tag:blogger.com,1999:blog-56651731930555981322024-02-19T12:46:21.153-06:00Avidan Stern's Civil Procedure BlogA law-related blog tracking developments in civil procedure, including emerging trends in electronic evidence and discovery.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.comBlogger148125tag:blogger.com,1999:blog-5665173193055598132.post-88223596038017239212012-03-13T16:17:00.012-05:002012-03-14T15:06:25.935-05:00Proof of Mailing Receipts and Delivery Green Cards MatterWhen you send something through the U.S. Postal Service by certified mail, return receipt requested, you receive two bits of paperwork. One is a receipt for the certified mailing, which is stamped by the post office and shows proof of mailing. The other is a "green postcard" that is mailed back to you showing that the article you mailed was received at the other end. These are pesky little pieces of paper that can be easy to lose, but sometimes they can be very important.<br /><br /><em><a href="http://www.civprolaw.com/blog/2012-03/National_City_Mortgage_v_Hillside_Lumber.pdf" target="'_blank">National City Mortgage v. Hillside Lumber, Inc.</a></em>, 2012 IL App (2d) 101292 (Mar. 8, 2012), illustrates what can happen if you lose those bits of paper. Plaintiff lender brought a foreclosure proceeding against its borrower and joined defendant because it had recorded a mechanic's lien. However, under the Mechanics Lien Act, 770 ILCS 60/24, defendant Hillside was required to serve plaintiff with notice of its mechanics lien. The parties cross-moved for summary judgment, with plaintiff claiming defendant had never served notice of the lien, and Hillside claiming it had. Normally, one would imagine that competing stories like this would preclude the entry of summary judgment. However, that is not the case where the question is whether notice was served. The court noted that in Illinois, service of notice is an issue that can be decided as a matter of law by the judge, under the right circumstances.<br /><br />Here, the two sides provided competing affidavits that said "I never received notice," and "But I mailed it." At the hearing, the court asked whether the defendant had the receipt or the green card proving mailing or delivery, but defendant had to admit it could not produce them. Based on that, the court granted plaintiff's motion and denied defendant's motion. On appeal, the court held that the Mechanics Lien Act requires service of actual notice, and the burden was on the lienor to prove that notice was complied with. "[O]nce plaintiff asserted its lack of notice at the summary judgment stage, Hillside had to prove that plaintiff actually received notice. Hillside admitted that it could not produce documentation that it even sent notice, let alone documentation that notice was received." Therefore, the court affirmed the victory for plaintiff.<br /><br />One might ask why the affidavit that the notice was mailed was insufficient to establish a fact issue. After all, there are many situations in which documents are lost, and a sworn affidavit is used to testify to facts even in the absence of the documents. Here, however, it seems that <em>National City Bank</em> stands for the rule that if there are dueling affidavits about whether or not notice of a mechanics lien was properly given, summary judgment is still possible and there is no substitute for producing the actual proof of mailing or proof of delivery documentation.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-2351859046155160592012-03-08T15:24:00.018-06:002012-03-11T10:20:34.447-05:00Seventh Circuit Rejects Theory That State Cause of Action Is "End-Run" Around Absence of Express Private Right of ActionThe U.S. Court of Appeals for the Seventh Circuit Court has issued an important decision about the Home Affordable Mortgage Program (or "HAMP"), finding that a putative class action stated claims under various Illinois common-law and statutory theories. <a href="http://www.civprolaw.com/blog/2012-03/Wigod%20v%20Wells%20Fargo.pdf" target="_blank"><em>Wigod v. Wells Fargo Bank, N.A.</em></a>, No. 11-1423, 2012 WL 727646 (7th Cir. Mar. 7, 2012). One of the important aspects of the case is that it appears to be the first federal appellate court to address consumer claims involving HAMP. Indeed, the opinion itself says the court has identified more than 80 federal cases in which mortgagors brought HAMP-related claims. It is also important in that the court decided in favor of the plaintiffs, reversing the dismissal of a number of their claims. So it is a significant case because of its implications for a national program affecting a sector that has played a major role in the current economic situation facing our country.<br /><br />However, it is also an important decision beyond the substantive area of law involved because it puts to rest (at least in the Seventh Circuit) the concept of denying claims because they are an "end-run around the absence of a private right of action." To be sure, the concept has some surface appeal -- it is easy to imagine that when Congress enacted a new legislative scheme to right some sort of wrong, but did not expressly create a right for private parties to enforce that scheme in court, it meant that people shouldn't be able to sue at all for 'violation' of the statute. Therefore, the theory goes, a plaintiff who uses state common law or statutory causes of action to sue regarding conduct that would be a violation of the federal scheme is actually trying to achieve an impermissible "end-run" around Congressional intent. The Seventh Circuit has now firmly rejected that theory.<br /><br />In <em>Wigod</em>, Wells Fargo Bank was sued by a mortgagor for failure to provide a permanent loan modification after a four-month 'trial period' modification was successfully implemented. The mortgagor alleged, on behalf of a putative class, that this went against what she had been promised, and she filed a complaint alleging breach of contract, promissory estoppel, fraudulent misrepresentation, violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, and several other theories. The district court granted Wells Fargo's motion to dismiss, based primarily on their argument that plaintiff's allegations were an "impermissible end-run around the lack of a private action" in HAMP. On appeal, Wells Fargo continued to pursue that theory, arguing that "If Congress had intended courts to be adjudicating whether a borrower qualified for a loan modification under ... HAMP, it would have provided a private right of action -- but it chose not to do so."<br /><br />The Seventh Circuit held that "[t]he end-run theory is built on the novel assumption that where Congress does not create a private right of action for violation of a federal law, no right of action may exist under state law, either." However, that assumption has no support in the law. The court thought the concept probably arose from conflating two distinct lines of cases: (1) the law of implied private rights of action; and (2) federal preemption of state law. It distinguished the first line, observing that the issue was not about whether to imply a private right of action in HAMP because the plaintiff had not sued for violation of HAMP. The Supreme Court's trend for some time has been to avoid implying private rights of action, so it is not surprising that the Seventh Circuit observed that if this case involved whether to recognize a federal right of action under HAMP the caselaw "would certainly weigh in favor of judicial caution."<br /><br />As to the second line, the court thought that "the end-run theory lies in a doctrinal no-man's land, and its adoption would upset a century or two of preemption and arising-under jurisdicational precedents." It firmly held:<br /><br />"The absence of a private right of action from a federal<br />statute provides no reason to dismiss a claim under a state<br />law just because it refers to or incorporates some element<br />of the federal law. ... To find otherwise would require<br />adopting the novel presumption that where Congress provides<br />no remedy under federal law, state law may not afford one<br />in its stead."<br /><br />The court also observed that the Second Circuit had decided a case in favor of the "end-run theory," <a href="http://www.civprolaw.com/blog/2012-03/Grochowski.pdf" target="_blank"><em>Grochowski v. Phoenix Construction</em></a>, 318 F.3d 80 (2d Cir. 2003), but the Seventh Circuit praised the dissenting opinion that had rejected that theory. It agreed with the dissent that if a state provides a right or remedy, any plaintiff has an absolute right to invoke it, unless that law is contrary to or is preempted by federal law. Here, Wells Fargo had not been able to demonstrate from the mere absence of an express cause of action that Congress intended to preclude states from enacting one. "It seems to us that the <em>Grochowski</em> end-run theory is really just an 'end-run' around well-established preemption doctrine, and we decline to adopt it."<br /><br />The <em>Wigod</em> case promises to have a lasting impact on future cases involving statutes not incorporating express private rights of action.<br /><br />UPDATE (3/9/2012): I am quoted in a Chicago Tribune story about the <em>Wigod</em> opinion. <a href="http://trib.in/wWLeWS" target="_blank">Go to http://trib.in/wWLeWS for the story.