"Come on . . . come on . . . I have not tasted blood in a long time."

In this case a security guard allegedly had repeatedly confronted an African-American and Muslim family in a shopping mall, ordering the mother to remove her traditional Muslim headgear or be forcefully removed.  In the second confrontation, the security guard allegedly pulled a knife while violently yelling, among other things, "Come on . . . come on . . . I have not tasted blood in a long time."  (The security guard eventually plead guilty to criminal charges of second degree assault and assault with a dangerous weapon.) 

Woods v. AlliedBarton Security Services, LLC, No. 11-2831 (D. Maryland Feb. 9, 2012)(unpublished) is a suit by the terrified family against the security guard, his employer, and the firm that hired them, that started off in the Circuit Court for Baltimore City.  After the action was pending for many months and the plaintiffs failed to serve the security guard, the Circuit Court dismissed the security guard as a defendant "without prejudice." 

At that point, the remaining two defendants seized their opportunity, and removed the case to federal court based on diversity jurisdiction.  By doing so, the remaining defendants would be able to try the case while pointing at an "empty chair" as the truly culpable party, and would also be able to subject the plaintiffs' damages experts to the rigors of a Daubert challenge.

The first thing that the plaintiffs did after removal was to serve the security guard with the Circuit Court summons, and then move to remand the case to State court.  The District Court denied that motion, on the grounds that such service was ineffective because the prior removal had deprived the Circuit Court of jurisdiction to re-issue the summons.

Next, the plaintiffs then moved for leave to file an amended complaint to rejoin the security guard as a party defendant.  The two other defendants opposed that motion, which gave U.S. District Judge Catherine C. Blake the occasion to review the relevant factors that a federal court will consider in deciding under Section 1447(e) whether to deny joinder, or permit joinder which destroys diversity jurisdiction and remand the action to State court.  The Court pointed out that the statute "does not allow a district court to retain jurisdiction once it permits a nondiverse defendant to be jointed in the case."

To make this discretionary decision, the District Court considers four factors: (1) the extent to which the purpose of the amendment is to defeat federal jurisdiction; (2) whether the plaintiff has been dilatory in asking for amendment; (3) whether the plaintiff will be significant injured if amendment is not allowed; and (4) any other factors bearing on the equities.  The District Court will also consider the danger of parallel suits in state and federal courts, resulting inconsistent results and judicial inefficiency, and the defendant's interest in a federal forum. 

In this analysis, courts take into consideration the strength of the substantive claim against the party to be joined.  If it is a weak or frivolous claim, then a court may infer the impermissible purpose of forum shopping.

In this case the claim against the security guard was strong, and in fact was the central claim of the case.

Further, the plaintiffs' actions in State court demonstrated that they had been interested in suing the security guard long before the case was removed to federal court and removal or remand was at issue.  The other defendants had been on notice from the outset that the suit could properly be heard in State court. 

The District Court noted that the most plausible inference is that the Circuit Court's dismissal of the security guard "without prejudice" lulled plaintiffs' counsel into believing he had time to rectify the situation before trial.  "In such a situation, the proper action is the one taken here -- for the plaintiffs to immediately notify this court of the mistake and to attemnpt to rejoin the defendant before taking unnecessary and duplicative measures in federal court."

The District Court concluded that the plaintiffs should be allowed to amend their complaint, that his joinder destroys complete diversity among the parties, and that the case must be remanded to the Circuit Court for Baltimore City.

This case is a good illustration of the counter-moves that a plaintiff can make when the defendants in a State court proceeding remove a case under diversity jurisdiction prior to service of the non-diverse defendant, and the analysis that the District Court will undertake. 



The amended diversity jurisdiction statute and removal before service

Last month I noted the amendment of the federal diversity jurisdiction statute.  For an overview of the amendments, see Federal Jurisdiction and Venue - New Legislation Takes Effect.  There is also an interesting analysis of this legislation on the Drug and Device Law blog, concerning the impact of the amendment on the issue of removal before service of the non-diverse defendant.  (For a discussion of this tactic, see Removal to Federal Court Before Forum Defendant Is Served.) The argument concerning the amendment is, in essence, that Congress, by re-enacting the same key provision in the amended statute, has effectively ratified the validity of pre-service removal.  I plan to follow this to see how the courts react to this argument.

