Civil Procedure & Federal Courts Blog

Atlantic Marine, Forum-Selection Clauses & Erie

I started off this month talking about Erie, so here’s another Erie post to bring things full circle. Back in the fall, I was glad to participate in the Hastings Law Journal’s symposium on last Term’s SCOTUS decision in Atlantic Marine Construction Co. v. United States District Court. Atlantic Marine was a unanimous decision—authored by Justice Alito—on how and when to enforce forum-selection clauses in federal court. It’s a set of issues that only a civil procedure professor could love, and if you teach civil procedure Atlantic Marine may already be on your syllabus.

The symposium issue is now out. You can find links to all of the articles here, including contributions by Andrew Bradt, Kevin Clermont, Scott Dodson, Robin Effron, Linda Mullenix, Steve Sachs, and Brad Shannon. My piece is Atlantic Marine Through the Lens of Erie, and here’s the abstract:

The Supreme Court’s unanimous decision in Atlantic Marine clarified several things about the enforcement of forum-selection clauses in federal court. But something important was missing from Justice Alito’s opinion — the Erie doctrine. Erie, of course, helps to determine the applicability of state law in federal court, and state law potentially has a lot to say about contractual forum-selection clauses. Indeed, Erie was front and center the last time the Court confronted the enforcement of forum-selection clauses in federal court, when it decided Stewart Organization v. Ricoh a quarter century ago. 

This article for the Hastings Law Journal’s symposium on Atlantic Marine examines that decision through the lens of Erie, and explores the role that Erie and state law should play in the Atlantic Marine framework. Atlantic Marine may appear at first glance to mandate virtually unflinching enforcement of forum-selection clauses. But Justice Alito’s approach in Atlantic Marine applies only when the forum-selection clause is “contractually valid.” Properly understood, Erie requires federal courts to look to state law to decide this question — at least in diversity cases. To allow federal courts to disregard state law in applying Atlantic Marine would raise several troubling Erie concerns: geographic relocation contrary to what would occur in state court; changing the substantive law that would govern the ultimate merits of the litigation in state court; and overriding state contract law and contractual remedies via the sort of federal common law that Erie forbids.

My thanks once again to the students, organizers, and panelists, as well as to the DJ who was able to find some Rod Stewart tracks without any advance notice. I learned a lot and had a great time.

[Cross-posted at PrawfsBlawg]

 

Lens on Stays Pending Appeal

Jill Lens has posted on SSRN a draft of her article, Stays Pending Appeal: Why the Merits Should Not Matter, which will be published in the Florida State University Law Review. Here’s the abstract: 

In Nken v. Holder, the Supreme Court delineated the standards that should guide a court’s discretion in deciding whether to stay injunctive relief pending appeal. A “critical” factor is whether the stay applicant has made a “strong showing” of her likelihood to succeed on the merits of the appeal. Because of the critical label, it is not surprising to see courts issue long decisions extensively predicting the decision of the appellate court on the merits. To preserve her interest in judicial review, the stay applicant must effectively show that she will win the appeal.

Stays play an important role in appellate judicial review, but have received little academic commentary. This Article is the first to specifically argue against the evaluation of the merits within the decision to stay injunctive relief pending appeal. An evaluation of the merits, and the current emphasis on the factor, is not supported historically, theoretically, or practically. Instead the Court should look to whether a stay is necessary — due to any potentially changing circumstances, harm to the parties, and the public interest, similar to the other three Nken factors. The Article is also the first to argue that courts must explain their decisions on stays. Otherwise, the decisions seem unjustified, inconsistent, and illegitimate.

 

 

 

 

SCOTUS Decision on Agency Determinations and Issue Preclusion

Today the Supreme Court decided B&B Hardware, Inc. v. Hargis Industries, Inc., a case about the preclusive effect of determinations made by the Trademark Trial and Appeal Board (TTAB) when reviewing trademark registrations. Writing for a seven-Justice majority, Justice Alito concludes that “a court should give preclusive effect to TTAB decisions if the ordinary elements of issue preclusion are met.”

Going forward, parties in trademark litigation will likely continue to litigate whether “the ordinary elements of issue preclusion” are, in fact, met with respect to any given TTAB decision. As Justice Ginsburg emphasizes in her brief concurrence, the Court recognizes that “for a great many registration decisions issue preclusion obviously will not apply.” Ginsburg explains that “contested registrations are often decided upon a comparison of the marks in the abstract and apart from their marketplace usage,” and that, if so, “there will be no preclusion of the likelihood of confusion issue in a later infringement suit.”

