Civil Procedure & Federal Courts Blog

Green on Horizontal Erie

Michael Steven Green (William & Mary) has posted Horizontal Erie and the Presumption of Forum Law to SSRN.

Abstract:      
According to Erie Railroad v. Tompkins and its progeny, a federal court interpreting state law must decide as the state’s supreme court would. In this Article, I argue that a state court interpreting the law of a sister state is subject to the same obligation. It must decide as the sister state’s supreme court would.

Horizontal Erie is such a plausible idea that one might think it is already established law. But the Supreme Court has in fact given state courts significant freedom to misinterpret sister-state law. And state courts have taken advantage of this freedom, by routinely presuming that the law of a sister state is the same as their own - often in the face of substantial evidence that the sister state’s supreme court would decide differently. This presumption of similarity to forum law is particularly significant in nationwide class actions. A class will be certified, despite the fact that many states’ laws apply to the plaintiffs’ actions, on the ground that the defendant has failed to provide enough evidence to overcome the presumption that sister states’ laws are the same as the forum’s. I argue that this vestige of Swift v. Tyson needs to end.

Applying horizontal Erie to state courts is also essential to preserving federal courts’ obligations under vertical Erie. If New York state courts presume that unsettled Pennsylvania law is the same as their own while federal courts in New York do their best to decide as the Pennsylvania Supreme Court would, the result will be the forum shopping and inequitable administration of the laws that are forbidden under Erie and its progeny. As a result, federal courts have often held that they too must employ the presumption of similarity to forum-state law, despite its conflict with their obligations under vertical Erie. Applying horizontal Erie to state courts solves this puzzle.

RJE

What's the Alternative?: 9th Circuit Opinion Shows Flaws With Forum Non Conveniens Analysis; Professor Suggests Solution

In its opinion in Gulf Oil Corp. v. Gilbert, 330 U.S. 501 (1947), in which the Supreme Court first laid out the test for forum non conveniens, the Court noted that "unless the balance is strongly in favor of the defendant, the plaintiff's choice of forum should rarely be disturbed." In preparing to teach Civil Procedure again this spring, I had to look askance at this conclusion because it didn't accord with what I had seen in most forum non conveniens cases, including a recent one from the Ninth Circuit. Trying to find empirical evidence on the subject I came across the excellent recent article, When Is An Alternative Forum Available? Rethinking the Forum Non Conveniens Analysis, 85 Ind. L. J. (2010), by Joel H. Samuels, a professor at the University of South Carolina School of Law. Not only does the article propose a new framework for properly and effectively resolving forum non conveniens cases, but it also conducts an empirical analysis of every published federal court decision since 1982 that has considered the doctrine of forum non conveniens. So, what was the Ninth Circuit case, and what's the matter with forum conveniens (can't you tell that it's out of style)?

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SCOTUS Oral Argument in Erica P. John Fund v. Halliburton

The Supreme Court heard oral argument earlier this week in Erica P. John Fund, Inc. v. Halliburton. Here’s the oral argument transcript.

The questions presented in Halliburton are:

(1) Whether the Fifth Circuit correctly held, in direct conflict with the Second Circuit and district courts in seven other circuits and in conflict with the principles of Basic Inc. v. Levinson, 485 U.S. 224 (1988), that plaintiffs in securities fraud actions must satisfy not only the requirements set forth in Basic to trigger a rebuttable presumption of fraud on the market, but must also establish loss causation at class certification by a preponderance of admissible evidence without merits discovery.

(2) Whether the Fifth Circuit improperly considered the merits of the underlying litigation, in violation of both Eisen v. Carlise & Jacquelin, 417 U.S. 156 (1974), and Federal Rule of Civil Procedure 23, when it held that a plaintiff must establish loss causation to invoke the fraud-on-the-market presumption even though reliance and loss causation are separate and distinct elements of security fraud actions and even though proof of loss causation is common to all class members.

