Blawgletter®

Letting Justices Rule on Their Biases

Do you think a Supreme Court justice who has given good wishes, outside of court, to one side or the other should sit in judgment of the case?

Should we hold the justice who chooses to remain on the case accountable for his or her recusal decision?

The Chief Justice of the Court devoted his year-end report on the federal judiciary to claiming that Their Honors need to choose whether to recuse in Total Peace. He went on to say:

Indeed, if the Supreme Court reviewed those decisions [on whether or not to recuse], it would create an undesirable situation in which the Court could affect the outcome of a case by selecting who among its Members may participate.

So you can "affect the outcome of a case by selecting who among [the Court's Members]" get to vote. Huh.

Second Circuit Explains Why It Lifted Order Barring Efforts to Enforce Ecuadoran Judgment in New York

Last September, a panel of the Second Circuit tossed a preliminary injunction that barred any action, anywhere, to collect on an Ecuardoran court's $17.2 billion judgment against Chevron for polluting part of the Amazon. Last week, the court got around to saying why.

[Blawgletter describes some of the dispute's facts, claims, and decades-long history here.]

The court grounded its ruling on the fact that the basis for the injunction -- New York’s Uniform Foreign Country Money-Judgments Recognition Act, N.Y. C.P.L.R. §§ 5301-5309 -- "does not authorize affirmative relief of this kind, but only recognizes a defense available when a would-be judgment-creditor first attempts enforcement in New York." Chevron Corp. v. Naranjo, No. 11-1150-cv(L), slip op. at 2 (2d Cir. Jan. 26, 2012). The panel went on:

Judgment-debtors can challenge a foreign judgment’s validity under the Recognition Act only defensively, in response to an attempted enforcement – an effort that the defendants-appellees have not yet undertaken anywhere, and might never undertake in New York.

Id. at 4. Got that? The Recognition Act recognizes foreign judgments except when it doesn't, in which case you have to invoke the exception by way of defense and not through an action for a pre-emptive injunction.

We suspect that the outcome in Naranjo won't mean a huge change in your law practice, but we all must marvel at the great lengths to which people who seek or want to keep large amounts of money will go to get or retain them.

 

Quote of the Day: Dick Tufeld

Danger, Will Robinson!

Dick Tufeld, as Robot B-9 in Lost in Space (1965-68). 

Mr. Tufeld died Jan. 23, 2012. R.I.P.

 

Spying by GPS Amounts to "Search", Supreme Court Holds

You run a nightclub. You also drive a Jeep. And sometimes you use the Jeep to bring cocaine and cocaine base to your nightclub.

The police suspect you. They get a warrant to put on your Jeep a device that will allow the police, by using global positioning satellite technology, to track where your Jeep goes. But they fail to comply with the warrant, which issued from the District of Columbia, by attaching the GPS signal-emitter to your Jeep in Maryland. That doesn't keep them from watching you via satellite for about a month. And they use the info to help convict you on drug charges.

You appeal on the ground that the fourth amendment barred the police from tracking your Jeep's movements. And, today, the Supreme Court holds that the warrantless use of the GPS thing did amount to an unlawful "search" under the fourth amendment.

Justice Scalia's majority opinion, which Chief Justice Roberts and Justices Kennedy, Sotomayor, and Thomas joined, based the ruling on the fact that in Merry Olde England the means the police used to gather info on you would have counted as a tort -- trespass to chattels. United States v. Jones, No. 10-1259 (U.S. Jan. 23, 2012).

Justice Sotomayor concurred to point out that in the digital age, which requires us to share info all the time, the fourth amendment ought not "treat secrecy as a prerequisite for privacy." Slip op. at 6.

Justice Alito concurred in the judgment, urging that the case should turn on your "reasonable expectations of privacy" and not whether the police committed a trespass in the 1791 sense. Slip op. at 2. Justices Breyer, Ginsburg, Kagan, and Sotomayor joined in the Alito concurrence.

Okay for Suits in State Courts Doesn't Bar Actions in Federal Ones, Supreme Court Holds

The Telephone Consumer Protection Act of 1991 provides that a private person who claims a violation of the act may sue "in an appropriate court of [a] State" so long as "the laws or rules of court of [the] State" permit the suit. 47 U.S.C. §§ 227(b)(3) & (c)(5). May the person also bring her TCPA action in federal court on the ground that her claim falls within "federal question" jurisdiction?

