The presentations spanned a broad array of issues and problems regularly confronted in civil litigation.   The strength of the presentations rested not just in their discussion of doctrine and rules, but in the panelists bringing to bear their experience and insights in preparing and trying cases.   Links to the written CLE material and the accompanying PowerPoint presentations will be posted on the Law School’s website later this week.

             Starting the day was Michael J. Cohen (L’86) of Meissner Tierney Fisher & Nichols SC, who underscored the important relationship between pretrial practice and outcomes at trial.  Drawing on his extensive experience as a commercial litigator, Mike addressed the duty to preserve evidence, especially electronic information, when a lawsuit appears on the horizon.  Mike emphasized the need to work with the client to understand what the law requires so that discoverable information is not destroyed, inadvertently or otherwise, thereby exposing the client (or counsel) to sanctions.  Pat Dunphy (L’76) of Cannon & Dunphy SC, addressed a different aspect of pretrial practice, namely, the creative use of requests to admit during discovery.  Pat described how he used requests to admit to obtain a binding judicial admission in a major product liability case that proved determinative of its outcome.

             Turning from the pretrial to the trial setting, the Hon. Patricia J. Gorence (L’77), a federal magistrate judge in Wisconsin’s Eastern District, spoke about the management of exhibits at trial.  Judge Gorence particularly emphasized some of the issues that arise in the use of electronic exhibits of various sorts, including the introduction of e-mails, website pages, and CGI animations.  Lynn Laufenberg (L’75), of the Laufenberg Law Group SC, then undertook the Herculean task of providing an overview of state law governing the admissibility of expert opinion testimony.  Lynn’s masterful lecture featured his own experience in working with a wide variety of experts, including a seasoned dairy farmer who turned out to be the critical witness in a stray voltage case.

             Leading the afternoon session was one of Wisconsin’s most accomplished women trial attorneys, Mary Lee Ratzel (L’81), of Peterson, Johnson, and Murray SC.  Drawing upon her considerable experience in defending complex civil cases, particularly medical malpractice actions, Mary Lee took up a variety of important issues related to expert testimony, including Wisconsin’s unique expert witness privilege, an expert’s reliance on inadmissible evidence, experts whose opinions “shift” between discovery and trial, and the use of learned treatises at trial.  Her partner, James T. Murray (L’74) then surveyed the law governing the lawyer-client privilege.  Jim focused attention on recurring problems regarding inadvertent disclosures by lawyers, the uncertain contours of the privilege where the client is a corporation, and the sticky problem of contacting employees, officers, and ex-employees of a corporate entity.  Closing the day was Timothy S. Trecek (L’93), of Habush, Habush & Rottier SC, who discussed two subjects that haunt personal injury litigation in particular: the collateral source rule and the admissibility of “other accident” evidence.  Tim addressed recent developments in litigation that have unsettled the long-standing rule that a tortfeasor cannot reap the benefits that might accrue to the plaintiff when, for example, a hospital accepts an insurer’s payment for less than the amount of its invoice.  Tim also skillfully laid out the intricate evidentiary steps required when lawyers want to put in proof of other accidents in order to prove causation, notice, or the existence of defects in a product.

             Next year’s conference will feature a docket of similarly stimulating issues and distinguished lawyers.  We have the good fortune to draw from the very deep well of Marquette trial lawyers to assist us.

Here’s the abstract:

In Bivens v. Six Unknown Named Agents of Federal Bureau of Narcotics, 403 U.S. 388 (1971), the Supreme Court held that the Federal Constitution provides a cause of action in damages for violations of the Fourth Amendment by individual federal officers. The so-called “Bivens” cause of action — initially extended to other constitutional provisions and then sharply curtailed over the past two decades — has been a subject of controversy among academics and judges since its creation. The most common criticism of Bivens — one that has been repeated in different venues for thirty years — is that the Court’s individual liability model, in which the offending officer is personally liable in damages, should be abandoned in favor of a governmental liability model akin to respondeat superior liability.

