Under Fed. R. Civ. P. 25(a), if a party dies and the claim is of a type that survives, the relevant party must file a motion for substitution within 90 days. Russell v. City of Milwaukee, 338 F.3d 662 (7th Cir. July 28, 2003), illustrates that, although a district court has the discretion to allow a late filing, it will not be reversed for enforcing the Rule and dismissing the case instead. The Seventh Circuit was not persuaded by plaintiff’s argument that the clock did not start to run because notice of death was served on him but never filed with the court.
As reported in an earlier post, the Southern District of New York recently developed an approach to determining who should pay the costs for restoring otherwise unavailable electronic documents. Zubulake v. UBS Warburg, 217 F.R.D. 309 (S.D.N.Y. May 13, 2003). Since then, defendant restored a sampling of e-mail backup tapes, and based on that sample plaintiff demanded that defendant pay the cost of full production. In Zubulake, 216 F.R.D. 280 (July 24, 2003), the court applied its new approach and concluded that plaintiff must pay 25% of the cost of restoration; however, once data is restored the “usual rules of discovery apply” -- defendant must pay the costs of production, such as attorneys’ review for privilege. The court suggested that defendant potentially could shift those costs by making a Rule 68 offer of judgment.
In Smith v. American General Life and Accident Ins. Co., 337 F.3d 888 (7th Cir. July 24, 2003), plaintiff alleged bad faith against an insurance company, and claimed actual damages well below $75,000. Defendant argued that plaintiff’s additional claim for $1 million in punitive damages conferred diversity jurisdiction. However, in part relying on State Farm Mut. Automobile Ins. Co. v. Campbell, 538 U.S. 408 (Apr. 7, 2003) [see my post here], the Seventh Circuit disagreed, finding that a federal court must take a "realistic look" at punitive damages when considering whether the jurisdictional amount is satisfied for removal.
In Husvar v. Rapoport, 337 F.3d 603 (6th Cir. July 23, 2003), plaintiffs brought claims in Ohio state court alleging common law breach of fiduciary duty for alleged mismanagement of their ESOP. Defendants removed the case by arguing that it implicated ERISA. The district court agreed, and subsequently granted a motion to dismiss. The Sixth Circuit found that the claims did not challenge the actions of the plan fiduciary, but rather attacked the actions of the company’s board of directors in compensating the plan fiduciary. The complaint could not be characterized as preempted by ERISA. Therefore, federal subject-matter jurisdiction was absent and the case was remanded to state court.
In Medisys Health Network, Inc. v. Local 348-S United Food & Comm’l Workers, 337 F.3d 119 (2d Cir. July 17, 2003), the Second Circuit explained that once a district court has determined that a matter removed to federal court should be remanded back to the state court, 28 U.S.C. § 1774(c) precludes federal appellate jurisdiction even if the district court erred in its determination of the facts or the law. Any such determinations are not preclusive and can be litigated again in the state court. The court rejected defendant’s claim that the “independent relevance” exception under Waco v. U.S. Fidelity & Guar. Co., 293 U.S. 140 (1934), applied to confer jurisdiction.
An offer of judgment under Fed. R. Civ. P. 68 requires a plaintiff to make a choice between a proposed settlement and risking continued litigation with the possible addition of costs. In Basha v. Mitsubishi Motor Credit of America, Inc., 336 F.3d 451 (5th Cir. July 14, 2003), the court held that the offer was too vague to allow plaintiff to make an informed decision. The faulty language stated that the offer “envisions the attorneys for the parties agreeing upon reasonable compensation for Plaintiff’s claimed ‘actual damages,’ and that said amount is added to this Offer of Judgment.”
The Third Circuit has reversed a district court’s amendment of an injunction bond to almost 20 times the original amount after the defendants’ costs of compliance appeared to escalate. In Sprint Communications Company L.P. v. CAT Communications Int’l Inc., 335 F.3d 235 (3rd Cir. July 11, 2003), the court held that an injunction bond constitutes the “price” to the movant of an injunction and limits its total exposure in the event the injunction is found to have been wrongfully entered. The court sets the amount after hearing evidence of the harm that the injunction will cause to the non-movant. Retroactive increases impermissibly alter the bargain after the fact.
The Ninth Circuit has issued an en banc decision clarifying the circumstances under which an appellate panel may reexamine normally controlling circuit precedent in the face of an intervening U.S. Supreme Court decision, or a decision on controlling state law by a state court of last resort. In Miller v. Gammie, 335 F.3d 889 (9th Cir. July 9, 2003), the court held that where the reasoning or theory of prior circuit authority is clearly irreconcilable with the reasoning or theory of intervening higher authority, a three-judge panel should consider itself bound by the later and controlling authority, and should reject the prior circuit opinion as having been effectively overruled.