Category: Civil Procedure


Stanford Law Review, 64.1 (2012)

Stanford Law Review

Volume 64 • Issue 1 • January 2012

The Right Not to Keep or Bear Arms
Joseph Blocher
64 Stan. L. Rev. 1

The Ghost That Slayed the Mandate
Kevin C. Walsh
64 Stan. L. Rev. 55

State Sovereign Standing:
Often Overlooked, but Not Forgotten

Kenneth T. Cuccinelli, II, E. Duncan Getchell, Jr.
& Wesley G. Russell, Jr.
64 Stan. L. Rev. 89

Establishing Official Islam?
The Law and Strategy of Counter-Radicalization

Samuel J. Rascoff
64 Stan. L. Rev. 125

Lobbying, Rent-Seeking, and the Constitution
Richard L. Hasen
64 Stan. L. Rev. 191

Bringing a Judicial Takings Claim
Josh Patashnik
64 Stan. L. Rev. 255


Levitt v. Yelp: Why Twombly/Iqbal Are Regrettable

I’m just at the start of my pleadings journey with my Civil Procedure II students, which has got me reading lots of terrific scholarship on the regrettable impact of Twombly and Iqbal.  Federal district court Judge Chen’s recent dismissal of the third amended complaint in Levitt v. Yelp, 2011 WL 5079526, seems a perfect example of why Twombly and Iqbal’s insistence upon factual plausibility before discovery transforms FRCP 12(b)(6) motions into something far different from sussing out “fair notice” and more like summary judgment as Suja Thomas astutely suggests.  (Scott Dodson and Adam Steinman also have insightful pieces on Twombly and Iqbal — New Pleading, New Discovery” and “The Pleading Problem,” respectively).

Let me first tell you a bit about the Levitt suit against Yelp.  Plaintiffs, two subclasses of business owners, alleged that Yelp unlawfully manipulated its business review pages to induce them to pay for advertising in violation of California’s civil extortion statute.  In a previous ruling, the court dismissed the complaint with leave to amend because it lacked factual allegations from which a threat might be plausibly inferred.  The Third Amended Complaint (TAC) added allegations concerning Yelp’s dealing with plaintiff Wheel Techniques (WT) in late 2008 and early 2009.  According to the TAC, soon after WT noticed negative reviews on its Yelp page that did not correspond with its actual customers, it received calls from Yelp representatives seeking advertisements.  Plaintiffs alleged that Yelp created false reviews to induce WT to advertise with it and that “200 Yelp employees or individuals acting on their behalf have written reviews of businesses on Yelp.” Plaintiffs alleged that when Wheel Techniques contacted Yelp to ask why a competitor had a high rating on Yelp, the Yelp representative told him the competitor advertised and “we work with your reviews if you advertise with us.” Id. ¶ 78. On March 8, 2010, Wheel Techniques was again contacted to purchase advertising. Upon declining, Plaintiffs allege that a 1–star review was moved to the top of the business page “within minutes” as a threat to induce Wheel Techniques to advertise. Id. ¶¶ 79–81. Plaintiffs allege that Wheel Techniques owner John Mercurio was told several Yelp employees had been fired and computers had been frozen “as a result of scamming related to advertising.” Id. ¶ 82.

The district court ran through the Twombly-Iqbal standard, with a few tweaks.  It explained that a complaint may be dismissed for failure to state a claim if it lacks a cognizable legal theory or sufficient facts alleged under a cognizable legal theory.  Citing Twombly, the court noted that a motion to dismiss should be granted if a plaintiff fails to plead “enough facts to state a claim to relief that is plausible on its face.” “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.”  The court stated that “allegations of material fact are taken as true and construed in the light most favorable to the non-moving party.”  (The “construed in the light most favorable” to the non-movant language was absent in Iqbal).  Citing Iqbal, the court said that: it “need not, however, accept as true pleadings that are no more than legal conclusions or the ‘formulaic recitation of the elements’ of a cause of action.   Determining whether a complaint states a plausible claim for relief … [is] a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.”  The court dismissed the complaint for failure to state a claim.  Here’s the court’s explanation:

The TAC, like the SAC, fails to allege facts sufficient to support a conclusion that Yelp created any content. Plaintiffs have added an allegation that “approximately 200 Yelp employees or individuals acting on behalf of Yelp have written reviews of businesses on Yelp,” TAC 37, and that “Yelp has paid users to write reviews,” id. ¶ 38. Despite these allegations, however, it remains “entirely speculative that Yelp manufactures its own negative reviews or deliberately manipulates reviews to the detriment of businesses who refuse to purchase advertising,” and “[t]he [TAC] provides no basis from which to infer that Yelp authored or manipulated the content of the negative reviews complained of by plaintiffs,” Order Dismissing SAC at 17.  That Yelp employees have written reviews, even for pay, does not raise more than a mere possibility that Yelp has authored or manipulated content related to Plaintiffs in furtherance of an attempt to “extort” advertising revenues. See Iqbal, 129 S.Ct. at 1950 (“[W]here the well-pleaded facts do not permit the court to infer more than the mere possibility of misconduct, the complaint has alleged-but it has not ‘show[n]’-‘that the pleader is entitled to relief.’ ”) (quoting Fed.R.Civ.P. 8(a)(2)). Similarly, that Wheel Techniques noticed negative reviews of its business that did not match its customer records does not support the logical leap that Yelp created those reviews. See TAC ¶¶ 74–75. Nor does an allegation that Mr. Mercurio (Wheel Techniques’ owner) “was told” by an unnamed source “that a former Yelp employee stated that Yelp, upon information and belief, terminated a group of sales employees … as a result of scamming related to advertising” and that “the computers of sales employees were, at one point, frozen to prohibit employees from being able to change reviews” raise more than a speculative possibility that Yelp employees created or substantively manipulated the content of Plaintiffs’ reviews in this case. See TAC ¶ 82. “Scamming related to advertising” could have referred to a host of practices not involving manufacturing of false reviews.

Despite the court’s claim that it would draw all inferences in plaintiffs’ favor, it seemed to do the opposite.  The plaintiffs provided a factually plausible account of extortion: that Yelp employees write reviews; that after WT notice negative reviews that did not accord with its customer records, a Yelp representative called seeking advertising; that a Yelp employee told WT that it works with customers that advertise with it; that as soon as WT refused Yelp’s advertising solicitation, a one-star rating appeared at the top of its Yelp page; and that WT’s owner learned that Yelp employees had been fired due to scamming related to advertising.  Nonetheless, the court reads the allegations seemingly in the light most favorable to defendant movant, reasoning that scamming related to advertising could have referred to a host of practices not involving false reviews and that even if Yelp hired people to write reviews it does not raise more than a mere possibility that it manipulated content regarding WT to extort advertising revenues.  The court seemingly ignores the allegations related to the solicitation calls and the subsequent negative review appearing on WT’s page after it declined Yelp’s second advertising solicitation.  It’s difficult to imagine what more plaintiffs could have alleged at this stage in the game.  Taking a cue from Scott Dodson’s article “New Pleading, New Discovery,” plaintiffs need discovery to figure out if Yelp employees did what the circumstances suggest–manipulate reviews to bully WT and other plaintiffs into buying advertising.  In the end, Suja Thomas has it right.  This whole endeavor sounds a lot more like a summary judgment motion than a motion to dismiss.


Censorship on the March

Today, you can’t get to The Oatmeal, or Dinosaur Comics, or XKCD, or (less importantly) Wikipedia. The sites have gone dark to protest the Stop Online Piracy Act (SOPA) and the PROTECT IP Act, America’s attempt to censor the Internet to reduce copyright infringement. This is part of a remarkable, distributed, coordinated protest effort, both online and in realspace (I saw my colleague and friend Jonathan Askin headed to protest outside the offices of Senators Charles Schumer and Kirstin Gillibrand). Many of the protesters argue that America is headed in the direction of authoritarian states such as China, Iran, and Bahrain in censoring the Net. The problem, though, is that America is not alone: most Western democracies are censoring the Internet. Britain does it for child pornography. France: hate speech. The EU is debating a proposal to allow “flagging” of objectionable content for ISPs to ban. Australia’s ISPs are engaging in pre-emptive censorship to prevent even worse legislation from passing. India wants Facebook, Google, and other online platforms to remove any content the government finds problematic.