What may be of broader interest is the Court’s discussion of “whether an agency decision can ever ground issue preclusion.” The answer: yes, it can. Quoting a number of earlier decisions (citations omitted), Justice Alito writes:

“[B]ecause the principle of issue preclusion was so well established at common law, in those situations in which Congress has authorized agencies to resolve disputes, courts may take it as given that Congress has legislated with the expectation that the principle of issue preclusion will apply except when a statutory purpose to the contrary is evident. This reflects the Court’s longstanding view that when an administrative agency is acting in a judicial capacity and resolves disputed issues of fact properly before it which the parties have had an adequate opportunity to litigate, the courts have not hesitated to apply res judicata to enforce repose.”

The Court then addresses – and dismisses – potential constitutional concerns with agency preclusion. Although Justice Alito finds that Hargis did not present any direct constitutional challenge, he discusses the Seventh Amendment and Article III in the context of Hargis’s “statutory argument that we should jettison administrative preclusion in whole or in part to avoid potential constitutional concerns.” Alito writes that “the Seventh Amendment does not strip competent tribunals of the power to issue judgments with preclusive effect; that logic would not seem to turn on the nature of the competent tribunal.” And he rejects the argument that “it might violate Article III if an agency could make a decision with preclusive effect in a later proceeding before a federal court.”

Justice Thomas writes a dissenting opinion, joined by Justice Scalia, that is much more skeptical of agency preclusion. His opinion begins:

The Court today applies a presumption that when Congress enacts statutes authorizing administrative agencies to resolve disputes in an adjudicatory setting, it intends those agency decisions to have preclusive effect in Article III courts. That presumption was first announced in poorly supported dictum in a 1991 decision of this Court, and we have not applied it since. Whatever the validity of that presumption with respect to statutes enacted after its creation, there is no justification for applying it to the Lanham Act, passed in 1946.   

[Cross-posted at PrawfsBlawg] 

 

Advisory Committee Agenda Includes Class Action Amendment "Sketches," Loser-Pays Report

The Advisory Committee on Civil Rules has released the 640-page agenda for its April 9-10, 2015 meeting.

The agenda includes many items that are of interest.  The following is far from an exhaustive list:

•  In the Draft Minutes for the Committee's October 30, 2014 meeting (p. 39):

 "Judge Campbell reported that the Forms Working Group in the Administrative Office has already begun deliberating what response they might make if the proposed abrogation of Rule 84 and the Rule 84 Forms is approved by the Supreme Court and Congress. They have begun to think about new forms that might be created. This Committee will keep in touch with the Working Group, perhaps by means as formal as appointing a liaison member."

• The Report of the Rule 23 Subcommittee considers the following topics.  Some contain "sketches" of possible amendments to the rule on class actions (p. 243):

• Settlement approval criteria (p. 246)
• Settlement class certification (p. 253)
• Cy pres treatment (p. 263)
• Dealing With Objectors (p. 272)
• Rule 68 Offers and Mootness (p. 277)
• Issue Classes (p. 281)
• Notice (p. 284)

•  The Discovery Subcommittee reports on "Requester Pays Issues."  (p. 333)

 

Two Interesting SCOTUS Cert Grants Today

Today’s order list from the Supreme Court includes grants of certiorari in two cases.

DIRECTV v. Imburgia (No. 14-462) will ask the Court once more to address arbitration agreements and the Federal Arbitration Act. The question presented is:

Whether the California Court of Appeal erred by holding, in direct conflict with the Ninth Circuit, that a reference to state law in an arbitration agreement governed by the Federal Arbitration Act requires the application of state law preempted by the Federal Arbitration Act.

Montgomery v. Louisiana (14-280) involves the retroactivity of the Court’s 2012 decision in Miller v. Alabama, which held that the Eighth Amendment forbids sentencing schemes that mandate life-without-possibility-of-parole sentences for juvenile homicide offenders. The question presented in the cert. petition is:

Whether Miller adopts a new substantive rule that applies retroactively on collateral review to people condemned as juveniles to die in prison?

But the Court also asked the parties to address whether it even has jurisdiction:

Do we have jurisdiction to decide whether the Supreme Court of Louisiana correctly refused to give retroactive effect in this case to our decision in Miller?

[Cross-posted at PrawfsBlawg] 

 

Macfarlane on A New Approach to Local Rules

Katherine Macfarlane (Louisiana State University) has published in the Stanford Journal of Civil Rights and Civil Liberties (Vol. 11, 2015) an article entitled A New Approach to Local Rules.