Commentators base their criticism of the individual liability model on two empirical assumptions: (1) Bivens suits are almost never successful; and (2) the defense of qualified immunity, available only to individuals, is a nearly insuperable barrier to plaintiffs’ prevailing in Bivens claims. On this account, a move to the governmental liability model will ensure adequate compensation and deterrence while removing a substantial barrier to plaintiffs’ success. These empirical claims about the general failure of Bivens suits and the explanation for that failure have never been tested. This Article corrects that oversight by offering the results of the first detailed empirical study of the determinants and outcomes of Bivens litigation. Based on data collected from cases filed in five district courts from 2001-2003, this Article concludes that the truths that scholars and judges have taken as a given are unsupported. Bivens claims succeed at a much higher rate than previously thought, especially compared to other civil rights litigation, and the defense of qualified immunity rarely plays a role in the outcome of Bivens litigation. These data call into question the given wisdom about the characteristics of Bivens litigation, and undermine the policy proposals that have occupied the field in Bivens scholarship.

So why do I bring this interesting article to the labor and employment law readers of this blog?  In an article I published last year, Whither the Pickering Rights of Federal Employees?, I pointed out that as a result of the Supreme Court’s 1983 decision in Bush v. Lucas, federal employees are not permitted to bring Bivens constitutional tort claims directly to federal court to vindicate their First Amendment rights to free speech under Pickering v. Bd. of Education. Instead, the Bush Court found that Congress had established an effective, alternative statutory scheme for vindication of such claims under the Civil Service Reform Act of 1978.

Because my empirical analysis of all First Amendment Pickering cases involving federal employees found that there had not been one successful employee claim of this type under that administrative scheme, I argued that Bush should be revisited and overturned, and a Bivens claim implied to vindicate the First Amendment interests of federal employees.

Some had argued that by going back to Bivens that these federal employees would face insurmountable odds because of the difficulties associated with winning these claims. Reinert’s new study demonstrates, however, that federal employees given a Bivens claim will likely find a more meaningful remedy for their First Amendment claims in federal trial courts.

Now, I can only hope that more people will pay attention to this study and see its importance for federal employees’ constitutional rights in the workplace.

Professor Blinka started the lunch discussion with Arizona v. Gant, a 5-to-4 decision written by Justice Stevens and joined by Justices Scalia, Souter, Thomas, and Ginsburg (an odd confederation to say the least).  In Gant, the Court limited the scope of “search incident to arrest.”  The Court held that while police can conduct a warrantless vehicle search “incident to an arrest,” police can only search without a warrant and without consent if the arrestee is within reaching distance of the vehicle or if the officers have reasonable belief that “evidence of the offense of arrest might be found in the vehicle.” Arizona v. Gant 556 U. S. ____, 2 (2009).

After the discussion of the case, Professor Blinka suggested that one ramification of Gant is that law enforcement will likely put more emphasis on gaining consent to search vehicles, since arrest will no longer yield such access. Professor Blinka also left the lunch group with one question: why did the Court decide that it was appropriate to narrow the “search incident to arrest” rule in 2009, especially since the broader search rule had been in effect for nearly thirty years?

Professor McChrystal addressed the Court’s decision in Safford Unified School District v. Redding, 557 U.S. ___ (2009), another Fourth Amendment case. Unlike Gant, which was based on a police search, this case addressed the ability of public school administrators to strip search a minor student for contraband. In reaching their decision that the school administrator’s strip-search violated the student’s Fourth Amendment protection, the eight-member majority found that the intrusive nature of the search did not adequately correspond with a “substantial chance” of finding contraband in her underwear.

The 8-to-1 decision in Redding left Justice Thomas alone in dissent. In his dissenting opinion, Justice Thomas argued that the doctrine of in loco parentis (literally meaning “in place of the parent,” allows a third party to act with same authority that a parent would have) should be applied to allow school administrators to search a student’s person without any Fourth Amendment concerns whatsoever. Under this approach, not only would a strip search be constitutional, but so would a more drastic search of a student’s body cavities.