Censorship is on the march, in democracies as well as dictatorships. With this movement we see, finally, the death of the American myth of free speech exceptionalism. We have viewed ourselves as qualitatively different – as defenders of unfettered expression. We are not. Even without SOPA and PROTECT IP, we are seizing domain names, filtering municipal wi-fi, and using funding to leverage colleges and universities to filter P2P. The reasons for American Internet censorship differ from those of France, South Korea, or China. The mechanism of restriction does not. It is time for us to be honest: America, too, censors. I think we can, and should, defend the legitimacy of our restrictions – the fight on-line and in Congress and in the media shows how we differ from China – but we need to stop pretending there is an easy line to be drawn between blocking human rights sites and blocking Rojadirecta or Dajaz1.

Cross-posted at Info/Law.


Walker v. City of Birmingham

On tap today in civil procedure: the dispiriting Walker case, in which Justice Stewart holds that the collateral bar rule trumps the First Amendment.  It’s a terrific case to teach early in the semester, and scheduling it immediately after MLK Monday can be especially gripping.  In Duncan Kennedy’s framing (from  The Reproduction of Hierarchy), Walker is a hot, hot case, which makes students quite angry, but leaves them ultimately unsure on how to channel that anger in a legally appropriate manner.  Shouldn’t MLK and the ministers have petitioned the court even though it was futile?  Isn’t Justice Stewart sort of right that such general rules can’t abide small exceptions, lest we fail to “pay for the civilizing hand of law”?  Surely there’s an argument that courts, who lack armies, require special solicitude which the executive and legislative branches don’t.

Well, I’m not so sure about the merits of those arguments, but I recognize what effect they are likely to have on 1Ls. As Kennedy wrote:

“Most students can’t fight the combination of cold cases and hot cases. The cold cases are boring, but you have to do them if you want to be a lawyer.  The hot cases cry out for response, seem to say that if you can’t respond you’ve already sold out, but the system tells you to put away childish things, and your reaction to the hot cases is one of them.  Without any intellectual resources, in the way of knowledge of the legal system and of the character of legal reasoning, it will appear that emoting will only isolate and incapacitate you.”


The Fight For Internet Censorship

Thanks to Danielle and the CoOp crew for having me! I’m excited.

Speaking of exciting developments, it appears that the Stop Online Piracy Act (SOPA) is dead, at least for now. House Majority Leader Eric Cantor has said that the bill will not move forward until there is a consensus position on it, which is to say, never. Media sources credit the Obama administration’s opposition to some of the more noxious parts of SOPA, such as its DNSSEC-killing filtering provisions, and also the tech community’s efforts to raise awareness. (Techdirt’s Mike Masnick has been working overtime in reporting on SOPA; Wikipedia and Reddit are adopting a blackout to draw attention; even the New York City techies are holding a demonstration in front of the offices of Senators Kirstin Gillibrand and Charles Schumer. Schumer has been bailing water on the SOPA front after one of his staffers told a local entrepreneur that the senator supports Internet censorship. Props for candor.) I think the Obama administration’s lack of enthusiasm for the bill is important, but I suspect that a crowded legislative calendar is also playing a significant role.

Of course, the PROTECT IP Act is still floating around the Senate. It’s less worse than SOPA, in the same way that Transformers 2 is less worse than Transformers 3. (You still might want to see what else Netflix has available.) And sponsor Senator Patrick Leahy has suggested that the DNS filtering provisions of the bill be studied – after the legislation is passed. It’s much more efficient, legislatively, to regulate first and then see if it will be effective. A more cynical view is that Senator Leahy’s move is a public relations tactic designed to undercut the opposition, but no one wants to say so to his face.