</a><br /><a href="http://trib.in/wWLeWS" target="_blank"><img style="TEXT-ALIGN: center; MARGIN: 0px auto 10px; WIDTH: 213px; DISPLAY: block; HEIGHT: 42px; CURSOR: hand" id="BLOGGER_PHOTO_ID_5717979806450409794" border="0" alt="" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjPIWxKz7jddD95CeVXqqnIaGYIcD9zGp-GIT01JvCJuA-ZG5z2Z9-tstCfkuU-8e2SL1FjDMaZ2cfkYPYt-Z5RUXH0xI48irPazsNaAa9ZD1BAjkp-_j4zZq94etMGbHoUY9mhkFnWMnOO/s320/ChiTrib.png" /></a>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-86131253453970160732011-11-21T15:11:00.008-06:002011-11-21T15:46:33.065-06:00Counting Days for Statutes of LimitationMy understanding has long been that in counting out time for a statute of limitations, one begins with the day aftrer the triggering event. The Federal Rules of Civil Procedure tell us to do that (<a href="http://www.law.cornell.edu/rules/frcp/Rule6.htm">Fed. R. Civ. P. 6(a)(1)(A)</a>), and my state jurisdiction, Illinois, has a statute that seems to say so as well (the Statute on Statutes, <a href="http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=79&ChapterID=2">5 ILCS 70</a>). The Illinois provisions states:<br /><br />"The time within which any act provided by law is to be done shall be computed by excluding the first day and including the last, unless the last day is Saturday or Sunday or is a holiday as defined or fixed in any statute now or hereafter in force in this State, and then it shall also be excluded. If the day succeeding such Saturday, Sunday or holiday is also a holiday or a Saturday or Sunday then such succeeding day shall also be excluded." (5 ILCS 70/1.11.)<br /><br />Federal Rule 6(a)(1)(A) uses similar language, telling us to "exclude the day of the event that triggers the period".<br /><br />This seems straightforward enough. However, as Joseph R. Marconi recently wrote in an article published by ISBA Mutual (a provider of lawyers' professional liability insurance), it may not be as clear as we thought. One intermediate appellate court and one Justice of the Illinois Supreme Court have treated the issue as subject to debate, raising the possibility that a limitations period actually expires on the day <em>before</em> the anniversary date of a triggering event. See his article, "<a href="http://iln.isba.org/blog/2011/11/18/what-can-you-count-these-days">What Can You Count On These Days?</a>" for details.<br /><br />One thing is clear -- don't wait until the last day to file. While the law seems to be settled for now, even the mere possibility that the ultimate day is really the penultimate day should be enough incentive to file earlier.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-78259487710767158902011-11-02T07:45:00.007-05:002011-11-02T11:32:28.654-05:00Illinois Supreme Court Requires Redaction of Social Security Numbers in Filings Starting in 2012Pursuant to Section 40 of the <a href="http://www.ilga.gov/legislation/ilcs/ilcs3.asp?ActID=3174&ChapterID=2" target="_blank">Identity Protection Act, 5 ILCS 179/40</a>, passed in 2010 and designed to protect Social Security numbers, the Illinois Supreme Court has adopted new <a href="http://www.state.il.us/court/SupremeCourt/Rules/Art_II/ArtII.htm#138" target="_blank">Rule 138</a> requiring parties not to include Social Security numbers within any filings "unless required for a particular filing". Presumably that means you can't include a Social Security number unless there is a good reason that the number itself matters to a particular filing. Such a situation is hard to imagine because a filer generally should be able to refer to a number's existence without actually spreading the number itself of record. For example, a claim about identity theft could be drafted to satisfy pleading requirements without revealing to the world the actual Social Security number at issue. In any event, if you must include the number the rule requires that you use just the last four digits in the public filing, and accompany it with a sealed filing disclosing the full number.<br /><br />The rule does not specify how documents that the filer did not create (e.g., photocopied exhibits) that include embedded Social Security numbers should be brought into compliance. However, the wording of the rule implies that the filer should redact the document to make the number unreadable.<br /><br />Filers should take care that their redaction technique actually accomplishes the redaction, becuase sometimes when you think something has been redacted, the supposedly covered-up information is still accessible. See the Administrative Office of U.S. Courts' admonition <a href="http://www.uscourts.gov/News/TheThirdBranch/08-08-01/Out_of_Sight_But_Not_Gone.aspx" target="_blank">here</a>, and an interesting discussion of failed redaction at <a href="https://freedom-to-tinker.com/blog/tblee/studying-frequency-redaction-failures-pacer" target="_blank">this blog</a>. The National Security Agency has published some tips on ways to properly redact documents, available <a href="http://www.fas.org/sgp/othergov/dod/nsa-redact.pdf" target="_blank">here</a> and <a href="http://www.nsa.gov/ia/_files/support/I733-028R-2008.pdf" target="_blank">here</a>. Some district courts have posts about it, such as the <a href="http://www.njd.uscourts.gov/cm-ecf/RedactTips.pdf" target="_blank">District of New Jersey</a>.<br /><br />The new rule also states that the Illinois courts are not responsible for checking individual filings for compliance. In other words, a clerk is not supposed to take on the responsiblity of checking your filing to see whether you let a Social Security number slip through. The only policing mechanism is that "a party or identified person" who sees that a Social Security number has been publicly filed can move the court to order compliance, and if they prove the infraction was "willful" then they can be awarded fees and costs for bringing the motion. This rule should not spawn a cottage industry of 'file scrubbers' who troll the dockets looking for infractions because only a party to the actual case or the person whose Socual Security number was disclosed appear to have standing to file the motion.<br /><br />The new rule originally was to be effective starting November 1, 2011. However, the court has now changed the effective date to January 1, 2012.<br /><br />This rule brings the Illinois courts in line with federal courts, whose Judicial Conference began addressing this issue in 2000 (see their report <a href="http://www.privacy.uscourts.gov/Policy.htm" target="_blank">here</a>), which led to the adoption of rules such as Fed. R. Civ. P. 5.2 (effective Dec. 1, 2007) requiring redacted filings.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-6749671448021831192011-10-05T22:35:00.014-05:002012-03-09T13:35:58.817-06:00Experts in Federal PracticeToday I spoke at the annual federal civil procedure update seminar presented in Chicago by the Practising Law Institute. This year's program was entitled <a href="http://www.pli.edu/Content/CourseHandbook/Federal_Civil_Practice_Update_2011_A_Practical/_/N-4mZ1z13gd9?ID=98294" target="_blank">“Federal Civil Practice Update 2011: A Practical Guide to New Developments, Procedures & Strategies.”</a> I presented two topics relating to experts in federal practice: (1) methods of challenging an opponent’s experts, and (2) the 12/1/2010 amendments to the Federal Rules of Civil Procedure regarding expert discovery. I authored two articles that were published in the PLI Handbook for the seminar, which I am making available for download here:<br /><br /><br /><p><span style="font-size:130%;">"</span><a href="http://www.civprolaw.com/blog/2011-10/2011-10-05%20Excluding%20Expert%20Opinions%20and%20Testimony%20Under%20FRE%20702%20and%20Daubert.pdf" target="_blank"><span style="font-size:130%;">Challenging An Expert’s Opinion and Testimony</span></a><span style="font-size:130%;">"</span></p><br /><p><span style="font-size:130%;">"</span><a href="http://www.civprolaw.com/blog/2011-10/2011-10-05%202010%20Amendments%20to%20expert%20discovery%20rules.pdf" target="_blank"><span style="font-size:130%;">The 2010 Amendments to the Expert Discovery Rules</span></a><span style="font-size:130%;">"</span></p><br /><br /><p>I hope you find these materials useful.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-19513363479588246172010-08-03T11:07:00.024-05:002012-03-09T17:43:42.763-06:00Seventh Circuit Examines Pleading Requirements After Twombly/IqbalThe Seventh Circuit has issued an opinion in <em><a href="http://www.civprolaw.com/blog/2010-07/Swanson%20v%20Citibank.pdf" target="_blank">Swanson v. Citibank, N.A.</a></em>, No. 10-1122, 614 F.3d 400 (7th Cir. July 30, 2010), that explores the nature of federal civil pleading after <em>Bell Atlantic Corp. v. Twombly</em>, 500 U.S. 544 (2007), <em>Erickson v. Pardus</em>, 551 U.S. 89 (2007), and <em>Ashcroft v. Iqbal</em>, 556 U.S. 662 (2009). In an opinion by Judge Wood, joined by Judge Easterbrook, the majority evaluated the Supreme Court's new "plausibility" standard and ruled that the district court had raised the bar too high in dismissing plaintiff's complaint. In dissent, Judge Posner said that the majority's ruling was difficult to square with <em>Iqbal</em> because the plaintiff's allegations of housing discrimination were implausible.<br /><br /><em>Swanson</em> clarified the Seventh Circuit's pleading standard, and should be required reading for all practitioners with civil cases in Illinois, Indiana and Wisconsin federal courts.<br /><br />In <em>Swanson</em>, the majority held that the Supreme Court's movement away from the long-standing rule of <em>Conley v. Gibson</em>, 355 U.S. 41, 45-46 (1957), meant that it is now clear "that a plaintiff must do better than putting a few words on paper that, in the hands of an imaginative reader, might suggest that something has happened to her that might be redressed by the law." However, the "question with which courts are still struggling is how much higher the Supreme Court meant to set the bar" when it decided <em>Twombly</em>, <em>Erickson</em> and <em>Iqbal</em>. The majority framed the issue this way: "On the one hand, the Supreme Court has adopted a 'plausibility' standard, but on the other hand, it has insisted that it is not requiring fact pleading, nor is it adopting a single pleading standard to replace Rule 8, Rule 9, and specialized regimes like the one in the Private Securities Litigation Reform Act."