Abstract:

The Federal Rules of Civil Procedure no longer govern all non-substantive decisions in federal civil litigation. Rather, control over a case’s procedural course has shifted to district courts’ local rules, of which there are currently more than 6,000. Despite the proliferation of local rules and their increasing importance, federal procedural scholarship remains focused on the Federal Rules. That scholarship is rigorous, highlighting the Federal Rules’ history and purpose, and proposing ways that the Rules might adapt to the evolving nature of federal litigation. Local rules should be subject to similar scrutiny. However, it is not enough to borrow theories applied to the Federal Rules. A new approach is needed.

Scrutiny of local rules must first consider how they are created. Though Federal Rules are amended through a process that requires public comment and debate, local rules are adopted or amended through a process that does not automatically give notice of impending changes to affected parties, nor does it provide all affected parties with a meaningful way to comment. Applying this new approach and its focus on meaningful notice and comment, the Article compares local patent rules to local rules governing pro se prisoner litigation, arguing that when parties are not allowed to participate in the local rule adoption and amendment process, the rules that result are procedurally and substantively unfair. Finally, it proposes how District Courts can ensure that all parties potentially affected by proposed local rules receive actual notice and a real opportunity to comment.

Has Conley v. Gibson really been overruled? (And did the Fourth Circuit just tee up the next big SCOTUS case on pleading?)

Over at PrawfsBlawg, Dave Hoffman has a post up on the empirical impact of Twombly and Iqbal. That issue has been hotly debated, but there’s no question that federal courts are continuing to struggle with what those decisions mean for how judges should decide Rule 12(b)(6) motions. A particularly difficult question has been the vitality of pre-Twombly Supreme Court precedents like Conley v. Gibson and Swierkiewicz v. Sorema.

These issues were on display last Friday (the 13th, by the way) as a divided Fourth Circuit panel affirmed the dismissal of an employment discrimination claim in McCleary-Evans v. Maryland Department of Transportation (No. 13-2488). The majority opinion by Judge Niemeyer rejected the plaintiff’s reliance on Swierkiewicz, emphasizing that the Supreme Court in Swierkiewicz had “applied a pleading standard more relaxed than the plausible-claim standard required by Iqbal and Twombly.” In dissent, Judge Wynn argued that the majority had improperly “ignore[d] the factual underpinnings of the Swierkiewicz holding, looking solely to the Supreme Court’s 2009 decision in Iqbal to guide its decision,” and noted that lower federal courts “have no authority to overrule a Supreme Court decision no matter how out of touch with the Supreme Court’s current thinking the decision seems.”

Twombly and Iqbal are problematic decisions in many respects, and diagnosing their flaws is important. Even more important, though, is the question of how courts should be applying Twombly and Iqbal, especially in relation to pre-Twombly Supreme Court case law. Properly understood, Twombly and Iqbal can and should be read to preserve the notice-pleading approach that the Supreme Court repeatedly employed during the half-century before Twombly. I’ve laid out this argument here and here, and explained how the basic framework Iqbal articulated can be applied in a way that is consistent with notice pleading and pre-Twombly precedent. This understanding of Twombly and Iqbal is confirmed by more recent Supreme Court pleading decisions—especially the 2014 decision in Johnson v. City of Shelby—which cast doubt on the presumption that the Court’s pre-Twombly case law even is “out of touch with the Supreme Court’s current thinking.”

I may have more posts on pleading as March marches on, but for now I wanted to address the one—and only—instance where the Twombly and Iqbal opinions directly call into question any aspect of pre-Twombly case law. That, of course, was Twombly’s “retirement” of Conley’s statement that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.”

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Fitzpatrick on Class Actions

Brian Fitzpatrick (Vanderbilt) has posted two new articles to SSRN on class actions.

The End of Class Actions: In this Article, I give a status report on the life expectancy of class action litigation following the Supreme Court’s decisions in Concepcion and American Express. These decisions permitted corporations to opt out of class action liability through the use of arbitration clauses, and many commentators, myself included, predicted that they would eventually lead us down a road where class actions against businesses would be all but eliminated. Enough time has now passed to make an assessment of whether these predictions are coming to fruition. I find that, although there is not yet solid evidence that businesses have flocked to class action waivers — and that one big category of class action plaintiffs (shareholders) remain insulated from Concepcion and American Express altogether — I still see every reason to believe that businesses will eventually be able to eliminate virtually all class actions that are brought against them, including those brought by shareholders.