Yes, the Supreme Court held last week. Mims v. Arrow Financial Services, LLC, No. 10-1195 (U.S. Jan. 18, 2012).

Nothing in the text, structure, purpose, or legislative history of the TCPA calls for displacement of the federal-question jurisdiction U. S. district courts ordinarily have under 28 U. S. C. §1331.  In the absence of direction from Congress stronger than any Arrow has advanced, we apply the familiar default rule: Federal courts have § 1331 jurisdiction over claims that arise under federal law.  Because federal law gives rise to the claim for relief Mims has stated and specifies the substantive rules of decision, the Eleventh Circuit erred in dismissing Mims’s case for lack of subject-matter jurisdiction.

Id., slip op. at 17-18.

Enemy of the Good: Class Cert Doesn't Require Perfect Proof, Seventh Circuit Says

The Seventh Circuit held last week that a district court set too high a standard for class certification in an antitrust case.

"In essence," the panel ruled, it is important not to let a quest for perfect evidence become the enemy of good evidence." Messner v. Northshore University HealthSystem, No. 10-2514, slip op. 3 (7th Cir. Jan. 13, 2012).

The district court had refused to certify a class of suburban Chicago hospital patients who claimed that a merger hurt competition for their healthcare dollars and raised prices. The court thought that common issues didn't "predominate" under Rule 23(b)(3) unless the class could prove uniform increases in hospital prices for all services after the merger. But not all prices went up at the same rate.

The Seventh Circuit vacated the order denying certification. The panel concluded:

[T]he evidence shows that [plaintiffs' economics expert] Dranove can use common evidence and his difference-in-differences methodology to estimate the antitrust impact, if any, of Northshore’s merger on the members of that class. Together with the common questions and evidence on other liability issues, this was sufficient to show predominance under Rule 23(b)(3).

Id. at 45.

The defendants, by the way, had lost at trial before an administrative law judge on the Federal Trade Commission's claim that the merger created an unlawful monopoly under section 2 of the Sherman Act.

Quote of the Day: Martin Luther King, Jr.

Quote of the Day: Martin Luther King, Jr.

  
Martin Luther King, Jr. (1929-68).

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.

 

Waiver Ban Skips "Right to Sue" in Credit Repair Notice, Supreme Court Holds

A federal law says firms that offer "credit repair" have to tell customers about their "right to sue a credit repair organization that violates" the law. The statute also voids "[a]ny waiver by any consumer of any protection provided by or any right of the consumer under this subchapter".

May a consumer still waive the "right to sue", such as by agreeing to arbitrate a claim that the credit repair outfit violated the statute?

Of course, the Supreme Court ruled in CompuCredit Corp. v. Greenwood, No. 10-948 (U.S. Jan. 10, 2012) (per Scalia, J.). Mr. Greenwood did waive any right to sue by agreeing to arbitrate disputes relating to the Visa card account he got through CompuCredit. The anti-waiver part of the Credit Repair Organization Act didn't trump the arbitration clause, the Court held, because the CROA itself simply made violators "liable" and didn't specify a "right to sue". And CROA's notice requirement didn't "provide[] consumers with a right to bring an action in a court of law" and Mr. Greenwood's waiver of his right to sue therefore didn't waive a "right of the consumer under this subchapter".

If that leaves you scratching your head, don't feel like the Lone Ranger. CROA does create a private cause of action by making violators "liable", and the disclosure CROA calls for does deem that right a "right to sue" in court. But that doesn't amount to a "right" that CROA created?

We think the two concurring justices did better with their reasons for ruling against Mr. Greenwood. Justice Sotoymayor, whom Justice Kagan joined, said Congress didn't make its desire to ban arbitration quite clear enough in CROA to beat the strong presumption in favor of arbitration under the federal Arbitration Act. Which seems about right.

The broader -- and, to us, hard-to-grasp -- rationale that Justice Scalia and the majority offered, we fear, signals a long and ugly Term ahead for consumers and other plaintiffs.

The status quo almost always favors the wealthy and powerful -- the haves. With this Court, God help the have-nots. Because a majority of the Court surely won't.

Quote of the Day: Elena Kagan

Well, even if some regulation is permissible, the kind of regulation that the FCC has done here is regulation that gives it complete discretion as to what kind of speech to go after and what not to go after; that it has not tied itself in any way to any kinds of standards. And, it's, you know, evident in the notion that this -- the way that this policy seems to work, it's like nobody can use dirty words or nudity except for Steven Spielberg and that there's a lot of room here for FCC enforcement on the basis of what speech they think is kind of nice and proper and good. And so that's a serious First Amendment issue.