<br /><br />The majority emphasized that Rule 8 has never been abandoned, and that the Supreme Court "was not engaged in a <em>sub rosa</em> campaign to reinstate the old fact-pleading system." This was shown by the pronouncement in <em>Erickson</em> that the short-and-plain-statement required under Rule 8 "need only give the defendant fair notice of what the . . . claim is and the grounds upon which it rests" and "[s]pecific facts are not necessary." <em>Erickson</em>, 551 U.S. at 93. It also is evident from the Court's reaffirmance of the validity of <em>Swierkiewicz v. Sorema N.A.</em>, 534 U.S. 506 (2002), cited with approval in <em>Twombly</em>, 550 U.S. at 556, under which the Court struck down attempts to impose heightened pleading requirements not listed in Fed. R. Civ. P. 9(b).<br /><br />Given the continued validity of notice pleading, the majority held that under the new requirement that a pleader "state a claim to relief that is plausible on its face" (<em>Twombly</em>, 550 U.S. at 570; <em>Iqbal</em>, 129 S. Ct. at 1949), plausibility "does not imply that the district court should decide whose version to believe, or which version is more likely than not." It set forth the Seventh Circuit's view of what the requirements now are for pleading in civil cases not governed by Fed. R. Civ. P. 9(b) or special statutory pleading requirements:<br /><br />"As we understand it, the Court is saying instead that the plaintiff must give enough details about the subject-matter of the case to present a story that holds together. In other words, the court will ask itself <em>could</em> these things have happened, not <em>did</em> they happen. For cases governed only by Rule 8, it is not necessary to stack up inferences side by side and allow the case to go forward only if the plaintiff’s inferences seem more compelling than the opposing inferences."<br /><br />Judge Posner disagreed with the majority because in his view the plaintiff's housing discrimination claim simply was implausible, and the majority gave too much leeway to allow pleading of a mere possibility. He emphasized that while <em>Iqbal</em> stated, "The plausibility standard is not akin to a 'probability requirement'" (quoted by the majority), the rest of the sentence said, "but it asks for more than a sheer possibility that a defendant has acted unlawfully." As I read Posner's dissent, he seems to be saying that the majority's holding that a district court "will ask itself <em>could</em> these things have happened, not <em>did</em> they happen," would allow the "sheer possibility" that <em>Iqbal </em>expressly rejected.<br /><br />The case also includes an interesting discussion of the role of discovery in this debate. The majority acknowledged that "one powerful reason that lies behind the Supreme Court’s concern about pleading standards is the cost of the discovery that will follow in any case that survives a motion to dismiss on the pleadings." It noted that the Supreme Court's new standard was intended to make it more difficult to earn the right to engage in discovery. But it drew the line at using judicial interpretation to impose higher pleading standards than Rules 8 and 9 contemplate, which is what the majority evidently thought was the consequence of the dissent's approach.<br /><br />In his dissent, Judge Posner wrote that the asymmetrical nature of much discovery in a pure notice-pleading regime was a structural flaw that helps explain and justify the Supreme Court's new approach. "It requires the plaintiff to conduct a more extensive precomplaint investigation than used to be required and so creates greater symmetry between the plaintiff’s and the defendant’s litigation costs, and by doing so reduces the scope for extortionate discovery." To those who argue that a restrictive interpretation of the "plausibility" requirement would close the courthouse door too easily, Judge Posner offered an intriguing suggestion:<br /><br />"If the plaintiff shows that he can’t conduct an even minimally adequate investigation without limited discovery, the judge presumably can allow that discovery, meanwhile deferring ruling on the defendant’s motion to dismiss. <em>Miller v. Gammie</em>, 335 F.3d 889, 899 (9th Cir. 2003) (en banc); <em>Coss v. Playtex Products, LLC</em>, No. 08 C 50222, 2009 WL 1455358 (N.D. Ill. May 21, 2009); Edward A. Hartnett, 'Taming <em>Twombly</em>, Even After <em>Iqbal</em>,' 158 U. Pa. L. Rev. 473, 507-14 2010); Suzette M. Malveaux, 'Front Loading and Heavy Lifting: How Pre-Dismissal Discovery Can Address the Detrimental Effect of <em>Iqbal </em>on Civil Rights Cases,' 14 Lewis & Clark L. Rev. 65 (2010)."<br /><br />Judge Posner also offered an interesting opinion, echoing Judge Easterbrook of the majority, on the practical aspects of the use of magistrate judges to handle discovery disputes. It appears that in his view, district courts do not limit discovery as effectively as a restrictive interpretation of the "plausibility" requirement would:<br /><br />"It is true, as critics of <em>Twombly</em> and <em>Iqbal</em> point out, that district courts have authority to limit discovery. [Citations omitted.] But especially in busy districts, which is where complex litigation is concentrated, the judges tend to delegate that authority to magistrate judges. And because the magistrate judge to whom a case is delegated for discovery only is not responsible for the trial or the decision and can have only an imperfect sense of how widely the district judge would want the factual inquiry in the case to roam to enable him to decide it, the magistrate judge is likely to err on the permissive side. 'One common form of unnecessary discovery (and therefore a ready source of threatened discovery) is delving into ten issues when one will be dispositive. A magistrate lacks the authority to carve off the nine unnecessary issues; for all the magistrate knows, the judge may want evidence on any one of them. So the magistrate stands back and lets the parties have at it. Pursuit of factual and legal issues that will not matter to the outcome of the case is a source of enormous unnecessary costs, yet it is one hard to conquer in a system of notice pleading and even harder to limit when an officer lacking the power to decide the case supervises discovery.' Frank H. Easterbrook, 'Discovery as Abuse,' 69 B.U. L. Rev. 635, 639 (1989)."<br /><br />The court's split illustrates the great difficulty encountered in attempting to apply a "plausibility" standard without straying into evaluating probabilities, which <em>Iqbal</em> said was not the proper approach, or flat-out requiring fact pleading, which the Court repeatedly rejected. The majority's view in <em>Swanson</em> is that it is better to apply plausibility by applying a sliding scale of factual detail, varying with the particular case, so that there is just enough to tell a coherent story from which the legal conclusions <em>plausibly</em> could flow.<em></em><em></em>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-63253852113211257932010-07-28T05:52:00.002-05:002010-08-06T08:12:45.247-05:00Illinois Supreme Court Considering Allowing Discovery Depositions at TrialsI previously reported on the Illinois practice of differentiating between "discovery depositions" and "evidence depositions, and the unfortunate consequences that sometimes result -- as in the case of <a href="http://avidanstern.blogspot.com/2008/06/illinois-pitfalls-in-preserving-dying.html" target="_blank"><em>Berry v. American Standard, Inc.</em></a>, 382 Ill. App.3d 895 (2008). Motivated by the situation discussed in <em>Berry</em> and the strict result mandated under the current version of the applicable rule, the Illinois Supreme Court Rules Committee has proposed an amendment to Supreme Court Rule 212 to allow the use of a discovery deposition transcript as trial evidence in a very limited set of circumstances. The Committee's comments for the proposal state:<br /><br />"The Committee believes that a trial court should have the discretion under Rule 212(a)(5) to permit the use of a party’s discovery deposition at trial. The current version of the Rule is absolute in its prohibition against the use of a party’s discovery deposition at trial. It appears, however, that there may be rare, but compelling circumstances under which a party’s discovery deposition should be permitted to be used. In the Committee’s view, <em>Berry</em> presents such circumstances. Given that in most cases, counsel will have the opportunity to preserve a party’s testimony via an evidence deposition, it is expected that the circumstances that would justify use of a discovery deposition would be extremely limited."<br /><br />Click <a href="http://www.state.il.us/court/SupremeCourt/Public_Hearings/Rules/2010/0728_Proposal%2009-04.pdf" target="_blank">here</a> for the proposed rules change. The Rules Committee is holding public hearings on the proposal in Chicago on July 28, 2010.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-87336241393974220042010-02-23T17:45:00.003-06:002012-03-09T17:50:06.281-06:00Supreme Court Clarifies Corporation's Citizenship for Diversity JurisdictionIn <em>Hertz Corp. v. Friend</em>, 130 S.Ct. 1181 (Feb. 23, 2010), the Supreme Court unanimously held that a corporation's state of citizenship for diversity purposes is its nerve center. For a detailed discussion of the background of this case, <a href="http://avidanstern.blogspot.com/2009/11/us-supreme-court-hears-argument-on.html">see the article I posted previously</a>.