The restyled Federal Rules of Evidence became effective on Dec. 1

The Federal Rules of Evidence were restyled, and the new version became effective on December 1, 2011.  Here is a link to the restyled version of the Rules, which is defnitely worth reading.   As a sample, the restyled version of Fed. R. Evid. 702 is as follows:

Rule 702. Testimony by Expert Witnesses

A witness who is qualified as an expert by knowledge,
skill, experience, training, or education may testify in the
form of an opinion or otherwise if:

(a) the expert’s scientific, technical, or other specialized
knowledge will help the trier of fact to understand
the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(c) the testimony is the product of reliable principles and
methods; and

(d) the expert has reliably applied the principles and
methods to the facts of the case.

A copy of the Report of the Advisory Committee can be found here, and discusses in some detail the contributors to the effort to make the Rules more easily understandable.  Among other things, Bryan Garner's legal style guide was used in the rewrite of the Rules.

As reported by BeSpacific.com, there are also amendments to the Federal Rules of Appellate, Bankruptcy, and Criminal Procedure which also became effective on Dec. 1.  

Congress amends diversity jurisdiction statute

Who says it is a do-nothing Congress?  Congress passed the Federal Courts Jurisdiction and Venue Clarification Act of 2011 on 12/2/2011, which now awaits the President's signature.  Among other things, this statute makes significant adjustments to diversity jurisdiction. 

The amendments are helpful in a case involving multiple defendants, because the statute resolves a disagreement between the Circuits.  Every defendant will now get 30 days to remove, however, the defendants will still need to be unanimous as to the removal decision.

Where removal is based on federal question jurisdiction, there is a provision that requires the severance and remand of state claims not within original or supplemental federal jurisdiction.  That provision requires some caution, because removal could result in the client having to defend two lawsuits instead of one. 

A summary of the bill is available at this post on ProfsBlawg.

Thanks to the Civil Procedure and Federal Courts Blog for the link. 

D.C. Court of Appeals formally adopts Iqbal and Twombly

In Mazza v. Housecraft LLC, No. 09-CV-1068 (D.C. April 28, 2011), the D.C. Court of Appeals held that the recent Supreme Court decisions articulating the requirements that a complaint must meet in order to survive a motion to dismiss, i.e. Ashcrof v. Iqbal and Bell Atlantic Corp. v. Twombly, apply in the District of Columbia.

In pertinent part, the Court stated:

The Supreme Court has recently articulated two prongs in determining whether acomplaint is sufficient to survive a motion to dismiss: whether the complaint includes well pleaded factual allegations as an initial matter, and whether such allegations plausibly give rise to an entitlement for relief. In Ashcroft v. Iqbal, — U.S. —, 129 S.Ct. 1937, 173 L.Ed.2d868 (2009), the Court elaborated on Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 127 S.Ct.1955, 167 L.Ed.2d 929 (2007). In Iqbal, the Court noted that as an initial matter, Fed. R.Civ. P. 8 (a) “does not require ‘detailed factual allegations [in a pleading],’ but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” 129 S.Ct. at1949 (quoting Twombly, supra, 550 U.S. at 555, 127 S.Ct. 1955). . . . While only the first prong is relevant to our analysis here, we hold that both requirements apply in our jurisdiction. We have not heretofore expressly adopted both of the requirements articulated in Twombly and Iqbal. . . . However, we take this opportunity to recognize thatTwombly and Iqbal apply in our jurisdiction.

 7/5/2011:  The D.C. Court of Appeals issued an order dated June 30, 2011, vacating the Mazza opinion, on the grounds that the case had settled and therefore was moot.  Therefore, the Mazza opinion is no longer binding precedent in the District.  At the same time, the opinion hasn't been "disappeared":  it is still available.

