Federal Government Is A “Person” Amenable To Service Of A Rule 45 Subpoena

The Court of Appeals for the District of Columbia Circuit has rejected the assertion by the federal government that it is not subject to Rule 45 because it is not a “person.”

In Yousuf v. Samantar, No. 05-5197, 2006 WL 1651050 (D.C. Cir. June 16, 2006), plaintiffs served a third-party subpoena on the State Department seeking certain documents relevant to their tort claims against another individual. The government objected that Rule 45(a)(1)(C) authorizes service of a subpoena only upon a “person” and that it was not within the scope of that word as used in the rules.

After an exhaustive analysis of the government’s statutory construction arguments, the court held that litigants indeed may serve third-party subpoenas upon the government because the framers of the rules intended the term “person” to include non-natural persons including the U.S. government.

Administrative Closure Not Final Disposition Allowing Appeal

Appellate courts sometimes get very technical about the finality requirement for appeals.

In CitiFinancial Corp. v. Harrison, No. 04-60979, 2006 WL 1644828 (5th Cir. June 15, 2006), a financial services consumer brought claims in state court concerning a contract that included an arbitration clause. CitiFinancial removed the case.

While it was pending before one judge, CitiFinancial filed its own lawsuit before another judge seeking an order to compel arbitration and to stay the first case. The court granted that motion and the judge in the original case complied, “administratively closing” the case that was now stayed.

The consumer appealed the order staying the first case and compelling arbitration. The Fifth Circuit concluded that under normal circumstances it has jurisdiction over an appeal from an order compelling arbitration because such an order essentially is final. Here, however, part of the dispute was still ongoing in the original court. The Fifth Circuit ruled that the “administrative closure” did not count as ending the case, because such closures merely stay the case while removing the case from the court’s active docket for statistical purposes, without permanent dismissal.

Federal Arbitration Act Does Not Authorize Nationwide Service Of Process.

In Dynegy Midstream Services, LP v. Trammochem, 451 F.3d 89 (2d Cir. June 13, 2006), several parties arbitrated a dispute before a New York panel of arbitrators. One of the parties sought to subpoena Dynegy, a Texas-based third-party, and the panel served a subpoena for documents to be produced in Houston.

After Dynegy ignored the subpoena, the interested party successfully moved to compel compliance with the subpoena in New York federal court, and Dynegy appealed.

The Second Circuit held that the Federal Arbitration Act does not authorize nationwide service of process. While it empowers arbitrators to “summon in writing any person to attend before them” and to bring documents, it also requires that service of such a summons be made in the same manner as a Rule 45 subpoena. In this case, the New York panel could not have served the Houston company under the geographic limitations of Rule 45, and the district court lacked personal jurisdiction.

Appellate Court Affirming Jury Verdict Still Must State Reasoning

The Texas Supreme Court has remanded an appeal for preparation of a more informative opinion.

In Gonzalez v. McAllen Medical Center, Inc., No. 03-0939, 2006 WL 1562847 (Tex. June 9, 2006), a jury rejected the claims of medical negligence plaintiffs. On appeal, the court affirmed the verdict and disagreed with plaintiffs’ argument about the sufficiency of the evidence. However, its rejection of that argument in a single sentence that the evidence was sufficient without stating any reasons why.

In Texas, an appellate court reversing a jury verdict on sufficiency grounds must detail the evidence and clearly state why the jury’s findings were factually insufficient. Even though in affirming a verdict a much lower level of detail is needed, the Supreme Court held that the court still must provide the “basic reasons” for the decision, and not merely recite that the evidence was sufficient.

U.S. Supreme Court Holds No Private RICO Action Available For Tax Underpayment

The U.S. Supreme Court has limited the reach of the Racketeer Influenced and Corrupt Organizations Act in certain private disputes.

In Anza v. Ideal Steel Supply Corp., 126 S. Ct. 1991 (June 5, 2006), a steel supplier brought RICO claims against a competitor that it alleged had unfairly obtained market share by not charging its customers a state tax that plaintiff did charge, thereby undercutting plaintiff’s prices.

Reversing the Second Circuit, the Supreme Court held that a RICO plaintiff must allege some direct relation between the injury alleged and the injurious conduct at issue, and that here the direct victim of the tax fraud was the State of New York. The court rejected the claim here as too attenuated to satisfy the fundamental proximate cause requirement.