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-28558505147767918402009-11-20T06:16:00.004-06:002010-08-03T16:47:45.879-05:00New Seventh Circuit Appellate Court Nominee Receives Senate ConfirmationThe <a href="http://www.ca7.uscourts.gov/" target="_blank">U.S. Court of Appeals for the Seventh Circuit</a> will be adding a new judge to its roster. The <a href="http://legaltimes.typepad.com/blt/2009/11/us-senate-confirms-hamilton-for-7th-circuit-slot.html" target="_blank">Blog of the Legal Times</a> of Washington, D.C. reports that David Hamilton, Chief Judge of the <a href="http://www.insd.uscourts.gov/" target="_blank">U.S. District Court for the Southern District of Indiana</a> in Indianapolis, and President Obama's first judicial nominee, was confirmed by a vote of 59 to 39. According to his <a href="http://www.insd.uscourts.gov/Judges/bio_DFH.htm" target="_blank">page</a> on the District Court's website, Judge Hamilton was appointed in 1994, and previously was a partner at Barnes & Thornburg in Indianapolis. He served as Counsel to the Governor of Indiana from 1989 to 1991 and from 1984 to 1989 was an associate at Barnes & Thornburg.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.comtag:blogger.com,1999:blog-5665173193055598132.post-26348836039091655122009-11-11T12:20:00.015-06:002009-11-11T13:23:55.839-06:00U.S. Supreme Court Hears Argument On Corporation's Location For Diversity PurposesThe U.S. Supreme Court heard argument yesterday in <em>Hertz Corp. v. Friend</em>, No. 08-1107 (U.S.), <em>cert. granted at</em> 129 S. Ct. 2766 (June 8, 2009). The case concerns the vexing question of which state(s) constitute a corporation's state of citizenship for purposes of federal diversity jurisdiction under 18 U.S.C. §1332. Section 1332(a)(1) specifies that diversity exists between "citizens of different States," and §1332(c)(1) expressly provides that for purposes of diversity "a corporation shall be deemed to be a citizen of any State by which it has been incorporated and of the State where it has its principal place of business."<br /><br />That begs the question of how one should determine where a corporation has its <strong>principal place of business</strong>. The federal appellate courts have taken multiple approaches to deciding that question, and it appears that <em>Hertz Corp.</em> will allow the Supreme Court to resolve the split in the circuits. In the opionion below, <em>Friend v. Hertz Corp.</em>, 297 Fed. Appx. 690 (9th Cir. Oct. 30, 2008), the Ninth Circuit held that its "place of operations" test was corerctly applied. Under that framework, if the conglomeration of a corporation’s business activity in one State is significantly larger than that in any other state in which the corporation conducts business, that State is the corporation’s principal place of business. The entirety of the unpublished opinion below is reprinted here:<br /><br /><p><span style="font-size:85%;">Hertz's Notice of Appeal makes clear that Hertz removed this class action under the Class Action Fairness Act (CAFA). 28 U.S.C. § 1453(c). Therefore, even assuming we lack authority “to accept an appeal from the denial of a motion to remand when a class action has been removed to federal court on the basis of traditional diversity jurisdiction,” <em>Saab v. Home Depot U.S.A., Inc.</em>, 469 F.3d 758, 759 (8th Cir.2006), rather than pursuant to CAFA, we have jurisdiction over Hertz's timely appeal from the district court's order remanding this class action to state court. 28 U.S.C. § 1453(c)(1). </span></p><p><span style="font-size:85%;">The district court correctly applied the “place of operations” test to determine Hertz's principal place of business. T<em>osco Corp. v. Communities for a Better Env't.</em>, 236 F.3d 495 (9th Cir.2001); <em>Industrial Tectonics v. Aero Alloy</em>, 912 F.2d 1090 (9th Cir.1990). </span></p><p><span style="font-size:85%;">Taking the facts as set forth in the Declaration of Krista Memmelaar, Hertz's relevant business activities are “significantly larger” in California than in the next largest state, Florida. Although the difference between the amount of Hertz's business activity in California and the amount of its activity in Florida is not as large as the difference deemed to be significant in <em>Tosco</em>, California nevertheless “contains a substantial predominance” of Hertz's operations. <em>Tosco Corp.</em>, 236 F.3d at 500. </span></p><p><span style="font-size:85%;">Neither <em>Tosco</em> nor <em>Industrial Tectonics</em> supports Hertz's argument that we must consider the comparative population of states in which a corporation operates to determine whether activities are significantly larger in one state than another. <em>Id.</em>; <em>Industrial Tectonics</em>, 912 F.2d at 1092. Nor do policy concerns mandate the application of a per capita calculation. With its extensive California contacts and business activities, Hertz is not in jeopardy of being mistreated in California courts. </span></p><p><span style="font-size:85%;">Because California is Hertz's principal place of business under the “place of operations” test, we do not apply the nerve center test. <em>Tosco</em>, 236 F.3d at 500.</span></p><p>In contrast, the "headquarters" or "nerve center" test looks for the location at which the corporation operates its headquarters. <em>Illinois Bell Tel. Co. v. Global NAPs Ill., Inc.</em>, 551 F.3d 587, 590 (7th Cir. 2008). Hertz argued that the headquarters test should be applied instead of the conglomeration method used in the Ninth Circuit. The question presented in its petition for certiorari was "Whether, for purposes of determining principal place of business for diversity jurisdiction citizenship under 28 U.S.C. §1332, a court can disregard the location of a nationwide corporation's headquarters - i.e., its nerve center."<br /><br />The NLJ reported that at yesterday's oral argument, the Court appeared to be sympathetic to a "headquarters" standard. See their pair of interesting articles posted <a href="http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1202435301897" target="_blank">yesterday</a> and <a href="http://www.law.com/jsp/law/LawArticleFriendly.jsp?id=1202435341216" target="_blank">today</a>. Click here to download the Supreme Court <a href="http://www.civprolaw.com/blog/2009-11/Brief%20of%20Hertz.pdf" target="_blank">brief of Hertz</a>, the <a href="http://www.civprolaw.com/blog/2009-11/Opposition%20brief%20of%20Friend.pdf" target="_blank">opposition brief of Friend</a>, the <a href="http://www.civprolaw.com/blog/2009-11/Reply%20brief%20of%20Hertz.pdf" target="_blank">reply brief of Hertz</a>, and the <a href="http://www.civprolaw.com/blog/2009-11/Amicus%20brief%20supp%20Hertz.pdf" target="_blank">amicus brief supporting Hertz</a>.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-80530222021338944762009-08-16T23:52:00.000-05:002009-08-16T23:53:47.065-05:00I have moved my blog to be hosted in a different way. In the near future I will be consolidating all of my civil procedure blog files in once place, rather than the patchwork that exists now. Hopefully this will improve service and make it easier to maintain this blog. Meanwhile, a large number of older posts will be reappearing here.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-26569802217558671562008-10-01T18:33:00.005-05:002010-08-03T16:59:30.861-05:00Winning the Battle But Losing the WarWhen confronted with a discovery request, it often is a lawyer's instinct to react that the request is too broad. "That's outrageous and must be reigned in! I can't ask my client to find all of that!" However, you must be careful not to limit the opponent's discovery so much that you end up failing to produce documents that your own side needs to prove its claims or defenses.<br /><br />A recent case from the Eighth Circuit illustrates the importance of not taking discovery-limiting positions that hurt your own case. In <em><a href="http://www.civprolaw.com/blog/2008-08/Gander%20Mountain%20v%20Cabela.pdf" target="_blank">Gander Mountain Co. v. Cabela's, Inc.</a></em>, 540 F.3d 827 (8th Cir. Aug. 27, 2008), the parties disputed the meaning of a trademark license agreement. The key disputed provision gave defendant the right to license certain of plaintiff's trademarks, provided the license was "evidenced by a separate written agreement in form and content customary to licenses of the type described above." When defendant presented plaintiff with the required payment and a license agreement, plaintiff balked and brought a declaratory judgment action to find that defendant was not entitled to the license.<br /><br />During discovery, plaintiff served an interrogatory requesting defendant's explanation of what the contract meant by "customary form and content of licenses." Defendant responded that the license it had tendered (but which plaintiff rejected) was the only example that was needed. Plaintiff moved to compel a more informative answer but defendant prevailed. Plaintiff filed a second motion to compel a further response, but defendant countered with a motion for protective order, claiming the issue had been decided. The district court agreed with defendant.<br /><br />Defendant succeeded in shutting down plaintiff's attempt to get defendant to explain what it thought the contract meant beyond merely saying that it believed its proposed license was satisfactory. So far so good. Defendant was saving itself the trouble of answering plaintiff's troublesome discovery requests, right?