In Professor McChrystal’s closing remarks, he cautioned future practitioners about a broader issue of privacy— that in an age of Google searches, clients might want to limit their names from public record.  A Google search for the plaintiff in Redding results in nearly four million hits. And while Ms. Redding’s ordeal at school occurred six years ago this month, her name will always be attached to the school’s invasion of her privacy. However, had her lawyer petitioned the court for a pseudonym for the minor plaintiff, something that most courts would be likely to grant under the circumstances, she might have maintained more of the privacy that she fought so hard to protect.

The last case, Crawford v. Metropolitan Government of Nashville, discussed by Professor Secunda, reviewed the anti-retaliation provision of Title VII. This provision protects employees suffering from adverse employment actions (such as a demotion, change in pay, or termination) when the employee “participates” or “opposes” an unlawful employment practice. At the heart of the matter in Crawford was what type of employee conduct constitutes “opposition” to an unlawful employment practice. The Court, reversing the Sixth Circuit Court of Appeals, held that reporting sexual harassment was not needed for protection under the “opposition” prong of the anti-retaliation provision. Furthermore, applying an ordinary definition of “opposition” the Court held that the “opposition” prong of Title VII protected an employee’s cooperation with an internal investigation of sexual harassment when an employee gave a “disapproving account” of a supervisor’s conduct.

Professor Secunda noted that while the unanimous decision is good for employees that seek retaliation protection, the Court may have better helped such workers by addressing employee protection under the more frequently used “participation” clause.

MU-ACS sincerely appreciates the faculty members and students who gave their time for the event. All students are welcome to join MU-ACS events.

Depending on where you look, you can find members of the legal community making different predictions of where the courts will land on Iqbal.  Some are dismissing the significance of the case, and others are declaring it a major obstacle for plaintiffs and a coup for corporate defense.

The federal courts have begun the task of interpreting Iqbal.  For instance, a 12(b)(6) motion to dismiss based on the Iqbal standard was successful in a lawsuit claiming that a school’s music program violated free exercise and establishment clause by choosing songs that were religious in nature for students to perform.  And, Judge Posner recently wrote an opinion that distinguished the case at hand from Iqbal and suggested that didn’t govern, even though it has been believed to apply to all federal civil cases.

It appears Congress is ready to jump into the fray as well.  Senator Arlen Specter introduced the Notice Pleading Restoration Act of 2009 in late July, which, in its current state, would reinstate the Conley standard.  While at first glance, the proposed legislation does not seem to present a separation of powers problem, it remains to be seen whether or not this bill has legs enough to make it out of committee.

Even if we do not end up with a pleading standard radically different from that established in Conley, we should get used to hearing the name “Iqbal” as part of our common legal vocabulary for a while.  In the first two months after the Iqbal decision was handed down, the case was cited 500 times in federal courts.  It seems a FRCP 12(b)(6) motion to dismiss for “failure to state a claim upon which relief will be granted” citing Iqbal will be on the checklist for the defense counsel of every federal civil case from here on out.

While this appears to be the first post on Marquette Law School’s Faculty Blog discussing the implications of Iqbal and the pleading standard, it is the topic of a healthy discussion in the legal community right now.  My interest in Ashcroft v. Iqbal grew out of my final paper assignment for my Law and Rhetoric course in the first summer session and it has been fun to watch the analysis and law begin to develop over the past few weeks.  I’ve simplified the case and issues for the sake of presenting in the blog format, but welcome any comments or discussion in the forum below or offline by email  if folks are interested.

At the same ceremony, the Eastern District presented its Judge Myron L. Gordon Lifetime Achievement Award to Foley & Lardner’s Thomas L. Shriner, Jr., an Indiana University law graduate and well-known Milwaukee litigator (and adjunct professor of law here at Marquette). The citation accompanying the award, written by Bill Mulligan, L’60, and Dean Joseph D. Kearney, concluded with the observation that Tom is “respected and admired for his prodigious knowledge of the law, great wit, smile, and willingness to help others.”  Congratulations as well to Tom.

