Here are the (quite critical) conclusions of the Sentencing Project:

Results vary somewhat, but when inconsistencies and research errors are adjusted the savings associated with investing in private prisons appear dubious. Even minimal savings are far from guaranteed, and many studies claiming otherwise have been criticized for their methodology. The available data belies the oft-claimed economic benefits of private contracting, and points to the practice being an unreliable approach toward financial stability.

Even if private prisons can manage to hold down costs, this success often comes at the detriment of services provided. Nationwide, public funds for prisons are already limited, leaving little excess spending that can be cut. Therefore, private prisons must make cuts in important high-cost areas such as staff, training, and programming to create savings.  The pressure that companies feel to maintain low overhead costs combined with less direct oversight are likely what led researchers at the University of Utah to conclude that, “quality of services is not improved” in private prisons.

Finally, private prison companies’ dependence on ensuring a large prison population to maintain profits provides inappropriate incentives to lobby government officials for policies that will place more people in prison. This is evidenced by the creation and coordination of model legislation through conservative lobbying groups, as well as in the political contributions and lobbying efforts of individual companies. This effort to increase reliance on incarceration comes at a time where America’s rate of imprisonment is the highest in the world and when the prison population is far beyond the point of diminishing returns in terms of public safety.

The available evidence does not point to any substantial benefits to privatizing prisons. Although there are instances where private prisons result in small savings, the structure and demands of for-profit prisons appear to produce a negative overall impact on services. In order to reconcile this information with the continued claims that private prisons are superior, one must assume that these contentions are couched more in ideology than in facts.

With that backdrop in mind, here’s what happened in Minneci v. Pollard.  The inmate plaintiff, Pollard, alleged that he was injured in a fall and that the injury was mishandled by prison medical staff and other prison employees in ways that amounted to “deliberate indifference” in violation of the Eighth Amendment.  He sued for damages under Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388 (1971), which permits such lawsuits against federal agents for violations of constitutional rights.  However, the Supreme Court has generally taken a restrictive approach to Bivens actions since about 1980, including its decision in Correctional Services Corp. v. Malesko, 534 U.S. 61 (2001), which ruled out Bivens actions against the corporations that run private prisons.

Malesko did not necessarily foreclose Pollard’s claim because Pollard was suing individual employees, not the corporation as a whole.  In the end, however, eight justices saw no reason to recognize the distinction, with only Justice Ginsburg deciding to the contrary.

For the majority, the key to the case was that the defendants could have been sued under state tort law; in their view, it seems that Bivens only provides a stop-gap remedy for constitutional violations that lie beyond the reach of tort law.  This does seem consistent with the thrust of recent Bivens jurisprudence.

But it is important to note that the Court does not insist that plaintiffs must necessarily fare as well under state law as under Bivens:

We note, as Pollard points out, that state tort law may sometimes prove less generous than would a Bivens action, say, by capping damages, see Cal. Civ. Code Ann. §3333.2(b) (West 1997), or by forbidding recovery for emotional suffering unconnected with physical harm, see 629 F. 3d, at 864, or by imposing procedural obstacles, say, initially requiring the use of expert administrative panels in medical malpractice cases, see, e.g., Me. Rev. Stat. Ann., Tit. 24, §2853, (Supp. 2010); Mass. Gen. Laws, ch. 231, §60B (West 2010). But we cannot find in this fact sufficient basis to determine state law inadequate.

. . . .

Rather, in principle, the question is whether, in general, state tort law remedies provide roughly similar incentives for potential defendants to comply with the Eighth Amendment while also providing roughly similar compensation to victims of violations.  (10-11)

This begs the question, of course, of just how robust a state-law remedy must be in order to count as “roughly similar.”  The Court did leave itself a little wiggle room in this regard to handle different sorts of Eighth Amendment claims against private defendants differently in the future:

[W]e concede that we cannot prove a negative or be totally certain that the features of state tort law relevant here will universally prove to be, or remain, as we have described them. Nonetheless, we are certain enough about the shape of present law as applied to the kind of case before us to leave different cases and different state laws to another day. That is to say, we can decide whether to imply a Bivens action in a case where an Eighth Amendment claim or state law differs significantly from those at issue here when and if such a case arises. (11-12)

It seems almost certain that the Supreme Court will again take up the issue of affirmative action in higher education, as two highly controversial cases separately make their way up the appellate ladder.

On two occasions, Regents of the University of California v. Bakke (1978) and the companion cases of Gratz v. Bollinger (2003) and Grutter v. Bollinger (2003), the Supreme Court has, by narrow 5-4 majorities, upheld the constitutionality of college and graduate school admissions programs that take race into account when making admissions decisions. In the same cases, the Court, also by 5-4 votes, struck down the use of formal admissions quotas (Bakke) and the awarding of a specific number of points for race in a numerically-based admissions systems (Gratz) as running afoul of the Equal Protection Clause of the Fourteenth Amendment. Although there was no clear majority sentiment on this point, the use of race as an admissions “consideration” was famously justified in opinions by now-former justices Lewis Powell and Sandra Day O’Connor as a way of achieving the “compelling state interest” in “diversity” in the composition of college and university student bodies.