<br /><br />Not so fast. Plaintiff moved for summary judgment, contending that the contract language did not provide definite enough terms. Because the single example of a license agreement that defendant offered could not be determinative of what constitutes <em>customary</em> form and content of <em>licenses</em>, plaintiff argued, there was no evidence in the record from which one could conclude that the tendered license satisfied the contract's requirements. The defendant must have been surprised when the district court agreed, and granted summary judgment. It appealed, requesting among other things that the matter be remanded with directions to re-open for additional fact and expert discovery.<br /><br />The Eighth Circuit affirmed, finding that the district court had not committed error "by granting [plaintiff's] motion for summary judgment without allowing [defendant] an opportunity to conduct discovery that it had previously declined to conduct." The lesson here is that defendant was too good at shutting down plaintiff's discovery attempts. Without allowing information to find its way into the record that defendant needed to prove its own interpretation of the contract, defendant deprived itself of any defense to the summary judgment motion. As this was a situation of defendant's own creation, defendant apparently found little sympathy with the district court or appellate court.<br /><br />It is interesting to note that on appeal defendant argued that the district court had somehow violated the law-of-the-case doctrine. Apparently, defendant claimed that the fact that the district court had refused to compel defendant to produce the evidence concerning trademark license agreements generally rendered any such evidence, if it had been produced in response to the summary judgment motion, inadmissible for purposes of establishing a genuine issue of material fact. The appellate court disagreed, finding that refusal to compel was in no way a ruling on admissibility.<br /><br />I tend to see the law-of-the-case argument as better fitting the other side's argument because that doctrine, like other branches of judicial estoppel, is intended to force parties to live with the consequences of their litigation strategy choices. If a defendant argues that it shouldn't be put to producing something in discovery, it must accept that if the court accepts that argument defendant will be barred from producing it later should it turn out to be needed. So before you set out to win a discovery battle, be sure that you aren't setting yourself up to lose the war.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-35571059690905186002008-09-18T04:55:00.003-05:002010-08-03T17:11:23.418-05:00Recent Developments Making Privilege Waivers Less LikelyThe past few weeks have seen some extraordinary developments in the area of waiver of attorney-client privilege and attorney work product protection.<br /><br />First came the news that the Department of Justice has reversed course after pursuing a policy for many years in which it has pressured corporations to waive privilege if they want to be credited with being cooperative in a DOJ investigation. That policy had been embodied in a memorandum by Deputy Attorney General Larry D. Thompson entitled "<a href="http://www.usdoj.gov/dag/cftf/corporate_guidelines.htm" target="_blank">Principles of Federal Prosecution of Business Organizations</a>," dated January 20, 2003. A short memorandum, entitled "<a href="http://lawprofessors.typepad.com/whitecollarcrime_blog/files/AttorneyClientWaiverMemo.pdf" target="_blank">Waiver of Corporate Attorney-Client and Work Product Protections</a>," by Acting Deputy Attorney General Robert D. McCallum, Jr., was published on October 21, 2005, which recognized the need to develop some procedural controls that were absent from the Thompson Memorandum. The policies embodied in those memoranda were highly controversial because they represented a systematic assault on the confidentiality of the lawyer-client relationship that forms a central backbone of our adversarial judicial system. The DOJ in effect was saying that it could pressure corporations to waive confidentiality during an investigation, even though such a waiver could have disasterous consequences for individual corporate employees who also were targets of the same investigation and for the company and its employees in companion civil litigation brought by private parties.<br /><br />The controversy led to a revised memorandum by Deputy Attorney General Paul J. McNulty entitled "<a href="http://www.usdoj.gov/dag/speeches/2006/mcnulty_memo.pdf" target="_blank">Principles of Federal Prosecution of Business Organizations</a>," dated December 13, 2006, but that memorandum brought little real change in policy. Although it imposed <a href="http://www.usdoj.gov/opa/pr/2006/December/06_odag_828.html" target="_blank">new internal approval procedures</a> that prosecutors had to follow when requesting that a corporate target waive privilege, the fundamental issue remained: Prosecutors were empowered to make requesting waiver of privilege a part of their arsenal whenever they felt justified in doing so.<br /><br />However, all of that changed on August 28, 2009 when newly-appointed Deputy Attorney General Mark R. Filip announced the promulgation of a new policy. Bowing to pressure from a wide range of sources, the DOJ adopted a formal policy generally directing prosecutors not to seek privilege waivers from companies as part of their cooperation efforts. Rather than continue the string of less formal internal memoranda, the new policy formally was incorporated into <a href="http://www.usdoj.gov/usao/eousa/foia_reading_room/usam/title9/28mcrm.htm" target="_blank">Chapter 9-28 of the U.S. Attorneys' Manual</a>. This change likely will moot <a href="http://www.usdoj.gov/ola/views-letters/110-1/11-13atty-client-priv-protection-act.pdf" target="_blank">efforts in Congress</a> to legislatively direct a change in DOJ policy regarding a waiver-based quid pro quo.<br /><br />Second, and coincidentally on the same day, the Second Circuit published <em><a href="http://www.civprolaw.com/blog/2008-08/US%20v%20Stein.pdf" target="_blank">United States v. Stein</a></em>, 541 F.3d 130 (2d Cir. Aug. 28, 2008). In addition to pressuring companies to waive privilege to the detriment of individual employees (often ex-employees), the DOJ also had a policy of pressuring corporations not to pay the legal fees of accused employees. Among other things, this represented a different kind of erosion of attorney-client privilege and work product protection, <em>i.e.</em> by preventing company employees from hiring lawyers so that attorney-based privileges never arose in the first place. In <em>Stein</em>, the Second Circuit held that it was improper for the DOJ to have pressured KPMG into refusal to pay defense costs for numerous individuals at KPMG who were accused of wrongdoing in connection with counseling clients regarding various tax shelters. The court found that the DOJ's actions deprived those individual defendants of their right to counsel under the Sixth Amendment, and affirmed the district court's dismissal of the indictment.<br /><br />Finally, last week the U.S. Congress sent <a href="http://www.uscourts.gov/rules/S2450.pdf" target="_blank">legislation</a> to the President that would create a new Federal Rule of Evidence 502, which the Judicial Conference proposed to Congress on September 26, 2007. As stated in the original <a href="http://www.uscourts.gov/rules/Hill_Letter_re_EV_502.pdf">proposal</a>, and in the Senate committee <a href="http://www.uscourts.gov/rules/S_Rep_110-264.pdf" target="_blank">report</a> on the legislation, the purpose of new Rule 502 is to provide protections against waiver of the attorney-client privilege and work product immunity, and to reduce the costs associated with discovery (and, it was noted, particularly electronic discovery). The rule accomplishes the following:<br /><ol><li><u>Avoidance of broad subject-matter waiver implications</u>. If a waiver is found, it only applies to the information disclosed, unless a broader waiver is made necesary by the holder's intentional and misleading use of protected information.</li><li><u>Waiver does not occur through inadvertent disclosure</u>. Inadvertent disclosure in federal proceedings does not cause a waiver if the holder took reasonable steps to avoid inadvertent disclosure and took reasonable steps to claw it back, <em>e.g.</em> following Fed. R. Civ. P. 26(b)(5)(B).</li><li><u>Non-waiver provisions in protective orders enforceable</u>. If a federal court orders that disclosure of protected information is not a waiver, that order is also binding against non-parties and in both state and federal proceedings. If the parties enter into a non-waiver agreement, they can make it binding on non-parties by having it entered as a court order.</li><li><u>State courts covered</u>. When a disclosure is made in a state proceeding and is not the subject of a state-court order concerning waiver, the disclosure does not operate as a waiver in a federal proceeding if the disclosure: (1) would not be a waiver under Rule 502 if it had been made in a federal proceeding; or (2) is not a waiver under the law of that state.</li></ol><p>If signed by the President as expected, Rule 502 will not change the substantive law of privilege at all, only the law of waiver. As one member of the House of Representatives remarked, "The<br />legislation improves the efficiency and the discovery process, while it still promotes accountability. It alters neither Federal nor State law on whether the attorney-client privilege or the work product doctrine protects specific information. The bill only modifies the consequences of an inadvertent disclosure once a privilege exists." (<a href="http://www.uscourts.gov/rules/Congressional_Record_re_S2450.pdf" target="_blank">Cong. Rec. Sept. 8, 2008</a> at p. H7819.)