Former Chairman of SEC struck as expert witness in securities fraud case

Who would have thought that a former head of the SEC would for any reason be struck as an expert witness in a securities fraud case? Yet, that's what happened in In re Fannie Mae Securities Litigation, No. 04-1639 (DDC March 8, 2011). Former SEC Chairman Harvey Pitt had been retained as an expert by the lead plaintiff, and was deposed for a day. However, he refused to continue his deposition after he learned that former SEC Chief Accountant Donald Nicolaisen had been deposed in the action, because he had not had an opportunity to review Nicolaisen's testimony.

In their motion the defendants argued that the discovery schedule for expert witnesses had been negotiated with great effort, and that allowing Plaintiffs' to unilaterally delay Mr. Pitt's deposition and then potentially have him change or add to his opinions would upset the schedule, and would waste the time the defense experts had already expended to rebut those opinions.

Judge Leon had harsh words for lead plaintiff's counsel for failing to provide Mr. Pitt with that transcript, stating "Of course, the repeated failure of Lead Plaintiffs' counsel to provide Mr. Pitt with Nicolaisen's deposition transcript, both prior to the submission of his expert report, and prior to his deposition, is inexplicable and inexcusable!"

The Court pointed out the Lead Plaintiffs' counsel had initiated the litigation which had required the deposition of Mr. Nicolaisen in the first place. The Court struck Mr. Pitt as an expert witness, finding that the prejudice to the defendant could not be overcome by simply allowing the deposition to continued one week later.

Hat tip to the Blog of the Legal Times for first covering this.

Removal to federal court before forum defendant is served

There was an interesting post on Ron Miller's blog, The Maryland Injury Lawer Blog, on the recent case of Robertson v. Iuliano, No. 10-1319 (D. Md. Feb. 4, 2011). Robertson v. Iuliano illustrates that in a case filed in state court, where diversity jurisdiction would exist but for the presence of forum defendants, and the forum defendants have not yet been served, the non-forum defendant can, in many jurisdictions including Maryland, still remove the action to federal court.

In fact, in the Robertson case, the non-forum defendant removed the case to federal court before he or any of the other defendants were served.

Under the unanimity rule reaffirmed by the 4th Circuit in its recent en banc opinion, where there are multiple defendants, it is necessary for the other defendants in the case to consent to the removal within 30 days of their being served. Here they apparently did, because they filed oppositions to the motion to remand. The District Court denied the plaintiff's motion to remand.

In a medical malpractice case, removal would result in the application of the more stringent Daubert standard for the admissibility of expert testimony, which would be reason enough to do it.

I can understand why this result could be viewed by the plaintiffs' bar as unfair, but on the other hand, I've seen many cases where a forum defendant was joined in a complaint for no apparent reason other than to destroy diversity.

There was a recent article on this topic in DRI's journal, For the Defense, in April, 2010, which among other things provided citations to other jurisdictions where this is the rule. See Tiffany Reece Clark, Removal Before the Forum Defendant Is Served - The Plain Language of 28 U.S.C. sec. 1441(b). Here are some other perpectives on this issue, one from the defense side, one from the plaintiffs' side, and one giving more extensive background on pre-service removal.

In sum, in the Robertson case the defense used a combination of two rare procedures -- removal before service of the forum defendants, and removal even before service on the client -- to steal a march on the plaintiff and gain a tactical advantage that may turn out to be decisive.




Lack of diversity jurisdiction can be raised at any time

A recent D.C. Circuit opinionreminds us that the lack of diversity jurisdiction can be raised at any time, even on appeal. IN RE: LORAZEPAM & CLORAZEPATE ANTITRUST LITIGATION was an appeal of a $77 million judgment in an antitrust suit.  On appeal, the defendants moved to dismiss for lack of diversity jurisdiction. 

