Blawgletter®

Judge Posner Explains Why Opinions Mislead

Blawgletter sometimes rues the length of court opinions.  We indeed find the feeling more common as we progress a few months into our second half century.  And yet our patience has lately improved.

Judge Richard Posner helped today by explaining, in an ironically long opinion for him, why judicial sound bites can make bad law.  He cited a phrase, "literally false", which a plaintiff brandished as it might a knife that cut its opponents' defense to a Lanham Act claim to ribbons:

This is an unfortunately common example of a litigant misled by general language in judicial opinions.  Opinions would be even longer than they are if judges couldn't use short phrases to denote what may be complex legal doctrines.  When those phrases are taken to be exhaustive statements of entire doctrines with all the necessary qualifications, the result is likely to be a misapprehension of the law.  William Blake declared that "to Generalize is to be an Idiot.  To Particularize is the Alone Distinction of Merit."   That is a bit extreme; but uncritical generalization is a path to error.  One form of uncritical generalization, ironically in view of Schering's invocation of the doctrine of "literal falsity," is reading general language literally.

Schering-Plough Healthcare Products, Inc. v. Schwarz Pharma, Inc., No. 09-1438, slip op. at 20 (7th Cir. Oct. 29, 2009).

FIRREA Lets Case Stay Federal Even After FDIC Leaves, Fifth Circuit Holds

The Financial Institutions Reform, Recovery, and Enforcement Act grew out of the last big financial mess, this one during the 1980s and 1990s, when savings and loans and banks went belly up in large numbers.  Speculation and shady practices, you'll recall, accounted for many collapses.

Congress granted the outfit that guarantees deposits, the Federal Deposit Insurance Company, a lot of new powers.  Section 1819(b)(2) of FIRREA, for example, allows the FDIC to remove to federal court a state court case involving a bank once the agency becomes the bank's receiver. 

But what happens after the FDIC exits the case it removed?  May the district court send the lawsuit back to state court?

The Fifth Circuit said no yesterday in Adair v. Lease Partners, Inc., No. 08-60674 (5th Cir. Oct. 28, 2009).  FIRREA requires the federal court to keep the case because section 1819(b)(2) transforms all claims into ones that arise under U.S. law, thus conferring federal question jurisdiction, the court ruled. 

One judge concurred in the judgment only.  He felt that the majority went too far and should've based its decision on the fact that federal claims remained in the case, FIRREA or no FIRREA.

AT&T Can't Beat Class by Offer to Lose $7,500 Penalty, Ninth Circuit Holds

Say you bought a cell phone.  Suppose the outfit that sold it to you said you'd get it for "free".  Say also the seller -- let's call it AT&T -- billed you 7.75 percent of what the phone would've cost if you'd purchased it at retail.  How would you feel about the freeness of the phone?

Not so good, Blawgletter guesses.  And yet the seller -- which we must still refer to as AT&T -- insists it did nothing wrong.

Alright.  Fine.  Okie dokie.

But AT&T takes things further.  It also adds to its contracts with customers like you a clause that bars you from suing on behalf of anyone else.  The attempt has worked in some states but seldom in federal court.

Which fact seems to have persuaded AT&T to add a sweetener, at least in the Golden State.  If you, the California customer, convince the arbitrator to award more than AT&T offered in settlement, you get a smacking $7,500.  But the district court and Ninth Circuit didn't accept the AT&T argument.  The latter said, in holding the class ban unconscionable under state law:

The $7,500 premium is available only if AT&T does not make a settlement offer to the aggrieved customer in a sum equal to or higher than is ultimately awarded in arbitration, and before an arbitrator is selected.  This means that if a customer files for arbitration against AT&T, predictably AT&T will simply pay the face value of the claim before the selection of an arbitrator to avoid potentially paying $7,500.  Thus, the maximum gain to a customer for the hassle of arbitratng a $30.22 dispute is still just $30.22. . . . As a result, aggrieved customers will predictably no file claims -- even if the odds are that after the letter-writing and arbitrator choosing they will get a $30.22 offer -- thereby "greatly reduc[ing] the aggregate liability" AT&T faces for allegedly mulcting small sums of money from many consumers.

Laster v. AT&T Mobility LLC, No. 08-56394, at 14397-98 (9th Cir. Oct. 27, 2009).

 Our feed admires the brevity of Circuit Judge Bea.

Supremes Will Hear Big Civil Cases Next Monday

The U.S. Supreme Court will hear arguments in a pair of key civil cases on November 2.  One involves a claim to recover "excessive" fees under the Investment Company Act of 1940, Jones v. Harris Assocs., No. 08-586; and the other concerns states' ability to bar class actions asserting state law claims in federal court, Shady Grove Orthopedic Assoc. v. Allstate Ins. Co., No. 08-1008.  The cases strike Blawgletter as leading indicators of how far the Court will go this Term in cutting back civil claims.  We'll listen with interest on Monday.

Quote of the Day: Clarence Thomas

So why do you beat up on people if you already know?  I don't know, because I don't beat up on 'em.  I refuse to participate.  I don't like it, so I don't do it.

Clarence Thomas, Oct. 23, 2009 (explaining to a group of law students at the University of Alabama why he doesn't ask questions during oral argument).

Second Circuit Stops Forum Non Transfer to Buenos Aires

May lenders to an Argentine consortium that won a concession to furnish sewer and water in Buenos Aires enforce choice of forum clauses against an outfit that succeeded to the concession after the first one went belly up?  Perhaps, the Second Circuit held yesterday.