In the first of the new cases, Fisher v. University of Texas, Abigail Fisher and a number of other unsuccessful white applicants to the undergraduate program at the University of Texas argue that they were denied the opportunity to attend the university because of its policy of taking race into account in making some of its admissions decisions.

The University of Texas uses an admissions system that guarantees admission to students who graduate in the top ten percent of their Texas high school classes. This system accounts for 81% of admitted students, but the other 19% are chosen through a competitive process in which race is taken into account as one of multiple factors used to determine which students will be offered admission. The policy was adopted following the Supreme Court’s decision in Grutter in which a similar practice by the University of Michigan Law School was upheld.

Fisher’s suit was dismissed by the federal district court on the grounds that this issue had been resolved by Grutter. On appeal to the Fifth Circuit, the three-judge panel unanimously upheld the decision of the district court, although one of the three, Judge Emilio Garza, filed a concurrence in which he forcefully questioned the correctness of the Grutter decision.

Fisher then petitioned for an en banc hearing, which was denied, although by a narrow vote of 9-7, with Chief Judge Edith Jones filing a dissenting opinion which was joined by four of her colleagues.

Fisher then petitioned to the United States Supreme Court for a writ of certiorari, and the petition remains on the Court’s current docket. To date, the University of Texas has, somewhat mysteriously, refused to respond to the petition, although at least six amicus briefs have already been filed. The Supreme Court has already taken the unusual step of formally requesting a response from the University, which now has until November 30, 2011, to file a reply or request an extension of the time to do so.

Should cert be granted, it is still possible that Fisher could still be argued before the full court during this term.

Two questions jump out in regard to this case. The first has to do with the personnel changes on the court since 2003. Is there now a five-justice majority willing to overturn the Court’s Grutter decision? Many observers think there is. Presumably, Chief Justice Roberts shares the affirmative action views of his predecessor Chief Justice Rehnquist, but there are strong reasons to believe that Justice Alito’s views are more in line with those of strongly anti-affirmative action justices Scalia and Thomas than they were of his predecessor, Justice Sandra Day O’Connor. However, the matter is somewhat complicated by the increasingly unpredictable views of Justice Kennedy, who could conceivably shift over to the pro-affirmative action side.

The other interesting issue raised by Fisher involves a question of standing. No court has yet ruled that either Abigail Fisher or any of her other co-appellants would have been admitted to the University of Texas had it not been for the school’s practice of taking race into account. This is a recurring problem in reverse discrimination cases: how does a plaintiff establish conclusively that he or she has Article III standing to challenge an allegedly unconstitutional admissions system that may (or may not) have affected them adversely?

It is possible, of course, that the trial court could reach such a conclusion, as it apparently did in Bakke and Grutter, but in this case there was really never an opportunity to do so, since the district court believed the question to be irrelevant under Grutter.

The Supreme Court may (or may not) have reached this issue in its 1999 decision in Texas v. Lesage, a Section 1983 action filed by an unsuccessful white applicant for a graduate program at the same University of Texas. In that case, the Supreme Court unanimously dismissed the plaintiff’s action, but there the trial testimony had included evidence that Lesage would not have been accepted to the program, even if all of the available slots had been filled by Caucasians. (My friend Vik Amar has written a very intelligent commentary on this question which can be found at http://verdict.justia.com/2011/10/28/an-update-on-the-fisher-v-university-of-texas-affirmative-action-case.)

The second of the two new cases involves an amendment to the Michigan state constitution enacted after the Supreme Court’s decision in Grutter. The amendment was designed to achieve what the Gratz-Grutter litigation had not. Similar state constitutional amendments had earlier passed in California and Washington.

The Michigan Civil Rights Initiative, formally known as Proposal 2, was a proposed amendment to the Michigan Constitution that was adopted by a public referendum in 2006, by a vote of 58% to 52%. The amendment prohibits any agent of the state from discriminating against, or giving preferential treatment to, anyone on the basis of race, sex, color, ethnicity, or national origin.

The Proposal 2 amendment was sponsored by a number of groups, including noted black anti-affirmative action activist Ward Connerly and the Michigan Civil Rights Initiative, whose executive director was Jennifer Gratz, the successful plaintiff in Gratz v. Michigan.

A number of different legal challenges have been filed against Proposal 2. An effort to have it removed from the ballot in 2006 as inconsistent with the federal Voting Rights Act was unsuccessful; however, after its adoption, it was again challenged on the theory that the amendment violated the Fourteenth Amendment to the United States Constitution.

