Missouri Deceptive Trade Practices Statute Protects Nonresidents From Missouri Misconduct

Various states have grappled with the question of whether their deceptive trade practices statutes can be applied to nonresidents, such as through certification of a nationwide class. The intermediate appellate court of Missouri recently held that the state’s Merchandising Practices Act expressly anticipated protection of victims of deceptive trade practices, regardless of residence, if the trade or commerce occurred in or from the state of Missouri. State ex rel. Nixon v. Estes, 108 S.W.3d 795 (Mo. Ct. App. (W. Dist.), June 30, 2003). The court distinguished cases considering the broader question of whether a state constitutionally could “project its legislation into other states” because (1) Missouri’s statutory language was unique, and (2) under the facts of this case there was no doubt that the defendant victimized consumers through a business originating trade or commerce from Missouri.


Supreme Court Declines to Hear Commercial Speech Case After All

The Supreme Court has declined to decide a closely-watched dispute involving free speech rights in the commercial context, although it had granted the writ of certiorari. Nike v. Kasky, 539 U.S. 654 (June 26, 2003). Plaintiff sued Nike under California’s Unfair Competition Law and False Advertising law, claiming that Nike’s public statements in response to criticism of its treatment of workers at factories abroad were false and were made to maintain or increase sales. The U.S. Supreme Court granted certiorari to consider the extent to which commercial speech is protected under the First Amendment, received briefing on the merits (including 31 amicus briefs) and heard oral argument, but then declined to decide the case. Three Justices supplied reasons, while three Justices dissented.


Use Of Incorrect ZIP Code Destroys Presumption Of Proper Service By Mail

The Ninth Circuit has concluded that service of a hearing notice was never made because the serving party used an incorrect ZIP code. Busquets-Ivars v. Ashcroft, 333 F.3d 1008 (9th Cir. June 24, 2003). The sender used certified mail with return receipt service, but could not produce a receipt. Relying on a Supreme Court case from 1884, the court noted that mail is presumed to have been delivered if properly addressed, but it found that use of the wrong ZIP code rendered the notice improperly addressed. The dissent argued that “a plethora of cases” hold that error in a ZIP code does not render an address insufficient for delivery.

Bankruptcy Filing Extends Time For Filing Notice Of Appeal

A motions panel of the Second Circuit has denied a motion to dismiss as untimely an appeal that a debtor filed more than 30 days after the entry of judgment. In Local Union No. 38 v. Custom Air Sys., Inc., 333 F.3d 345 (2d Cir. June 24, 2003), the Second Circuit adopted the reasoning of the only other appellate decision on point, Autoskill, Inc. v. National Educ. Support Sys., Inc., 994 F.2d 1476 (10th Cir. 1993). The court held that if a party wishing to appeal from an adverse judgment files for bankruptcy before the 30-day period under Fed.R.App.P. 4(a) expires, Bankruptcy Code §108(b) gives the trustee or debtor in possession an additional 60 days in which to file the notice of appeal.

No Federal Diversity Jurisdiction Exists Over Complaint For Equitable Relief If Value Of Relief Sought Cannot Be Determined

A federal complaint invoking diversity jurisdiction under 28 U.S.C. §1332 must concern an amount in controversy exceeding $75,000. If the only remedy sought is equitable relief, the plaintiff must make a good faith estimate of the value of the relief sought – which can be difficult to do at times. As recently observed in Macken v. Jensen, 333 F.3d 797 (7th Cir. June 24, 2003), a plaintiff who is unable to value that relief at all must commence the case in state court. According to the court, a plaintiff is not permitted to file in federal court and then place the burden on the defendant of demonstrating that $75,000 or less is at stake; rather, Fed.R.Civ.P. 11(b)(3) requires plaintiff to establish sufficient support for federal diversity jurisdiction before filing in federal court.


U.S. Supreme Court Reaffirms Doctrine of Foreign Affairs Preemption

In American Ins. Assn. v. Garamendi, 539 U.S. 396 (June 23, 2003), the U.S. Supreme Court reaffirmed the doctrine of “foreign affairs preemption,” invalidating a California statute that required insurance companies to disclose Holocaust-related information. Congress can preempt state law by enacting laws with which state legislative action is in conflict (i.e., “conflict preemption”), or by so fully occupying a particular field of rulemaking that there can be no room for state legislation (i.e., “field preemption”). Here, the Court primarily relied on conflict preemption to find that the state law was in conflict with foreign agreements the President had made. While the Court, therefore, did not reach the field preemption issue, it relied heavily on precedents holding that the Constitution entrusts “the field of foreign affairs” to the President and Congress. The decision implicates similar statutes and pending bills in at least eight other states.


Ninth Circuit Establishes Procedures For Obtaining Access To Documents Under Protective Order In A Different Case

Defendants often request blanket protective orders in an attempt to limit the use of discovery to a particular case, and many plaintiffs will agree merely to facilitate discovery. However, in Foltz v. State Farm Mut. Auto. Ins. Co., 331 F.3d 1122 (9th Cir. June 18, 2003), the court allowed plaintiffs in a different case to obtain access to protected documents. In a thorough analysis of the relevant issues, the court established procedures for handling requests to obtain (a) sealed filings, and (b) discovery designated confidential but not filed in court. In both situations, the court that entered the protective order must weigh the relevance of the documents sought against the producers’ reliance interest and the policy interest of avoiding duplicative discovery. If that court permits access, the court handling the collateral litigation becomes responsible for resolving specific disputes over the discoverability of particular documents. There is a presumption of access to documents filed under seal in support of dispositive motions only, for which “compelling reasons” must be shown to maintain the seal.


Seventh Circuit Clarifies Standards For Dismissal As A Discovery Sanction

In Maynard v. Nygren, 332 F.3d 462 (7th Cir. June 10, 2003), the Seventh Circuit considered an appeal from the entry of dismissal as a sanction under Fed.R.Civ.P. 37(c). Reconciling earlier cases, the court clarified that dismissal based on discovery misconduct requires a finding of willfulness, bad faith or fault, and an express determination that lesser sanctions would not suffice. The court distinguished dismissal under Rule 37(c) from dismissal for want of prosecution or for failure to comply with court orders (see Rule 41(b)), which require a record of delay, contumacious conduct or failure of prior sanctions. While the bases for all of these dismissals differ, Maynard established that “clear and convincing” evidence is required now across the board.


Federal Appellate Panel Must Be Composed Of Article III Judges

In Nguyen v. United States, 539 U.S. 69 (June 9, 2003), the U.S. Supreme Court invalidated an appeal where the panel included a judge from the U.S. District Court for the Northern Mariana Islands. Non-Article III judges are not authorized panelists under 28 U.S.C. § 292(a), which permits district judges to sit by designation. Petitioner raised this argument for the first time in his certiorari petition, but that was not too late to attack jurisdiction.


Complete Preemption Allows Removal Of State Usury Claim

A defense based on federal law ordinarily is not a sufficient basis to remove a case to federal court under 28 U.S.C. § 1441. The U.S. Supreme Court, however, clarified that an exception exists for cases in which a federal statute wholly displaces the state-law cause of action through complete pre-emption. Resolving a split between the Eighth and Eleventh circuits, the Court in Beneficial Nat’l Bank v. Anderson, 539 U.S. 1 (June 2, 2003), held that a state usury case brought against a national bank could be removed because the National Bank Act provides the exclusive cause of action for such claims.