I am not opposed to Internet censorship in all situations, which means I am often lonely at tech-related events. But these bills have significant flaws. They threaten to badly weaken cybersecurity, an area that is purportedly a national priority (and has been for 15 years). They claim to address a major threat to IP rightsholders despite the complete lack of data that the threat is anything other than chimerical. They provide scant procedural protections for accused infringers, and confer extraordinary power on private rightsholders – power that will, inevitably, be abused. And they reflect a significant public choice imbalance in how IP and Internet policy is made in the United States.

Surprisingly, the Obama administration has it about right: we shouldn’t reject Internet censorship as a regulatory mechanism out of hand, but we should be wary of it. This isn’t the last stage of this debate – like Wesley in The Princess Bride, SOPA-like legislation is only mostly dead. (And, if you don’t like the Obama administration’s position today, just wait a day or two.)

Cross-posted at Info/Law.


Assessing Twiqbal

Several months ago, the FJC put out a well-publicized study assessing the results of TwomblyIqbal on motions practice.  It concluded that there was little reason, overall, for concern that the Supreme Court’s new pleadings jurisprudence had worked a revolutionary change down below.  Lonny Hoffman (Houston) has just released an important new paper which questions the methods and conclusions of the FJC’s work.  He pulls no punches:

“This paper provides the first comprehensive assessment of the Federal Judicial Center’s long-anticipated study of motions to dismiss for failure to state a claim after Iqbal v. Ashcroft. Three primary assessments are made of the FJC’s study. First, there are reasons to be concerned that the study may be providing an incomplete picture of actual Rule 12(b)(6) activity. Even if the failure to capture all relevant motion activity was a non-biased error, the inclusiveness problem is consequential. Because the study was designed to compare over time the filing and grant rate of Rule 12(b)(6) motions, the size of the effect of the Court’s cases turns on the amount of activity found. Second, even if concerns are set aside that the collected data may be incomplete, it misreads of the FJC’s findings to conclude that the Court’s decisions are having no effect on dismissal practice. The FJC found that after Iqbal, a plaintiff is twice as likely to face a motion to dismiss. This sizeable increase in rate of Rule 12(b)(6) motion activity represents a marked departure from the steady filing rate observed over the last several decades and means, among other consequences, added costs for plaintiffs who have to defend more frequently against these motions. The data regarding orders resolving dismissal motions even more dramatically shows the consequential impacts of the Court’s cases. There were more orders granting dismissal with and without leave to amend, and for every case category examined. Moreover, the data show that after Iqbal it was much more likely that a motion to dismiss would be granted with leave to amend (as compared to being denied) both overall and in the three largest case categories examined (Civil Rights, Financial Instruments and Other). Employment Discrimination, Contract and Torts all show a trend of increasing grant rates. In sum, in every case type studied there was a higher likelihood after Iqbal that a motion to dismiss would be granted. Third, because of inherent limitations in doing empirical work of this nature, the cases may be having effects that the FJC researchers were unable to detect. Comparing how many motions were filed and granted pre-Twombly to post-Iqbal cannot tell us whether the Court’s cases are deterring some claims from being brought, whether they have increased dismissals of complaints on factual sufficiency grounds, or how many meritorious cases have been dismissed as a result of the Court’s stricter pleading filter. Ultimately, perhaps the most important lesson to take away from this last assessment of the FJC’s report is that empirical study cannot resolve all of the policy questions that Twombly and Iqbal raise.”

I should disclose that I provided Lonny comments on an earlier draft, and overall I think he’s done an incredible (and generally very fair) job.  One thing to think about, as always when evaluating litigation data, is the degree to which we would expect to see any results at all given case selection effects.  That Lonny does observe such substantively significant changes notwithstanding selection tells us something about how dramatic the Twiqbal decisions really were.


Same-Sex Couples and Divorce

Later this month, New York will join six other jurisdictions in permitting same-sex couples to marry. The other six jurisdictions are Connecticut, Iowa, Massachusetts, New Hampshire, Vermont, and the District of Columbia. When the marriages begin, same-sex couples from all over the United States will be able to marryin New York, because New York (like the other jurisdictions listed above) has no residency requirement for marriage.