As we covered earlier, this second question appears to overlap with issues being considered in Wal-Mart Stores v. Dukes, which was argued before the Supreme Court one month ago and also involves the extent to which a court must consider the merits of class claims at the certification stage.

For some of the coverage of the Halliburton argument, check out BNA’s Class Action Litigation Report (subscription required), JURIST, and SCOTUSblog’s argument recap by Prof. Linda Mullenix (Texas). The Conglomerate has also been hosting a roundtable on the case, which includes analysis of the oral argument.

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AALS Call For Papers on "Procedural Reform: Rulemaking v. Legislation"

The AALS Section on Civil Procedure has issued the following Call for Papers in connection with the January 2012 annual meeting:

The Executive Committee of the AALS Section on Civil Procedure invites the submission of papers for presentation at the Annual Meeting of the AALS January 4-8, 2012, in Washington, D.C.

The topic of our panel will be "Procedural Reform: Rulemaking v. Legislation." Procedural reform has enjoyed (or suffered from, depending on one’s point of view) considerable attention in recent years. Procedural topics are in the mainstream media. Supreme Court cases have reformed bedrock principles. Rulemakers regularly debate amendments to an ever-expanding corpus of rules. And the legislative branch seeks to undo some reforms while initiating still others.

Papers presented by the panel will put this constellation of procedural reforms into a broader perspective. The debate about whether procedural reform is more properly the province of rulemakers or lawmakers is neither new nor, perhaps, even resolvable. Yet it remains relevant-urgent, even, given the stakes.  We invite the submission of papers that address this topic in whole or in part. Papers that address the topic in whole might, for example, consider the use of empirical evidence as an engine for procedural reform. Or institutional choice theory might be applied to the procedural landscape. Even if your work addresses the topic only in part, we encourage you to submit it; we will be selecting papers so that the panel, considered as a whole, will generate a dialogue to explore the broader issues.

Drafts of the papers submitted for consideration must be received by September 1, 2011. Submissions should be sent to [email protected]. Papers already accepted for publication will be considered.

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SCOTUS Decision in AT&T Mobility v. Concepcion

The Supreme Court issued its decision in AT&T Mobility LLC v. Concepcion today. The Court divided 5-4, with Justice Scalia writing the majority opinion (joined by Chief Justice Roberts and Justices Kennedy, Thomas, and Alito) and Justice Breyer writing the dissent (joined by Justices Ginsburg, Sotomayor, and Kagan). Justice Thomas also writes a concurring opinion.

As covered earlier here, the case involved the application of California’s so-called Discovery Bank rule, which allows consumers to challenge as unconscionable contractual waivers of the right to arbitrate disputes on a class-wide basis. Justice Scalia’s majority opinion concludes:

Because it “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,” Hines v. Davidowitz, 312 U. S. 52, 67 (1941), California’s Discover Bank rule is preempted by the FAA. The judgment of the Ninth Circuit is reversed, and the case is remanded for further proceedings consistent with this opinion.

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Joined at the Hip?: Is the Fraudulent Misjoinder Doctrine the Fraudulent Joinder Doctrine's Twin or a Red-Headed Stepchild?

Courts have long recognized fraudulent joinder as an exception to the complete diversity rule....Fraudulent joinder occurs when a plaintiff files a frivolous or illegitimate claim against a non-diverse defendant solely to prevent removal....When determining if a party has been fraudulently joined, a court considers whether there is any reasonable basis in fact or law to support a claim against a nondiverse defendant. 

A more recent, somewhat different, and novel exception to the complete diversity rule is the fraudulent misjoinder doctrine which one appellate court  and several district courts have adopted. Fraudulent misjoinder occurs when a plaintiff sues a diverse defendant in state court and joins a viable claim involving a nondiverse party, or a resident defendant, even though the plaintiff has no reasonable procedural basis to join them in one action because the claims bear no relation to each other. In such cases, some courts have concluded that diversity is not defeated where the claim that destroys diversity has "no real connection with the controversy" involving the claims that would qualify for diversity jurisdiction. In re Prempro Products Liability Litigation, 591 F.3d 613 (8th Cir. 2010). 

