Civil Procedure & Federal Courts Blog

How the Current Version of Rule 5 Frustrates Public Access to Discovery in the “Trump University” Lawsuit and Other Cases

            Most people know by now that Cohen v. Donald Trump, No. 3:13-cv-02519, is a class action in federal court in San Diego alleging that Trump University defrauded thousands of consumers who purchased real estate courses.  What is less widely reported is that the complaint alleges that Donald Trump violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”), a federal statute passed in 1970 to make it easier to prosecute members of organized crime – e.g., the Mafia.  Specifically, the complaint alleges that Donald Trump violated RICO by conducting Trump University (the alleged criminal enterprise) through a “pattern of racketeering activity” consisting of crimes of mail fraud and wire fraud. 

 

The Discovery Sought by the News Media

            What does this have to do with the Federal Rules of Civil Procedure?  Well, hang on.  One of the latest skirmishes in the case is that major news media organizations (CNN, The Washington Post, CBS, and several others) have moved to intervene for the purpose of modifying the protective order so that the videotaped depositions of Donald Trump taken in the case may be released.   

            Earlier, the plaintiff tried to file portions of the videos in court as exhibits to his brief opposing Trump’s motion for summary judgment. The court returned the videos to the plaintiff for failing to comply with a court rule.  The plaintiff promptly moved to file “a series of electronic files of video excerpts from the depositions of Trump, taken on December 10, 2015, and January 21, 2016.”  Trump opposes the motion. 

            But meanwhile, plaintiff’s motion revealed the existence of two days of depositions of Trump in videotape form, of which plaintiff is only seeking to file a fraction.  The putative intervenors (the news media) want it all. 

 

Rule 5 Prohibits the Filing of Discovery in Court Until “Used in the Proceeding”

            Perhaps one of the most somnolent of the Federal Rules of Civil Procedure is Rule 5, “Serving and Filing Pleadings and Other Papers.”  Since 2000, Rule 5(d)(1) has prohibited the filing in court of discovery requests and responses (including initial disclosures, depositions, interrogatories, requests for documents, and requests for admission).  From 1980 to 2000, Rule 5 allowed local courts to prohibit the filing of discovery.  (Of course, once a party “uses” the discovery “in a proceeding” – for example, as an exhibit to a summary judgment motion – it must be filed in court.) 

            In contrast, before 1980, Rule 5 required the filing of discovery – depositions, interrogatories, and so forth – in court.  The only reason that was publicly stated for the change to prohibiting the filing of discovery in court was that the copies for filing could be expensive and that the courts did not have enough physical storage space.  But now that everything is digital, it would seem that the issues of expense and physical storage space are moot.   

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Judge Pro on Federal Magistrate Judges

Judge Philip M. Pro (United States District Court for the District of Nevada) has posted on SSRN his article United States Magistrate Judges: Present but Unaccounted For, forthcoming in the Nevada Law Journal.

Abstract:

The relationship between United States district judges and United States magistrate judges is unique within the American judiciary. United States magistrate judges are the first judges encountered in most federal civil or criminal cases and play an increasingly important role in the adjudication of virtually every case in United States district court. Yet, while the behavior of Article III judges has been the subject of active academic scrutiny, the behavior of magistrate judges, who are appointed to renewable eight-year terms by their Article III district judge colleagues, has largely been ignored. This paper reports the results of interviews of thirty-four magistrate judges and district judges, and through their experiences, explores whether their judicial decision-making relationship, a motivation for re-appointment, or elevation to Article III status influences their judicial behavior and that of their district judge colleagues. The answers to these questions are nuanced and dependent on variables not previously considered, and are best understood in the context of the remarkable evolution of the Magistrate Judges System, which has existed for less than fifty years.

Jacobs on Transient Jurisdiction: If Corporations Are People, Why Can't They Play Tag?

Cody Jacobs (Freedman Fellow, Temple University Beasley School of Law) has published in New Mexico Law Review his article, If Corporations Are People, Why Can't They Play Tag?

Abstract:

The Supreme Court’s decision in Burnham v. Superior Court — despite producing a splintered vote with no opinion garnering a majority of the Court — made one thing clear: an individual defendant can be subject to personal jurisdiction simply by being served with process while he or she happens to be in a forum regardless of whether the defendant has any contacts with that forum. This method of acquiring personal jurisdiction is called transient or “tag” jurisdiction. Tag jurisdiction is older than minimum contacts jurisdiction, and used to be the primary method for determining whether an out of state defendant could be haled into a court. While Burnham held that tag jurisdiction remained constitutionally valid, the court split on the justification for allowing this form of jurisdiction, with four Justices approving the practice under an originalist methodology, and four others approving it based on contemporary notions offairness.

