Civil Procedure & Federal Courts Blog

Documentary on Forced Arbitration at AALS Meeting (Jan. 3)

If you’ll be in Washington, DC for the AALS meeting this coming weekend, Alliance for Justice will be showing their new documentary, Lost in the Fine Print: Examining the Impact of Forced Arbitration. It’ll be from 8:30-9:30pm on Saturday, January 3. More details and a list of speakers here.

 

 

 

Guest Post: Dodson on Twombly Creep in Dart

Twombly Creep

Yesterday’s Supreme Court’s opinion in Dart Cherokee held that a notice of removal need not be accompanied by evidence of the amount in controversy in a CAFA-removal case. The Court split 5-4 on the nerdy question of whether the Court could even review the issue itself because the Court of Appeals declined, in its discretion, to hear the appeal from the district court. That latter issue got quite a bit of play at oral argument, and coverage of the opinion’s resolution of that issue has overshadowed the Court’s decision on the merits, which pretty much everyone—myself included—thought fairly obvious.

But there’s something funny, and potentially important, in the merits part of the decision that people seem to be overlooking. 

Section 1446(a), which sets the standards for a notice of removal, requires the defendant to file a notice “containing a short and plain statement of the grounds for removal.” This language mirrors Rule 8(a)(1), which sets the standards for pleading the jurisdictional basis for a claim filed in federal court, requiring a complaint to provide: “a short and plain statement of the grounds for the court’s jurisdiction.” The parallel language is not coincidence. In drafting the removal standard, Congress meant to borrow and incorporate the liberalized pleading standard from Rule 8(a)(1), which contains the identical language “a short and plain statement of the grounds for,” and focuses on allegations of jurisdiction. Removal, after all, is concerned primarily with jurisdiction rather than the merits of the claim.

The Court has interpreted these standards before. For jurisdictional allegations, both in cases filed in federal court and in cases removed to federal court, the amount-in-controversy alleged in good faith by the plaintiff controls unless contested by the defendant. Mt. Healthy City Bd. of Ed. v. Doyle, 429 U.S. 274, 276 (1977); St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938). Thus, the standard for a “short and plain statement of the grounds for” the jurisdictional allegation of the amount in controversy for diversity jurisdiction is “good faith.”

This standard of a good-faith allegation leaves no room, at least prior to contestation by the defendant, for an evidentiary requirement. Dart was surely correct, then, in holding that a notice of removal requires no evidence beyond the good-faith allegation of the jurisdictional amount.

But, oddly, the Court did not phrase the question that way. The opinion sets the question presented a somewhat different way, with my emphasis added:

To assert the amount in controversy adequately in the removal notice, does it suffice to allege the requisite amount plausibly, or must the defendant incorporate into the notice of removal evidence supporting the allegation? That is the single question argued here and below by the parties and the issue on which we granted review. The answer, we hold, is supplied by the removal statute itself. A statement “short and plain” need not contain eviden­tiary submissions.

 The answer is correct: A “short and plain statement,” at least without other requirements, need not contain evidentiary submissions. But the italicized language is perplexing. It suggests that, though evidence is not required, the standard does require that the removal notice allege the requisite amount “plausibly.”

 And, later, the opinion concludes (my emphasis added): “In sum, as specified in § 1446(a), a defendant’s notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional thresh­old. Evidence establishing the amount is required by §1446(c)(2)(B) only when the plaintiff contests, or the court questions, the defendant’s allegation.” Again, last sentence is clearly correct. But the Court also seems to hold that the removal standard requires a “plausible” allegation of the amount in controversy.

 Where in the world did the insertion of the “plausibility” standard come from? The Court offers neither citation for it, nor textual support for it, nor reasoning for it. Further, the Court’s reasoning repeats the proper standard of “good faith.” What’s up with plausibility?

 The answer must be the infectious case Twombly, which established a new pleading standard of plausibility under Rule 8(a)(2) in federal court. This plausibility standard had never before been a part of any pleading regime; rather, Twombly imported it from the substantive antitrust context.

