Civil Procedure & Federal Courts Blog

Two Interesting Links:

Two thought-provoking links for the day:

• Over at his blog, Adamsdrafting, Ken Adams has an interesting post about the admissibility of expert testimony in the context of ambiguous contract terms.  Whether a contract is ambiguous is a legal question. Does that mean that, without regard to context, expert testimony is never admissible to help a generalist judge determine whether the words are reasonably susceptible to multiple interpretations?

• Over at Drug and Device Law, a "spirited off-line discussion" (of which I was a part) generated an interesting post regarding ethics in the adversarial system.  In short, we all know that sometimes in advocacy we win a point we should lose because our adversary defaults and somehow forfeits the point that she should have won.  What are the ethical implications of taking obviously-wrong-if-but-only-if--objected-to positions? Is there a difference between, say, introducing hearsay and removing a case late?  Click here to join the discussion.

Junior Federal Courts Conference at Michigan State

Click the link to view an updated flyer for the Federal Courts Conference at Michigan State this fall.  Prof. Lou Mulligan is the contact person, and you can find his information in the flyer.  Download Federal Courts Conference Flyer1

Cert. Granted

Yesterday, the Supreme Court granted certiorari on the following issue:  For purposes of determining principal place of business for diversity jurisdiction citizenship under 28 U.S.C. § 1332, can court disregard location of nationwide corporation's headquarters--i.e., its nerve center?  The case is Hertz. Corp. v. Friend from the 9th Circuit, 297 Fed. Appx. 690.   --RR

Hat tip to Ben Spencer.

Case of Interest -- Reed Elsevier v. Muchnick

Readers may be interested in a case currently pending before the Supreme Court called Reed Elsevier v. Muchnick.  It’s a copyright case, but it raises neat civil procedure issues.

The case is a class action on behalf of authors who contributed works to print periodicals, which then entered into agreements to publish the authors’ works in electronic databases.  The class sued the print publishers and electronic databases, claiming that the authors had not consented to reproduction in electronic publication.  All parties entered into a settlement agreement that, in grossly simplified form, would provide monetary compensation in exchange for electronic publication.

The settlement purports to cover works that were timely registered with the Copyright Office (and thus entitled to statutory damages), those that were untimely registered, and those that were never registered.  Objectors, led by Irvin Muchnick, a freelance writer covered by the class definition, argued that the settlement was unfair to authors of unregistered works and that the class representation was inadequate.  The district court certified the class and approved the settlement over the objections.  Muchnick and other objectors appealed.

And here is where the mundane copyright issues become subordinate to the sexy civil procedure issues.  The Second Circuit, acting sua sponte, ordered briefing on whether the district court ever had subject-matter jurisdiction over the claims based on unregistered copyrights.  Why?  Well, 17 U.S.C. § 411(a) provides: “No action for infringement of the copyright in any United States work shall be instituted until . . . registration of the copyright claim has been made.”  All parties, including objectors, argued that § 411(a) was nonjurisdictional and that its requirement had been waived.  Nevertheless, a divided panel held that § 411(a) deprived the district court of subject-matter jurisdiction over unregistered works.  The panel also held that the supplemental jurisdiction statute, 28 U.S.C. § 1367(a), does not permit supplemental jurisdiction over unregistered copyright claims even when joined with properly registered copyright claims.

The Supreme Court granted certiorari to review whether § 411(a) is jurisdictional and, because all parties challenged the Second Circuit’s holding, appointed an amica curiae (Ohio State’s Deborah Jones Merritt) to argue in support of the judgment.

The write-up on the case and all of the merits briefs challenging the judgment are here.  Note that the amica’s brief has not yet been filed.

The case presents, in a nutshell, two jurisdictional questions that are prime fodder for civil proceduralists.  First, does § 411(a) restrict the subject-matter jurisdiction of the federal courts—at least such that a district court cannot approve of a class action settlement resolving purported copyright claims for unregistered works?  Second, if so, does the supplemental jurisdiction statute nevertheless allow the exercise of jurisdiction when unregistered copyright claims are joined with claims over which the district court does have independent subject-matter jurisdiction under § 411(a)?

The first implicates the mess that is jurisdiction, on which the Court has been fairly active in recent years, deciding cases such as Kontrick v. Ryan, Eberhart v. U.S., Scarborough v. Principi, Arbaugh v. Y&H Corp., Bowles v. Russell, and John R. Sand v. U.S.  As I have written (somewhat extensively—see my papers here, here, here, here, and here, and my blog posts here and here), the Court’s pronouncements have failed to provide a clear framework for resolving jurisdictional characterization issues.  My latest piece, entitled “Mandatory Rules” and published in Stanford Law Review last year, argues that some limitations could be formally nonjurisdictional but yet have jurisdictional functionalities, such as being immune to waiver.  (That piece, along with another, was cited by the petitioners’ merits brief, though not for that proposition.)

The second implicates the extent to which the supplemental jurisdiction statute extends jurisdiction to claims that do not otherwise exist under state law.  Thus, the question is somewhat different than that presented in Exxon Mobile v. Allapattah Services, in which the Court held that the supplemental jurisdiction statute extends jurisdiction to state claims that did not meet the amount-in-controversy requirement for diversity jurisdiction.  The issue also implicates the meaning of § 1367(a)’s “except as otherwise expressly provided” language that might exempt a claim from supplemental jurisdiction.

