summary Judgment is Not a Dismissal!

Click here to download Prof. Bradley Scott Shannon's recent article A Summary Judgment is Not a Dismissal! (exclamation point in original.)  The article will appear in Vol. 56 of the Drake Law Review.  The abstract follows:

Many lawyers think that the granting of a motion for summary judgment results in the dismissal of the underlying claim or action. They are wrong. Though summary judgments and dismissals share some characteristics, they are distinct procedures. Accordingly, the failure to distinguish these concepts can lead to problems. In particular, the confusion of summary judgments with dismissals arguably has resulted in a widespread misapplication of the federal supplemental jurisdiction statute.

--RR