The full citations can be found here concerning Michael and here concerning Tom.

Background

To understand the importance of the Gross case to employment discrimination law, it is necessary to understand a fundamental distinction that has arisen in so-called individual disparate treatment cases, where a worker claims to have suffered an adverse employment action based on a protected characteristic under an employment discrimination statute. Initially, most of these cases were handled under the McDonnell Douglas pretext framework, which requires an employee to establish that the employer’s putative legitimate, nondiscriminatory reasons for its employment actions are pretextual and the real reason for the action was unlawful discrimination.

In 1989, the Supreme Court developed another model for proving disparate treatment discrimination in Price Waterhouse v. Hopkins. There, a woman denied promotion to partner in an accounting firm was able to show both legitimate and illegitimate motives for the employment action. Although a plurality of the Court decided that the plaintiff could make out a case by showing the illegitimate reasons for not promoting her were the “motivating reason,” a significant concurrence by Justice O’Connor set up that the illegitimate reason had to be a substantial part of the employer’s motivation and direct evidence was required to show that motivation. Many courts thereafter followed Justice O’Connor’s formulation.

Two years later, Congress enacted the CRA of 1991, requiring only that the illegitimate reason had to be motivating. Unfortunately, Congress did not make clear its intentions about what framework should govern age discrimination claims under the ADEA.

The issue thus plaguing the courts since 1991 is whether ADEA cases should continue to use the older Title VII mixed-motive analysis under Hopkins (which requires a higher showing of the illegitimate reason being substantial and direct evidence of the adverse motivation) or the lower standard under the CRA of 1991 (require mere motivating and now, after Desert Palace, Inc. v. Costa, allowing for both direct and circumstantial evidence of the motivation).

Gross: What’s at Stake

Although many believe that mixed motive cases generally favor plaintiffs more in litigation than pretext cases, it also appears that plaintiffs do much better (and get courts to give the necessary mixed-motive jury instruction) in cases where the CRA of 1991 is applicable. There is also the thought that mixed motive theory more closely reflects what happens with employment decisions in real life -– the analysis allows for the decisionmaker to consider that the employer usually offers a range or layer of reasons –- some legitimate, some illegitimate –- when it is carrying out an adverse employment action, and it is the decisionmaker’s job to try to figure out whether the illegitimate reason motivated the employer.

Gross is a hard case to predict because there are at least two or three strong arguments cutting in different directions. One argument, likely to be favored by conservative justices like Scalia, Thomas, Roberts, and Alito, is a textualist approach arguing that Congress knew what it was doing, could have expressly included the ADEA in the CRA of 1991, but chose not to for whatever reason. If we are unhappy with the current state of affairs, the argument continues, the proper approach is to allow Congress to amend the CRA of 1991 to include ADEA claims.

A better approach, however, is to point out that disparate treatment claims under the ADEA have been interpreted, on a procedural and substantive level, as substantially identical to claims brought under Title VII. Congress thought unnecessary to state what might have seem obvious to many; this new mixed-motive standard favoring plaintiffs applies to all employment discrimination statutes and there was no need to single the ADEA out. Public policy then provides added ammunition as it makes little sense to have different standards for similar employment discrimination cases, only diverging in the type of discrimination involved. It is confusing to employers and employees alike, and uniform standards in this regard will help the parties fashion their future conduct in this area.

Although the Supreme Court has not specifically addressed this question of the appropriate mixed-motive standard in ADEA cases, the Court has decided a number of ADEA cases in recent years which might provide some important clues. In short, relevant precedents may be read narrowly by the Court to apply to only the “reasonable factors other than age” defense and disparate impact claims, and those parts of the ADEA that have been treated as substantially similar to Title VII should not be impacted by these previous decisions.