In 2008, the United States District Court for the Eastern District of Michigan upheld the constitutionality of the Michigan Amendment, but that decision was recently reversed by a 2-1 decision of the Sixth Circuit Court of Appeals in Coal. to Defend Affirmative Action v. Regents of the Univ. of Mich. At the end of June, the court ruled that the amendment “unconstitutionally alters Michigan’s political structure by impermissibly burdening racial minorities.” The state of Michigan has petitioned for a hearing en banc, and as of the end of November, no ruling on the request has been issued.

While the Michigan case will not be part of the Supreme Court’s 2011-12 docket, it may well hear the matter the following year.

The Supreme Court has avoided making a conclusive ruling on the constitutionality of race-based affirmative action for almost forty years now, but the issue has a way of coming back time after time. However, with all the evidence pointing toward a sharply and evenly divided court, it is unlikely that these cases, if they are in fact heard, will be the end of the story.

Paul filed a series of complaints, each of which was initially dismissed without prejudice under FRCP 8(a)(2) for failure to provide a “short plain statement of the claim showing that the pleader is entitled to relief.” In none of the cases did Paul take advantage of the opportunity to file a new complaint in compliance with the rule. The district court then dimissed each case for failure to prosecute. Paul finally obtained the assistance of a fellow inmate who had better drafting skills and managed to file a complaint that did state a claim. However, the district court dismissed the new complaint based on the PLRA three-strikes rule and Paul’s failure to prepay his fees.

On appeal, the Seventh Circuit indicated that the earlier cases should have been dismissed for failure to state a claim instead failure to prosecute (5). But, given that the dismissal orders nowhere used strike-triggering language, the court held that they should not be counted against Paul:

[W]e think the plaintiff was entitled to take the previous dismissals at face value, and since none of them was based on any of the grounds specified in section 1915(g), to infer that he was not incurring strikes by the repeated dismissals. The statute is explicit, and the case law confirms, . . . that classifying a dismissal as a strike depends on the grounds given for it; since most prisoners litigate their civil claims pro se, they should not be required to speculate on the grounds the judge could or even should have based the dismissal on. (7-8)

Cross posted at Life Sentences Blog.

This state-centric arrangement has come under fire in the last couple of decades, with the federal government staking its ground regulating insurance first around the periphery and then increasingly at the core of the insurance industry.  Some federal statutes make certain practices with certain aspects of an application for or policy of insurance illegal, whether proscribing genetic discrimination, as the Genetic Information Nondiscrimination Act (GINA) does, or limiting the pre-existing condition as the Health Insurance Portability and Accountability Act (HIPAA) did.  Also regulating health insurance at the federal level is the monumental Patient Protection and Affordable Care Act of 2010 (PPACA or “Obamacare” as it is more popularly known).  The PPACA statutorily mandates that some health insurance policies and group health plans eliminate certain provisions altogether, such as lifetime limits on health benefits and the pre-existing condition limitation.  Perhaps even more radically, the PPACA delegates authority to the Department of Health and Human Services to regulate the contents of health insurers’ and plans’ summary of benefits and even the policies themselves.

All the while, a bigger proposal for federalizing insurance laid under the surface.  Something else was being debated amid the political grandstanding accusing conservatives of callously turning a blind eye to the poor’s unmet health care needs and liberals of fashioning monstrous “death panels.”  These debates considered repealing the McCarran-Ferguson Act.  Timothy Noah, Busted Trust, Slate (Oct. 14, 2009), http://www.slate.com/id/2232443/ (last visited Jul. 10, 2011).

Though there would be significant symbolic import to repealing a statute prescribing a policy of federalism, as Professor Kenneth Abraham suggested in Insurance Law & Regulation, favoring state regulation in an era of increasing federal commercial regulation, some commentators posit that McCarran-Ferguson might not have much of an effect on its own, with other theories and defenses that can take up its slack. According to Phillip Areeda’s and Herbert Hovenkamp’s treatise, the antitrust laws might already apply to the insurance industry’s collaborative activity in situations lacking sufficient state regulation or to activities that are sufficiently interstate;  might not create antitrust liability in the first instance; or would be saved by the defense of state action immunity under Parker v. Brown, 317 U.S. 431 (1943).  Phillip E. Areeda & Herbert Hovenkamp, Antitrust Law § 219d (2000).  Nonetheless, Professors Areeda and Hovenkamp also maintain there may be some ways in which McCarran-Ferguson may add something to the overall mix of antitrust liability, such as providing a more expansive defense than does Parker immunity. Id.

