Source: http://federalcivilpracticebulletin.blogspot.com/2007/12/
Timestamp: 2018-11-20 16:15:14
Document Index: 639120740

Matched Legal Cases: ['§ 78', '§ 78', '§ 1292', '§ 1291', '§ 1983', '§ 1332', '§ 1332', '§ 10', '§ 10', '§ 10']

Federal Civil Practice Bulletin: December 2007
Per In re JPMorgan Chase & Co. Securities Litigation, Slip Copy, 2007 WL 4531794 (N.D. Ill. Dec. 18, 2007):
Plaintiffs argue that (1) negligence is not a state of mind, and therefore does not require a pleading of particular facts to give strong inference, and (2) even if it were, the pleadings are sufficient. There seems to be some discrepancy on how a 14(a) negligence allegation should be treated under 15 U.S.C. § 78u-4(b) (2). The Seventh Circuit has not ruled on whether the PSLRA applies to Section 14(a) cases. The district courts in this circuit have been split on the issue. In Blau v. Harrison, Judge Hibbler stated that “Plaintiffs' Section 14(a) allegations are not required to meet the PSLRA particularity requirement because these claims are based on averments of negligence.” 2006 U.S. Dist. LEXIS 18785 (N.D.Ill., 2006). Judge Hibbler reasoned that because the Seventh Circuit ruled that Rule 9(b) pleading requirements were not applicable to negligence claims, the PSLRA heightened requirements would not be applicable either. Id.; Kennedy v. Venrock Assocs., 348 F.3d 584, 593 (7th Cir.2003). Judge Leinenweber disagreed with the ruling in Blau, concluding that “the Seventh Circuit's opinion in [ Kennedy ] ... never addressed the PSLRA at all,” but only stated that Rule 9(b)'s heightened pleading standards did not apply to Section 14(a) claims unless those claims charged fraud, as opposed to negligence. Beck v. Dobrowski, et al ., 2007 U.S. Dist. LEXIS 84093 (N.D.Ill.2007). Judge Leinenweber found that this analysis was inapplicable to the PSLRA, because Rule 9(b) was “expressly limited to claims of fraud or mistake,” whereas the PSLRA encompasses negligence claims as well. Id. Judge Leinenweber states the following, specifically finding that negligence constitutes a “state of mind”:
The Court concludes that the PSLRA governs Plaintiff's claim. Although the Seventh Circuit has not decided whether the PSLRA applies to Section 14(a) cases, the statutory language is unambiguous. All relevant sections of the Act commence with the phrase, “in any private action arising under this chapter,” 15 U.S.C. § 78u-4(b)(1),(2). & (4) (emphasis added). The Act contains no exceptions based on considerations of scienter or previous common law causation rules. Indeed, the Act's pleading standard provisions are to the contrary. Section(b)(2) applies to actions for money damages requiring proof of only “a particular state of mind.” Since negligence is a state of mind, the language of Section (b) (2) by its terms encompasses negligence-based securities actions.
S.D.N.Y. Raises Interesting Question Re Scope of Tellabs
Per S.E.C. v. Collins & Aikman Corp., Slip Copy, 2007 WL 4480025 (S.D.N.Y. Dec. 21, 2007):
In Tellabs, the Supreme Court determined that to plead a “strong inference of scienter” in the context of the PSLRA, a complaint must allege facts that give rise to an inference of scienter at least as strong as any competing inference. It is unclear whether district courts must now find that the inference of scienter raised in actions not governed by the PSLRA, but governed by Rule 9(b), be at least as compelling as any other inference. I need not reach this thorny (albeit interesting) issue, however, because I find that even under this heightened standard, the SEC has pled scienter.
