Civil Procedure & Federal Courts Blog

Dodson on Opt-In Class Actions

Scott Dodson (Hastings) has posted An Opt-In Option for Class Actions

Federal class actions today follow an opt-out model: absent an affirmative request to opt out, a class member is in the class. Supporters defend the opt-out model as necessary to ensure the viability of class actions and the efficacy of substantive law. Critics argue the opt-out model is a poor proxy for class-member consent and promotes over broad and ill-defined classes; these critics favor an opt-in model. This bimodal debate — opt out vs. opt in — has obscured an overlooked middle ground that relies on litigant choice: Why not give the class the option to pursue certification on an opt-out or an opt-in basis? This article explores such an opt-in option. It considers the effects of opt-in classes’ enhanced cohesiveness and representational character on the ease of class certification, the logistical challenges of opt-in mechanisms and the technological advances that can mitigate those challenges, the doctrinal feasibility of allowing an opt-in option, and the potential pitfalls the option presents. The article concludes that the opt-in option has positive potential, and it offers specific proposals for rule makers to consider.

 

 

House to Consider "Fraudulent Joinder Prevention Act" This Week

The House of Representatives is to consider the so-called Fraudulent Joinder Prevention Act of 2016, H.R. 3624. this week.  The bill provides:

Section 1447 of title 28, United States Code, is amended by adding at the end the following:

(f) Fraudulent joinder

(1) This subsection shall apply to any case in which—

(A) a civil action is removed solely on the basis of the jurisdiction conferred by section 1332(a);

(B) a motion to remand is made on the ground that—

(i) one or more defendants are citizens of the same State as one or more plaintiffs; or

(ii) one or more defendants properly joined and served are citizens of the State in which the action was brought; and

(C) the motion is opposed on the ground that the joinder of the defendant or defendants described in subparagraph (B) is fraudulent.

(2) The joinder of the defendant or defendants described in paragraph (1) (B) is fraudulent if the court finds that—

(A) there is actual fraud in the pleading of jurisdictional facts;

(B) based on the complaint and the materials submitted under paragraph (3), it is not plausible to conclude that applicable State law would impose liability on each defendant described in paragraph (1)(B);

(C) State or Federal law clearly bars all claims in the complaint against all defendants described in paragraph (1)(B); or

(D) objective evidence clearly demonstrates that there is no good faith intention to prosecute the action against all defendants described in paragraph (1)(B) or to seek a joint judgment.

(3) In determining whether to grant or deny a motion under paragraph (1)(B), the court may permit the pleadings to be amended, and shall consider the pleadings, affidavits, and other evidence submitted by the parties.

(4) If the court finds fraudulent joinder under paragraph (2), it shall dismiss without prejudice the claims against the defendant or defendants found to have been fraudulently joined and shall deny the motion described in paragraph (1)(B).

 

 

Nash on Summary Judgment's Standard of Review

Jonathan Remy Nash (Emory) has posted Unearthing Summary Judgment's Concealed Standard of Review to SSRN.

The common wisdom has it that the appellate standard of review for summary judgment is uniformly de novo. However, the general unreviewability of summary judgment denials renders as dicta most statements about the standard of review for summary judgment denials. This Paper argues that courts of appeals should accord district courts discretion to deny summary judgment in (i) close cases that (ii) turn at least in part on an issue of fact (at least where a jury trial right is available and has been exercised). This standard will have the greatest impact in the limited universe of summary judgment denials that are immediately appealable — those cases where summary judgment is sought by government officials on the basis of immunity from suit. An empirical study of such cases decided by the courts of appeals confirms that the proposed standard would have a substantial effect on the treatment by courts of appeals of summary judgment denials in qualified immunity cases. Beyond the courts of appeals, implementation of the standard would have an effect on the treatment of qualified-immunity-based summary judgment motions by district courts and the Supreme Court.

 

 

Macfarlane on Staff Attorney Adjudication of Prisoner Claims

Katherine Macfarlane (University of Idaho College of Law) has posted on SSRN a draft of her article "Shadow Judges: Staff Attorney Adjudication of Prisoner Claims."

Abstract:

Prisoners bring over twenty percent of the civil cases filed in federal district courts, predominantly seeking redress for violations of their civil rights, or release from prison under habeas corpus. Because most prisoners (around 93%) proceed pro se in their federal civil litigation, they are already at a disadvantage. The deck is stacked against prisoner plaintiffs in other systemic ways. Local rules, general orders, and even district courts’ job postings suggest that when a plaintiff is a pro se prisoner, the plaintiff is denied an Article III judge. Judicial tasks that must be performed in prisoners’ cases, from administration to adjudication, are delegated to non-judicial staff. As a result, in the very same court, prisoners’ cases are decided by a court employee who works as part of the court’s “pro se staff,” while all other plaintiffs get an Article III judge (or at least a magistrate judge, if they consent). The Supreme Court’s 2015 Wellness International Network v. Sharif decision drew attention to delegation of Article III claims to non-Article III judges in the bankruptcy realm. There, the Court rigorously considered the impact of the structural error caused by delegation to judges who do not enjoy fixed salaries or life tenure. But delegation of the judicial power in the prisoner litigation context is still hiding in plain sight.