An Empirical Look at Compensation in Consumer Class Actions:  Consumer class actions are under broad attack for providing little in compensation to class members. One response to this charge is the argument that one of us has made elsewhere: consumer class actions should not be measured by their compensatory value but by their deterrence value. But here we take up this critique of consumer class actions on its own terms: can they serve a meaningful compensatory role? Scholars have taken up this question before, but they have been stymied by the lack of available data. In this article, we present original data on the distribution of class action settlements in fifteen related small-stakes consumer class action lawsuits against some of the largest banks in the United States. We obviously can make no claim that these settlements are representative of most consumer class actions. Nonetheless, we believe our findings support the notion that, under certain circumstances, consumer class actions can indeed serve a meaningful compensatory role: when they eschew claim forms in favor of automatic distributions and when they rely on direct deposits or standard-sized checks rather than the cheaper, postcard-sized variety to make those distributions.

RJE

Tidmarsh on Zimmerman on Presidential Settlements

Now available on the Courts Law section of JOTWELL is an essay by Jay Tidmarsh entitled The Settler-in-Chief. Jay reviews Adam Zimmerman’s recent article, Presidential Settlements, 163 U. Pa. L. Rev. (forthcoming 2015).

 

 

 

 

Would the Alabama Supreme Court prefer no marriage at all?

There’s an interesting paragraph in this week’s order from the Alabama Supreme Court, which confirmed that Mobile County probate judge Don Davis is subject to its earlier mandamus ruling even though he is also the subject of a federal-court injunction. In trying to make sense of this situation, Judge Davis had stopped issuing marriage licenses altogether. 

Here’s what the Alabama Supreme Court said (emphasis mine) on p.9: 

Section 30-1-9, Ala. Code 1975, provides that Judge Davis "may" issue “marriage licenses." To the extent he exercises this authority, he must issue those licenses in accordance with the meaning of the term "marriage" in that Code section and in accordance with other provisions of Alabama law, as discussed in our March 3 opinion. 

Is the implication here that Judge Davis has no obligation to issue marriage licenses to anyone? That he can refuse to issue them across the board, just as long as no marriage licenses are issued to same-sex couples? 

Meanwhile, expect some more activity in federal court next week. Judge Granade has ordered Judge Davis to file a response to the Strawser plaintiffs’ motion for class certification by Tuesday, March 17.

[Cross-posted at PrawfsBlawg]

 

 

New developments in the Alabama same-sex marriage litigation

The litigation over Alabama’s ban on same-sex marriage has taken many twists and turns in these early months of 2015, but the main action has been in two arenas: the Alabama Supreme Court and U.S. District Judge Callie Granade’s courtroom in the Southern District of Alabama. Of course, everyone will be watching the U.S. Supreme Court as well, where Obergefell v. Hodges will be argued next month. And it was the Supreme Court’s February order refusing to stay Judge Granade’s initial injunction that began the latest round of activity. Here’s where things stand:

The Alabama Supreme Court said its piece last week, granting a writ of mandamus ordering all Alabama probate judges to stop granting marriage licenses. The merits of that ruling are certainly open to debate—both on the key constitutional issue and the standing/jurisdiction issue—but there are a few things to keep in mind going forward. First, the mandamus action was brought by two groups opposing same-sex marriage (acting as “relators” for the State of Alabama) against the Alabama probate judges. No individuals or couples who might wish to challenge Alabama’s same-sex marriage ban were parties to that proceeding, so as a matter of preclusion the ruling by the Alabama Supreme Court does not prevent them from seeking relief in federal court.

Second, the court ordered Alabama probate judges not to issue new same-sex marriage licenses (and it seems to have had that effect), but it ignored the relators request to order Alabama probate judges “not to recognize any marriage licenses issued to same sex couples.” In doing so, the court avoided one potential direct conflict with the federal judiciary, insofar as Judge Granade had previously ordered Mobile County probate judge Don Davis to issue marriage licenses to four same-sex couples in the Strawser case. Indeed, the Alabama Supreme Court’s order asked Davis to “advise” it “as to whether he is bound by any existing federal court order regarding the issuance of any marriage license other than the four marriage licenses he was ordered to issue in Strawser.” His deadline was last Thursday (3/5), but he’s asked for more time to respond. [Update: Today the Alabama Supreme Court posted on its website an order confirming that Judge Davis was also subject to its mandamus ruling, but only after determining for itself (whether correctly or not) that Judge Granade’s injunction did not extend beyond those four licenses.] 