Prof. Adam Steinman recently published an article entitled Reinventing Appellate Jurisdiction, 48 B.C. L. Rev. 1237 (Nov. 2007). Here is the Abstract:
Appellate jurisdiction in the federal system has been properly criticized for both its doctrinal incoherence and its procedural complexity. Although these critiques are well-founded, this Article reveals that, as applied in practice, federal courts have drawn sensible lines between interlocutory orders that are immediately appealable and those that are not. A limited category of interlocutory orders, primarily those rejecting immunities from suit, are immediately appealable as of right. All other interlocutory orders are potentially eligible for discretionary appellate review. The doctrinal morass of the present framework, however, has obscured this basically sensible structure and has led to inefficient procedures for seeking appellate review of interlocutory orders. This Article proposes two new theories of appellate jurisdiction that preserve the current regime's pragmatic structure without its procedural problems. First, this Article argues that the All Writs Act authorizes discretionary appeals (not just writs of mandamus), and that such appeals are a superior vehicle for discretionary review of interlocutory orders. Second, this Article argues that for the limited category of interlocutory orders over which appellate jurisdiction is mandatory, 28 U.S.C. § 1292(a) provides a more coherent doctrinal foundation than the collateral order doctrine's awkward interpretation of the term “final decision” under 28 U.S.C. § 1291.
Prof. Sack Posts Article on the Domestic Relations Exception
Prof. Emily Sack has recently posted an article entitled The Domestic Relations Exception, Domestic Violence, and Equal Access to Federal Courts on SSRN. Here is the Abstract:
This article examines the classic issue of the allocation of jurisdiction between the state and federal courts, with an untraditional focus on family law, domestic violence, and women's access to federal courts. The piece first explores the domestic relations exception to federal jurisdiction, a longstanding judge-created doctrine under which the federal courts lack jurisdiction to hear divorce, custody and other family matters traditionally reserved to the states. In the recent case of Marshall v. Marshall, 126 S. Ct. 1735 (2006), the Supreme Court had the opportunity to abandon the domestic relations exception (as well as its relative, the probate exception), but refused to do so, despite acknowledging the weak rationale for maintaining it. The article critiques the traditional explanations for the exception's existence, and argues that its roots may be traced to the principles of coverture. The "exception" may in fact not be an exception to jurisdiction at all, but rather a recognition that divorce and related cases could not meet federal diversity requirements, because married women could not establish citizenship separate from that of their husbands. This explanation reveals both one of the primary causes for the exception's creation, and the consequences of maintaining it - the consideration of family law as a "woman's issue" that is not deserving of the attention of the federal courts.
The article goes on to suggest that the legacy of the exception can be seen in the Court's treatment of domestic violence cases. It focuses primarily on Castle Rock v. Gonzales, 125 S. Ct. 2796 (2005), which held that a domestic violence victim had no constitutionally protected property interest in the enforcement of a protection order, and therefore no claim under § 1983. In so doing, the Court has again restricted federal court review of issues that centrally concern women. The article concludes that the domestic relations exception should be abolished as a significant first step. However, the Supreme Court must also recognize that in its denial of federal rights to victims of domestic violence, it is continuing to deny all women full participation and citizenship.
posted by A. Benjamin Spencer @ 12:37 AM 1 comments
Ninth Circuit Holds that Plaintiff is Entitled to New Trial after Premature Grant of JMOL
Per U.S. Law Week, December 18, 2007 (76 USLW 1356, 2007):
A plaintiff in a negligence suit against two airlines is entitled to a new trial because a magistrate judge granted judgment as a matter of law before the plaintiff's case was "fully heard," the U.S. Court of Appeals for the Ninth Circuit held Nov. 27 (Summers v. Delta Air Lines Inc., 9th Cir, No. 05-35220, 11/27/07).
Fed. R. Civ. P. 50(a), the JMOL rule, precludes a district court from requiring that testimony be given through an offer of proof when, as in this case, a party seeks at trial to present relevant, admissible testimony from a witness on a disputed issue, Judge Susan P. Graber explained.