This article is the first to investigate the scope of the delegation to pro se staff and to consider the separation of powers concerns caused by delegation of the judicial power to pro se staff. It argues that local procedure has enabled the delegation, and that it has gone too far. Local procedure crafts rules for prisoner litigation that conflict with federal law, effectively denying access to an Article III judge. When federal courts overreach in this manner, their rulemaking exceeds the limited rulemaking authority Congress has delegated to the judiciary. This local procedure also violates federal policy, which generally disfavors allowing non-judicial actors to perform judicial tasks.

This article concludes with recommendations about how to solve the delegation problem. The strongest solution would be to eliminate the local procedure in question, and the pro se staff it creates. Congress would be required to address the issue directly and nationwide by creating, or not, additional procedure for prisoner litigation. A more moderate approach would publicize the identity of pro se staff as well as the nature of the work the staff undertakes. Pro se staff would come out of the shadows and into public view.

Morley on Injunctive Relief and De Facto Class Actions

Michael Morley has posted on SSRN a draft of his article, De Facto Class Actions? Injunctive Relief in Election Law, Voting Rights, and Other Constitutional Cases. Here’s the abstract:

When a court holds that a legal provision is unconstitutional; inconsistent with, or preempted by, federal law; or invalid under an agency's organic statute or a framework statute such as the Administrative Procedures Act, the court must decide whether to grant injunctive relief and, if so, how broad that relief should be. In particular, the court must decide whether to issue a Plaintiff-Oriented Injunction or a Defendant-Oriented Injunction. A Plaintiff-Oriented Injunction bars the government defendants from enforcing the challenged provision only against the plaintiffs in the case or affected members of plaintiff organizations. A Defendant-Oriented Injunction, in contrast, completely bars the government defendant from enforcing the challenged provision against anyone in the state or nation.

Many courts tend to award Defendant-Oriented Injunctions in election law and voting rights cases, even when they are not brought as class actions, without recognizing or addressing most of the pertinent issues that choice implicates. Individual plaintiffs typically lack Article III standing to seek relief protecting the rights of third parties not before the court. And such third parties may neither fall within the court’s personal jurisdiction nor wish to challenge the provision at issue. Defendant-Oriented Injunctions in non-class cases also raise asymmetric preclusion concerns, undermine the policy considerations underlying Rule 23, and allow trial courts to enforce their rulings beyond the geographic limits of their jurisdiction. 

Continue reading

Choi and Pritchard on SEC Investigations and Securities Class Actions

A new article by Professors Stephen J. Choi and A.C. Pritchard, SEC Investigations and Securities Class Actions: An Empirical Comparison, has been published in the Journal of Empirical Legal Studies.

Abstract:

Using actions with both an SEC investigation and a class action as our baseline, we compare the targeting of SEC-only investigations with class-action-only lawsuits. Looking at measures of information asymmetry, we find that investors in the market perceive greater information asymmetry following the public announcement of the underlying violation for class-action-only lawsuits compared with SEC-only investigations. Turning to sanctions, we find that the incidence of top officer resignation is greater for class-action-only lawsuits relative to SEC-only investigations. Our findings are consistent with the private enforcement targeting disclosure violations at least as precisely as (if not more so than) SEC enforcement.

Palmer on Partisan Appointments to Special Courts and Panels

A new article, Does the Chief Justice Make Partisan Appointments to Special Courts and Panels?, by political science professor Maxwell Palmer (Boston University), has been published in the Journal of Empirical Legal Studies.

Abstract:

The Chief Justice of the Supreme Court has the exclusive and independent power to appoint federal judges to various special courts and panels, including the Foreign Intelligence Surveillance Court (FISC), the court that oversees all domestic surveillance for national security, including domestic data collection by the National Security Agency (NSA). This article examines the propensity of Chief Justices to appoint co-partisan judges to these panels. Such appointments may serve to produce decisions and policies that align with the Chief Justice's preferences. I use computational simulations to model the appointment decisions made by Chief Justices. I find that there is less than a 1 percent chance that a neutral Chief Justice would appoint as many Republicans to the FISC as have been appointed in the last 36 years. I further show that the Chief Justice is not selecting appointees on other observable judicial characteristics, such as age, experience, gender, senior status, or caseload. These results have important implications for the creation of judicial institutions, the internal politics of the judiciary, legislative delegation, and the powers and oversight of the national security state.