Thus, because individual disparate treatment cases are substantially similar under Title VII and the ADEA, the Supreme Court in Gross should find that the CRA of 1991 standard applies to mixed-motive cases under the ADEA as well. This result is consistent with using other sources of authority when the relevant statutory language in the CRA of 1991 is ambiguous and provides a much more predictable and uniform playing field for parties to employment discrimination litigation in the future (who have enough interpretative difficulty without these mixed-motive matters being added to the mix, so to speak).

Cross posted on ACS Blog and Workplace Prof Blog.

In addition to the ridiculously overbroad nature of the requests (all of the emails in their personal accounts?), J.T. Shannon’s subpoenas ran up against the Stored Communications Act (SCA), Title II of the Electronic Communications Privacy Act. The SCA prohibits a non-party ISP from disclosing emails to litigants in a civil case without the consent of its subscriber. This law may seem counterintuitive to litigation attorneys, who are used to being able to subpoena whomever they want within the scope of the Federal Rules of Civil Procedure. But the SCA is not incredibly onerous; it just means you have to request that the party produce their own emails, not the ISP.

The first case to note this limitation on discovery practice imposed by the SCA was FTC v. Netscape Communications Corp., 196 F.R.D. 559 (N.D. Cal. 2000), but since that was a federal agency enforcement action, it may not have received much attention outside of that context. However, since the California Court of Appeals applied the same reasoning in an ordinary civil case in O’Grady v. Superior Court, 139 Cal. App. 4th 1423 (2006), the SCA’s marker has clearly been placed. I expect a surge of such cases in the future as attorneys unfamiliar with electronic privacy law begin looking for emails in ordinary civil matters.

18 U.S.C. § 2702 limits what an ISP can disclose about their subscribers.  Section 2702(a) provides that neither an “electronic communication service” nor a “remote computing service” to the public may disclose the contents of any communication stored on the provider’s network to any person, with just a few exceptions. One is with the consent of the subscriber, obviously. There are other exceptions for responses to administrative subpoenas, grand jury subpoenas, or trial subpoenas from a “governmental entity.” But there is no exception for ordinary pre-trial discovery.

For reasons that are too complicated to go into here, I think the ISP holding old emails is best viewed as a “remote computing service,” not an “electronic communication service,” under the Act, but it doesn’t matter; in either case, the ISP cannot disclose emails in response to a civil subpoena. The J.T. Shannon court went even further, however, and said that ISPs cannot even disclose customer records to a private litigant, citing Section 2702(c). Customer records include such things as the name and address of the subscriber, a record of access times, and everything other than the contents of communications. But there’s a difference between the two anti-disclosure rules. Section 2702(a)(1) and (2) provide that ISPs cannot disclose the contents of communications to anyone, other than pursuant to an exception. Section 2702(a)(3), however, only prohibits ISPs from disclosing customer records “to any governmental entity.” (See also § 2702(c)(6).) Selling those records to telemarketers, for example, is A-OK, at least under the SCA. And so, it would seem, is responding to a civil subpoena for “non-content” records.

There’s one wrinkle in that argument, which is that attorneys sending a Rule 45 subpoena do so as officers of the court, Fed.R.Civ.P. 45(a)(3), and one might think that the court is a “governmental entity,” so an ISP could not disclose even customer records in response to a civil subpoena. “Governmental entity” is defined in 18 U.S.C. § 2711(4) as “a department or agency of the United States or any State or political subdivision thereof.” Is the judiciary a “department or agency of the United States”? I don’t think so; that sounds like it is referring to executive departments and independent agencies. There have been decisions that have held courts to be “governmental entities,” but those decisions did not discuss the actual definition of the term. The issue does not arise often since most subpoenas will be seeking the contents of emails anyway.