Let’s flesh this out a bit, first by examining the first-level statements of each defense’s elements.  The Parker Court exempted from federal antitrust scrutiny acts of government and public officials implementing a state law that requires anticompetitive conduct.  Parker v. Brown, 317 U.S. 341, 352 (1943).  That being said, states may not confer Parker immunity simply by allowing private parties to engage in anticompetitive conduct.  Cantor v. Detroit Edison Co., 428 U.S. 579, 592-93 (1976).  ”It is not enough that . . . anticompetitive conduct is ‘prompted’ by state action; rather, anticompetitive activities must be compelled by direction of the state acting as a sovereign.”  Goldfarb v. Virginia State Bar, 421 U.S. 773, 791 (1975).  The Midcal Aluminum case gave further definition to Parker immunity, stating that “the challenged restraint must be ‘one clearly articulated and affirmatively expressed as state policy’ [and] the policy must be “actively supervised” by the State itself.”  California Liquor Dealers v. Midcal Aluminum, Inc., 445 U.S. 97, 105 (1980) (citing City of Lafayette v. Louisiana Power & Light Co., 435 U.S. 389, 410 (1978) (Brennan, J.)). 

By contrast, the relationship between state insurance regulation and acquiring McCarran-Ferguson immunity can be much looser; to qualify, “[the states] do not have to expressly authorize a specific activity, or proscribe it, for the exemption to apply. . . .  It is enough that a detailed overall scheme of regulation exists.”  Klamath-Lake Pharmaceutical Ass’n v. Klamath Medical Service Bureau, 701 F.2d 1276, 1287 (9th Cir. 1983).

To make this abstract comparison more concrete, let’s next look at a hypothetical.  For a situation similar to FTC v. Ticor Title Insurance Co., 504 U.S. 621 (1992), imagine that a group of liability insurance providers conspired to fix the prices they charge for premiums.  Without any defenses available, price-fixing between and among competitors may be per se illegal under the Sherman Act.  United States v. Socony-Vacuum Oil Co., 310 U.S. 150 (1940).  Enter McCarran-Ferguson; because state insurance commissions regulate premium setting, McCarran-Ferguson immunity may save the cartelizing insurance companies from antitrust liability.  There may be some room for debate whether the price-fixing scheme somehow is an effort to “boycott, coerce, or intimidate,” 15 U.S.C. § 1013(b) (2006), but otherwise, immunity is fairly easily found.

Now consider this same scenario under Parker immunity.  Whether state action immunity will lie depends on the nature of various state insurance agencies’ methods of premium ratemaking.  Some actually make rates, though that approach is rare.  Abraham, supra, at 136.  Other regulatory programs for setting premiums require prior approval by an insurance commission before an insurance company can use them or agency approval after proposed premium rates have been filed with the state commission beforehand.  Id. at 137.  Others still allow insurers to increase and decrease rates within an allowable range, a practice called “flex rating.”   Id. And some agencies will just let private insurers prescribe rates through market competition.  Id. Many of these regulatory schemes would not form a basis for Parker immunity, especially those that require insurer competition in the market.  Furthermore, that state insurance commissions mandate regulatory approval of premium rates as a general matter does not excuse anticompetitive means by insurers to create these rates.  Cf. FTC v. Superior Court Trial Lawyers Ass’n, 493 U.S. 411, 424-25 (1990) (holding that even though private parties may petition the government to allow them to engage in anticompetitive conduct, an antitrust violation may occur if their methods of petitioning are unreasonable restraints on trade in themselves).  Even if an insurance commission allows these practices, as noted above, such authorization of private-party collusion does not necessarily qualify for Parker immunity.

Professors Areeda and Hovenkamp recognize that there is such a the gap between Parker and McCarran-Ferguson.  And for them, that gap might justify a repeal.  Their treatise states:

To the extent these three reasons do not apply to a practice, repeal seems desirable, for the effective impact of McCarran is to immunize activities (1) that would normally be antitrust violations when engaged in by private parties, and (2) where there is inadequate public supervision to qualify for Parker supervision.  Thus the residual impact of repeal would be to force states either to regulate more actively themselves or else leave provable antitrust violations to the antitrust tribunals rather than the unsupervised discretion of private firms.

Areeda & Hovenkamp, supra.

But such unsupervised discretion might ultimately be more favorable to consumers of insurance.  Subjecting the insurance industry to the antitrust laws would mire insurance companies’ in-house legal departments in additional legal research and drive them away from other matters of corporate policy-making.   To the extent that an insurance company wishes to place these legal issues on the desks of outside counsel, the insurance industry may then spend millions in the aggregate on legal fees.  And this says nothing of the possible liabilities for treble damage suits under the federal antitrust laws.  See Abraham, supra, at 189.  As per a discussion on this topic I had with Professor Kircher, the effects could be even more painful for small, local insurers.  In any case, the risk thus arises that these additional costs would be placed on the shoulders of insureds through higher premiums.

Such would be the result if a new law swamped an entire industry with new regulations, but the insurance industry’s antitrust exemption is especially valuable given the history of collaboration among insurance companies, from standard ISO policy forms to data pooling.  Abraham, supra, at 32-34, 189-90.  These collaborative practices allow insurance companies to assess their risk and liability exposures more efficiently.  To the extent such pooling might pose antitrust problems–whether they actually would is a different question–insurance companies may then be forced to endure additional uncertainty as to actuarial data and underwriting.  This too creates a risk of rising premiums.