While somewhat recent, the Eleventh Circuit's opinion creating the fraudulent misjoinder doctrine was more than 15 years ago in Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353 (11th Cir. 1996). And, as the Eighth Circuit noted last year in Prempro, the Eleventh Circuit remains the only appellate court to adopt the doctrine although other appellate courts have acknowledged it. And, in Prempro, the Eleventh Circuit joined the ranks of these other appellate courts, acknowledging the doctrine but finding that it did not need to adopt or apply it given the facts before it. As the Eighth Circuit also noted, several district courts have adopted the doctrine, but several other district courts have refused to adopt it. Moreover, as E. Farish Percy, a professor at The University of Mississippi School of Law, noted in her article, Defining the Contours of the Emerging Fraudulent Misjoinder Doctrine, 29 Harv. J.L. & Pub. Pol'y 569 (2006), even courts that have adopted the doctrine are sharply split over how to apply it. So, what will and should happen with the doctrine in the future?

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Risch on Injunctions in Patent Law

Over at PrawfsBlawg, Michael Risch has a posting about "Civil Procedure in Patent Clothing."  The post concerns the retrial of issues in a patent contempt proceeding in the case of Tivo v. Echostar.  From the posting:

I think the best way to read the case is that the retrial of infringement only happens where the court finds colorable differences. In other words, where the redesign is targeted at the specific claim elements that were disputed and proven at trial. If the changes are only small, then the judge can verify that there is still infringement (or not). But where the changes are big and targeted at disputed claim elements, then allegations of continued infringement by other product features must be retried. This interpretation helps reconcile the seemingly contradictory quotes above, and also makes sense in practice.

There are longer term consequences from this rule. First, it might give an incentive to overlitigate, because patentees will now want to prove as many alternate forms of infringement as possible. Of course, maybe they do that anyway. Second, it puts pressure on the rule that winning parties cannot appeal arguments they lost. After all, it is much cheaper to file a contempt claim than to retry infringement in case of a design around, and then appeal the court's errors.

RJE

 

What's It All About Alfie?: Compiling All of the Data on the Effect of Twombly and Iqbal on 12(b)(6) Motions

What has been the effect of Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 129 S. Ct. 1937 (2009), on motions to dismiss for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure 12(b)(6)? It looks like there are at least 7 relevant sources of information about the topic, and most of them have been blogged about in one place or another on the internet. In this post, I thought I would post links to all of this information as well as brief summaries of what each found.

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Sullivan on Iqbal and Employment Discrimination

Professor Charles Sullivan (Seton Hall) has published Plausibly Pleading Employment Discrimination, 52 William & Mary L. Rev. 1613 (2011). Here’s the abstract:

The Supreme Court’s unanimous 2002 decision in Swierkiewicz v. Sorema N.A., which took a very permissive approach to pleading discrimination claims, may or may not remain good law after Ashcroft v. Iqbal. As is well known, Iqbal took a restrictive approach to pleading generally under the Federal Rules of Civil Procedure, and its application to employment discrimination cases could pose serious problems for plaintiffs attempting to get into federal court. In addition, there is certainly a tension between Swierkiewicz and Iqbal. This is in part because the former is a strong reaffirmation of notice pleading as it has traditionally been understood whereas the latter makes clear that “plausible pleading” is something very different. But it is also because Iqbal was, after all, a discrimination case, albeit brought under the Constitution rather than a federal statute, and its finding that the discrimination alleged there was not plausibly pled could easily be applied to statutes such as Title VII, the Age Discrimination in Employment Act, and the Americans with Disabilities Act.

Numerous scholars have analyzed Iqbalgenerally and several have addressed the application of plausible pleading to claims under the antidiscrimination laws. A respectable view is that Swierkiewicz remains good law, although the commentators recognize legitimate questions about its continued vitality. This Article, while agreeing that readings of both Swierkiewicz and Iqbal would permit this result, nevertheless explores the contrary possibility: supposing Iqbal sub silentio overruled Swierkiewicz and applies plausible pleading to discrimination claims, what must a plaintiff plead to avoid dismissal for failure to state a claim?