Justice Elena Kagan, FCC v. Fox Television Stations, Inc., No. 10-1293, Transcript at 51:20-52:8 (emphasis ours).

[Hat tip to Adam Liptak.]

Guest Post: David Shank

Today, Blawgletter has the pleasure of giving honor to an item by one of our firm's newest lawyers, David Shank, late from a clerkship with the estimable and Honorable Barbara M. Lynn.

Mr. Shank spotted a big issue in a new Texas law that aims to cut back on what our lawmakers and governor deemed "frivolous" lawsuits. Does the law really import from federal law a subjective standard of plausibility, he asks.

Let us see what Mr. Shank has to say.

Last May, Texas Governor Rick Perry signed into law a bill that adopts a form of  “loser pays” for “causes of action that have no basis in law or fact”. Last month, a branch of the Texas Supreme Court Advisory Committee drafted a new rule to implement that part of House Bill 274. But guess what? The draft would import a kind of Twombly test into Texas practice – a cure worse than the disease. 

HB 274 requires the Supreme Court in Austin to “create rules to provide for the dismissal” of baseless claims “on motion and without evidence.”  It also provides that, upon deciding such a motion, “the court shall award costs and reasonable and necessary attorney’s fees to the prevailing party.” So far so good.

To many Texas lawyers, the phrase “no basis in law or fact” will look familiar.  Texas Rule of Civil Procedure 13, which provides for sanctions against attorneys who submit groundless pleadings and motions, defines the term “groundless” as having “no basis in law or fact and not warranted by good faith argument for the extension, modification, or reversal of existing law.”

By using the same phrase to define baseless claims in  HB 274 as the Supreme Court used in Rule 13, the legislature seems to have done most of the Supreme Court’s work for it. A voluntary working group of lawyers, on both sides of the docket, thought so. Members from the Texas Association of Defense Counsel, the Texas Trial Lawyers Association, and the Texas chapters of the American Board of Trial Advocates, with help from the Texas Bar’s Section of Litigation, unanimously approved a draft rule that used the “without basis in law or fact” language with no change.

But, as Texas Lawyer’s Tex Parte blog reports, a subcommittee of the Texas Supreme Court Advisory Committee sees things differently.  The relevant parts of the committee’s draft rule, which it recently finalized and submitted to the Supreme Court, provide as follows (with our emphasis):

A. Grounds and content of motion.

(1) On motion a court must dismiss a claim that has no basis in fact or that is not supported by existing law or by a reasonable argument for extending, modifying, or reversing existing law.

(2) In deciding the motion to dismiss the court must not consider evidence, except as to attorneys’ fees, and must accept as true all allegations in the challenged pleading unless a reasonable person could not believe them.

. . . .

G. Attorneys’ fees. Upon granting or denying the motion in whole or in part, the court must award costs and reasonable and necessary attorneys’ fees to the prevailing party for preparing and presenting, or responding to, the motion.

The subcommittee’s decision to alter the statutory language “no basis in law or fact” looks curious, since that language incorporates a standard already in the rules.  Tex Parte reports that the committee engaged in “hours of discussion” about how the rules should “define a claim with ‘no basis in law or fact.” But the post sheds no light on why the group dropped “no basis in law or fact” in favor of a wordier test.

Nor does it explain why the subcommittee chose to instruct courts to disregard factual allegations that “a reasonable person could not believe.”  That sounds an awful lot like the plausibility standard that the United States Supreme Court created for federal Rule 12(b)(6) motions to dismiss in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007)—a standard the Texas solons avoided by specifically removing the original bill’s reference to federal Rule 12 and replacing it with Texas Rule 13’s standard for groundless claims.

Did the subcommittee have a choice?  The final bill expressly provides that a court must decide the motion to dismiss “without evidence.” If a judge cannot review evidence, the subcommittee seems to have thought, how can she determine a claim lacks a basis in fact?   But granting trial judges license to disregard factual allegations they deem unreasonable would defy the long-standing Texas rule that requires courts to accept all factual allegations as true.

The working group had the better idea. Put the exact words the legislature used in the rule and no more. We don’t need no stinkin’ Twombly badges in Texas.