This article argues that both the originalist and fairness-based tests proposed by the principal opinions in Burnham support allowing the assertion of tag jurisdiction over corporations and other entity defendants through in-state service on their officers. This article shows that at the time of the Fourteenth Amendment’s ratification, corporations were often subject to personal jurisdiction based only on their officers’ physical presence in a forum when served with process. The article also demonstrates that the fairness considerations that led four Members of the Court to endorse tag jurisdiction in Burnham apply with even greater force to modern corporations because of their greater ability to take advantage of the protections and services offered by states outside of their own. Finally, the article examines how the application of tag jurisdiction to corporate entities would be in accord with general trends in constitutional law affording corporations rights equivalent to those of natural persons.

 

Clermont on the Last-in-Time Judgment Rule

Professor Kevin M. Clermont (Cornell) has posted to SSRN his article, Limiting the Last-in-Time Judgment Rule. 

Abstract:

A troublesome problem arises when there are two binding but inconsistent judgments: Say the plaintiff loses on a claim (or issue) in the defendant’s state and then, in a second action back home, wins on the same claim (or issue). American law generally holds that the later judgment is the one entitled to preclusive effects. In the leading article on the problem, then-Professor Ruth Bader Ginsburg suggested that our last-in-time rule should not apply if the U.S. Supreme Court declined to review the second court’s decision against giving full faith and credit. Although that suggestion is unsound, the last-in-time rule indeed should not apply if the first judgment is American and the second judgment comes from a foreign-nation court. To establish those contentions, this Article must go to the depths of res judicata and conflicts law, here and also abroad, where the first-in-time rule reigns. The Article resurfaces to rearrange the puzzle pieces into a simple reformulation—an elaboration but not an amendment—of the American law on inconsistent judgments.

Coleman on One Percent Procedure

Brooke Coleman has posted on SSRN a draft of her article One Percent Procedure, which is forthcoming in the Washington Law Review. Here’s the abstract:

In this election year, political rhetoric about the one percent is already pervasive, as those with the greatest concentrated wealth prosper and the remaining population stagnates. Because of their affluence, the one percent exercise disproportionate control over political and economic systems. This Article argues that federal civil procedure is similarly a one percent regime. The crème de la crème of the bench and bar, along with equally exclusive litigants, often engage in high-stakes, complex civil litigation. It is this type of litigation that dominates both the elite experience and the public perception of what civil litigation is. This litigation is not particularly common, however; while expensive and well known, it is in the minority. Yet this litigation and the individuals engaged in it have an incongruent influence on how the Federal Rules of Civil Procedure and procedural doctrine develop. They create one percent procedure. 

This Article interrogates and connects disparate phenomena related to civil litigation, including the recent discovery amendments and the rise of multidistrict litigation. It demonstrates that the elite — those who are deeply steeped in complex, high-stakes litigation — are setting the agenda and determining the rules for how the entire civil litigation game is played. It further argues that the benefits of a one percent procedure system — notably expertise of the participants — are not worth the costs; indeed, that expertise can be detrimental to the design of a civil litigation system.

As in politics and economics, a system that gives too much control to the one percent risks undervaluing and underserving the remaining ninety-nine. Using social and political science, the Article argues that the homogenous policymaking of one percent procedure creates suboptimal results. The Article concludes that the structures giving rise to one percent procedure must be modified and proposes a set of reforms intended to allow the ninety-nine percent representation in, and access to, the process of constructing our shared civil litigation system.

 

 

Civil Procedure Bar Exam Refreshers on YouTube

Just in time for the July bar exam . . . Professor Ira Nathenson has posted seven new YouTube videos reviewing various aspects of Civil Procedure.   Enjoy!

While We Were Grading: Recent Scholarship on Civil Procedure

Here are seven papers posted on SSRN in the last month relating to civil procedure issues:

1. We Have a Consensus on Fraud on the Market -- And It's Wrong 

James C. Spindler (University of Texas School of Law; McCombs School of Business, University of Texas at Austin)

Abstract:     

Recent scholarship overwhelmingly contends that the fraud on the market securities class action has neither deterrent nor compensatory effect and should be cut back or even abandoned entirely. This scholarship largely focuses on two critiques: circularity, which holds that shareholder class action claimants are suing themselves, making compensation impossible; and diversification, which holds that fraud constitutes a diversifiable risk, such that diversified shareholders both gain and lose from fraud in equal measure and hence are not negatively impacted. These critiques are arguably the most important and widely-used theoretical development of the last two decades in securities law, and enjoy a broad consensus.

Unfortunately, these critiques are wrong. After tracing the evolution of these critiques, this paper demonstrates economically that, despite widespread acceptance, none of the principal claims of these critiques are correct. In particular: fraud on the market does indeed compensate defrauded purchasers despite circularity (under certain conditions, perfectly); and diversified investors do have expected losses from fraud and have incentives to undertake deadweight precaution costs. Further, the fraud on the market remedy deters both precaution costs and, under certain conditions, fraud itself. The critiques are fundamentally flawed, the academic consensus on fraud on the market is incorrect, and the panoply of reform proposals based on these critiques is without foundation. These critiques have fueled a trend of cutbacks and ongoing existential challenges to fraud on the market (as in Halliburton) that, in light of these results, should be rethought.

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