Per Dieffenbach v. Cigna Corp., Slip Copy, 2007 WL 4275502 (E.D. Pa. Dec. 04, 2007):
The question of the applicability of Rule 11 in a removal case where the defendant seeks sanctions for the filing of a state court complaint is an unresolved one in this circuit. There appears to be a split among the other circuits on the issue with the Second, Fourth and Fifth Circuits holding that Rule 11 sanctions cannot be imposed on state court complaints, while the Sixth Circuit has held that they can. See, e.g., Tompkins v. Cyr, 202 F.3d 770 (5th Cir.2000); Herron v. Jupiter Transportation Co., 858 F.2d 332, (6th Cir.1988); Kirby v. Allegheny Beverage Corp., 811 F.2d 253 (4th Cir.1987); Stiefvater Real Estate, Inc. v. Hinsdale, 812 F.2d 805 (2d Cir.1987). The only Court in this district to consider the matter, however, followed the 6th Circuit to conclude that the fact that the case was removed from state court had no bearing on the application of Rule 11, which applies to a pleading once it is removed to federal court and thereby imposes upon the attorney a duty to reevaluate his signed pleadings once they are in federal court. See, Riley v. City of Philadelphia, 136 F.R.D. 571, 574 (E.D.Pa.1991).
We do not believe that we need to reach the issue of whether Rule 11 is properly applied to pleadings originally filed in the state court to resolve the motion now before us. While it was the plaintiff's filing of a complaint in the Chester County Court of Common Pleas which once again initiated these proceedings in July, 2007, it is the plaintiff's continuing insistence on the prosecution of this matter and his repeatedly signing papers, motions and amended pleadings in this Court which is at the heart of the Rule 11 motion before us.
posted by A. Benjamin Spencer @ 7:53 AM 2 comments
Per Lanier v. Norfolk Southern Corp., Slip Copy, 2007 WL 4270847 (4th Cir. Dec. 05, 2007):
For the district court to have original jurisdiction over a class action under CAFA, the proponent of removal must show minimal diversity, and it must be clear from the face of the complaint that the amount in controversy exceeds $5 million. . . .
The district court concluded that the amount in controversy was satisfied and minimal diversity between Lanier and Norfolk was present. Because Lanier's complaint indicated that the purported class consisted of at least 350 people seeking damages, it would take a minimum of $15,000 per person to exceed the $5 million amount in controversy.FN1 Our review of the record shows that minimal diversity is present between the parties and there is nothing in the record that would support a finding to a legal certainty that the judgment would be less than $5 million.FN2 Thus, we conclude that jurisdiction exists under CAFA, and the district court correctly denied Lanier's motion to remand.
FN2. For the first time on appeal, Lanier argues that the local controversy exception under 28 U.S.C.A. § 1332(d)(4) applies. Section 1332(d)(4) states that a district court “shall decline to exercise jurisdiction” over a class action if greater than 2/3 of the class are from the state in which the action was filed; at least one defendant from whom significant relief is sought is from that same state; the principal injuries resulted from conduct within the same state; and that no other class actions have been filed asserting the same thing. 28 U.S.C.A. § 1332(d)(4) (West 2006). This court will generally not consider issues raised for the first time on appeal. Muth v. United States, 1 F.3d 246, 250 (4th Cir.1993). “Exceptions to this general rule are made only in very limited circumstances, such as where refusal to consider the newly-raised issue would be plain error or would result in a fundamental miscarriage of justice.” Id. As Lanier did not raise this argument to the district court and provides no facts warranting a finding of exceptional circumstances, we do not consider this argument. Id.
Per Cordova v. Lehman Bros., Inc., --- F.Supp.2d ----, 2007 WL 4287729 (S.D. Fla. Dec. 07, 2007):
To survive a motion to dismiss, a plaintiff's claims of fraud under § 10(b) and Rule 10b-5 must satisfy the requirements of Fed.R.Civ.P. 9(b), which requires that “the circumstances constituting fraud or mistake shall be stated with particularity.” Ziemba, 256 F.3d at 1202. “The particularity rule serves an important purpose in fraud actions by alerting defendants to the ‘precise misconduct with which they are charged’ and protecting defendants ‘against spurious charges of immoral and fraudulent behavior.’ “ Ziemba, 256 F.3d at 1202 (citing Durham v. Bus. Management Assocs., 847 F.2d 1505, 1511 (11th Cir.1988)). “The application of Rule 9(b) ... ‘must not abrogate the concept of notice pleading.’ “ Id. Further, “Rule 9(b) must be read in conjunction with Rule 8(a) [of the Federal Rules of Civil Procedure], which requires a plaintiff to plead only a short, plain statement of the grounds upon which he is entitled to relief.”