 But importing plausibility to removal makes little sense. For one, removal already has a perfectly fine standard that has worked for 75 years: good faith. It is possible that the Court thinks that “plausible” is a useful, clarifying synonym for good faith. But it’s far from obvious that “good faith” and “plausible” are synonyms in this context. And there’s no indication that the standard of “good faith” was unclear (as if the gloss of “plausibility” would be helpfully clarifying).

 For another, Twombly grafted plausibility onto Rule 8(a)(2), which has a different standard from either the removal standard or the Rule 8(a)(1) standard. True, all three standards use the same preliminary language requiring “a short and plain statement.” But the removal and Rule 8(a)(1) standards go on to use the phrase “of the grounds [for jurisdiction],” while the merits pleading standard of Rule 8(a)(2) uses the different language “of the claim showing that the pleader is entitled to relief.” In developing the “plausibility” standard, Twombly focused on Rule 8(a)(2) and its unique concluding language: “The need at the pleading stage for allegations plausibly suggesting (not merely consistent with) agreement reflects the threshold requirement of Rule 8(a)(2) that the ‘plain statement’ possess enough heft to ‘sho[w] that the pleader is entitled to relief.’” Twombly’s textual support for the plausibility standard—such as it is—has no bearing on jurisdictional allegations under Rule 8(a)(1) or § 1446(a).

 For yet another, the rationale of Twombly maps poorly onto plausibility for removal allegations. Twombly foisted plausibility on merits allegations to guard against excessive discovery costs imposed on defendants at the behest of an implausible claim for relief: “Probably, then, it is only by taking care to require allegations that reach the level suggesting conspiracy that we can hope to avoid the potentially enormous expense of discovery in cases with no ‘“reasonably founded hope that the [discovery] process will reveal relevant evidence”’ to support a . . . claim.” Removal, of course, merely shifts the forum; discovery cannot be avoided simply by defeating removal. And, in removal, the notice is filed by the defendant, the putative beneficiary of the plausibility standard. Applying the plausibility standard to removal turns Twombly on its head.

 So, in Dart, it appears that, without citation or, frankly, any reasoning at all, “plausibility” has snuck in to yet another place where it doesn’t belong: removal. If so, this opens the door to arguments that Twombly’s standard is even more broadly applicable than previously thought.

 

Posted by Scott Dodson

 

Rosenberg & Spier on Class Actions

Now available on the Journal of Legal Analysis website is David Rosenberg and Kathryn Spier’s article, Incentives to Invest in Litigation and the Superiority of the Class Action. Here’s the abstract:

We formally demonstrate the general case for class action in a rent-seeking contest model, explaining why separate action adjudication is biased in the defendant’s favor and collective adjudication is bias free. Separate action bias arises from the defendant’s investment advantage in capitalizing on centralized control over the aggregate (classwide) stake in the common question defense, while the plaintiff, with only an individual recovery at stake, spends much less. Class action eliminates bias by enabling both parties to make their best case through centralized optimal classwide investments. Our social benefit–cost analysis shows that class action surpasses alternative methods for achieving bias-free adjudication.

And here’s a link to the PDF file.

H/T: Larry Solum (who justifiably says to download it while it’s hot).

 

 

SCOTUS Decision in Dart Cherokee: What Must a Notice of Removal Contain? (And More!)

Today the Supreme Court issued a 5-4 decision in Dart Cherokee Basin Operating Co. v. Owens. It’s an interesting breakdown. Justice Ginsburg writes the majority opinion, joined by Roberts, Breyer, Alito, and Sotomayor. The dissenters are Scalia, Kennedy, Thomas, and Kagan. 

The question presented in Dart Cherokee involves what a party must include in a notice of removal. The answer, from Justice Ginsburg’s majority opinion:

To assert the amount in controversy adequately in the removal notice, does it suffice to allege the requisite amount plausibly, or must the defendant incorporate into the notice of removal evidence supporting the allegation? That is the single question argued here and below by the parties and the issue on which we granted review. The answer, we hold, is supplied by the removal statute itself. A statement “short and plain” need not contain evidentiary submissions.

