Second Circuit Now Requires Parties Jointly To Affirmatively Request Oral Argument

The Second Circuit Court of Appeals has adopted an interim rule, effective August 27, 2007, that imposes a new, ‘opt-in’ procedure for oral argument. It does not appear that any other circuit has adopted such a requirement.

Under Fed.R.Civ.App. 34, oral argument is required unless the court finds that certain conditions are satisfied such that oral argument can be dispensed with and the case decided solely on the briefs. The Rule also specifies that a court “may require by local rule a statement explaining why oral argument should, or need not, be permitted.”

In a new twist on that rule, the Second Circuit’s Interim Local Rule 34 requires the parties to file a joint statement indicating whether they seek oral argument or agree to submit the case on the briefs. If the parties disagree, that must also be indicated. The joint statement is due within 14 days after the due date for the last brief. Any party failing to file the statement will be deemed not to seek oral argument.

The court allowed a one-month comment period, which expires September 27, 2007, and is running simultaneously with the adoption of the rule itself. There does not seem to have been much publicity about this, and because it is a unique and counter-intuitive change (going from an opt-out system to an opt-in system), the new rule seems like a trap for the unwary.

Propriety of Strategic Pre-Service Removal in Diversity Will Not Be Tested In Appellate Courts

The Seventh Circuit has just issued a ruling dismissing an appeal from a remand order for lack of jurisdiction. In so doing, the court was forced to hold off deciding a very interesting dispute over removal jurisdiction, which it concluded that Congress excluded from appellate jurisdiction. The ruling follows closely on the heels of an additional district court decision that noted the issue was on appeal.

The underlying issue concerned the "forum defendant" removal rule under 28 U.S.C. § 1441(b). That rule provides that even though diversity jurisdiction may be satisfied because of different citizenship, so it could have been commenced in federal court, a case is still not removable unless "none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought." The controversy raised in the appeal concerned the proper interpretation of the "properly joined and served" language.

In Holmstrom v. Harad, No. 05 C 2714, 2005 WL 1950672 (N.D. Ill. Aug. 11, 2005), a New Jersey shareholder brought a putative derivative action on behalf of Home Depot, Inc., a Delaware company, in Illinois state court against 28 officers and directors, two of whom are Illinois citizens. Before plaintiff actually served any of the defendants, one of them (an Ohio citizen) removed the case to the Northern District of Illinois. Plaintiff moved to remand on the ground that removal ran afoul of the forum defendant rule because two of the defendants are citizens of the forum state. The removing defendant responded that the rule was fully satisfied given that neither of the Illinois defendants had yet been "properly joined and served."

The district court granted the motion. It found only one other case on point, Recognition Communications, Inc. v. American Automobile Association, No. Civ. A. 3:97-CV-0945-P, 1998 WL 119528 (N.D. Tex. Mar. 5, 1998), and it agreed with that court's reasoning. It concluded that although the literal language of the rule favors the removing defendant in this scenario, Congress did not intend that a fast-acting defendant should have an end-run through strategic pre-service removal. Rather, Congress created the forum defendant rule to protect defendants from plaintiffs who listed among multiple defendants a resident of the forum state they did not intend to pursue but merely named to defeat removal.

The defendant appealed the remand order to the Seventh Circuit. While that case was being briefed and argued, the same scenario occurred in the district court in another case. In Vivas v. Boeing Co., 486 F.Supp. 2d 726 (N.D. Ill. Mar. 12, 2007), plaintiffs sued Boeing in Illinois state court in connection with a plane crash in another country. Although Boeing was an Illinois citizen, it removed the case before it or any other defendant had been served, as it is permitted to do under 28 U.S.C. § 1446(b). The district court, relying on Holmstrom (which it noted was on appeal), refused to allow Boeing to use the fact that one may file a notice of removal before formal service to defeat the "properly joined and served" language of 28 U.S.C. § 1441(b), and it granted plaintiffs' motion to remand.

When the Seventh Circuit ultimately ruled in Holmstrom v. Harad, 492 F.3d 833 (7th Cir. July 3, 2007), it did not speak to the merits of the district courts' refusal to apply 28 U.S.C. § 1441(b) literally. Following an exhaustive analysis of the legislative history and development of that statute across multiple versions, it concluded that the 1996 amendments made clear that Congress intended to exclude from appellate review any remand order that was based on a defect in removal. The court determined that a remand order based on "failure to comply with the forum defendant rule is a defect in removal subject to § 1447(d)’s jurisdictional bar."

If the Seventh Circuit's reasoning prevails, it will be up to the district courts to establish the common law of whether strategic pre-service removal can be used to avoid the forum defendant rule.

Second Circuit Adopts Local Rule Regarding Non-Precedential ("Unpublished") Opinions

On December 1, 2006, the Federal Rules of Appellate Procedure were amended to add Rule 32.1, which adopted a uniform standard permitting the citation of all judicial dispositions on or after January 1, 2007. The rule had the effect of requiring some courts of appeal to revise their rules to eliminate prohibitions against citing so-called “unpublished” opinions.

In a recent example of meeting the new requirement, on June 26, 2007, the Second Circuit adopted a final version of amended Local Rule 32.1, setting specific requirements for the issuance and citation of such opinions, which the court termed “summary orders.” The court commentary explained its purposes in issuing summary orders, and noted that although such orders are not precedential it “does not mean that the court considers itself free to rule differently in similar cases.”

