Category: Civil Procedure

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What Should We Be Working On? Empirical Civil Procedure Post CELS

Earlier this week, I argued that civil procedure empiricists are spending too much time on the Twiqbal problem.  That’s not the same as saying that Twiqbal is an unimportant set of cases.  It probably signals an important shift in federal pleading doctrine, and, arguably, some litigants we care about are being shut out of federal court. I mean to say merely this: the amount of attention paid to Twiqbal is exceeding its importance to litigants (over state and federal court).  Our focus is being driven largely by data availability and law professor incentives. We can do better.

I’m starting to make a genre of these “people should be writing about X not Y” posts.  Boy, that could get tiresome fast!  Luckily, no one actually has to listen to me except for the poor 1Ls.  In any event, it seemed useful to start a conversation about what topics are more worth writing about than Twiqbal. Use the comment thread below to generate a list and if there’s enough interest I’ll create a poll. To qualify, the topic has to be real-data-driven (i.e., not merely doctrinal analysis, not experimental, etc.); and there must be a way, in theory, to get the data.  For example,

  • Does law influence outcomes in small claims court?
  • How well do choice of law clauses work in state court?
  • When do attorneys matter?
  • What are the determinants of summary judgment grant rates in state courts?
  • Is there a way to get a handle on which cases are being “diverted” to arbitration or “carved-[back]-in“?

 

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CELS VII: Data is Revealing Part 2

 

Shouldn't it be "data are revealing?"

Shouldn’t it be “data are revealing?”

[This is part 2 of my recap of the Penn edition of CELS, promised here. For Part 1, click here.  For previous installments in the CELS recap series, see CELS IIIIVV, and VIVII.]

Where were we?  I know: throwing stink-bombs at a civil procedure panel!

At the crack of dawn saturday I stumbled into the Contracts II panel. Up first was Ian Ayres, presenting Remedies for the No Read Problem in Consumer Contracting, co-authored with Alan Schwartz.  Florencia Marotta-Wurgler provided comments.  The gist of Ayres’ paper is that consumers are optimistic about only a few hidden terms in standard-form contracts. For most terms, they guess the content right. Ayres argued that should be concerned only when consumers believe that terms are better than they actually are.  The paper  proposes that firms make such terms more salient with a disclosure box, after requiring firms to learn about consumer’s knowledge on a regular basis. Basically: Schumer’s box, psychologically-calibrated, for everyone.  Florencia M-W commented that since standard-form contracts evolve rapidly, such a calibrated disclosure duty might be much more administratively complex than Ayres/Schwartz would’ve thought.  A commentator in the crowd pointed out that since the proposal relies on individuals’ perceptions of what terms are standard, in effect it creates a one-way ratchet. The more people learn about terms through the Ayres/Schwartz box, the weaker the need for disclosure. I liked this point, though it appears to assume that contract terms react fairly predictably to market forces. Is that true?  Here are some reasons to doubt it.

Zev Eigen then presented An Experimental Test of the Effectiveness of Terms & Conditions.  Ridiculously fun experiment — the subjects were recruited to do a presidential poll. The setup technically permitted them to take the poll multiple times, getting paid each time.  Some subjects were exhorted not to cheat in this way; others told that the experimenters trusted them not to cheat; others were given terms and conditions forbidding cheating. Subjects exhorted not to cheat and trusted not to cheat both took the opportunity to game the system significantly less often than those presented with terms and conditions. Assuming external validity, this raises a bit of a puzzle: why do firms attempt to control user behavior through T&Cs? Maybe T&Cs aren’t actually intended to control behavior at all! I wondered, but didn’t ask, if T&Cs that wrapped up with different formalities (a scan of your fingerprint; a blank box requiring you to actually try to sign with your mouse) would get to a different result.  Maybe T&Cs now signal “bad terms that I don’t care to read” instead of “contract-promise.”  That is, is it possible to turn online T&Cs back into real contracts?

Next, I went to Law and Psych to see “It All Happened So Slow!”: The Impact of Action Speed on Assessments of Intentionality by Zachary C. Burns and Eugene M. Caruso. Bottom line: prosecutors should use slow motion if they want to prove intent. Second bottom line: I need to find a way to do cultural cognition experiments that involving filming friends jousting on a bike. I then hopped on over to International Law, where Adam Chilton presented an experimental paper on the effect of international law rules on public opinion. He used a mTurk sample.  I was a concern troll, and said something like “Dan Kahan would be very sad were he here.” Adam had a good set of responses, which boiled down to “mTurk is a good value proposition!”  Which it is.

