Justia Civil Procedure Opinion Summaries

ESN, an African-American-owned television-network operator, sought to have cable television conglomerate Comcast carry its channels. Comcast refused, citing lack of demand, bandwidth constraints, and a preference for different programming. ESN alleged that Comcast violated 42 U.S.C. 1981, which guarantees “[a]ll persons . . . the same right . . . to make and enforce contracts . . . as is enjoyed by white citizens.” The Ninth Circuit reversed the dismissal of the suit, holding that ESN needed only to plead facts plausibly showing that race played “some role” in the decision-making process.The Supreme Court vacated. A section 1981 plaintiff bears the burden of showing that the plaintiff’s race was a but-for cause of its injury; that burden remains constant over the life of the lawsuit. The statute’s text suggests but-for causation and does not suggest that the test should be different in the face of a motion to dismiss. When the “motivating factor” test was added to Title VII in the Civil Rights Act of 1991, Congress also amended section 1981 without mentioning “motivating factors.” The burden-shifting framework of McDonnell Douglas provides no support for the reading ESN seeks. The court of appeals should determine how ESN’s amended complaint fares under the proper standard. View "Comcast Corp. v. National Association of African-American Owned Media" on Justia Law

In 1979, the Superintendent of Catholic Schools of the Archdiocese of San Juan created a trust to administer a pension plan for Catholic school employees. In 2016, active and retired school employees filed suit, alleging that the Trust had terminated the plan, eliminating the employees’ pension benefits. They named as defendants the “Roman Catholic and Apostolic Church of Puerto Rico” (Church), which they claimed was a legal entity with supervisory authority over all Catholic institutions in Puerto Rico, the Archdiocese, the Superintendent, three schools, and the Trust.Following a remand, the Puerto Rico Supreme Court reinstated orders requiring payment. The court held that the Treaty of Paris recognized the “legal personality” of “the Catholic Church” in Puerto Rico, and that the only defendant with separate legal personality, and the only entity that could be ordered to pay the pensions, was the Church.The U.S. Supreme Court vacated, declining to address issues under the Free Exercise and Establishment Clauses. The Court of First Instance lacked jurisdiction to issue the payment and seizure orders. After the remand, the Archdiocese removed the case to federal court, arguing that the Trust had filed for bankruptcy and that this litigation was sufficiently related to the bankruptcy to give rise to federal jurisdiction. The Bankruptcy Court dismissed the Trust’s bankruptcy proceeding before the Court of First Instance issued the relevant payment and seizure orders but the district court did not remand the case to the Court of First Instance until five months later. Once a notice of removal is filed, the state court loses all jurisdiction over the case. The orders were void. View "Roman Catholic Archdiocese of San Juan v. Feliciano" on Justia Law

The Employee Retirement Income Security Act (ERISA) requires plaintiffs with “actual knowledge” of an alleged fiduciary breach to file suit within three years of gaining that knowledge, 29 U.S.C. 1113(2), rather than within the six-year period that would otherwise apply. Sulyma worked at Intel, 2010-2012, and participated in retirement plans. In 2015, he sued plan administrators, alleging that they had managed the plans imprudently. Although Sulyma had visited the website that hosted disclosures of investment decisions, he testified that he did not remember reviewing the relevant disclosures and that he had been unaware of the allegedly imprudent investments while working at Intel. Reversing summary judgment, the Ninth Circuit held that Sulyma's testimony created a dispute as to when he gained “actual knowledge.”A unanimous Supreme Court affirmed. A plaintiff does not necessarily have “actual knowledge” of the information contained in disclosures that he receives but does not read or cannot recall reading. To meet the “actual knowledge” requirement, the plaintiff must, in fact, have become aware of that information. The law sometimes imputes “constructive” knowledge to a person who fails to learn something that a reasonably diligent person would have learned but section 1113(2)'s addition of “actual” signals that the plaintiff’s knowledge must be more than hypothetical. While section 1113(2)'s plain meaning substantially diminishes the protection of ERISA fiduciaries, Congress must be the one to make changes. The Court noted the “usual ways” to prove actual knowledge. View "Intel Corp. Investment Policy Committee v. Sulyma" on Justia Law