Imposing even greater costs still is the system variability and unpredictability of the antitrust laws themselves.  The line between antitrust liability and no antitrust liability for a given trade practice is a blurry and moving one.  To be sure, the default rule under the Sherman Act for antitrust violations in section 1, which relates to conspiracies and agreements to restrain trade, is the Rule of Reason.  Texaco Inc. v. Dagher, 547 U.S. 1, 5 (2006). The rule’s name speaks for itself:  it is an overall reasonableness test.  State Oil Co. v. Khan, 522 U.S. 3, 10 (1997) (recognizing that the ”Court has long recognized that Congress intended to outlaw only unreasonable restraints” on trade).  Reasonableness tests are notorious in other areas of the law for their lack of predictability.  Cf. Ira E. Williams, First, Do No Harm: The Cure for Medical Malpractice 52 (2004) (“A legal definition for an acceptable standard of care found in many state statutes is ‘one used by a reasonably prudent practitioner.’  This is so vague as to be meaningless.”).  Even the categories of per se illegal restraints on trade do not inject much certainty into the antitrust analysis, with the Supreme Court’s move away from per se illegality for some trade practices toward more case-by-case reasonableness inquiries and characterization analyses. Lawrence A. Sullivan & Warren S. Grimes, The Law of Antitrust: An Integrated Handbook (2d ed. 2006); accord, e.g., FMC v. Svenska Amerika Linien, 390 U.S. 238, 250 (1968) (“Under the Sherman Act, any agreement by a group of competitors to boycott a particular buyer or group of buyers is illegal per se.”); Northwest Wholesale Stationers, Inc. v. Pacific Stationery and Printing Co., 472 U.S. 284 (1985) (limiting per se illegality to some and not all horizontal group refusals to deal).  And so, Professors Areeda’s and Hovenkamp’s second point–that some practices may not violate the antitrust laws in the first instance–is exceedingly difficult to quantify.

These considerations all demonstrate that McCarran-Ferguson does pull some weight in the antitrust and trade regulation fields, whether as an objective doctrinal matter or in terms of creating expectations upon which insurance companies can rely in their own internal legal compliance programs.

Right now, however, we are in a state of nature, legally speaking. Case law under the relevancy test, the current standard, is of little avail. And while the new rules are copied from the federal rules, state courts are not bound by federal precedent (yes, that includes Daubert itself!). Last week alone I spoke at two conferences, one a large, attentive gathering of state judges in Elkhart Lake and the other an even larger, equally engaged joint convocation of state prosecutors, public defenders, and private defense counsel here at Eckstein Hall. There is a clamor for answers and a discernable unease about what to do.

In both settings I greatly benefited from my participation on a panel just a week earlier on April 7, 2011 at the annual meeting of the Eastern District of Wisconsin Bar Association in Milwaukee. The panel was entitled “Daubert Today: A Standard for All Wisconsin Courts.”  Organized by Matthew W. O’Neill (of Friebert Finerty & St. John) and moderated by Dean Joseph D. Kearney of Marquette Law School, the panel also consisted of two seasoned federal civil litigators and two federal judges (and me). Let me briefly summarize some of their more salient points.

Ralph A. Weber, a Marquette adjunct professor and partner in Gass Weber Mullins LLC, sees the new rules as a substantial improvement over the “trial-friendly” rules that preceded them precisely because they empower trial judges to exclude unreliable expert testimony. Ralph hopes that trial lawyers and trial judges take the new rules seriously, suggesting that evidentiary hearings and even expert witnesses on reliable methodologies may be in order. One problem, though, is that the state legislature did not mandate that expert witnesses submit reports that conform with Fed. R. Civ. Pro. 26, which is designed to foster Daubert scrutiny.

My Marquette colleague Rick Esenberg (formerly of Foley & Lardner), also an experienced civil litigator, thoughtfully underscored the contingency of the new rules.  Rick noted that their effect on litigation is dependent (“it depends”) on a variety of factors, including especially Wisconsin’s “trial friendly” legal culture. Old habits are hard to break. Moreover, state judges simply do not have the resources available to federal courts when closely scrutinizing expert opinion testimony. Rick also brought up the proscription against ipse dixit (“because he said so”) testimony, the bane of the Seventh Circuit, whereby parties offer well-credentialed witnesses who rely more on inflated (my word) resumes than tested methodologies or proven protocols.

We then turned from the panel’s lawyers to the judges. Judge Rudolph T. Randa, a federal district judge with substantial state judicial experience as well, also addressed the ipse dixit problem, noting the Seventh Circuit’s close scrutiny of such testimony and that some lawyers blur relevancy concerns (the “4s” in the FREs) with the assistance standard (the “7s”). Acknowledging that much of Daubert lore is caught up in how to establish reliable methods, etc., Judge Randa emphasized the equally significant problems that arise when expert witnesses are ignorant of the underlying facts of the case.