After lunch it was off to a blockbuster session on Legal Education. There was a small little paper on the value of law degrees. And then,  Ghazala Azmat and Rosa Ferrer presented  Gender Gaps in Performance: Evidence from Young Lawyers. They found that holding all else equal, young women lawyers tend to bill somewhat fewer hours than men, a difference attributable to being less likely to report being highly interested in becoming partners while spending more time on child care.  What was noteworthy was the way they were able to mine the After the JD dataset. What seemed somewhat more troubling was the use of hours billed as a measure of performance, since completely controlling for selection in assignments appeared to me to be impossible given the IVs available.  Next, Dan Ho and Mark Kelman presented Does Class Size Reduce the Gender Gap? A Natural Experiment in Law. Ho and Kelman found that switching to small classes significantly increases the GPA of female law students (eliminating the gap between men and women). This is a powerful finding – obviously,it would be worth it to see if it is replicable at other schools.

The papers I regret having missed include How to Lie with Rape Statistics by Corey Yung (cities are lying with rape statistics); Employment Conditions and Judge Performance: Evidence from State Supreme Courts by Elliott Ash and W. Bentley MacLeod (judges respond to job incentives);  and Judging the Goring Ox: Retribution Directed Towards Animals by Geoffrey Goodwin and Adam Benforado.  I also feel terrible having missed Bill James, who I hear was inspirational, in his own way.

Overall, it was a tightly organized conference – kudos to Dave Abrams, Ted Ruger, and Tess Wilkinson-Ryan.  There could’ve been more law & psych, but that seems to be an evergreen complaint. Basically, it was a great two days.  I just wish there were more Twiqbal papers.

 

 

6

Credit Card Merchant Fee Settlement — Injunctive Relief

Credit Card CroppedPrior installments in this series addressed the background leading up to the credit card merchant fee class action and the damages provisions in the b(3) opt out class action.  This post addresses the injunctive relief provisions that the settlement in In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation styles as a mandatory b(2) non-opt out class action.  An upcoming final installment in this series will address the release provisions in the settlement.

B(2) classes are appropriate where the nature of the injunctive relief is such that it will necessarily affect every class member.  After setting out the relief proposed in the settlement, I’ll provide some thoughts on whether b(2) is really an appropriate device for this case.  Perhaps class action experts out there could weigh in on this issue in the comments.

The injunctive relief set out by the settlement is notable for what is not provided.  Nothing in the settlement addresses the core concerns in the complaint about (1) the collective setting of a default interchange fee; (2) the rule prohibiting merchants from rejecting the cards of, surcharging the card transactions of, or otherwise discriminating against some card-issuing banks, but not others; or (3) the rules making it impossible for merchants to route transactions over the least expensive network.

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The Credit Card Merchant Fee Litigation Settlement

I’d like to thank Concurring Opinions for inviting me to blog about In re: Payment Card Interchange Fee and Merchant Discount Antitrust Litigation.  This eight-year-old multi-district litigation has produced the largest proposed cash settlement in litigation history  ($7.25 billion) along with what is perhaps the most extraordinary release from liability ever concocted.  It may also be the most contentious.  Over half the name plaintiffs and over 25% of the class, including most large merchants (think Walmart, Target) and most merchant organizations, have objected.  On September 12, Eastern District of New York Judge John Gleesaon held a fairness hearing to consider the settlement, and the parties are awaiting his decision.  An appeal is a virtual certainty.

This post will provide background on the credit card industry pricing mechanisms that led to this litigation, the legal issues in the case, and the structure of the settlement.  (You can read more about the history of the credit card industry’s relationship to the antitrust laws here.)  In subsequent posts, I’ll separately analyze the damages and relief provisions in the settlement.  (If you can’t wait 😎 my working paper analyzing the settlement is here.)  If there are particular issues that you’d like to read more about, let me know in the comments and I will respond in subsequent posts.