</p><p>Hopefully this new rule will give parties confidence in the non-waiver agreement as a cost-reducing technique in appropriate cases, lessen the consequences of inadvertent production, and reduce litigation over waiver issues.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-29697156924530819202008-06-18T21:02:00.002-05:002010-08-03T17:44:25.362-05:00Illinois Pitfalls In Preserving Dying Party’s Testimony<span xmlns=""><p>A recent case from the Fifth District of Illinois' intermediate appellate court illustrates how very different the Illinois state rules are from the Federal Rules of Civil Procedure concerning deposition discovery. <em><a href="http://www.civprolaw.com/blog/2008-05/Berry%20v%20American%20Standard.pdf" target="_blank">Berry v. American Standard, Inc.</a></em>, 382 Ill. App. 3d 895, 888 N.E.2d 740 (Ill. App. (5th Dist.) May 19, 2008), also discusses an important pitfall when attempting to preserve the testimony of a dying party.<br /></p><p>In <em>Berry</em>, plaintiff sued multiple defendants for asbestos-related injuries after learning that he had contracted terminal mesothelioma and had a life expectancy of less than 18 months. Plaintiff quickly served defendants with a notice that his deposition would take place on February 25, 2004. The notice stated that the deposition would be an "evidence deposition."<br /></p><p>Under Illinois procedure, a deposition may either be a "discovery deposition" or an "evidence deposition." Except under limited circumstances, the only deposition that may be used in court in lieu of in-person testimony is an evidence deposition. The court in <em>Berry</em> explained the distinction as follows (citations omitted):<br /></p><p style="MARGIN-LEFT: 36pt">Illinois has long recognized a sharp distinction between depositions taken for the purpose of discovery and those taken for use as evidence at a trial. The purpose of a discovery deposition is to explore the facts of the case, and for this reason wide latitude is given in the scope and manner of questioning. Discovery depositions are used to obtain information, to commit witnesses to particular stories, and to obtain admissions from opposing parties. Their admissibility in evidence is limited. Knowing in advance that a deposition is for discovery only and hence of limited availability, counsel ordinarily do not urge technical objections, and the taking of the deposition proceeds informally and expeditiously. Discovery depositions are not permitted to be used at a trial even if the deponent is unavailable, because that use would inhibit free discovery by requiring time-consuming evidentiary objections at every discovery deposition. In contrast, an evidence deposition is generally used for the purpose of preserving testimony for trial, and questioning is therefore limited by the rules of evidence.<br /></p><p>Plaintiff knew that it was important to preserve his testimony through an evidence deposition, not merely a discovery deposition, because he was not going to live long enough to testify in person. That is why he noticed his own evidence deposition.<br /></p><p>Because an evidence deposition serves as the equivalent of trial testimony, opposing parties typically first take a discovery deposition of the witness – no one wants to examine a witness for the first time at trial, after all. The <em>Berry</em> defendants exercised their right to object to being forced to take an evidence deposition without the benefit of a prior discovery deposition. Ultimately, the trial court agreed and plaintiff's deposition proceeded as a discovery deposition instead, with the parties agreeing to take the evidence deposition once the discovery deposition was completed.<br /></p><p>Unfortunately, the discovery deposition became a long, drawn-out affair due to the large number of defendants seeking to examine plaintiff and extensive related motion practice. Plaintiff passed away before his evidence deposition could be taken, and plaintiff's wife was substituted as executrix.<br /></p><p>Defendants subsequently moved to bar plaintiff from using any of the discovery deposition as testimony at trial, citing Illinois Supreme Court Rule 212(a)(5). The trial court agreed and the appellate court affirmed. When it comes to using discovery depositions as evidence, the Illinois rules are even more strict if the testimony at issue is of a party. The few situations listed in Rule 212(a)(5) permitting discovery depositions to be used at trial do not apply if the witness is a party or a controlled expert witness:<br /></p><p style="MARGIN-LEFT: 36pt">(a) *** Discovery depositions taken under the provisions of this rule may be used only: *** (5) upon reasonable notice to all parties, as evidence at trial or hearing against a party who appeared at the deposition or was given proper notice thereof, <span style="TEXT-DECORATION: underline">if the court finds that the deponent is neither a controlled expert witness nor a party</span>, the deponent's evidence deposition has not been taken, and the deponent is unable to attend or testify because of death or infirmity, and if the court, based on its sound discretion, further finds such evidence at trial or hearing will do substantial justice between or among the parties.<br /></p><p>Plaintiff advanced numerous arguments why his discovery deposition should be permitted at trial, but the court refused to bend the rules. Most significant was the argument that because of his death he was no longer a "party" for purposes of the rule, which was a matter of first impression in Illinois. The court rejected that argument, holding that his wife's substitution kept him in the case as a party for all purposes. (After all, if that were not true the case would have to be dismissed for lack of a plaintiff.)<br /></p><p>This harsh result stands in sharp contrast to federal civil procedure. First of all, there is no distinction between "discovery" and "evidence" depositions. Second, the rules are more relaxed when it comes to using a deposition as trial testimony. If this case had been brought in federal court, Mr. Berry could have testified by deposition under Fed. R. Civ. P. 32(a)(4): "A party may use for any purpose the deposition of a witness, <span style="TEXT-DECORATION: underline">whether or not a party</span>, if the court finds: (A) that the witness is dead." It's that simple.<br /></p><p>So what should you do when you need to preserve a dying party's testimony for use at trial in Illinois? It is critical that you take that party's evidence deposition; the courts will accept no substitutes. If time is short, make your notice of deposition a notice of both a discovery and an evidence deposition. In some of the cases that the Fifth District distinguished, the deposition had been noticed that way, and the courts allowed use of the transcript where the other side had not objected at the deposition to its being an evidence deposition. If the other side does object, try to conduct any motion practice as expeditiously as possible, perhaps on an emergency basis.</p></span>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-52951129606280268892008-01-17T16:58:00.000-06:002011-10-06T02:47:41.029-05:00While House Embroiled In E-Discovery ControversyWhile lawyers may be getting used to the occasional e-discovery dispute boiling over into the trade press or advance sheets, we still don't expect to see it make front-page news in traditional media. But there, on the front of today's Chicago Tribune, Wall Street Journal, and many others, are dreaded phrases like "deleted e-mails," "backup tapes," and "preservation."<br /><br />The White House has been under fire since last year based on an investigation that found numerous e-mails had not been preserved as they should have been. White House Press Secretary Dana Perino acknowledged this in April 2007, saying there could be as much as 5 million missing e-mails. In response to that report, a public watchdog group called Citizens for Responsibility and Ethics in Washington, brought a <a href="http://citizensforethics.org/node/30207" target="_blank">lawsuit</a> asserting that the White House and certain agencies were in violation of the Federal Records Act and other statutes. <em>Citizens for Responsibility and Ethics in Washington v. Executive Office of the President</em>, Civ. No. 1:07 cv 1707 (HHK) (D.D.C.).<br /><br />The complaint asserted that the only place the missing e-mails might still exist is on backup tapes the White House made for disaster recovery purposes. Plaintiff moved for expedited discovery on that subject. In response, on January 8, 2008 the court <a href="http://citizensforethics.org/node/30705" target="_blank">ordered</a> the government to provide an affidavit answering four specific questions designed to cut through the dispute and determine whether the backup tapes did or did not have the e-mails that were the subject of the case.<br /><br />Yesterday, the White House filed the <a href="http://citizensforethics.org/node/30773">affidavit</a>. It essentially admitted that the White House "recycled" its backup tapes for several years. In other words, many of the e-mails are not going to be found on those tapes because tapes regularly were overwritten with newer data. If this sounds like the kind of thing that gets litigants into trouble these days, you're right. In its briefs, the White House seems to take the position that because the recycling did not happen once the complaint was filed, but that misses the point. The lawsuit maintains that the government has a statutory duty not to destroy the e-mails wholly apart from whatever obligations exist under the Federal Rules of Civil Procedure. Even without that duty, the duty to preserve would have kicked in much earlier because of plaintiff's pre-litigation demands.