-- Scott Dodson

Against Twombly & Iqbal -- A Reply to Drug & Device Law Post

Rory and Jeremy have invited responses to the formidable and polite defense of Twombly and Iqbal posted by the folks at the Drug & Device Law blog.  I’m not shy—I’ll give it a shot.

Let me first note a couple of areas of agreement that I have with DDL’s defense.  I agree that the decisions are attempts to be “practical and common-sense.”  Reasonable people can disagree about the proper pleading standard, and I do not think that the standards of Twombly and Iqbal are unreasonable.  To borrow from AEDPA, I think they are wrong, but I do not think they are unreasonable.  I think DDL is right that they are borne of practicality, of a perceived need to reduce discovery pressures.

I also agree that discovery has significant problems.  DDL is right that discovery costs can be unduly high and abusive (although I’d suggest that it’s not always the plaintiff that “weaponizes” discovery and not always the defendant that bears the costs), and that there may be room for reforms to the rules to alleviate those burdens.

I might also agree (though I’d want to bone up on my tort law knowledge first) that the allegation that “the defendant violated FDA regulations” without stating the regulation that was violated or what the defendant did should be inadequate under Rule 8.  The same might be said for a complaint that simply alleges “defective design.”  But I doubt that such allegations would have survived even pre-Twombly because they fail to give proper notice to the defendant.

Finally, I agree that there are two sides to the coin.  We should worry about imposing difficult pleading burdens on plaintiffs.  But DDL is right that we should worry too about frivolous lawsuits that impose significant costs on defendants.  The question, of course, is how to do both.

Having exchanged pleasantries, though, let me now engage our disagreements.  There are several, but I'll highlight two of the most fundamental.

First, I disagree that “[t]he only way to avoid discovery . . . is to win a motion to dismiss.”  Justice Stevens, I think, does a nice job in his Twombly dissent explaining how a district court has ample authority to structure and limit discovery to avoid undue burdens while still allowing the plaintiff access to the crucial information she needs.  DDL quotes extensively from the Twombly majority opinion, which in turn quotes from a Just Easterbrook article on discovery abuse written in 1989, arguing that district court control of discovery costs is largely ineffective.  But that has not always been the case in my own experience defending large corporations against lawsuits.  And it certainly does not ring true in theory, particularly after the amendments to the Federal Rules made after 1989 that limit discovery and give more supervisory control to the judge.  I see no reason why (and my anecdotal experience suggests the contrary) judges/magistrates cannot effectively measure the costs and benefits to the requester and the burdens to the defendant.  (Isn’t that what Rule 26 requires anyway?)  And, even if only a rough estimation is possibly, the district court has the authority to narrow the discovery scope, to allow limited discovery at first as a “test” production, and to order cost-shifting where appropriate to alleviate the defendant’s burden.  In short, the idea that discovery costs are always a problem that cannot be addressed within the confines of the existing discovery rules is misplaced.

The discovery rules may still not be up to the task of controlling undue costs in some cases, but that suggests that we ought to consider how to fix the problem by reforming discovery rather than by resort to raising the pleadings bar.  After all, the discovery costs and burdens apply (and may apply unfairly) even when the claim has merit.  So, I think that if folks have problems with discovery, the discussion ought to properly focus (at least initially) on discovery changes, not pleadings changes.

But even if reforms to alleviate discovery burdens must go beyond the discovery rules, it’s not clear to me that they must focus on Rule 8 pleading.  Other options might include tinkering with Rule 12(e), Rule 11, or fee-shifting rules.  I’m not necessarily advocating these options—I just mean to say that I’m not convinced that raising Rule 8 pleading standards best achieves the amelioration of discovery costs that DDL seeks.  If discovery costs are really the elephant in the room, then let’s deal with the elephant.

Second, DDL does not appreciate fully the downside to raising the pleading standards.  The failure to plead a plausible claim is not necessarily an indication that the claim lacks merit.  Nevertheless, Twombly, at least, appears to proceed on that premise, calling the complaint at issue there “largely groundless,” having no “reasonably founded hope” of revealing supporting evidence in discovery.  And DDL appears to assume that as well, calling the “hallmark of a meritorious case is that it’s factually supported from the get go.”  In some cases, that might be true.  But it is not always true, particularly in the kinds of cases where the plausibility standard is likely to be invoked the most—discrimination and conspiracy cases.  In those cases, the information often necessary to meet the plausibility standard is largely in the hands of the defendants.  The problem is one, as Randy Picker described it, of information asymmetry.  The point is that, in many cases, just because the plaintiff doesn’t have a fact in her possession doesn’t mean it didn’t happen.  And, as a result, erroneously equating the failure to plead plausibility with meritlessness will result in fewer meritorious cases filed, fewer meritorious cases surviving to discovery, and fewer injuries resulting from wrongful conduct being redressed.  Neither the Court nor DDL comes to terms with this unjust result.

--Scott Dodson

 

UPDATE: I now see that Howard Wasserman also has a response up on Prawfslaws here.

Reviewing Remand Orders

Justice Scalia once asked a brilliant question: "How can that be? How can a statute explicitly eliminating appellate jurisdiction to review a remand order not 'control' whether an appellate court has jurisdiction to review a remand order?"  His question reflects the confused state of the law regarding the reviewability of remand orders, which is the topic of Drug and Device Law today. --RR