I don’t know what the Amish view is but they — and certain other denominations – apparently read the text as calling for believers to resist receiving the forecast mark of the beast. This lawsuit, brought in federal court in Michigan, seeks relief from the federally sponsored program (voluntary for the states, but now adopted in Michigan) that requires the placing of RFID chips in cattle to facilitate the tracking of bovine and other livestock diseases. The plaintiffs make a variety of administrative law claims, as well as claims under the National Environmental Policy Act and the Fifth Amendment, but I’m interested in the claims made under the federal Religious Freedoms Restoration Act (RFRA) and a “supplemental” claim under the Michigan Constitution’s Free Exercise Clause. The requisite chips are claimed to require the plaintiffs to take the mark of the beast or to infringe their divinely ordained dominion over the cattle and all other living things. (Genesis 1:26-28.)

We know that the federal RFRA cannot be applied to the states. The plaintiffs try to get around that by arguing that Michigan is acting to implement federal law (and, it seems, receiving some type of federal grant in return for participation in the program, although the complaint is a bit unclear). If the feds are mandating this in some way as a condition of federal funding, then RFRA may apply.

In the context of this lawsuit, the state law claims almost certainly must be dismissed, with counsel risking sanctions if they refuse a request to do so. Under the Pennhurst line of cases, the Eleventh Amendment has been construed to bar federal courts from hearing requests for injunctive relief compelling state officials to comply with state law.

But the state law claims might, if they could be heard, have merit. Federal free exercise jurisprudence is currently ungenerous toward plaintiffs, holding, as a general matter, that neutral laws of general applicability are not subject to heightened scrutiny even if they substantially burden religious practice.

But some states interpret their own free exercise provisions differently, and Michigan is apparently one of them. So is Wisconsin. These states apply some form of heightened scrutiny to general laws that, when applied to particular religious groups, substantially burden their free exercise. The leading Wisconsin case (written by our own Janine Geske) held that the state could not compel the Amish to place those orange “slow moving vehicle” signs on their buggies.

I don’t know enough about the particular program to express a view on whether the RFRA may be applicable, but there are two lessons here for public interest litigants. First, be wary of the Pennhurst trap. Lawyers who add state law claims as afterthoughts often need to promptly withdraw them. Second, there is a tendency to assume – less pronounced now than in the past — that federal court is “where we ought to be.” This isn’t always the case.

A post at Legal Theory Blog alerted me to Amy E. Sloan’s new article, If You Can’t Beat ‘Em, Join ‘Em:  A Pragmatic Approach to Nonprecedential Opinions in the Federal Appellate Courts, 86 Neb. L. Rev. 895 (2008), available on SSRN.  Amy Sloan is an Associate Professor of Law and Co-Director of the Legal Skills program at University of Baltimore School of Law.  She is well known to legal writing professors, and to many law students, as the author of a popular legal research textbook, Basic Legal Research: Tools and Strategies.

Sloan makes an interesting argument, advocating that Federal Rule of Appellate Procedure 32.1 be amended to assign non-precedential opinions a sort of “mixed” precedential value, specifically, that “non-precedential opinions [would be] binding unless overruled by a later panel’s precedential opinion.”  She contends that giving non-precedential cases this “‘overrulable’ status” would ensure that the opinions’ precedential weight would “correspond[] to their position within the traditional hierarchy of federal decisional law.”  

As Sloan discusses, there are good questions about whether such a change should (or even could) be implemented by rule change.  But setting that procedural issue aside, the changes she recommends have some appeal, to me.  Currently, Federal Rule of Appellate Procedure 32.1 prohibits the circuits from prohibiting citation of non-precedential opinions, but does not specify what weight can or should be accorded any such opinions that are issued.  As Sloan details in her article, under this regime the circuits have developed different, somewhat inconsistent approaches regarding the issuance of and importance of non-precedential opinions.  Uniformity seems preferable.  

Also, assigning the opinions the sort of intermediate weight Sloan advocates is intuitively appealing, if only because it seems a rough approximation of the way that courts will respond to such opinions.  I.e., even if non-precedential opinions are designated as merely “persuasive,” once an on-point non-precedential opinion is presented to a court, the court probably will feel the need to respond to its reasoning in some way or another, either adopting it as good reasoning, or disapproving it.