Finally, federal magistrate judge William E. Callahan, Jr., spoke of the numerous Daubert challenges he has confronted over the years. Judge Callahan emphasized that nothing in the Daubert case law, or the rules themselves, require an evidentiary hearing. Nonetheless, they are difficult motions that require study by the judge, so counsel should consider pretrial motions, which may be based on “paper” (e.g., dueling affidavits, depositions, expert reports). Judge Callahan forecasts that Wisconsin trial judges will conduct more pretrial hearings on experts than they did under prior practice, especially in connection with summary judgment motions and in the absence of a Rule 26-type reporting requirement.  Finally, he cautioned against the overuse of expert witnesses, reminding those in attendance that not all such witnesses provide meaningful assistance to the court.

[I]n reviewing the motion the Court was more than somewhat surprised to read that “Plaintiffs have refused to agree to continue the trial setting and have indicated that they intend to oppose this Motion.”

Well, every party is entitled to file an opposition to a motion, and hoping that perhaps Defendants’ had mis-characterized the vigor of Plaintiffs’ opposition, we have eagerly awaited Plaintiffs defense of its opposition.  The Memorandum in Opposition arrived yesterday, and it was, sadly, as advertised.

The order goes on to shoot down the plaintiff’s attorneys’ arguments opposing the continuance, and ends with the suggestion that the opposing lawyer’s life priorities are out of whack:

Certainly this judge is convinced of the importance of federal court, but he has always tried not to confuse what he does with who he is, nor to distort the priorities of his day job with his life’s role.  Counsel are encouraged to order their priorities similarly.

It’s an interesting opinion (and charmingly written), and I forwarded it to my first-year legal writing students, because it is consistent with the approach to professionalism that I was trying to get across to them when we discussed ethics and advocacy. It is of course pleasant, and especially dramatic, that the order was written in the context of the joy of expecting a new child into the world. But most impressive to me is Judge Melgren’s weariness and disdain for the commitment to conflict that the opposition to the continuance seemed to illustrate:

“He who is his own lawyer has a fool for a client” is one of every lawyer’s favorite proverbs. Among the several reasons why this is undoubtedly true, is that lawyers are trained to handle disputes skillfully but without the emotional rancor that will mask the actual parties’ reason and good sense. [footnote omitted]  Regrettably, many attorneys lose sight of their role as professionals, and personalize the dispute; converting the parties’ disagreement into a lawyers’ spat.  This is unfortunate, and unprofessional, but sadly not uncommon.

Well, I still don’t suppose that I can join, but at least I’ll be able to get in this Thursday when I’ll have the privilege of joining several others for a discussion on proposed amendments to the Federal Rules of Civil Procedure – at the National Press Club in DC. My paper discusses limitations on e-discovery as informed by generally applicable and neutrally established document retention and retrieval policies. The notion is informed by a philosophy that I tried to follow as general counsel of Rite Hite Holding. We should try not, I used to say, run our business for purposes of litigation. Something about the tail wagging the dog.

I am sure that this event at the National Press Club will not be broadcast. Even public radio has some required threshold of excitement.

Sherwin-Williams is currently before Adelman as a defendant in a personal injury action involving lead paint, heard in diversity jurisdiction. S-W believed “his impartiality might reasonably be questioned” (the relevant legal standard) because he had written an article defending the Wisconsin Supreme Court’s controversial lead paint decision in Thomas v. Mallett, 2005 WI 129.  (The article is Adelman & Fite, Exercising Judicial Power: A Response to the Wisconsin Supreme Court’s Critics, 91 Marq. L. Rev. 425 (2007)). In the article, Adelman defended the Court’s 04-05 term generally and praised Thomas particularly as a “positive development” which ensured that “the doors of the courthouse remain open.” Id. at 446. 

Based on this characterization, S-W sought his recusal in this case. 

Judge Adelman rejected the motion, stating that “the fact that a judge has expressed views on a legal subject is not a ground for disqualification.” (Burton Order at 6.) He quoted a Ninth Circuit decision stating that a “judge’s view on legal issues may not serve as the basis for a motion to disqualify.” Id. The Seventh Circuit panel, in a per curiam opinion, upheld his decision.

The panel said that S-W argued that “a reasonable person would suspect that Judge Adelman has an unusual interest in assisting [lead paint] plaintiffs – i.e., that he has an ax to grind” (7). The Court dismissed this argument, saying that “judges may speak, write, and participate in other activities concerning the legal issues of the day” (Id.).

This discussion is interesting when juxtaposed next to the murky matter of State v. Allen, pending in the Wisconsin Supreme Court (2007AP000795). Counsel for Allen contended that Justice Michael Gableman must recuse himself from that criminal case, and by implication all criminal cases, because a reasonable person would suspect that Justice Gableman has an unusual interest in assisting law enforcement, an ax to grind against criminal defendants.