The credit card industry is atypical, but not unique, in that it competes in a two-sided market, i.e., one that serves two distinct customer bases.  A card system like Visa provides both a purchasing device (credit cards) to consumers and a payment acceptance service to merchants.  (By way of comparison, the legal blogging market is also two-sided.  Concurring Opinions provides both an information forum to its readers and a platform to its advertisers.)

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UCLA Law Review Volume 60 Symposium: Volume 60, Issue 6 (September 2013) and Discourse

UCLA Law Review, Volume 60 Symposium

Twenty-First Century Litigation: Pathologies and Possibilities

A Symposium in Honor of Stephen Yeazell

 

Volume 60, Issue 6 (September 2013)
Articles

Complexity, the Generation of Legal Knowledge, and the Future of Litigation Ronald J. Allen 1384
Regulation by Liability Insurance: From Auto to Lawyers Professional Liability Tom Baker & Rick Swedloff 1412
When Courts Determine Fees in a System With a Loser Pays Norm: Fee Award Denials to Winning Plaintiffs and Defendants Theodore Eisenberg, Talia Fisher, and Issi Rosen-Zvi 1452
Symmetry and Class Action Litigation Alexandra D. Lahav 1494
Atomism, Holism, and the Judicial Assessment of Evidence Jennifer L. Mnookin 1524
Altering Attention in Adjudication Jeffrey J. Rachlinski, Andrew J. Wistrich, and Chris Guthrie 1586
Wolves and Sheep, Predators and Scavengers, or Why I Left Civil Procedure (Not With a Bang, but a Whimper) D. Michael Risinger 1620
Gateways and Pathways in Civil Procedure Joanna C. Schwartz 1652
Pleading and Access to Civil Justice: A Response to Twiqbal Apologists A. Benjamin Spencer 1710
Teaching Twombly and Iqbal: Elements Analysis and the Ghost of Charles Clark Clyde Spillenger 1740
Unspoken Truths and Misaligned Interests: Political Parties and the Two Cultures of Civil Litigation Stephen C. Yeazell 1752

 

 

Volume 61, Discourse

Discourse

Re-Re-Financing Civil Litigation: How Lawyer Lending Might Remake the American Litigation Landscape, Again Nora Freeman Engstrom 110
Of Groups, Class Actions, and Social Change: Reflections on From Medieval Group Litigation to the Modern Class Action Deborah R. Hensler 126
Procedure and Society: An Essay for Steve Yeazell William B. Rubenstein 136
What Evidence Scholars Can Learn From the Work of Stephen Yeazell: History, Rulemaking, and the Lawyer’s Fundamental Conflict David Alan Sklansky 150
Procedure, Substance, and Power: Collective Litigation and Arbitration Under the Labor Law Katherine V. W. Stone 164
13

My Civil Procedure Syllabus: Hypothetical Problems Included

Like so many other law profs, I’m amidst drafting my syllabus for the fall. (It’s an amazing thing to be done with a draft of Hate 3.0: A Civil Rights Agenda to Combat Discriminatory Online Harassment (forthcoming HUP) and a substantive edit of “The Right to Quantitative Privacy” with my amazing colleague David Gray–now I can turn to my students!) For my civil procedure students, my syllabus is full of tips/questions/hypos, so that they don’t have to turn to commercial outlines (or so I hope). I just wrote a new hypo for subject matter jurisdiction, thanks to terrific guest blogger and civ pro scholar Howard Wasserman whose essay “A Jurisdictional Perspective on New York Times v. Sullivan” served as an inspiration.

Here is the newly drafted hypo for all of my civ pro teacher colleagues. Suggestions for improving it, so welcome!

In-class hypo (or for study group)[1]

The year is 1965. In Southern towns and cities, civil rights protestors are being beaten and intimidated by local police and private citizens. Montgomery, Alabama is no exception. To draw the public’s attention to the mistreatment of civil rights protestors, advocates put an advertisement in the New York Times highlighting the abuse in Montgomery, Alabama and in other Southern cities. Civil rights activists and four Alabama activists signed the ad, which appears here.