Discovery Protocol Results in More Settlements, Fewer Motions to Compel

I don’t know how I missed this when it came out, but better late than never.  The Federal Judicial Center has published a brief empirical study of the pilot project on initial discovery protocols in employment cases.  Emery G. Lee & Jason A. Cantone, Report on Pilot Project Regarding Initial Discovery Protocols for Employment Cases Alleging Adverse Action (Oct. 2015).

One of the ideas floated at the 2010 conference on civil litigation held at Duke Law School was that pattern discovery (set forms) in particular case types might reduce discovery battles (and hence, “cost and delay”).  Another, related idea expressed at the conference was that initial required disclosures under FRCP 26(a) were generally not helpful.  The Advisory Committee did not officially pursue these ideas (in fact, it abolished all the forms following the FRCP).  However, a group of plaintiffs’ and defendants’ attorneys experienced in employment cases negotiated and finalized discovery protocols for those cases that replace the standard initial disclosures.  Judge John G. Koeltl and the Institute for the Advancement of the American Legal System (IAALS) facilitated the project.   

The protocols cover only cases alleging adverse employment action.  Certain cases are exempt from the protocols: class actions, and cases alleging only discrimination in hiring, harassment, or violations of FLSA, ADA, FMLA, or ERISA.

The protocols are posted on the FJC's website.  About 75 federal district court judges have adopted the protocols, and the FJC has now studied their effect.

As described by the FJC:

The Protocols create a new category of information exchange, replacing initial disclosures with initial discovery specific to employment cases alleging adverse action. This discovery is provided automatically by both sides within 30 days of the defendant’s responsive pleading or motion. While the parties’ subsequent right to discovery under the F.R.C.P. is not affected, the amount and type of information initially exchanged ought to focus the disputed issues, streamline the discovery process, and minimize opportunities for gamesmanship. The Protocols are accompanied by a standing order for their implementation by individual judges in the pilot project, as well as a model protective order that the attorneys and the judge can use [as] a basis for discussion.

For example, among the many items the plaintiff is required to produce to the defendant are “diary, journal, and calendar entries maintained by the plaintiff concerning the factual allegations or claims at issue in this lawsuit,” and “the plaintiff’s current resume(s).”  Among the many items the defendant is required to produce to the plaintiff are “the plaintiff’s personnel file, in any form, maintained by the defendant, including files concerning the plaintiff maintained by the plaintiff’s supervisor(s), manager(s), or the defendant’s human resources representative(s), irrespective of the relevant time period” and “the plaintiff’s performance evaluations and formal discipline.”  

So now to the FJC’s study of the effect of the pilot project.  The FJC constructed a sample of 477 cases in the pilot program and a comparison sample (random and nationwide) of 672 recently-terminated cases alleging employment discrimination not in the pilot program.  Here are some of the results.  Please note that I constructed the table below based on the text in the FJC’s report:

	Pilot cases	Non-pilot cases	p value (if given)
Number of cases	477	672
Mean disposition time in days	312	328	.241
Median disposition time in days	275	286
Case outcomes:
o   Settlement	51%	30%
o   Voluntary dismissal (which could include settlement, but not clear from docket)	27%	35%
o   Dismissed on Rule 12 motion	7%	13%
o   Resolved by summary judgment	7%	12%
o   Trial	<1%	2%
o   Other (DWP, failure to exhaust)	7%	8%
Motions to dismiss filed	23%	31%
Motions for summary judgment filed	11%	24%
One or more discovery motions filed*	12%	21%	<.001**

*Includes motions to compel and motions for protective order (apparently includes only contested, not stipulated, motions for protective order).

**Statistically significant.

Some of these findings are cause for celebration.  There were significantly fewer discovery motions filed in the pilot cases.  The pilot cases were more likely to result in settlement.  The pilot cases were less frequently dismissed on motion or resolved by summary judgment.  Fewer such motions were even filed in the pilot cases.   

As for case disposition time, the FJC seems almost apologetic that pilot cases were resolved faster than, but not statistically significantly faster than, non-pilot cases, stating, “The pilot does not, in short, appear to have an appreciable effect on reducing delay.”  But whether pilot or non-pilot, these cases last about nine or ten months from filing to disposition.  How much faster does anyone want?  Having practiced law in the 1980s and 1990s (including in Illinois state courts), I’d like to suggest that this is a rocket docket.  Once we account for the preliminary time periods allowed by the FRCP (up to 90 days to serve the complaint after filing and then up to 90 days to issue the scheduling order), and add a standard six months to complete discovery, that’s what we get – nine or ten months.  Where’s the “delay”?  (Not blaming the FJC for using this term: it’s the mantra used by discovery “reformers.”)

