Blawgletter®

Quote of the Day: Lewis Carroll

"You must know -- " said the Judge:  but the Snark exclaimed "Fudge!

That statute is obsolete quite!

Let me tell you, my friends, the whole question depends

On an ancient manorial right."

Lewis Carroll, "The Barrister's Dream", The Hunting of the Snark (1874).

(For another obsolete statute, see ruling.  If you dare.)

Webinar on Class Certification in Antitrust Cases: A Brave New World

A couple weeks ago, if you found yourself in downtown Philadelphia, you could've stopped in the U.S. courthouse there and seen Blawgletter argue a Rule 23(f) appeal to an impressive panel of the Third Circuit Court of Appeals.  The appeal challenges an order certifying a class of Philadelphia-area cable subscribers.  Behrend v. Comcast Corp., No. 10-2865 (3d Cir.).  The judges asked lots of questions.  We like that.

Anyway, the appeal and the trial court proceedings that preceded it gave us a fair grasp of the State of the Law on class certification, particularly in antitrust Cases.  And this coming Tuesday we'll have the chance to share what we've learned in a Practising Law Institute webinar.  For info on the program and how to sign up, go here.

We wrote a paper for the webinar.  Email us or post a comment if you'd like a copy.

The Third Circuit panel directed the parties to provide a transcript of the argument.  We'll send you a copy of that, too, if you request it via an email or comment.

A Lawyer Loses Her Kudos, Lawsuit to Regain Them

State bars like to reward lawyers who do great work, and they should.  Although they bestow praise erratically, they do so in lots of ways.  Methods include public embrace of those whose wondrous skills, in the opinion of the kudos-givers, set them apart from run of the mill license-holders.

A case involving a Florida lawyer raised the question of whether losing the acclaim of the Sunshine State's bar gave the lawyer a basis for suing it.  The Eleventh Circuit held that the bar did nothing wrong by choosing not to renew the lawyer's status as a "specialist" in marital and family law.  Zisser v. The Florida Bar, No. 10-11974 (11th Cir. Jan. 19, 2011).  The panel pointed out that the lack of praise didn't bar the lawyer from the practice of law.  It added that "failure to convey a badge of distinction is not stigmatizing."  Id. slip op. at 17.

Rate Hike Didn't Change Credit Terms, Supreme Court Holds

Your credit card comes with Terms and Conditions.  You've never read them.  But they include, somewhere around page 18, a warning that if you make any payment late, the card issuer has the right, if it wants, to increase the interest rate that applies to your Outstanding Balance.  And it may do so retroactively.  Without notice.  

You make a payment late.  The card issuer, Chase Bank, raises your rate retroactively.  And you sue under the Truth in Lending Act.

Blawgletter knows what question just came to your mind.  You want to know whether that violates Regulation Z, right?

No, per a unanimous Supreme Court today.  The Federal Reserve's Regulation Z says, among other things, that credit card issuers must give advance notice of a "change in terms".  12 C.F.R. § 226.9(c)(1).  But, as the Fed conceded in an amicus brief to the First Circuit in a different case, the regulation doesn't unambiguously deem a rate hike that the Ts and Cs allow a "change".  Because the terms allowed the change, the Fed admitted and the Court therefore held, it didn't count as a change.  Chase Bank USA, N.A. v. McCoy, No. 09-329 (U.S. Jan. 24, 2011).

Although, since August 20, 2009, a different set of rules applies.  So we all have that going for us.  Which is nice.

D.C. Circuit Tries to Save Big Verdict from Jurisdictional Oblivion

Remember Capron v. Van Noordan, 6 U.S. (2 Cranch) 126 (1804)? 

How about Strawbridge v. Curtiss, 7 U.S. (3 Cranch) 267 (1806)?

From your civil procedure class?  In law school?  Nothin'?

Well, even if you don't, we may all take comfort in the fact that the D.C. Circuit does.  Indeed, the holdings in Capron and Strawbridge prompted a panel of that court last week to come very near to ordering far worse than a bad court thingy.

In Blue Cross and Blue Shield of Mass. v. Mylan Labs., Inc. (In re Lorazepam & Clorazapate Antitrust Litig.), No. 08-5044 (D.C. Cir. Jan. 18, 2011), four insurers sued Mylan in federal court on state antitrust claims.  They invoked "diversity" federal jurisdiction on the ground that each insurer's state citizenship differed from the state citizenships of all defendants.  See 28 U.S.C. § 1332 (conferring federal court jurisdiction in cases, among others, between citizens of different states).  The insurers alleged that Mylan used exclusive licenses to inflate the price for two anti-anxiety drugs.  The licenses kept other drug makers from competing.  The case resulted in a verdict and judgment against Mylan for $76,823,943.