And later:

In sum, as specified in §1446(a), a defendant’s notice of removal need include only a plausible allegation that the amount in controversy exceeds the jurisdictional threshold. Evidence establishing the amount is required by §1446(c)(2)(B) only when the plaintiff contests, or the court questions, the defendant’s allegation.

The dissenters in Dart Cherokee don’t challenge the majority on this. The cause of the disagreement, rather, is an issue that received considerable attention during the oral argument—one that was first flagged by Public Citizen in an amicus brief questioning the proper standard of review and the extent to which the Supreme Court could review a Court of Appeals’ decision to deny permission to appeal under the Class Action Fairness Act (CAFA). Review of the Tenth Circuit’s decision was complicated by the fact that it issued only a short order that failed to explain why it denied permission to appeal the district court’s remand order.

Justice Ginsburg finds that these concerns did not prevent Supreme Court review in this case, noting that “[t]he case was ‘in’ the Court of Appeals because of Dart’s leave-to-appeal application, and we have jurisdiction to review what the Court of Appeals did with that application. See 28 U. S. C. §1254; Hohn v. United States, 524 U. S. 236, 248 (1998),” and that “[t]here are many signals that the Tenth Circuit relied on the legally erroneous premise that the District Court’s decision was correct” in denying permission to appeal. In remanding the case, however, Justice Ginsburg notes that “[o]ur disposition does not preclude the Tenth Circuit from asserting and explaining on remand that a permissible ground underlies its decision to decline Dart’s appeal.”

Justice Scalia writes the dissenting opinion, arguing that the Court should have dismissed the writ as improvidently granted.

“Because we are reviewing the Tenth Circuit’s judgment, the only question before us is whether the Tenth Circuit abused its discretion in denying Dart permission to appeal the District Court’s remand order. Once we found out that the issue presented differed from the issue we granted certiorari to review, the responsible course would have been to confess error and to dismiss the case as improvidently granted.”

The most amusing part of the Dart Cherokee decision comes in Justice Scalia’s dissent, where he responds to Justice Ginsburg’s observation that a 2013 case, Standard Fire v. Knowles, came to the Court in a similar posture, yet Justice Scalia joined that decision without raising these concerns. Justice Scalia writes:

As for my own culpability in overlooking the issue, I must accept that and will take it with me to the grave. But its irrelevance to my vote in the present case has been well expressed by Justice Jackson, in a passage quoted by the author of today’s opinion: “I see no reason why I should be consciously wrong today because I was uncon­sciously wrong yesterday.” Massachusetts v. United States, 333 U. S. 611, 639–640 (1948) (dissenting opinion), quoted in Burwell v. Hobby Lobby Stores, Inc., 573 U. S. ___, ___, n. 11 (2014) (slip op., at 12, n. 11) (GINSBURG J., dissenting).

Finally, it’s worth noting that Justice Thomas does not join the final sentence of Justice Scalia’s dissenting opinion, where Justice Scalia writes that he would vote “to affirm” the Tenth Circuit if the writ were not dismissed as improvidently granted. This is because, as Justice Thomas explains in a separate dissenting opinion, he believes that the Supreme Court lacks jurisdiction even to review the Tenth Circuit’s decision under 28 U.S.C. § 1254. 

 

 

 

SCOTUS Cert. Grants of Interest: Bullard & Toca

On Friday the Supreme Court granted certiorari in several new cases. A couple of them raise some interesting federal-courts issues.

Bullard v. Hyde Park Savings Bank (No. 14-116) presents the question: Whether an order denying confirmation of a bankruptcy plan is appealable.

Toca v. Louisiana (No. 14-6381) is a follow-up to the Supreme Court’s 2012 decision in Miller v. Alabama, which found that the Eighth Amendment forbids life-without-parole sentences for juvenile offenders. It presents the questions:

1) Does the rule announced in Miller apply retroactively to this case?