Sloan’s article also reminded me of a question that Wisconsin Court of Appeals Judge Joan Kessler raised a couple of weeks ago, when I was on a CLE panel sponsored by the Association of Women Lawyers, along with Judge Kessler and Court of Appeals Judge Kitty Brennan.    During discussion of the recent decision to amend Wisconsin Statute 809.23(3), Judge Kessler asked whether Cook v. Cook, the Wisconsin Supreme Court case that prohibits the Wisconsin Court of Appeals from overruling its own opinions, would also apply to non-precedential opinions, when they  become “persuasive” authority after the new rule takes effect in July 2009. 

Judge Kessler seemed to presume, correctly I think, that Cook v. Cook would not limit the court’s ability to overrule or modify such decisions.  The precise holding of Cook v. Cook,  “that the constitution and statutes [of Wisconsin] must be read to provide that only the supreme court, the highest court in the state, has the power to overrule, modify or withdraw language from a published opinion of the court of appeals,” does not reach non-precedential opinions.  

Nonetheless, Judge Kessler’s question, like Sloan’s questions in this new article, lead me to believe that questions about the proper “value” of non-precedential opinions in legal arguments will persist, despite (and maybe because of) the trend toward allowing citation of these opinions.

In the PrawfsBlawg series, I noted a number of interesting legal issues that might be raised during any litigation or, even better, appeal of the dispute between Hasbro, the owners of the North American rights to Scrabble, and RJ Softwares et al., the makers of Scrabulous. In particular, I noted some surprising weaknesses with Hasbro’s copyright claims, including the blackletter rule that games are not copyrightable, lack of ownership over the Scrabble dictionary, and the apparent lack of registration of the Scrabble letter tiles. Even more troubling, I noted a possible formalities problem with all of the Scrabble copyrights dating back to the original 1948 registrations. On the plus side for Hasbro, I questioned the purpose of the under-theorized blackletter rule, although I ultimately concluded it played an important role in copyright law.

Much as I would like to see these issues play out in court, however, I may not get that chance. On Thursday, Hasbro filed proof of service with the court, showing that the defendants were served on August 13. My guess would be that a motion for a default judgement will be hot on its heels. For civ pro junkies, I’ll go into a few more details after the jump.

Hasbro’s filing indicates that RJ Softwares and the Agarwalla brothers were served in India by an Indian law firm under Rule 4(f)(2). India is evidently not a signatory to the Hague Convention; Rule 4(f)(2)(A) permits service in a non-Hague-Convention country “as prescribed by the foreign country’s law for service in that country in an action in its courts of general jurisdiction.” The method of service described by the Indian attorneys in the filing looks to me like what we used to call in New York “nail and mail.” That is, a copy of the summons and complaint was affixed by “hanging over the outside of the premises in the presence of some persons,” then another copy was mailed, return receipt requested. The “nailing” occurred August 13; the “mailing” was signed for August 25. The Indian attorneys say that under Indian law, service was complete on August 13, but even if August 25 is the right day, the 20-day deadline for the defendants to respond passed long ago.

(By the way, one of my geekier moments in practice was using Rule 4(f)(2)(C)(ii) to serve a foreign defendant. That’s right; I had the clerk of the court mail the summons and complaint. We even went in with a copy of the rule, to prove that we weren’t just making it up.)

The next step is to request that the clerk enter a default under Rule 55(a) for failure to appear; and then to move for a default judgement under Rule 55(b). Unless the defendants act soon, this case may be over before it even started. However, if as I suspect the Agarwalla brothers are just a couple of programmers operating out of Kolkata, India, they may have decided that foreign litigation with uncertain chances of success just isn’t worth the candle, particularly now that they have an Indian judgement stating that they are not infringing the copyrights in Scrabble. As the French tower guard said in Monty Python and the Holy Grail, “Now go away, before I taunt you a second time!”