As a recent article in the NYTimes describes, however, many of the estimated 80,000 married same-sex couples are finding it difficult to divorce if and when the need arises. As I explain in forthcoming article in the Boston University Law Review, this difficulty is “the result of the confluence of two factors.” First, many same-sex couples are unable to get divorced in their home states because they live in states with statutory and/or constitutional provisions stating that the jurisdiction will not recognize marriages between two people of the same sex. Second, they may be unable to divorce somewhere other than their home state because “it is widely understood that for a court to have the power to grant a divorce, one of the spouses must be domiciled in the forum[.]”

Being unable to get divorced is not simply a theoretical problem. During the time in which the parties remain married (despite their efforts to the contrary), the parties continue to accrue rights and responsibilities vis-à-vis each other. They may, for example, continue to accrue rights to marital property and obligations for debt incurred during the continued relationship.

My Article, Modernizing Divorce Jurisdiction: Same-Sex Couples and Minimum Contacts, considers why this anomalous jurisdictional rule arose in the first instance, why it has persisted over time, and whether it can be squared with contemporary principles of personal jurisdiction. Previously, divorce jurisdiction and the domicile rule were subjects of significant interest to the courts and to legal scholars. Likely to the surprise of many today, the Supreme Court decided a number of cases involving these issues in the middle of the last century. More recently, however, (with a few notable exceptions) there has been little contemporary judicial or scholarly engagement with the issue. Instead, the domicile rule is generally accepted today as an example of family law exceptionalism.

In my piece, I resist the myth of family law exceptionalism by critically considering whether the domicile rule can be reconciled with general principles of state court jurisdiction. Ultimately, as others including Rhonda Wasserman have done, I argue that the domicile rule should be abandoned. Instead, actions to terminate a marriage should be governed by the usual rules of personal jurisdiction. While this change alone would help many of the “wedlocked” same-sex couples (to borrow an apt phrase from Mary Pat Byrn and Morgan Holcomb), some may still be stranded. Accordingly, I conclude the Article by offering a set of normative proposals to ensure that all spouses have at least one forum in which to divorce.


Pennoyer v. Neff, By God!

One of Kevin Clermont’s Cornell civil procedure students lives “about ten minutes away from where our esteemed friend Sylvester Pennoyer is buried.”  Pennoyer, as you will recall, is a party in one of the best known Supreme Court cases of all times — at least, best known by lawyers.  The student took some photos of Pennoyer’s grave, which Kevin then shared with the Civ Pro Listserv.

Pennoyer rests at “Riverview Cemetery … located just south of Portland overlooking the Willamette river.”  RIP, Sylvester.


Corporate Control in the Courtroom

Corporate litigation has long followed a predictable pattern. When a corporation announces a restatement or similar bad news, shareholders race to the courtroom, filing nearly identical complaints in multiple courts. Congress sought to halt this practice in federal securities cases through the Private Securities Litigation Reform Act, but the practice continues unabated in state law cases. The Delaware Court of Chancery has been the clear loser of this filing strategy. Empirical evidence suggests that shareholder lawsuits are leaving Delaware in droves. Defense lawyers even claim that plaintiffs now use an “Anywhere but Chancery” approach when filing state law class actions and derivative suits.

The Delaware Court of Chancery recently suggested one way for corporations to protect themselves from these practices. Last summer, Vice Chancellor Laster stated in dicta that “if boards of directors and stockholders believe that a particular forum would provide an efficient and value-promoting locus for dispute resolution,” these corporations should adopt a charter provision selecting this forum as the exclusive venue for shareholder lawsuits.  This idea was not unprecedented—a small number of companies had already included such provisions in their governing documents—but it was the first time (to my knowledge) that the concept received judicial approval.  The defense bar quickly picked up the charge, with Wachtell, Lipton, Rosen & Katz recommending to its corporate clients that they adopt a charter amendment requiring that the Delaware Court of Chancery be the “sole and exclusive forum” for any breach of fiduciary duty suit filed against the company or its officers, directors, or shareholders. A recent memorandum by Latham & Watkins reports that more than 70 companies have included these provisions in their bylaws or charters.

This development raises intriguing questions about how much control corporations should have when it comes to lawsuits filed by their shareholders. Read More