But, as Mylan's lawyer got ready for oral argument to the court of appeals, he had an epiphany.  He knew that the insurers sued not just for themselves but also on behalf of big companies that insured themselves.  These "self-funded customers", he realized, should count as parties to the case -- and, because the citizenship of at least one of the self-funders matched the citizenship of at least one of the defendants, Capron v. Van Noordan and Strawbridge v. Curtiss required dismissal of the case as one that never belonged in federal court, he concluded.

The D.C. Circuit agreed.  But it also found a way to avoid throwing out the whole case.  Under Federal Rule of Civil Procedure 21, a court may "add or drop a party".  Dropping non-diverse self-funders, the panel noted, would retroactively fix the lack of jurisdiction "through the fiction that Rule 21 relates back to the date of the complaint."  Id. slip op. at 8-9.  The court continued:

This way, the court may proceed as if the nondiverse parties were never part of the case.  With those parties effectively scrubbed from the complaint, they are not present to contaminate the other claims.  The fiction also allows the district court to save its prior rulings, and the jury's findings, which otherwise were entered without jurisdiction.

Id. at 9.

Blawgletter, by the way, fully credits the story by Mylan's lawyer that "only when he began preparing for oral argument did he realize" that the non-diverse self-funders killed jurisdiction.  Id. at 5.  As best we can tell, the lawyer didn't get into the case until a couple years after the jury rendered its verdict (in 2005).  That another two and a half years passed before his epiphany doesn't surprise us.  The intense preparation that goes into getting ready for oral argument to a U.S. court of appeals forces the superior lawyer to study minute details.  The depth of that study, in our experience, often can make the difference between winning and losing.

Quote of the Day: Bumper Sticker

Get Involved:  The World Is Run by People Who Show Up

Class Fee Fight Nets Bigger Pay for Renegade

The Seventh Circuit last week settled a battle over a fee award to class counsel by lifting a cap that, the court held, the district court set for no good reason.  But only one lawyer got the benefit of the rising tide. In re Trans Union Corp. Privacy Litig., No. 10-1154 (7th Cir. Jan. 14, 2011) (Posner, J.).

The case involved claims that Trans Union broke the Fair Credit Reporting Act.  It had settled fairly quickly for $40 million.   The pot of money resulted from the efforts of firms that the district court had chosen as lead counsel for a class of credit reportees. But non-lead lawyers -- Dawn Wheelahan and "Texas counsel" -- demanded a better deal.  And the class got one.  Thanks to the lawyers' meddling, the settlement near-trebled to $110 million.

The ensuing fee petition prompted the district court to appoint a special master.  Citing data from securities class actions and deeming the case an easy low-risk one, the master chose to cap the total fee at 12 percent of the $110 million common fund.  He also split the resulting $13.2 million award 63 percent to lead counsel and 22 percent and 15 percent, respectively, to the pesky Wheelahan and Texas counsel. The district court adopted the master's report.

The court of appeals panel found the master's thought process faulty and his award stingy. Class counsel -- with Trans Union's support -- had asked for 17 percent of the common fund, but the master gave no sound excuse for cutting them back to 12 percent.  The court said:

The 12 percent figure was plucked out of a hat, and a hat with three holes in it:  the unresolved comparison with securities class actions, the arbitrary reduction in attorneys' fees for the [$35 million in] nonpecuniary relief, and the perfunctory (less than a page) consideration, also left unresolved, of the relative risk of loss in the present case and in [In re] Synthroid [Marketing Litig., 324 F.3d 974 (7th Cir. 2003)].

Id., slip op. at 10-11.  The panel went on to uphold the division between lead and non-lead counsel. As a result, Wheelahan's award rose by $1.425 million to $4.125 million. The cuts of the other class lawyers stayed the same; they hadn't appealed.

Blawgletter's main thoughts?  First, you seldom, if ever, see objectors adding so much value -- almost tripling the common fund -- to a class action settlement.  Second, the fuzzy thinking of the master and the district court happens more often that you'd think.  Third, Judge Posner's review of the dynamics of class action settlements and fee awards makes interesting, and enlightening, reading.

Quote of the Day: Martin Luther King, Jr.

I know you are asking today, "How long will it take?" Somebody’s asking, "How long will prejudice blind the visions of men, darken their understanding, and drive bright-eyed wisdom from her sacred throne?" Somebody’s asking, "When will wounded justice, lying prostrate on the streets of Selma and Birmingham and communities all over the South, be lifted from this dust of shame to reign supreme among the children of men?" Somebody’s asking, "When will the radiant star of hope be plunged against the nocturnal bosom of this lonely night, plucked from weary souls with chains of fear and the manacles of death? How long will justice be crucified, and truth bear it?"

I come to say to you this afternoon, however difficult the moment, however frustrating the hour, it will not be long, because "truth crushed to earth will rise again."