This is based on various statements he made during the 2008 campaign when he publicly criticized the court’s decisions, particularly from the 2004-05 term. A number of “Allen motions” were filed in other cases, urged on by the State Public Defender’s Office.

Just as Judge Adelman should not recuse himself from all lead paint cases because he publicly defended the court’s 04-05 lead paint case, so Justice Gableman should not recuse himself from all criminal cases because he publicly criticized the court’s 04-05 criminal cases.

A judge holding a defendant liable for trespass perhaps carries the vision of plaintiffs having their rights vindicated, but cases do not end at liability.  The judge must also determine whether further remedies beyond damages are appropriate, including whether a permanent injunction should issue.  Such is a weighty decision touches upon an extraordinary remedy: a court order that a defendant must cease and desist its illegal activity or face punishment for contempt.   That being said, in many property cases, a court order only issuing damages would effectuate a judicial licensing of the behavior.  With that result, the incentives are adjusted such that the right to exclude does not rest with the plaintiff; instead, it is determined only by the extent to which the defendant is willing and able to engage in the trespassing behavior.  As such, the courts have presumptively treated infringement of property rights as worthy of injunctive relief.

That has also been the rule in copyright infringement cases for the last few decades. 

The courts have roundly held that irreparable harm is presumed to flow from copyright infringement, and a plaintiff will normally be granted injunctive relief where there is a threat of future infringement.  As with tangible property, when a plaintiff obtains only a damage judgment, a defendant is then free to infringe that copyright owner’s exclusive rights again.  As Justice Story notes in his commentaries on equity, this would potentially “ruin[]” an intellectual property owner by miring him or her in “perpetual litigation.”  Joseph Story, 2 Commentaries on Equity Jurisprudence as Administered in England and the United States 931 (1836).

This rule, however, is slowly slipping out of the mainstream.  After the U.S. Supreme Court held in eBay v. MercExchange, 547 U.S. 388 (2006), that a patent infringement plaintiff “must demonstrate . . . that it has suffered an irreparable injury,” many lower courts are abolishing the presumption of irreparable harm in copyright cases, from the oft-cited Metro-Goldwyn-Mayers Studios v. Grokster, 518 F. Supp. 2d 1197 (C.D. Cal. 2007), to Judge Calabresi’s recent opinion in Salinger v. Colting, which Professor Boyden flagged for readers of this blog.

Though some courts continue to apply the presumption of irreparable harm, e.g., Microsoft Corp. v. McGee, 490 F. Supp. 2d 874 (S.D. Ohio 2007), the courts are trending towards eliminating the presumption, and thus, copyright plaintiffs should be prepared to prove that they will face irreparable injury in court, as the ABA has suggested.  ABA Section of Intellectual Property, American Bar Association, Annual Review of Intellectual Property Law Developments: 2006–08, at 415, 417 (George W. Jordan III et al. eds., 2009).

And therein lies the question. How does one prove irreparable harm?  Though a clear split of authority is emerging as to whether the presumption of irreparable harm survives eBay, an issue that most courts have not addressed is whether a threat of future infringement can give rise to irreparable harm.

Traditionally, the answer was a resounding “yes.”  The MGM court, however, stated that the threat of future infringement alone does not amount to irreparable harm, because “future copyright infringement can always be redressed via damages,” albeit in the multitude of suits Justice Story feared.  That is not to say that threats of future infringement are absolutely irrelevant to whether a plaintiff will suffer irreparable harm.  To the contrary, MGM left open the possibility that “future infringement plus” could satisfy the irreparable injury factor outlined in eBay.

In Designer Skin v. S & L Vitamins, 88 U.S.P.Q.2D 1679 (D. Ariz. 2008), the district court likewise treated the threat of future infringement as a factor in whether irreparable harm will result, adding that further irreparable injury was all the more possible because there was no market for licenses of the copyrights infringed in that case.  The court did state in dicta, however, that the threat of continuing infringement can by itself provide irreparable harm such that the equities could favor granting injunctive relief.  Ultimately, however, the court did not take a position supporting or opposing MGM‘s rule, instead holding that “future infringement plus” may furnish irreparable injury.

One court, however, in Apple v. Psystar, 673 F. Supp. 2d 943 (N.D. Cal. 2009), came close to holding explicitly that future infringement can be an independently adequate basis to support a finding of irreparable harm, though much is unclear from the decision.  Though the court treated the Psystar’s “brazen plans” to continue to allow third parties to infringe Apple’s copyrights as providing “compelling support” for a finding of irreparable harm, the court also found that Psystar’s actions would irreparably harm Apple’s business goodwill, brand, reputation, and market share.  And so, though the Northern District of California warmed up to the idea that future infringement can give rise to irreparable injury, one cannot be sure that a threat of continuing infringement would by itself be understood by this court to irreparably harm Apple or other copyright owners.

Thus, in light of this authority, attorneys should consider using the threat of future infringement as one piece of evidence relevant to whether irreparable harm would result, but, with the courts deviating from the traditional practice preceding eBay, future infringement alone may not carry the day.