Third Circuit Finds One Panel May Overrule Another When Predicting State Rulings

In Jaworowski v. Ciasulli, 490 F.3d 331 (3d Cir. June 18, 2007), a panel of the Third Circuit took the unusual step of overruling a prior decision of the same court. It acknowledged that ordinarily the only way for the court to overrule its own precedent is for the court to act en banc, but it found that an exception exists for cases based on diversity jurisdiction in which the court predicts how a state’s highest court would decide an issue.

The panel said that in such circumstances an appellate court should be free to reexamine the validity of a previous prediction in light of subsequent decisions of the state’s highest court. It concluded that, although the New Jersey Supreme Court still had not decided the particular matter at issue, there were sufficient new decisions to reveal a “change in the legal landscape” and a clear direction for the Third Circuit to follow to change its prediction.

Clerk’s Entry Of Judgment Started Appeal Countdown Even Without Court Approval

Federal Rule of Civil Procedure 58 requires that judgments be entered on a separate piece of paper, which is docketed by the clerk. The intent of the rule was to make it very clear when the time would begin to run for filing a notice of appeal. However, the “Rule 58 judgment” concept created some unique problems. For example, if the Rule 58 judgment was never created, the time for appeal could last forever.

In an effort to address that problem, the rule was revised in 2002 to provide that certain types of judgments need not be memorialized in a separate document but are to be docketed by the clerk automatically. All other types of judgments must be placed in a separate document under Rule 58(B)(1), but the clerk must also record on the docket the substance of the judgment. If the separate document is never created, an absolute cap of 150 days from the time the clerk notes the substance of the judgment on the docket under Rule 79(a) limits the time to appeal.

The Fifth Circuit recently applied this rule in Burnley v. City of San Antonio, 470 F.3d 189 (5th Cir. Sept. 15, 2006). There, the clerk entered the fact of a judgment on the docket, but the court never prepared a required Rule 58 judgment. The defendant argued that the clerk’s docketing was “not authorized” and therefore a nullity, but the court held that a clerk has “independent authority and a duty to enter the judgment based on the verdict in the civil docket.” When 150 days passed without the filing of a separate Rule 58 judgment, the clerk’s entry became the judgment as a matter of law. The appellant did not file its appeal within 30 days of that entry, so the appeal was dismissed.

Skeletal Rule 59(e) Motion Fails To Extend Time For Filing Appeal

Under Fed. R. App. P. 4(a)(4)(A), certain post-judgment motions, including motions under Fed. R. Civ. p. 59(e), extend the time in which to file a notice of appeal. However, in Goodspeed v. Quechee Lakes Corp., 463 F.3d 195 (2d Cir. Sept. 13, 2006), the court held that a Rule 59(e) motion that is so “skeletal” that it fails to raise proper grounds for relief under Rule 59(e) does not qualify to extend the time for appeal.

The motion in this case was clearly perfunctory. It merely stated that counsel required an extension of time to support the motion itself so that counsel could perform a review and determine whether there was something there to bring to the court’s attention. The Second Circuit held that such a motion fails to “state with particularity” the grounds for relief, as required under Rule 7(b)(1), and also seeks an improper end-run around the prohibition in Rule 6(b) against extending the time for taking any action under Rule 59(e).

Time To Appeal Of Class Certification Ruling Not Extended By Renewed Motion

Interlocutory appeal of rulings on class certification motions is available, at the discretion of the appellate court, by filing a petition under Fed. R. Civ. P. 23(f) within ten days of the ruling.

In Carpenter v. Boeing Co., No. 04-3334, 2006 WL 2244242 (10th Cir. Aug. 8, 2006), the Tenth Circuit held that the 10-day period is not subject to extension through the filing of a motion seeking the district court’s reconsideration of its ruling. In the Carpenter case, plaintiffs filed a petition within 10 days after the district court denied their “renewed” motion for class certification. The appellate court viewed that motion as a motion to reconsider, and dismissed the petition as untimely.

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.

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 Allows Citation To Unpublished Opinions

One of the procedural issues that has been debated in the federal courts for many years involves the citation of so-called “unpublished” opinions.

The federal courts of appeal have disposed of many appeals with abbreviated opinions that are not published in the official reports (i.e., West’s Federal Reporter), and have in varying degrees prohibited the citation of such opinions. However, those opinions have long been available through Lexis and Westlaw, and in recent years through the courts’ own Web sites.

On April 12, 2006, the U.S. Supreme Court approved new Fed. R. App. P. 32.1 to allow citation of unpublished opinions. The new rule, which becomes effective on December 1, 2006 unless Congress intervenes, prohibits federal courts from restricting the citation of federal unpublished opinions released beginning on January 1, 2007. If a party cites an unpublished opinion, it must furnish copies along with its brief. The new rule only speaks to citation rules, and does not prohibit courts from assigning such opinions different precedential weight.

U.S. Supreme Court Holds Failure To Renew Rule 50(a) Motion Waives Appeal

Parties to a federal jury trial may attempt to avoid having the jury decide particular issues pursuant to Rule 50. Under Rule 50(a), a party may file a motion for judgment on particular issues as a matter of law after the close of the evidence. If the court denies the motion and the issues proceed to jury verdict, the party has ten days to renew its motion for judgment as a matter of law under Rule 50(b) and/or to move for a new trial under Rule 59(e).

It turns out that renewing the motion for judgment as a matter of law is the only way to preserve the issue for appeal.

In Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc., No. 04-597 (U.S. Jan. 23, 2006), the U.S. Supreme Court held that if a party fails to renew its motion after the jury reaches its verdict, that party waives the right to appeal the sufficiency of the evidence. The Court cited precedent finding that courts of appeals only have jurisdiction to overturn a jury verdict if the appellant asked the district court to do so first.