The FJC is, as always, careful to note the limitations of its study.  First, judges are free to adopt or not adopt the protocols, so the pilot cases came from only ten districts, and 75% of the pilot cases were in Connecticut or the Southern District of New York.  Second, because the initial disclosures were not usually docketed (and under FRCP 5, they would not be required to be), the FJC could not determine whether the parties “actually complied with the discovery protocols and exchanged the required initial disclosures.”  Finally, “this report makes no claim that the only factor differing between the pilot and comparison cases was the pattern discovery in the former,” and “caution is warranted before concluding that the pilot program caused the above described differences between the pilot and comparison cases.”

In my opinion, the pattern discovery approach should be pursued in more types of cases.  Having experienced attorneys on both sides negotiate protocols to produce the types of documents and information repeatedly sought in discovery in a particular kind of case represents a far more sensible, concrete, and helpful approach to improving discovery than the adoption of a vague “proportionality” standard. 

Registration Opens for 2016 SEALS Conference

Registration for the 2016 annual conference of the Southeastern Law Schools Association (SEALS) is now open.  The final program is available.  The conference will be held August 3-9, 2016 in Amelia Island, Florida. 

The programs that seem to relate most to civil procedure, litigation, and courts are (I apologize if I missed any):

Continue reading

Bills to Curb Forced Arbitration, Split Ninth Circuit Introduced

A bill to prohibit corporations from forcing arbitration of certain disputes, Restoring Statutory Rights Act, S.2506, was introduced on February 4 by Senator Patrick Leahy (D-VT).

Separately, bills were introduced in both the House, H.R. 4457, and the Senate, S.2490, to divide the Ninth Judicial Circuit into two circuits.  The bills are sponsored by Republicans from Arizona.   

New Study Finds "Stunning and Unacceptable Level of Randomly Distributed Justice"

Professor Gary Neustadter of Santa Clara University School of Law has posted on SSRN his article, Randomly Distributed Trial Court Justice: A Case Study and Siren from the Consumer Bankruptcy World.

Abstract:     

Between February 24, 2010 and April 23, 2012, Heritage Pacific Financial, L.L.C. (“Heritage”), a debt buyer, mass produced and filed 218 essentially identical adversary proceedings in California bankruptcy courts against makers of promissory notes who had filed Chapter 7 or Chapter 13 bankruptcy petitions. Each complaint alleged Heritage’s acquisition of the notes in the secondary market and alleged the outstanding obligations on the notes to be nondischargeable under the Bankruptcy Code’s fraud exception to the bankruptcy discharge. The notes evidenced loans to California residents, made in 2005 and 2006, which helped finance the purchase, refinancing, or improvement of California residential real property. When issued, the notes were secured by junior consensual liens on the real property, but subsequent foreclosure of senior consensual liens, precipitated by the mid-decade burst of the housing bubble, left the notes unsecured.

This article reports an empirical study of these bankruptcy adversary proceedings. Because the proceedings were essentially identical, they offer a rare laboratory for testing the extent to which our entry-level justice system measures up to our aspirations for “Equal Justice Under Law.” We are unlikely to find many conditions better suited to empirical exploration of that question: (1) civil litigation filed during a relatively brief time span by one plaintiff against 266 defendants (including co-defendant spouses); (2) some defendants defaulting, some defendants appearing pro se, and some represented by an attorney; (3) dispersal of the litigation among forty-seven different bankruptcy court judges, all sitting in one state (and thus, where applicable, required to apply the relevant substantive law of a single state); and (4) legal claims and factual allegations by the plaintiff so nearly identical that each dispute is resolvable on the basis of one obvious and straightforward factual question (reliance by an originating lender on a borrower’s misrepresentations) or on the basis of three less obvious and more complex legal rules (a California statutory limitation on fraud claims and two alternative varieties of a standing defense).

The results in the Heritage adversary proceedings evidence a stunning and unacceptable level of randomly distributed justice at the trial court level, generated as much by the idiosyncratic behaviors of judges, lawyers, and parties as by even handed application of law. We anticipate some randomly distributed justice as the inevitable byproduct of disparities in economic and other resources of the parties and disparities in the knowledge, capabilities, and attitudes of even well-meaning attorneys and judges acting reasonably in an imperfect system. We aspire, nonetheless, to equal justice under law. The findings of this study reflect a departure from that ideal on a scale both larger than we may have expected and larger than we should tolerate.

Hat tip: Jason Kilborn, who had high praise for this article: “The paths and outcomes of these materially identical cases are so different in so many surprising (and often disturbing) ways, the paper offers a really stunning look behind the curtain of our often arbitrary trial-level justice system. . . . The revelations in this paper are a gold mine for civil proceduralists, and it offers a cautionary tale and useful playbook for lawyers (and perhaps judges) in how to make many aspects of our system more effective.”