How long? Not long, because "no lie can live forever."

How long? Not long, because "you shall reap what you sow."

How long? Not long:

Truth forever on the scaffold,

Wrong forever on the throne,

Yet that scaffold sways the future,

And, behind the dim unknown,

Standeth God within the shadow,

Keeping watch above his own.

How long? Not long, because the arc of the moral universe is long, but it bends toward justice.

How long? Not long, because:

Mine eyes have seen the glory of the coming of the Lord;

He is trampling out the vintage where the grapes of wrath are stored;

He has loosed the fateful lightning of his terrible swift sword;

His truth is marching on.

He has sounded forth the trumpet that shall never call retreat;

He is sifting out the hearts of men before His judgment seat.

O, be swift, my soul, to answer Him! Be jubilant my feet!

Our God is marching on.

Glory, hallelujah! Glory, hallelujah!

Glory, hallelujah! Glory, hallelujah!

His truth is marching on.

Martin Luther King, Jr., March 25, 1965, Montgomery, Alabama.  Watch it here.

Put Me In, Coach

Blawgletter got back last night from a trip, to Philadelphia and New York, that put us in touch with long-time lawyer friends we don't see often enough.  We enjoyed our visits. 

But one of the friends told us about something that disturbed us, even seemed bizarre.  Big firms, the friend said, don't value trial lawyers very much.  Because they don't value trials.

My friend said, among other things, that many colleagues don't get cases ready for trial.  They don't know how.  They've never tried a case!  My friend added that many don't want associates to get trial experience for fear that it would get others' hopes up!  And that some partners who call themselves litigators have never taken a deposition!

Yikes!

The surprising news stayed on our mind this morning.  But then John Fogerty's Centerfield came on.  It cheered us right up.

The song tells of a baseball enthusiast.  The chorus says:

Put me in, coach.

I'm ready to play, today.

Put me in, coach.

I'm ready to play, today.

Look at me, I can be, center field.

We've found over the years that the associates who become partners have the same attitude (towards trial work) that Mr. Fogerty sings about (towards baseball).  Some of them even say the same thing -- put me in, coach.  That never fails to impress us.  Even if we have doubts, the request -- and the desire behind it -- overcomes them.  We can't remember saying no.

So, all you new and newish lawyers out there, don't shrink from asking for a chance to do something that goes beyond your experience.  Tell the partner you can take that key deposition, cross-examine a trial witness, argue the jury charge.  Explain why the partner should believe you'll do a great job -- and bring the partner and client glory.  Say put me in, coach.  I'm ready.

As the Great One said, you miss 100 percent of the shots you don't take.

Casino Loses Dice Roll on Gambling Debt in Ninth Circuit

Your lawyer writes to a Las Vegas casino -- The Venetian, say.  In his letter he asks "that all credit lines established by [or for you] immediately be terminated and that no further credit be extended to [you] under any circumstances."

Seems you may have some kind of gambling problem?

Seven months later find you back at The Venetian.  The nice casino people get you to sign a "marker" for $500,000 and give you the money to gamble with as you wish.  And you proceed to lose it all.  All.  Of.  It.

But you refuse to pay.  The casino sues you.  The district court grants summary judgment against you.  You appeal.  Do you win?

This time you do.  Why?  The credit application that you signed to get the line of credit with The Venetian included the following:

The Venetian Resort-Hotel-Casino endorses responsible gaming.  We will cancel or reduce your credit line upon your request.

Your lawyer's letter, the court held, raises a fact question as to whether you canceled the credit line that may have allowed you to get and draw on the "marker".  No credit line in turn means no -- Uniform Commercial Code alert! -- holder in due course status for the casino and therefore no immunity from your personal defenses, including your defense that you didn't bind yourself to repay the line of credit or marker.  Las Vegas Sands, LLC v. Nehme, No. 09-16740 (9th Cir. Jan. 11, 2011).

The panel noted, by the way, that having "a 'gambling problem' . . . is not a defense to a gambling debt under Nevada law."  Id. slip op. at 665 n.4.  Which you figure Nevada law pretty much has to say.

Will The Venetian give up trying to pursue Mr. Nehme?  Blawgletter doubts it will.  Breach of the casino's promise to "cancel or reduce your credit line upon your request" caused you harm how?  It hurt you by causing you to sign a marker for $500,000 then losing it all?  That sounds like a hard sell to us -- especially to a Las Vegas jury.

Bonus:  The panel's ruling turned on whether the district court erred in refusing to consider letters by Mr. Nehme's lawyer to The Venetian and a postal receipt acknowledgment that someone at The Venetian appeared to have signed.  The court held that the documents seemed authentic because of what they said and that they didn't need an affidavit to prove their authenticity.