The most obvious response is that the plaintiff should plead a prima facie case of discrimination under the traditional McDonnell Douglas Corp. v. Green standard. Although Swierkiewicz held that pleading a prima facie case was not necessary, in part because there are other ways of proving discrimination, it did not suggest that such pleading would be insufficient. There are, however, complications with pleading a traditional prima facie case that should be explored. Further, there are at least three alternatives for attorneys who cannot, consistent with Rule 11, allege such a prima facie case. First, the Article proposes that the plaintiff might survive a Rule 12(b)(6) motion by pleading “direct evidence” of discrimination. Although the term has a checkered history in discrimination jurisprudence, the pleading context suggests a new look at an old concept. Second, the Article addresses the possibility of pleading the existence of a “comparator” whose more favorable treatment than the plaintiff may make the claim of discrimination plausible.

Third, and perhaps most radically, the Article argues that plaintiffs should be able to take the Supreme Court at its word in Iqbal that, in deciding a motion to dismiss for failure to state a claim, a district court must take as true all facts, as opposed to legal conclusions, alleged in the complaint. The Article proposes that plaintiffs plead the existence of social science research showing the pervasiveness of discrimination. Taken as true, this body of literature may well nudge a particular claim across the border drawn by the Supreme Court between a “possible” claim and a “plausible” one.

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NYTimes Runs Op-Ed on Flag Registration Practices for Ships

For those of us interested in the more international aspects of procedure and liability, the New York Times has an interesting Op Ed by Rose George this morning about the practice of registering a ship under the flag of countries with which it has no or little connection.

RJE

Harvard Law Review Tribute to Benjamin Kaplan

The current issue of the Harvard Law Review (Vol. 124, No. 6) is dedicated to Harvard Professor Emeritus Benjamin Kaplan. In Memoriam: Benjamin Kaplan features tributes authored by Justice Stephen Breyer, Justice Raya Dreben, Justice Ruth Bader Ginsburg, Marjorie Heins, Arthur Miller, Martha Minow, and Lloyd Weinreb.

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Stand in the Place Where You Live?: DDC Opinion Raises Questions About Whether Prospective Intervenors in D.C. Circuit Must Establish Article III Standing

Should prospective intervenors have to establish standing before intervening? After the Supreme Court amended Federal Rule of Civil Procedure 24(a)(2) in 1966, federal courts largely agreed for the next 25 years or so that the answer was "no." See Carl Tobias, Standing to Intervene, 1991 Wis. L. Rev. 415 (1991). But thereafter, "[a]n increasing number of circuit and district courts...demanded or suggested that [prospective intervenors] have an 'interest' greater than, or equal to, that necessary for standing or comply with certain standing requirements." Id. In its 1986 opinion in Diamond v. Charles, 476 U.S. 54 (1986), the Supreme Court noted this circuit split, pointing out that "[t]he Courts of Appeals have reached varying conclusions as to whether a party seeking to intervene as of right must himself possess standing." Ultimately, however, the Court concluded, "We need not decide today whether a party seeking to intervene before a District Court must satisfy not only the requirements of Rule 24(a)(2), but also the requirements of Art. III."

In the wake of Diamond v. Charles, the circuit split persists. And for years, the D.C. Circuit was on the side of the split requiring prospective intervenors to establish standing. But did that change with the D.C. Circuit's opinion in Roeder v. Islamic Republic of Iran, 333 F.3d 228 (D.C. Cir. 2003)? According to Judge Roberts of the United States District Court for the District of Columbia in Akiachak Native Community v. U.S. Dept. of Interior, 584 F.Supp.2d 1 (D.D.C. 2008), the answer is "yes." But according to Judge Kennedy of the same court in his opinion last week in Center for Biological Diversity v. U.S. E.P.A., 2011 WL 1346965 (D.D.C. 2011), the answer is "no." So, who is right, and which position makes more sense? Let's go to the scorecards!