In a unanimous opinion by Justice Breyer, the Court held that “the phrase ‘principal place of business’ refers to the place where the corporation’s high level officers direct, control, and coordinate the corporation’s activities.” That is, the Court authoritatively and explicitly identified a corporation’s “nerve center” as its principal place of business and further elaborated that “the ‘nerve center’ will typically be found at a corporation’s headquarters.” As one would expect of a unanimous Supreme Court opinion, the interpretation has much to recommend it, in terms of both textual analysis and administrability: in the latter regard, the Court cited with approval Justice Scalia’s observation in an earlier case that vague boundaries are “to be avoided in the area of subject-matter jurisdiction wherever possible.”

The decision will nonetheless not be warmly greeted across the country. I refer not so much to law professors, although it is true that they will have one less ambiguity with which to becloud—I mean, introduce—the study of law. Rather, many judges of the lower federal courts—which unlike the Supreme Court do not have discretion over their dockets—have long been the most vocal opponents of diversity jurisdiction. After all, one does not become a federal district judge out of an interest to decide state-law suits (such as wage-and-hour claims here) that happen to be in the federal system only because of the fortuity of diversity of citizenship (and the satisfaction of the amount in controversy), does he (or, in places outside of the Eastern District of Wisconsin, she)? Indeed, one can see this reality even in the Ninth Circuit, where Hertz arose: not exactly known for eschewing federal jurisdiction, the court’s failure previously to apply the “nerve center” test had meant that it could deem to be citizens of California many corporations—such as Hertz—with executive offices located elsewhere but with more employees in California than anywhere else (simply because of California’s size). More California “citizen[s],” less diversity jurisdiction, fewer state-law wage-and-hour claims for the federal courts in the Ninth Circuit to decide—but no longer will this be so.

The gravamen of the complaint is that appellees failed adequately to evaluate the investment options included in the Plan. It alleges that the process by which the mutual funds were selected was tainted by appellees’ failure to consider trustee Merrill Lynch’s interest in including funds that shared their fees with the trustee. The result of these failures, according to Braden, is that some or all of the investment options included in the Plan charge excessive fees. He estimates that these fees have unnecessarily cost the Plan some $60 million over the past six years and will continue to waste approximately $20 million per year . . . .

Braden alleges extensive facts in support of these claims. He claims that Wal-
Mart’s retirement plan is relatively large and that plans of such size have substantial bargaining power in the highly competitive 401(k) marketplace. As a result, plans such as Wal-Mart’s can obtain institutional shares of mutual funds, which, Braden claims, are significantly cheaper than the retail shares generally offered to individual investors. Nonetheless, he alleges that the Plan only offers retail class shares to participants. Braden also avers that seven of the ten funds charge 12b-1 fees, which he alleges are used to benefit the fund companies but not Plan participants.

The case is significant because the Plan has over one million participants and nearly $10 billion in assets.

Wal-Mart had moved for a motion to dismiss under 12(b)(1) and 12(b)(6) and:

The district court granted the motion, concluding that Braden lacked constitutional standing to assert claims based on breaches of fiduciary duty prior to the date he first contributed to the Plan and that he otherwise failed to state any plausible claim upon which relief could be granted.

The Eight Circuit reversed and remanded. Specifically on the standing issue, the court held that that Braden made a sufficient showing on Article III standing and proving a cause of action under ERISA and that the district court erred in concluding that he lacked standing to maintain claims for the period before he began participating in the Plan:

In reaching this conclusion, the district court mixed two distinct issues. Whether Braden may pursue claims on behalf of the Plan at all is a question of constitutional standing which turns on his personal injury. Whether relief may be had for a certain period of time is a separate question, and its answer turns on the cause of action Braden asserts.

On the plausibility issue, the court took issue with the high standards the district court placed on the plaintiffs under Iqbal and Twombley:

We conclude that the district court erred in its application of Rule 8. Accepting Braden’s well pleaded factual allegations as true, he has stated a claim for breach of fiduciary duty.

The district court erred in two ways. It ignored reasonable inferences supported by the facts alleged. It also drew inferences in appellees’ favor, faulting Braden for failing to plead facts tending to contradict those inferences. Each of these errors violates the familiar axiom that on a motion to dismiss, inferences are to be drawn in favor of the non-moving party.

More specifically,

Braden’s allegations are sufficient to state a claim that appellees breached their duty of loyalty by failing to disclose details about the revenue sharing payments. Braden alleges that those payments corrupted the fund selection process—that each fund was selected for inclusion in the Plan because it made payments to the trustee, and not because it was a prudent investment.

So, at this stage of the litigation, nothing of real substance has been decided as far as ERISA violations, but at least the court suggests that ERISA defendants will not be normally able to avoid more searching inquiries into their fiduciary acts in these fee litigation cases through a combination of standing and process objections.

             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.