<br /><br />This has the potential to become the best-known e-discovery spoliation case to date. Watch the plaintiff's <a href="http://citizensforethics.org/" target="_blank">web site</a> as the story develops.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-27529548772309010842007-12-03T12:00:00.000-06:002011-10-06T02:47:41.029-05:00U.S. Supreme Court To Address Whether Prevailing Party Wins Paralegal Fees At Billed Market Rate Rather Than At Cost<p>The U.S. Supreme Court has granted certiorari in <em>Richlin Security Service Co. v. Chertoff</em>, No. 06-1717 (cert. granted Nov. 13, 2007). </p><p>Plaintiff successfully pursued a claim in the Department of Transportation Board of Contract Appeals, and received an award as prevailing party under the Equal Access to Justice Act. However, the Board considered paralegal fees to be counsel’s expenses, reimbursable at cost rather than at the market rates at which the attorney billed his or her clients. The Federal Circuit affirmed, finding that “EAJA only permits reimbursement for paralegal services at cost.” <em>Richlin Security Service Co. v. Chertoff</em>, 472 F.3d 1370 (Fed. Cir. 2007). </p><p>The dissent argued that the majority’s holding was at odds with established Supreme Court and Federal Circuit precedent. In addition, the certiorari petition argued that the holding below contradicted the law of four other circuits.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-39876140394654514322007-11-14T12:00:00.000-06:002011-10-06T02:47:41.030-05:00Court Sanctions Party For Over-Designating Documents As Confidential<p>Parties often stipulate to protective orders under which a producing party is given the right to designate appropriate documents to be treated as "confidential." However, as the court held in <em>Del Campo v. American Corrective Counseling Services, Inc.</em>, No. C-01-21151 JW (PVT) (N.D. Cal. Nov. 5, 2007), the designating party must bear the responsibility for determining which documents truly are appropriate for confidential treatment. </p><p>The particular order at issue in <em>Del Campo</em> included a specific provision requiring each designating party to “take care to limit any such designations to specific material that qualifies under the appropriate standards,” and noted that indiscriminate designations “expose the Designating Party to possible sanctions.” The court found that the defendants produced thousands of documents with a blanket confidentiality designation in violation of the order, including obviously public documents such as law review articles and Web pages, and then failed to support their designations when challenged. The court ordered defendants to pay plaintiff’s attorney’s fees for challenging the over-designation.</p><p>The protective order here made the court's job a little easier because the court needed to look no further than the wording of the order to find violations. It seems likely, however, that even if a protective order lacked an express term concerning over-designation, a court easily could find violation of a protective order that merely permitted designation as "confidential" if the documents challenged clearly were not appropriate for confidential treatment.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-49658551157385358892007-11-06T10:34:00.000-06:002011-10-06T02:47:41.030-05:00Filing Voluntary Dismissal Starts Clock For One-Year Refiling Rule ImmediatelyThe Seventh Circuit has issued an opinion that once again illustrates the dangers of waiting until the last moment under a statute of limitations.<br /><br />In <em><a href="http://home.comcast.net/~fedcivpro1/Blog/Jenkins" target="_blank">Jenkins v. Village of Maywood</a></em>, No. 06-3411, 2007 WL 3239198 (7th Cir. Nov. 5, 2007), plaintiff filed a joint stipulation for voluntary dismissal of his Section 1983 action in federal court pursuant to Fed. R. Civ. P. 41(a)(1)(ii) on March 9, 2004. The court prepared an order of dismissal on the same day, and the clerk entered it on the docket on March 15, 2004.<br /><br />One year later, on March 15, 2005, plaintiff essentially re-filed the case in federal court. The statute of limitations for Section 1983 actions is derived from the appropriate state statute and its corresponding tolling rules. In this case, Illinois law applied and plaintiff's new case would have been out of time but for the existence of a special tolling statute. Under 735 ILCS 5/13-217, a plaintiff who voluntarily dismisses a case may commence the action again within one year or within the remaining limitations period, whichever is greater. Plaintiff believed that his filing within one year of the dismissal was timely because the Illinois Code of Civil Procedure specifies that a voluntary dismissal is not effective for purposes of the one-year tolling rule until the clerk has entered the order onto the docket.<br /><br />The Seventh Circuit disagreed, holding that the date that plaintiff filed the stipulation controlled instead. That is because federal, not state, procedural law governs a federal case even if the applicable statute of limitations is derived from state law. Under Fed. R. Civ. P. 41(a), no order is needed to effect a voluntary dismissal. It specifically states that "an action may be dismissed by the plaintiff without order of court ... by filing a stipulation of dismissal signed by all parties who have appeared in the action." Thus, the dismissal became effective as a matter of applicable law when plaintiff filed the stipulation on March 9, 2004, not when the clerk entered it on the docket the following week.<br /><br />The moral of the story: Don't file a complaint on what you think is the last possible day. Courts might find that you did not count correctly, or that the "mailbox rule" or other tolling rule did not work the way you thought it did, and you will have left no margin for error.<br /><br /><a href="http://home.comcast.net/~fedcivpro1/Blog/Jenkins" target="_blank"></a>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-2682109648491912732007-10-27T10:00:00.000-05:002011-10-06T02:47:41.030-05:00Florida High Court Again Leaves Emotional Distress “Impact Rule” In Place<p>In <a href="http://home.comcast.net/~fedcivpro1/Blog/Willis" target="_blank"><em>Willis v. Gami Golden Glades, LLC</em></a>, No. SC04-1929, 2007 WL 3024039 (Fla. Oct. 18, 2007), the intermediate appellate court certified questions to the Florida Supreme Court that invited reconsideration of the state’s “impact rule.” Under that rule, Florida treats emotional distress claims differently depending on whether the plaintiff has suffered a physical impact from an external force. </p><p>If there was an impact, Florida permits recovery for emotional distress not only from the impact itself but also for distress stemming from the incident during which the impact occurred. Without an impact, a plaintiff can only recover for mental distress manifested by the physical injury and the plaintiff must have been directly involved in the traumatizing event. </p><p>Although the certified questions raised important questions about the application of the impact rule, and invited reconsideration of the rule itself, the majority in <em>Willis</em> concluded that the facts of the case -- involving an assault and battery in a parking lot that plaintiff used at defendant’s direction -- so clearly satisfied the rule that none of the other issues argued by the parties needed to be addressed. However, the concurring and dissenting opinions addressed those issues and the underlying policy questions at length.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-66616081935069184002007-10-23T10:32:00.000-05:002011-10-06T02:47:41.030-05:00New York Does Not Recognize Tort Of Negligent Spoliation By Third Parties<p>In <a href="http://home.comcast.net/~fedcivpro1/Blog/Ortega" target="_blank"><em>Ortega v. City of New York</em></a>, No. 118, 2007 N.Y. Slip Op. 07741, 2007 WL 2988760 (N.Y. Oct. 16, 2007), New York’s highest court refused to recognize spoliation of evidence as an independent tort. </p><p>Plaintiff had suffered injuries in a vehicle that caught fire, but the City of New York negligently destroyed the vehicle in the ordinary course of its handling of unclaimed vehicles despite plaintiff’s attorney having obtained an order to preserve the car. Plaintiff did not attempt to sue the manufacturer, but sued the city on a theory of negligent spoliation. </p><p>The high court joined the majority of other courts considering the question, and ruled that no such cause of action exists. It also observed that here the plaintiff was not without some recourse given that she could pursue at least some damages for the city’s contempt of court.</p><p>Internet service providers, computer backup companies, on-line storage outfits and similar companies in New York perhaps heaved a collective sigh of relief, knowing that they could not be sued (at least in New York) for spoliation because of accidental or even intentional deletion of electronic files.