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Annual Federal Courts Data, Final Government Arbitration Study Released

In a data bonanza for numbers geeks, the federal government separately released two reports yesterday: the long-awaited Final Arbitration Study by the Consumer Finance Protection Bureau and the less-awaited Judicial Business of the United States Courts: Annual Report of the Director 2014.

I will post more about each of these reports as I digest them.  The CFPB report is over 700 pages long and contains a wealth of empirical information about arbitration clauses in consumer financial instruments such as credit cards.  This information includes the effect of arbitration clauses on consumer prices (none) and the interplay of arbitration clauses and class actions.  As for the 2014 federal courts data, I will add pertinent measures to my existing database to enable a longer-term view.     

 

Hines and Hines on Punitive Damages

Laura J. Hines (University of Kansas School of Law) and N. William Hines (University of Iowa College of Law) have posted on SSRN their article, Constitutional Constraints on Punitive Damages: Clarity, Consistency, and the Outlier Dilemma, 66 Hastings L.Rev. No. 2, 2015, U Iowa Legal Studies Research Paper No. 15-04.

Abstract:

It is now almost 20 years since the Supreme Court added a constitutional dimension to U.S. punitive damages law. In 1996, in BMW v. Gore the Court created three “Guideposts” to assist lower courts in implementing the newly required due process review of all punitive damages awards to check for unconstitutional excessiveness. The authors were curious to learn how these “Guideposts” were working out in practice with state and federal courts conducting this mandated excessiveness review. To help satisfy this curiosity the authors collected and carefully studied all of the 527 state and federal punitive damages judicial opinions published between 2003 and 2013. This paper reports the results of this project.

 

Alabama Supreme Court Issues Writ of Mandamus, Enjoins Probate Judges from Issuing Marriage Licenses to Same-Sex Couples

This evening the Alabama Supreme Court granted the petition for a writ of mandamus that had been filed earlier this month by two groups opposing same-sex marriage, purporting to be “relators” for the State of Alabama. Here is the 134-page per curiam opinion, which concludes with an order enjoining Alabama probate judges from issuing marriage licenses to same-sex couples.

Here is the full text of the order:

The named respondents are ordered to discontinue the issuance of marriage licenses to same-sex couples. Further, and pursuant to relator Judge Enslen's request that this Court, "by any and all lawful means available to it," ensure compliance with Alabama law with respect to the issuance of marriage licenses, each of the probate judges in this State other than the named respondents and Judge Davis are joined as respondents in the place of the "Judge Does" identified in the petition. Within five business days following the issuance of this order, each such probate judge may file an answer responding to the relator's petition for the writ of mandamus and showing cause, if any, why said probate judge should not be bound hereby. Subject to further order of this Court upon receipt and consideration of any such answer, each such probate judge is temporarily enjoined from issuing any marriage license contrary to Alabama law as explained in this opinion. As to Judge Davis's request to be dismissed on the ground that he is subject to a potentially conflicting federal court order, he is directed to advise this Court, by letter brief, no later than 5:00 p.m. on Thursday, March 5, 2015, as to whether he is bound by any existing federal court order regarding the issuance of any marriage license other than the four marriage licenses he was ordered to issue in Strawser.

The last sentence, of course, refers to the federal injunction issued by Judge Callie Granade against Mobile County probate judge Don Davis last month. 

 

 

 

The Dress, Justice Holmes & Erie

What’s the half-life for internet-breaking social media sensations these days? It seems to get shorter and shorter, so I figured I should address #TheDress sooner rather than later. Is it White & Gold, or Blue & Black? For all the snark, memes, and celebrity tweets the dress has inspired, a crucial piece of historical context has been overlooked.

Ninety years ago, there was a kerfuffle in Bowling Green, Kentucky that bears striking similarities to the one that now threatens the marital harmony of Kim & Kanye. Back then, the dispute was between Black & White taxis and Brown & Yellow taxis. A federal lawsuit was filed that made its way all the way to the U.S. Supreme Court, where it prompted a strong dissent from Justice Holmes. Holmes attacked the majority for reading the 1842 decision in Swift v. Tyson to allow the federal court to disregard Kentucky law on the enforceability of a contract giving Brown & Yellow the exclusive ability to solicit customers at the Bowling Green train station.

To Holmes, the majority improperly accepted the “fallacy” that parties in federal court “are entitled to an independent judgment on matters of general law.” The Swift opinion itself—Holmes contended—was written by Justice Story “under the tacit domination” of this fallacy. Holmes explained: 

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