In Aguas Lenders Recovery Group LLC v. Suez, S.A., No. 08-1589-cv (2d Cir. Oct. 23, 2009), a collection of lenders formed the Aguas Lenders Recovery Group and used ALRG to sue Agua y Saneamientos Argentios, S. A., to recover money that the lenders loaned years before to the original concession-holder, Aguas Argentinas, S.A.  ALRG alleged that Agua & Saneamientos owed the funds as the "successor" to Aguas Argentinas.  The district court dismissed under the forum non conveniens doctrine, which allows U.S. courts to require plaintiffs to bring suit in another country.

The Second Circuit reversed.  The panel wrote that the successor theory, if viable, would bind Aguas y Saneamientos to the contracts between Aguas Argentinas and the lenders.  That included the clauses that called for venue in New York and waived any forum non defense to suit in New York.  The court remanded the case for a ruling on whether New York or Argentine law applies and whether Agua y Saneamientos counts as Aguas Argetinas's legal successor.

The Informant! A Brief Review

 
Matt Damon gives his all for his craft.

Blawgletter treasures the cinema.  Watching film makes us giddy.  Plus we adore any celluloid through which light can project flickering images, upon a screen or picture tube, of Matt Damon.  

You thus may imagine our joy at seeing he who played Will Hunting . . . James Francis Ryan . . . Jason Bourne . . . and Linus Caldwell last weekend at The Angelika.  Only this time Lord Damon gained 30 plus pounds in the name of portraying the lysine price-fixing, and Sherman Act section 1-violating, bad guy Mark Whitacre, a bipolar executive at Archer Daniels Midland, the former Supermarket to the World, at least on public television.

You may also guess at our chagrin that The Informant! director Steven Soderbergh and script-writer Scott Z. Burns chose not to include a lecture on how price-fixing hurts consumers.  And why the antitrust-phobic decision in Twombly will cost people who buy commodities -- all of us -- tens and maybe hundreds of billions of dollars.  But we digress.

At the risk of spoiling the surprise ending, we will tell you that Whitacre's felonious ways seem to owe a big debt to the fact that he lies a great deal.  The movie struck us in fact as a journey into the pathology of a man who can't tell the difference between truth and fiction . . . or at least cares nothing about it.

The Informant! doesn't actually end with a surprise.  We regret any misunderstanding.  Except that, in addition to fixing prices with competitors, Whitacre stole $11.5 million from ADM.  That fact seems less surprising after you've seen the movie.  Which we recommend.

Happy Friday!

Year Without Discovery Favors Death to Complaint, Seventh Circuit Holds

Do people who bought stock at, say, $75 a share and who sell it at, oh, $80 per deserve our concern?  Even if the company whose shares rose in value lied about something important, causing the price to dip before recovering?

The Seventh Circuit today said ix-nay on the orry-way but did it in terms of whether the district court abused its discretion in dismissing the securities fraud complaint "with prejudice".  No, the panel ruled.  Fannon v. Guidant Corp., No. 08-2429 (7th Cir. Oct. 21, 2009).

Imagine that.

But what strikes Blawgletter as interesting -- a low hurdle, we admit -- arises from how the court explained why a dismissal with prejudice fell within the district court's discretion.  Because the trial judge "gave the plaintiffs about a year to review and investigate the case, and then to file a consolidated complaint",  id., slip op. at 11, "[t]he district court was entitled to view this case as one in which the plaintiffs had, as a practical matter, a number of opportunities to craft a complaint that complied with the standards of the PSLRA", id. at 12-13.  "It was therefore entitled to bring this litigation to a close with a dismissal with prejudice."  Id. at 13.

So:  "about a year to review and investigate the case" -- without discovery! -- makes dismissal with prejudice an okay thing.

Imagine that.

MDL Panel Heads to Harvard for Nov. 19 Session

The Judicial Panel on Multidistrict Litigation ordered today that its seven members will gather for the next argument session on November 19 in Cambridge, Massachusetts.  Their Honors will hear from lawyers in, by Blawgletter's count, 16 potential MDL matters.

By the way, we confess to error in guessing the Panel would head south for this gathering.  You can't get a whole lot farther north in the lower 48 than the Ames Courtroom at Harvard Law School.

Further by the way, the numbers have come in for the last set of MDL cases.  By circuit and district court:

First Circuit

None

Second Circuit

Southern District of New York (2)
Western District of New York

Third Circuit

District of New Jersey

Fourth Circuit

District of Maryland

Fifth Circuit

Northern District of Texas (2)

Sixth Circuit

None

Seventh Circuit

Southern District of Illinois

Eighth Circuit

District of Minnesota
Western District of Missouri

Ninth Circuit

District of Arizona
Central District of California
Southern District of California

Tenth Circuit

None

Eleventh Circuit

Northern District of Alabama
Northern District of Georgia (2)

D.C. Circuit

None

Quote of the Day: Merle Travis (Update)

 
A lump of bituminous coal.

Thomas Hobbes wrote awhile back that, in the state of nature, "the life of man" tends toward the "solitary, poor, nasty, brutish, and short."

Kentuckian Merle Travis translated the Hobbesian view into the brief candle of a bituminous miner.  Travis sang:

You load sixteen tons [of hard coal], what do you get?  Another day older and deeper in debt.  Saint Peter, don't you call me 'cause I can't go.  I owe my soul to the company store.

Merle Travis, "Sixteen Tons" (1946).

Update:  "Tennessee" Ernie Ford made "Sixteen Tons" nationally famous in 1955.  His recording sold 2,000,000 units within two months after its release. 

Our feed still believes that David Hume could out-consume Schopenhauer and Hegel.