2) Is a federal question raised by a claim that a state collateral review court erroneously failed to find a Teague exception?

For more information, and to keep tabs on the briefs as they start to roll in, check out the SCOTUSblog case files for Bullard and Toca.

 

 

 

Some Interesting SCOTUS Oral Arguments This Week

The Supreme Court heard oral argument in some interesting cases this week. Here are links to the transcripts in Gelboim v. Bank of America, United States v. Wong, and United States v. June.

Gelboim, which involves appellate jurisdiction in the context of MDL proceedings, presents the question: “Whether and in what circumstances is the dismissal of an action that has been consolidated with other suits immediately appealable?”

Wong and June both ask whether certain time limitations contained in the Federal Tort Claims Act are subject to equitable tolling, prompting the Court once again to consider which obstacles to relief qualify as “jurisdictional.”

Stay tuned.

 

Mulligan on Preis on the Relationship Between Federal Causes of Action, Rights, Remedies, and Jurisdiction

Now available on the Courts Law section of JOTWELL is an essay by Lou Mulligan entitled Federal Causes of Action and Everything that Follows.

Lou reviews a recent article by Jack Preis, How Federal Causes of Action Relate to Rights, Remedies and Jurisdiction, which is forthcoming in the Florida Law Review.

 

 

EvidenceProf Blog on SCOTUS Decision on FRE 606(b)

Federal Rule of Evidence 606(b) is one of the few evidence rules that usually makes the crossover into Civil Procedure books.  Continuing its expansive reading in Tanner v. U.S. of 606(b)'s general prohibition on juror testimony on an inquiry into the validity of a verdict, the Court yesterday issued Warger v. Shauers, which held that Rule 606(b) barred juror testimony in a proceeding to obtain a new trial on the ground that a juror lied during voir dire.

EvidenceProf Blog had a good post summarizing the case yesterday.

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Supreme Court Denies Cert in BP Oil Spill Settlement

As reported by SCOTUSBlog and The National Law Journal, the Supreme Court denied BP's cert petition that sought to reopen the Deepwater Horizon settlement.

Although I have only a passing familiarity with the incredibly convoluted BP litigation, I predicted this summer (but not publicly), when BP filed its petition, that the Court would deny cert.  BP repeatedly attempted to undo a settlement agreement that it negotiated for a year and strongly advocated to be approved at the time, and the procedural posture of its cert petition was murky.

Based on a quick reading of the cert petition, it seemed to me that BP mischaracterized both the settlement agreement and the lower courts' orders so it could manufacture a claimed "circuit split."   BP characterized the class as including people who suffered no damage traceable to Deepwater Horizon, but that didn't seem accurate to me.  I think that under the settlement agreement (which is 1,000 pages long and I admittedly have not read it), the claimants have to file a form that certifies that they did suffer such damage.  BP, which agreed to that in the settlement, later changed its mind and said that wasn't good enough proof.

In 2012 the Court also denied cert in the DB Investments (a/k/a De Beers Diamonds) antitrust class action, which was cited in BP's cert petition.  Objectors to the De Beers settlement agreement urged a similar argument that some class members had no cognizable claim.

 

Standing & SCOTUS

A couple of interesting posts this week about standing issues in some high-profile pending and perhaps-soon-to-be-once-again-pending Supreme Court cases:

• Richard Re, Is Fisher v. University of Texas a Precedent on Jurisdiction? (Re’s Judicata)
• Will Baude, The standing problem in Zivotofsky, revisited (Volokh Conspiracy)

 

 

First Annual Civil Procedure Workshop - Call for Papers Deadline: December 15, 2014

We covered earlier the announcement and call for papers for the First Annual Civil Procedure Workshop. Just a quick reminder that the deadline to submit is Monday, December 15.