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Popper on the Gulf Oil Spill and Caps on Liability

Andrew F. Popper (American University) has posted Capping Incentives, Capping Innovation, Courting Disaster: The Gulf Oil Spill and Arbitrary Limits on Civil Liability to SSRN.

Abstract:      
Limiting liability by establishing an arbitrary cap on civil damages is bad public policy. Caps are antithetical to the interests of consumers and at odds with the national interest in creating incentives for better and safer products. Whether the caps are on non-economic loss, punitive damages, or set for specific activity, they undermine the civil justice system, deceiving juries and denying just and reasonable compensation for victims in a broad range of fields. 

This paper Article postulates that capped liability on damages for offshore oil spills may well have been an instrumental factor contributing to the recent Deepwater Horizon catastrophe in the Gulf of Mexico. More broadly, it argues that caps on damages undermine the deterrent effect of tort liability and fail to achieve economically efficient and socially just results.

RJE

SCOTUS Decision in Virginia Office for Protection and Advocacy v. Stewart

Today the Supreme Court decided Virginia Office for Protection and Advocacy v. Stewart (No. 09-529). Per Justice Scalia’s majority opinion (joined by Justices Kennedy, Thomas, Ginsburg, Breyer, and Sotomayor), the case “consider[s] whether Ex parte Young, 209 U. S. 123 (1908), allows a federal court to hear a lawsuit for prospective relief against state officials brought by another agency of the same State.” The answer:

Although we have never encountered such a suit before, we are satisfied that entertaining VOPA's [the state agency’s] action is consistent with our precedents and does not offend the distinctive interests protected by sovereign immunity.

 In conclusion, Justice Scalia writes:

[W]e are mindful of the central role autonomous States play in our federal system, and wary of approving new encroachments on their sovereignty. But we conclude no such encroachment is occasioned by straightforwardly applying Ex parte Young to allow this suit. It was Virginia law that created VOPA and gave it the power to sue state officials. In that circumstance, the Eleventh Amendment presents no obstacle to VOPA’s ability to invoke federal jurisdiction on the same terms as any other litigant.

Justice Kennedy writes a concurring opinion joined by Justice Thomas. Chief Justice Roberts writes a dissenting opinion joined by Justice Alito. Justice Kagan took no part.

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So Say We All?: Northern District of Indiana Opinion Addresses Circuit Split Over Whether Each Defendant Must Submit Written Documentation Consenting to Removal

Earlier this month, I posted an entry about the circuit split over how 28 U.S.C. Section 1446(b)'s 30 day period for removal applies in actions with multiple defendants served on different days. In other words, the post dealt with when defendants can move to remove in multiple defendant litigation. In today's post, I will discuss the recent opinion of the United States District Court for the Northern District of Indiana in Boruff v. Transervice, Inc., 2011 WL 1296675 (N.D.Ind. 2011), which discussed the circuit split over whether each defendant in multiple defendant litigation must submit written documentation indicating that it consents to removal or whether one defendant's notice of removal can state that other defendant(s) consent to removal. In other words, this post will deal with how defendants can remove in multiple defendant litigation. 

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Cunningham on AT&T Mobility v. Concepcion

We covered earlier AT&T Mobility v. Concepcion, which was argued in November and is still pending in the Supreme Court. The case presents the issue:

Whether the Federal Arbitration Act preempts States from conditioning the enforcement of an arbitration agreement on the availability of particular procedures—here, class-wide arbitration—when those procedures are not necessary to ensure that the parties to the arbitration agreement are able to vindicate their claims.

Professor Lawrence Cunningham (George Washington) has some commentary on the case over at Concurring Opinions, in a post titled Supreme Court Arbitration Rhetoric v. Reality and AT&T.