“Rule 9(b) is satisfied if the complaint sets forth ‘(1) precisely what statements were made in what documents or oral representations or what omissions were made, and (2) the time and place of each such statement and the person responsible for making (or, in the case of omissions, not making) same, and (3) the content of such statements and the manner in which they misled the plaintiff, and (4) what the defendants obtained as a consequence of the fraud.’ “
Most of Plaintiffs' allegations of misrepresentations and omissions in the Second Amended Complaint do not satisfy the particularity requirement of Rule 9(b). Many allegations do not satisfy the particularity requirement because those allegations lump multiple defendants together. “Rule 9(b) does not allow a complaint to merely ‘lump’ multiple defendants together but ‘require[s] plaintiffs to differentiate their allegations when suing more than one defendant ... and inform each defendant separately of the allegations surrounding his alleged participation in the fraud.’" Throughout the Second Amended Complaint, Plaintiffs refer to Defendants collectively as the “Financial Institution Defendants,” refer to more than one Defendant, or combine Defendants with PFA when alleging a fraud, rather than identifying specific misrepresentations, omissions, or actions and stating clearly how they are attributable, on which occasions or in which documents, to specific individual Defendants. Such allegations are insufficient to state a claim under § 10(b) and Rule 10b-5.
Also, a plaintiff's use of the passive voice in alleging a fraud can impermissibly obscure allegations such that the allegations fail to satisfy the particularity requirements of Rule 9(b). Plaintiffs' repeated use of the passive voice when describing misrepresentations or fraudulent acts obscures exactly who made the statements or committed the fraudulent acts. In many instances, it appears that the representations or fraudulent acts are properly attributable to PFA but, by using the passive voice (e.g., stating that misrepresentations “were made” to investors), Plaintiffs attempt to broaden responsibility and make it appear that each Defendant is responsible for each of PFA's and/or another Defendants' statements, misrepresentations, and fraudulent acts or omissions. See e.g. 2nd Amend. Compl. ¶ 24 (Plaintiffs “were assured”), ¶ 27 (“investors were promised”), ¶ 28 (“were promised”), ¶ 32 (“marketing materials were used”), ¶ 55 (“investors were told”), ¶ 57 (“were marketed”), ¶ 60 (“Agreements were entered into”). Similarly, in other instances, Plaintiffs allege that marketing materials or documents made the representations, which also obscures who was responsible for a given representation, because Plaintiffs do not identify specific wording or indicate to whom the statement was attributable.
Per Betz v. Trainer Wortham & Co., Inc., 504 F.3d 1017 (9th Cir. Oct. 04, 2007):
We have held that the statute of limitations for a federal securities fraud claim begins to run when the plaintiff has either actual or inquiry notice that the defendants have made a fraudulent misrepresentation. See, e.g., Gray v. First Winthrop Corp., 82 F.3d 877, 881 (9th Cir.1996); Volk v. D.A. Davidson & Co., 816 F.2d 1406, 1412 (9th Cir.1987). In more recent cases, however, it has been suggested that under the United States Supreme Court's decision in Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 111 S.Ct. 2773, 115 L.Ed.2d 321 (1991), only actual notice of the facts forming the alleged fraud, and not inquiry notice of those facts, triggers the running of the statute of limitations for a § 10(b) claim. See Berry v. Valence Tech., Inc., 175 F.3d 699, 704 (9th Cir.1999); see also Livid Holdings Ltd. v. Salomon Smith Barney, Inc., 416 F.3d 940, 951 (9th Cir.2005). The uncertainty introduced by our opinion in Berry led us to suggest in Livid Holdings that, notwithstanding our unequivocal pre- Lampf case law, we had “considered, but not made a final determination on whether actual or inquiry notice of the alleged fraud triggers the running of Rule 10b-5's statute of limitations.” Livid Holdings, 416 F.3d at 951.
We hold that either actual or inquiry notice can start the running of the statute of limitations on a federal securities fraud claim.