  A Montgomery, Alabama police official sued the ad’s publisher The New York Times and the four Alabama residents for defamation, alleging that the ad falsely suggested that he was responsible for the physical attacks on civil rights protestors. The Alabama plaintiff brought the case in state court, where with his luck it was assigned to a judge known to be a member of the Ku Klux Klan. The New York Times would like to remove the case to federal court, fearing that the state court judge would be hostile to the Northern newspaper agitating for civil rights. An important fact to consider too is that a year before the plaintiff filed the case, the Supreme Court found that in defamation claims involving public officials and alleged falsehoods about their public duties, the First Amendment requires that the plaintiff proves the defendant published the falsehoods with “actual malice,” that is, knowing they were false or reckless to their truth or falsity.

Let’s discuss whether the New York Times can remove the case to the federal court and whether it should be permitted to do so given the rationale underlying subject matter jurisdiction. What is the rationale behind diversity jurisdiction? How does it fit here? Would the constitution permit removal and what about Section 1332? What are other roadblocks to removal under diversity jurisdiction? What about federal question jurisdiction analysis? There is much to think about with the well-pleaded complaint rule and the Grable analysis.


[1] As a factual matter, I am riffing from the famous New York Times v. Sullivan case and borrowing the substantive findings about the First Amendment from the case; I take the idea for this hypo from Professor Howard Wasserman, “A Jurisdictional Perspective on New York Times v. Sullivan,” volume 107, Northwestern Law Review, page 901 (2013).

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Remedies 101

Based on the comments coming out of this morning’s oral argument in Perry, it appears that there are only two possible outcomes:

1.  Petitioners have no standing.  The Ninth Circuit opinion is vacated.

2.  The writ of certiorari is dismissed as improvidently granted.  The Ninth Circuit opinion stands.

Now here’s my question.  Can a concurring opinion that does the latter count as a “controlling opinion” of the Court for purposes of ascertaining the holding?  I guess it does, though arguably it does not because it is not really an opinion at all.  Any precedent on that?

4

Supreme Court Appellate Jurisdiction over Facts

Here’s a question.  Article III, Section Two of the Constitution states that “the Supreme Court shall have appellate jurisdiction, both as to law and fact . . . .” The power of factual review was given largely because in maritime cases factual disputes were often critical and resolved on appeal (at least that’s what people said in the 1780s).

What I’m wondering is when was the last time the Justices formally reversed or vacated an opinion because its factual findings were clearly erroneous?  This probably happened with some regularity before certiorari jurisdiction was firmly established in the 1920s, but I’m not sure.  Any thoughts?

1

The Securities Class Action, Not So Special?

In a 6-3 decision authored by Justice Ginsburg (who taught and wrote about civil procedure as a professor at Columbia Law School), the Supreme Court held last week that plaintiffs in securities fraud class actions do not have to prove materiality at the class certification stage.  A class of plaintiff shareholders (Connecticut Retirement Funds) alleged that Amgen and its executives misled investors about the safety and efficacy of two drugs in violation of Section 10(b) and Rule 10b-5. One of the alleged material misstatements involved the company’s public statement that the FDA would not be addressing one of its drug’s safety at a particular meeting when in fact it was.  Plaintiff’s class action asserted the fraud-on-the-market theory, which creates a rebuttable presumption that securities purchasers relied on publicly available information in purchasing stock in an efficient market.  During class certification, Amgen argued that Rule 23(b)(3) required that plaintiffs needed to do more than plausibly plead that a misrepresentation materially affected the stock price.  Amgen insisted that plaintiff needed to prove materiality to ensure that the questions of law or fact common to the class will “predominate over any questions affecting only individual members.”  Both the district court and the Ninth Circuit Court of Appeals rejected Amgen’s argument.

The Supreme Court affirmed the Court of Appeal’s judgment, holding that proof of materiality is not a prerequisite to class certification in securities fraud cases.  The majority noted that Rule 23(b)(3) “requires a showing that questions common to the class predominate, not that those questions will be answered, on the merits, in favor the class.”  The Court held that plaintiffs need not prove materiality to ensure that questions of law or fact common to the class will predominate for two reasons. The first related to the objective nature of the materiality question.  As Justice Ginsburg explained, because materiality is judged according to an objective standard, it can be proved through evidence common to the class.  Thus, materiality is a “common question for purposes of Rule 23(b)(3).”  For the second, the Court reasoned that failure of proof on the common question of materiality posed no risk that individual questions will predominate. Quite the contrary, explained Justice Ginsburg.  Because materiality is an essential element of a 10b-5 claim, a failure of proof on this claim will “end the case for one and all.”  The Court determined that to make the plaintiffs prove materiality at the certification stage would effectively be “putting the cart before the horse.”  The Court noted,