Download Civil-procedure-workshop-call-for-papers

 

 

 

CFP: Yale/Stanford/Harvard Junior Faculty Forum

Request for Submissions
Yale/Stanford/Harvard Junior Faculty Forum

June 16-17, 2015, Harvard Law School

Yale, Stanford, and Harvard Law Schools announce the 16th session of the Yale/Stanford/Yale Junior Faculty Forum to be held at Harvard Law School on June 16-17, 2015 and seek submissions for its meeting.

The Forum's objective is to encourage the work of scholars recently appointed to a tenure-track position by providing experience in the pursuit of scholarship and the nature of the scholarly exchange. Meetings are held each spring, rotating at Yale, Stanford, and Harvard. Twelve to twenty scholars (with one to seven years in teaching) will be chosen on a blind basis from among those submitting papers to present. One or more senior scholars, not necessarily from Yale, Stanford, or Harvard, will comment on each paper. The audience will include the participating junior faculty, faculty from the host institutions, and invited guests. The goal is discourse on both the merits of particular papers and on appropriate methodologies for doing work in that genre. We hope that comment and discussion will communicate what counts as good work among successful senior scholars and will also challenge and improve the standards that now obtain. The Forum also hopes to increase the sense of community among American legal scholars generally, particularly among new and veteran professors.

TOPICS: Each year the Forum invites submissions on selected topics in public and private law, legal theory, and law and humanities topics, alternating loosely between public law and humanities subjects in one year, and private law and dispute resolution in the next. For the upcoming 2015 meeting, the topics will cover these areas of the law:

- Antitrust
- Bankruptcy
- Civil Litigation and Dispute Resolution

-Contracts and Commercial Law

- Corporate and Securities Law
- Intellectual Property
- International Business Law
- Private Law Theory and Comparative Private Law

- Property, Estates, and Unjust Enrichment
- Taxation
- Torts

A jury of accomplished scholars, again not necessarily from Yale, Stanford or Harvard, with expertise in the particular topic, will choose the papers to be presented. There is no publication commitment, nor is published work eligible. Yale, Stanford, or Harvard will pay presenters' and commentators' travel expenses, though international flights may be only partially reimbursed.

QUALIFICATIONS: There is no limit on the number of submissions by any individual author. To be eligible, an author must be teaching at a U.S. law school in a tenured or tenure-track position and must not have been teaching at either of those ranks for a total of more than 7 years. American citizens teaching abroad are also eligible provided that they have held a faculty position or the equivalent, including positions comparable to junior faculty positions in research institutions, for less than seven years, and that they earned their last degree after 2005. International scholars are not eligible for this forum, but are invited to submit to the Stanford International Junior Faculty Forum. We accept co-authored submissions, but each of the coauthors must be individually eligible to participate in the JFF. Papers that will be published prior to the forum in June are not eligible.

PAPER SUBMISSION PROCEDURE:

 

Electronic submissions should be sent to Jennifer Minnich ([email protected]), with the subject line “Junior Faculty Forum.” The deadline for submissions is March 1, 2015. Remove all references to the author(s) in the paper. Please include in the text of the email and also as a separate attachment a cover letter listing your name, the title of your paper, your contact email and address through June 2015, and which topic your paper falls under. Each paper may only be considered under one topic. Any questions about the submission procedure should be directed both to Adriaan Lanni ([email protected]) and her assistant, Jennifer Minnich ([email protected]).

FURTHER INFORMATION: Inquiries concerning the Forum should be sent to Gabby Blum ([email protected]) or Adriaan Lanni ([email protected]) at Harvard Law School, Richard Ford ([email protected]) at Stanford Law School, or Christine Jolls ([email protected]) or Yair Listokin ([email protected]) at Yale Law School.

Gabriella Blum

Richard Ford

Christine Jolls

Adriaan Lanni

Yair Listokin

Steinman on Larsen on Factual Precedents

Now running on the Courts Law section of JOTWELL is my essay, Judicial Fact Making. I review Allison Orr Larsen’s article, Factual Precedents, 162 U. Pa. L. Rev. 59 (2013).