Much has been made of the greed and speculative fervor that gripped the investment professionals on Wall Street. Clearly bets were being made with borrowed money that risked the very existence of institutions that are necessary to preserve the liquidity of capital in our markets. Expanding the oversight of the Treasury Department, increasing the transparency of transactions that involve derivatives and hedge funds, and re-examining accounting rules may all be necessary components of a plan to avoid such risk-taking in the future, but they will not be sufficient in and of themselves. From personal experience in the boardroom, I can vouch that nothing deters executive approval of speculative investment strategies as much as the prospect of a potential civil lawsuit if the deal goes sour.

Federal judges have been antagonistic towards plaintiff’s litigation alleging securities fraud for decades. The Supreme Court has deliberately sought to reduce frivolous lawsuits by interpreting the reach of Rule 10b-5 in ways that limit meritorious suits as well. Cases such as Tellabs, Inc. v. Makor Issues & Rights, Ltd., 127 S. Ct. 2799 (2007), and Stoneridge Investment Partners LLC v. Scientific Atlanta, Inc., 128 S. Ct. 761 (2008), are but the latest examples of this judicial attitude. And of course Congress has acted as well to limit private suits through the Private Securities Litigation Reform Act of 1995 (passed over President Clinton’s veto) and the Securities Litigation Uniform Standards Act of 1998.

The hostility of federal judges towards frivolous lawsuits is easy to understand. The judge can observe firsthand the cost that an unwarranted claim of securities fraud imposes on the corporate defendant and its executives. However, federal judges do not observe firsthand, and therefore undervalue, the deterrent effect that the possibility of a securities fraud lawsuit (even an unwarranted one) has on the willingness of market actors to engage in speculative behavior. The restrictions on private litigation over the last decade or so have substantially reduced this deterrent, and have undoubtedly contributed to risky boardroom decisions. These restrictions have also greatly reduced the ability of a corporate lawyer to act as a “gatekeeper” and police the quality of executive decision-making. When corporate executives are discussing risky financial strategies, speculation is often replaced by prudence after the lawyer asks how the executives would defend their decision if challenged in court.

President Clinton was roundly criticized as beholden to the plaintiffs’ bar when he vetoed the Private Securities Litigation Reform Act. The next President should reflect upon whether Bill Clinton was correct to do so, and whether private securities litigation plays an important role in deterring excessive risk-taking in the markets. Our nation’s ability to avoid a future financial crisis may depend on it.

As several heavy hitters in the financial world have come under pressure or have gone bankrupt in the past couple of months because of the subprime mortgage and lending crisis that has battered investment firms and banks, the employer “stock drop” cases that proliferated in the post-Enron Corp. and post-WorldCom Inc. age are on the rise.

Although the Employee Retirement Income Security Act claims raised in these stock drop cases have not been identical, there are two central claims that arise in these cases. The first claim typically raised is that the plan fiduciaries breached their duties by offering company stock as a plan investment option when the stock was an imprudent or unwise investment. The second claim focuses on the disclosure obligations of the plan fiduciaries and often alleges that the fiduciaries breached their duties by not telling plan participants of financial matters of the plan sponsor that made the sponsor’s stock an imprudent investment.

Among firms that recently have been hit with stock drop lawsuits are Lehman Brothers Holdings Inc., American International Group Inc. (AIG), Bear Stearns, Wachovia Corp., UBS, IndyMac Bank, and Fifth Third Bancorp.

I have written abut this type of stock drop litigation before. The issues at the forefront are how ERISA is overtaking securities law as the litigation vehicle of choice by plaintiffs who suffer stock losses and how these cases almost never make it to trial because the firms being sued are forced to settle if certification of the class is granted by the court.

Given the financial pain being felt by everyone these days, and with little hope of an end being in sight, I would suspect courts to cut down on certification of these classes or for a movement by the corporate lobby to amend ERISA to cut down on these types of suits.

Cross posted on Workplace Prof Blog.