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Providing a Venue: DDC Opinion Raises Specter of No Proper Venue for Plaintiffs Seeking Declarations of Citizenship Based on Circuit Split

Circuit splits are always troubling because they can lead to inequitable results in different jurisdictions. For instance, in a recent post, I noted that there is a circuit split over whether to apply the first- or last-served rule for removal, which means that defendants in jurisdiction A might be able to remove a case from state court to federal court while defendants in jurisdiction B would be stuck in state court. But at least these latter defendants could have their case heard in some court. The recent opinion of the United States District Court for the District of Columbia in Roman-Saldago v. Holder, 730 F.Supp.2d 126 (D.D.C. 2010), however, raises the specter of a different circuit split leaving some cases in which plaintiffs cannot have their cases heard in any court. If this is correct, the Supreme Court should step in immediately and resolve the split.

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Announcing a New Jotwell Section: Courts Law

Today the new Courts Law section of Jotwell is officially up and running. For those of you who are unfamiliar with Jotwell, here’s a quick summary:

Jotwell, the Journal of Things We Like (Lots), is intended to provide a space where legal scholars can go to identify and celebrate the latest work of their colleagues. The goal is to help Jotwell’s readers locate interesting developments both inside and outside of their particular areas of interest and to encourage positive reviews and discussion of legal scholarship.

The first contribution for the Courts Law section is Evidence Meets Civil Procedure by Howard Wasserman (Florida International). Howard's essay discusses the recent article by Michael Pardo (Alabama), Pleadings, Proof, and Judgment: A Unified Theory of Civil Litigation, 51 B.C. L. Rev. 1451 (2010). Watch for contributions in the coming months from the roster of Courts Law editors, after the jump:

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Battle of the Bulge: DNJ Applies Rule 4(k)(1)(B)'s "Bulge Rule" to Avoid Ping Pong Litigation

Under Federal Rule of Civil Procedure 4(k)(1)(B) Federal Rule of Civil Procedure 4(k)(1)(B), the so-called "bulge rule,"

Serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant...

who is a party joined under Rule 14 or 19  and is served within a judicial district of the United States and not more than 100 miles from where the summons was issued....

After looking for a while for a good case to explain this "bulge rule" to students, I finally came across Tatar v. Levi, 2010 WL 3740610 (D.N.J. 2010), in which the United States District Court for the District of New Jersey applied Rule 4(k)(1)(B) in part because it found that "this case is not a ping pong ball to be batted back and forth between the Eastern District of Pennsylvania and the District of New Jersey."

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Oman on Litigation as Vindication of Honor

Professor Nathan Oman (William & Mary) has posted on SSRN a draft of his article The Honor of Private Law. Here’s the abstract:

While combativeness is central to how our culture both experiences and conceptualizes litigation, we generally notice it only as a regrettable cost. This Article offers a less squeamish vision, one that sees in the struggle of people suing one another a morally valuable activity: The vindication of insulted honor. This claim is offered as a normative defense of a civil recourse approach to private law. According to civil recourse theorists, tort and contract law should be seen as empowering plaintiffs to act against defendants, rather than as economically optimal incentives or as a means of enforcing duties of corrective justice. The justification of civil recourse must answer three questions. First, under what circumstances – if any – is one justified in acting or retaliating against a wrongdoer? Second, under what circumstances does the state have reasons for providing a mechanism for such action? Finally, how are the answers to these questions related to the current structure of our private law? This Article offers the vindication of wronged honor as an answer to these three questions. First, I establish the historical connection between honor and litigation by looking at the quintessential honor practice, dueling. Then I argue that the vindication of honor is normatively attractive. I do this by divorcing the idea of honor from unsavory associations with violence and aristocracy, showing how it can be made congruent with certain core modern concerns. In particular, when insulted parties act against wrongdoers, they reestablish the position of respect and equality that the insult upset. I then show how having the state provide plaintiffs with a means of vindicating their honor avoids making the political community complicit in the humiliation of its citizens and provides those citizens with a means of exercising their agency in ways that provide a foundation for self-respect. Finally, I show those areas of private law where honor operates most powerfully as a justification for providing recourse through the courts while acknowledging that it operates less powerfully as a reason in other areas.

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(Hat Tip: Concurring Opinions)