Although we have cautioned that a court’s class-certification analysis must be “rigorous” and may “entail some overlap with the merits of the plaintiff’s underlying claim,” Wal-Mart Stores, Inc. v. Dukes, 564 U. S. ___, ___ (2011) (slip op., at 10) (internal quotation marks omitted), Rule 23 grants courts no license to engage in free-ranging merits inquiries at the certification stage. Merits questions may be considered to the extent—but only to the extent—that they are relevant to determining whether the Rule 23 prerequisites for class certification are satisfied. See id., at ___, n. 6 (slip op., at 10, n. 6) (a district court has no “‘authority to conduct a preliminary inquiry into the merits of a suit’” at class certification unless it is necessary “to determine the propriety of certi­ fication”); Advisory Committee’s 2003 Note on subd. (c)(1) of Fed. Rule Civ. Proc. 23, 28 U. S. C. App., p. 144 (“[A]n evaluation of the probable outcome on the merits is not properly part of the certification decision.”).

Amgen suggests that securities fraud class actions are not special vis-a-vis other kinds of classes.  It does not appear that they have additional prerequisites than what is already required in certifying other types of class actions.  To be sure, securities fraud class action are special but in the way that Congress required in the Private Securities Litigation Reform Act with its heightened pleading requirements, limits on damages, mandatory sanctions for frivolous litigation, etc.  In citing Professor Richard Nagreda’s NYU Law Review piece on aggregate litigation (which Justice Scalia relied on in Walmart to flesh out commonality of 23(a)(2)), Justice Ginsburg seemed to reminding us, as she did in the dissent in Walmart, that Professor Nagreda’s point about common injuries and common reasons for them pertained to Rule 23(b)(3), as in Amgen, not the commonality question of 23(a) (as the Walmart majority invoked it for its finding).  I’m not sure if Amgen signals a ratcheting back of the common question/common answer inquiry in 23(a)(2), but it may be worth watching and waiting.

4

Why Is Privatized Procedure So Rare?

For some time, I’ve been mulling over how closely parties can tailor the rules of civil procedure to their own purposes. That is: can parties write enforceable contract terms which state that if they sue each other, the ordinary procedural rules won’t apply? Do such contracts exist? For example, parties might contract to be able to take 5 depositions in a case instead of the default 10. Or they might dispose of the rules of hearsay.  The literature on this topic of private procedure arguably started with the Scott/Triantis piece, Anticipating Litigation in Contract Design, and has gotten new momentum from Bone, Kapeliuk/Klement, Dodge, and Drahozal/Rutledge. My contribution, freshly up on SSRN, ended up being slightly more empirical than I’d expected — though I guess this won’t surprise any of our long-time readers.  In Why Is Privatized Procedure So Rare?, I try to explain why there is actually so little private procedure in places we’d expect to see it:

“Increasingly we hear that civil procedure lurks in the shadow of private law. Scholars suggest that the civil rules are mere defaults, applying if the parties fail to contract around them. When judges confront terms modifying court procedures — a trend said to be explosive — they seem all-too-willing to surrender to the inevitable logic of private and efficient private ordering.

How concerned should we be? This Article casts a wide net to find examples of private contracts governing procedure, and finds a decided absence of evidence. I search a large database of agreements entered into by public firms, and a hand-coded set of credit card contracts. In both databases, clauses that craft private procedural rules are rare. This is a surprising finding given recent claims about the prevalence of these clauses, and the economic logic which makes them so compelling.

A developing literature about contract innovation helps to explain this puzzle. Parties are not rationally ignorant of the possibility of privatized procedure, nor are they simply afraid that such terms are unenforceable. Rather, evolution in the market for private procedure, like innovation in contracting generally, is subject to a familiar cycle of product innovation. Further developments in this field will not be linear, uniform and progressive; they will be punctuated, particularized and contingent.”

Download it here. I’d love your comments. It’s out in the scrum, but I’m intending to continue to revise it as data continues to come in.