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-20043097570930044842007-10-22T15:45:00.000-05:002011-10-06T02:47:41.030-05:00Plaintiff Has Right To Re-Present Evidence At Retrial Before New Judge<p>In <a href="http://home.comcast.net/~fedcivpro1/Blog/Anderson" target="_blank"><em>Anderson v. Kohler</em></a>, No. 2-05-1212, 2007 WL 2964372 (Ill. App. (2d Dist.) Oct. 4, 2007), plaintiffs sued for breach of contract but the court granted defendants’ motion at the close of plaintiffs’ evidence in a bench trial after finding, without making credibility determinations, that plaintiffs had not proven that the contract existed. The appellate court reversed and remanded for “further proceedings.” </p><p>However, the successor judge before whom the case was retried did not permit plaintiff to start again. Rather, he relied on the transcript of the first trial and only heard defendants’ case and plaintiffs’ rebuttal live, and then entered judgment for defendants after crediting their testimony over plaintiffs’. </p><p>On a second appeal, the appellate court ruled that the refusal to allow plaintiffs to present all evidence through live testimony violated their due process rights. The court held that absent agreement of the parties, a successor judge may not make credibility determinations based on a transcript of proceedings over which another judge presided, even if the new judge heard some live testimony from all the same witnesses.</p><p>The opinion did not discuss it, but a serious problem here is that a plaintiff who suffers a directed verdict has put on her entire case, while defendant has not reciprocated. Thus, defendant knows what plaintiff's case is, but plaintiff does not know defendant's case. If remanded for a new trial, a plaintiff must be given the chance to vary how she presented her case, so that the first half of the case is not entirely following a script that defendant has already read. </p><p>One might argue that the judge was just trying to save time on remand. But the system should not try to save time at the expense of a party.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-34607981322526015762007-10-20T10:45:00.000-05:002011-10-06T02:47:41.030-05:00State’s Agreement To Federal Venue Clause Waived Immunity Defense<p>The State of Massachusetts has learned that its agreement to a venue clause in a license agreement had the unintended consequence of waiving its defense of immunity under the Eleventh Amendment. </p><p>In <a href="http://home.comcast.net/~fedcivpro1/Blog/Baum" target="_blank"><em>Baum Research and Devel. Co. v. Univ. of Massachusetts at Lowell</em></a>, No. 2006-1330, 2007 WL 2937300 (Fed. Cir. Oct. 10, 2007), a patent owner sued the state university for breach of a patent license agreement in Michigan federal court. The venue was chosen pursuant to a clause that stated “all parties agree to proper venue and hereby submit to jurisdiction in the appropriate State or Federal Courts of Record sitting in the State of Michigan.” </p><p>Defendant asserted Eleventh Amendment immunity, but the trial and appellate courts held that the venue clause waived that defense. While the state may have assumed it would be able to assert immunity and the clause simply established Michigan courts would hear that defense, the clause actually had the broader effect of waiving the defense altogether.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-16966157730778373842007-10-18T11:00:00.000-05:002011-10-06T02:47:41.030-05:00New York Savings Statute Does Not Apply To Substituted Plaintiff<p>New York, like many states, has a statute that allows a plaintiff whose case is dismissed other than voluntarily or upon a final judgment on the merits to re-file the case within a certain amount of time, presumably after correcting defects, which in effect extends the statute of limitations. Under CPLR § 205(a), New York allows such a plaintiff a grace period of an additional six months to re-file after the dismissal. </p><p>In <a href="http://home.comcast.net/~fedcivpro1/Blog/Reliance" target="_blank"><em>Reliance Ins. Co. v. Polyvision Corp.</em></a>, No. 117, 2007 N.Y. Slip Op. 07500, 2007 WL 2947396 (N.Y. Oct. 11, 2007), answering a certified question from the Second Circuit, New York’s highest court held that § 205(a) does not apply if the plaintiff seeking to “re-file” is not the same plaintiff. The lower courts found the particular plaintiff who originally filed in Reliance Ins. Co. was not the correct entity, and a corporate affiliate un­suc­cessfully sought to re-file in reliance on § 205(a) to extend the statute of limitations.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-29832465001246587312007-10-15T08:35:00.000-05:002011-10-06T02:47:41.031-05:00Ninth Circuit Determines Removing Defendant’s Burden<p>In <a href="http://home.comcast.net/~fedcivpro1/Blog/Guglielmino" target="_blank"><em>Guglielmino v. McKee Foods Corp.</em></a>, No. 05-16144, 2007 WL 2916193 (9th Cir. Oct. 9, 2007), the Ninth Circuit determined as a matter of first impression the burden that a removing defendant must meet to establish federal jurisdiction where plaintiff moves to remand but the complaint specifically alleges damages below the diversity amount.</p><p>Here, defendants removed a case in which the complaint alleged damages of “less than $75,000,” and plaintiff’s motion to remand under 28 U.S.C. § 1447 attached affidavits with similar disclaimers. The appellate court observed that its precedents have placed three different burdens on removing defendants, depending on the circumstances. First, when the complaint alleges an amount on its face suffucuent to meet the jurisdictional threshold, the Ninth Circuit presumes that federal jurisdiction is satisfied "unless it appears to a 'legal certainty' that the plaintiff cannot actually recover that amount." (That could be called the "we take the plaintiff at his word unless it is undeniably only wishful thinking" rule.) Second, when the complaint is unclear or ambiguous about the jurisdictional amount, the removing defendant must establish by a preponderance of the evidence that the jurisdictional amount is met. Finally, when a complaint specifically alleges an amount in controversy that is less than the jurisdictional threshold, the party seeking removal must prove with legal certainty that the jurisdictional amount is met.</p><p>The new wrinkle here is that the complaint did not allege an amount but also pled that, whatever the damages were, they were less than $75,000. The Ninth Circuit concluded that this situation fit the second category of complaints best because the controlling factor was the ambiguity of the allegations. Thus, where a plaintiff specifically alleges damages are below the jurisdictional amount for diversity, but does not allege an actual total amount in controversy, the defendant must support removal by a “preponderance of the evidence.”</p><p>I have wondered about why, in a situation in which plaintiff is the movant -- having filed a motion to remand -- the court expresses its view in terms of the burden the non-movant defendant faces. Usually the movant bears the burden on his own motion. Why shouldn't the plaintiff have the burden of demonstrating the lack of federal jurisdiction by a preponderance of the evidence, rather than the defendant having the burden to establish the existence of federal jurisdiction? Perhaps the answer is that federal jurisdiction is never assumed and always must be established to the court's satisfaction. It follows that whoever is the proponent of the federal forum has to bear the burden of estabilshing entitlement to that forum, and in this case it is the removing defendant. That principle apparently trumps the ordinary rule that a movant bears his own burden.</p><p>Judge O'Scannlain filed a concurrence in <em>Guglielmino</em> examining the issue of defendants' and plaintiffs' competing burdens that the majority glossed over. He disagreed with the majority's imposition of a "legal certainty" burden on the removing defendant, a party seeking to invoke federal jurisdiction, rather than the moving plaintiff, a party seeking to defeat federal jurisdiction. He concluded that "in all cases where removal to federal court is challeneged in any appropriate way, it is incumbent upon the party seeking federal jurisdiction to prove the facts giving rise to such jurisdiction by a preponderance of the evidence. Only then, and only by proof to a legal certainty, can a party defeat the exercise of federal jurisdiction which those established fact support." He quoted approvingly from Judge Frank Easterbrook's opinion in <em>Meridian Security Ins. Co. v. Sadowski</em>, 441 F.3d 536 (7th Cir. 2006), which he says attempted to organize and clarify that court's removal law into a coherent whole. He observed that his proposal was consistent with the views of the Fifth, Sixth, Seventh and Eighth Circuits, and would resolve the multiple approaches of his own court into a single standard.</p>Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0tag:blogger.com,1999:blog-5665173193055598132.post-22642558687048984462007-10-12T21:00:00.000-05:002011-10-06T02:47:41.031-05:00Illinois Courts Lacked Jurisdiction To Hear Federal Civil Rights ClaimsThe intermediate appellate court of Illinois has reversed a judgment upon a jury trial because the trial court lacked jurisdiction.<br /><br />In <a href="http://home.comcast.net/~fedcivpro1/Blog/Blount" target="_blank"><em>Blount v. Stroud</em></a>, No. 1-06-2428, 2007 WL 2820964 (Ill. App. (1st Dist.) Sept. 28, 2007), the plaintiff sued her former employer for common law retaliatory discharge and for violation of 42 U.S.C. § 1981, ultimately receiving a favorable jury verdict of over $3 million in largely punitive damages.<br /><br />However, the appellate court held that the Illinois Human Rights Act provided that the Illinois Human Rights Commission was the exclusive venue for hearing civil rights claims in Illinois in the first instance, and that trial courts were authorized only to hear such matters on administrative review.<br /><br />Intersting footnote: The court noted that the Act has been amended so that beginning in 2008 plaintiffs may bring civil rights claims before either the Commission or the trial courts. Thus, the problem in <em>Blount</em> is not likely to be repeated in the future.Avidan J. Stern, Esq.http://www.blogger.com/profile/04834206902095467664noreply@blogger.com0