Plaintiffs were four health insurers who brought suit against two drug manufacturers.  Plaintiff brought suit for themselves and as claim administrators for self-funded customers, which are corporations which pay their employees health benefits out of their own funds.  On appeal, a motion was filed for the first time to dismiss due to lack of diversity jurisdiction, on the bases that one or more of the self-funded customers destroyed complete diversity:

After the parties had filed their briefs, and a few days before oral argument, defendants filed a motion to dismiss, arguing for the first time that the district court lacked jurisdiction because at least one (Minnesota Mining and Manufacturing Corporation (3M))—and potentially more—of plaintiffs' self-funded customers were from the same state as at least one of the defendants. The existence of these customers, defendants argued, destroyed "complete diversity" and stripped the court of power to hear the case.

The Court decided the appeal based on long-standing principles of diversity jurisdiction:

  • The absence of jurisdiction can be raised for the first time on appeal even by the party who invoked federal jurisdiction.
  • Parties cannot confer jurisdiction by consent. A corollary, long established, is that a party does not waive a jurisdictional objection by failing to raise it, at least so long as the jurisdictional defect appears on the face of the record.
  • Under the diversity statute (now 28 U.S.C. § 1332), "diversity jurisdiction does not exist unless each defendant is a citizen of a different state from each plaintiff." Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373 (1978). Thus the presence of just one nondiverse plaintiff destroys diversity jurisdiction under § 1332.
  •  Mollan v. Torrance, 22 U.S. (9 Wheat.) 537, 539 (1824), holds that the court's jurisdiction "depends upon the state of things at the time of the action brought . . .."
  • Ordinarily a finding that the district court lacked jurisdiction would lead the appellate court to vacate the court's judgment and remand for dismissal. See, e.g., LoBue v. Christopher, 82 F.3d 1081, 1082 (D.C. Cir. 1996).

Rather then dismiss the appeal, the Court invoked Rule 21, and remanded to the district court for consideration of whether the jurisdictional spoilers could be dismissed:

Rule 21 of the Federal Rules of Civil Procedure provides that "[o]n motion or on its own, the court may at any time, on just terms, add or drop a party." Fed. R. Civ. P. 21. This Rule allows the district court to dismiss so-called "jurisdictional spoilers"—parties whose presence in the litigation destroys jurisdiction—if those parties are not indispensable and if there would be no prejudice to the parties. Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 830-32 (1989).

Hit tip to Barry Bennett's Blawgletter and to Litigation World for pointing to this case.

Fourth Circuit, in en banc decision, addresses timing for removal where there are multiple defendants

In an en banc decision, the Fourth Circuit in Barbour v International Union, reaffirmed the rule in that Circuit for the time window for removal to federal court in a case in which there are multiple defendants.  The notice to removal must be filed within the 30 day window after the first defendant is served, but later served defendants have a 30 day window to join in the notice of removal.  If the later served defendants do not join in the notice of removal, the case has to be remanded to state court for lack of unanimity among the defendants.

To be sure, it seems eminently reasonable that, in drafting § 1446(b), Congress intended for the first-served defendant to decide within his thirty-day window whether to remove the case to federal court or allow the case to remain in state court. Such routine removal decisions are made day-in and day-out in courts all across the Nation. If the first-served defendant decides not to remove, later-served defendants are not deprived of any rights under § 1446(b), because § 1446(b) does not prevent them from removing the case; rather, it is the rule of unanimity that does. In other words, once the firstserved defendant elects to proceed in state court, the issue concerning removal is decided under the rule of unanimity. Alternatively, if the first-served defendant does file a notice of removal, the later-served defendants dictate whether the case remains in federal court, either by joining the notice or declining to do so.

Hat tip to Deborah Elkins of the Virginia Lawyers Weekly Blog.

Further information is available here.




Judges are not like pigs, hunting for truffles buried in briefs

"Judges are not like pigs, hunting for truffles buried in briefs."   It's a good line, but somewhat overused.  A search of Google Scholar indicates that the line has been used in 262 judicial opinions.

Still, it is a judicial rebuke that has to sting.  The Courts want pinpoint cites to the record.  The revised Federal Rule 56 now specifically requires pinpoint cites to the record.