The IRS allows affiliated corporations to file a consolidated federal return, 26 U.S.C. 1501, and issues any refund as a single payment to the group’s designated agent. If a dispute arises, federal courts normally turn to state law to resolve the question of distribution of the refund. Some courts follow the “Bob Richards Rule,” which initially provided that, absent an agreement, a refund belongs to the group member responsible for the losses that led to it. The Rule has evolved, in some jurisdictions, into a general rule that is always followed unless an agreement unambiguously specifies a different result. Soon after the bank suffered huge losses, its parent, Bancorp, was forced into bankruptcy. When the IRS issued a $4 million tax refund, the bank’s receiver, the FDIC, and Bancorp’s bankruptcy trustee each claimed it. The Tenth Circuit examined the parties’ allocation agreement, applied the more expansive version of Bob Richards, and ruled for the FDIC.The Supreme Court vacated. The Rule is not a legitimate exercise of federal common lawmaking. Federal judges may appropriately craft the rule of decision in only limited areas; claiming a new area is subject to strict conditions. Federal common lawmaking must be necessary to protect uniquely federal interests. The federal courts applying and extending Bob Richards have not pointed to any significant federal interest sufficient to support the rule, nor have these parties. State law is well-equipped to handle disputes involving corporate property rights, even in cases involving bankruptcy and a tax dispute. Whether this case might yield a different result without Bob Richards is a matter for the court of appeals on remand. View "Rodriguez v. Federal Deposit Insurance Corp." on Justia Law

Ritzen sued Jackson in Tennessee state court for breach of contract. Jackson filed for Chapter 11 bankruptcy. Under 11 U.S.C. 362(a), filing a bankruptcy petition automatically “operates as a stay” of creditors’ debt-collection efforts outside the bankruptcy case. The Bankruptcy Court denied Ritzen’s motion for relief from the automatic stay. Ritzen did not appeal but filed a proof of claim, which was disallowed. Ritzen then challenged the denial of relief from the automatic stay. The district court rejected Ritzen’s appeal as untimely under 28 U.S.C. 158(c)(2) and Federal Rule of Bankruptcy Procedure 8002(a), which require appeals from a bankruptcy court order to be filed “within 14 days after entry of [that] order.”The Sixth Circuit and a unanimous Supreme Court affirmed. A bankruptcy court’s order unreservedly denying relief from the automatic stay constitutes a final, immediately appealable order under section 158(a). Adjudication of a creditor’s motion for relief from the stay is a discrete “proceeding” that disposes of a procedural unit anterior to, and separate from, claim-resolution proceedings. The order can have large practical consequences, including whether a creditor can isolate its claim from those of other creditors and proceed outside bankruptcy. Rather than disrupting the efficiency of the bankruptcy process, an immediate appeal may permit creditors to establish their rights expeditiously outside the bankruptcy process, affecting the relief awarded later in the bankruptcy case. View "Ritzen Group, Inc. v. Jackson Masonry, LLC" on Justia Law

The Fair Debt Collection Practices Act (FDCPA) authorizes private civil actions against debt collectors “within one year from the date on which the violation occurs,” 15 U.S.C. 1692k(d). Klemm sued Rotkiske to collect an unpaid debt and attempted service at an address where Rotkiske no longer lived. An individual other than Rotkiske accepted service. Rotkiske failed to respond to the summons; Klemm obtained a default judgment in 2009. Rotkiske claims that he first learned of this judgment in 2014 when his mortgage application was denied. He filed suit, alleging that Klemm violated the FDCPA by contacting him without lawful ability to collect. Rotkiske argued for the application of a “discovery rule” to delay the beginning of the limitations period until the date that he knew or should have known of the alleged FDCPA violation. The Third Circuit and Supreme Court affirmed the dismissal of the suit. Absent the application of an equitable doctrine, section 1692k(d)’s limitations period begins to run when the alleged FDCPA violation occurs, not when the violation is discovered. Rotkiske cannot rely on the application of an equitable, fraud-specific discovery rule to excuse his otherwise untimely filing, having neither preserved that issue before the Third Circuit nor raised it in his certiorari petition. View "Rotkiske v. Klemm" on Justia Law

Kisor, a Vietnam veteran, unsuccessfully sought VA disability benefits in 1982, alleging that he had developed PTSD from his military service. In 2006, Kisor moved to reopen his claim. The VA then agreed he was eligible for benefits, but granted benefits only from the date of his motion to reopen, not from the date of his first application. The Board of Veterans’ Appeals, Court of Appeals for Veterans Claims, and Federal Circuit affirmed, citing deference to an agency’s reasonable reading of its own ambiguous regulations. The Supreme Court vacated and remanded, reasoning that when the reasons for the presumption in favor of deference do not hold up, or when countervailing reasons outweigh them, courts should not give deference to an agency’s reading. Confining its 1997 decision, Auer v. Robbins, the plurality stated that a court should not afford deference unless, after exhausting all “traditional tools” of construction, the regulation is genuinely ambiguous. If genuine ambiguity remains, the agency’s reading must fall “within the bounds of reasonable interpretation” and the court must independently determine the character and context of the agency interpretation. The interpretation must be the agency’s authoritative or official position and must implicate its substantive expertise. The basis for deference ebbs when the subject matter of a dispute is distant from the agency’s ordinary duties. The agency’s reading of a rule must reflect its “fair and considered judgment” not a “convenient litigating position,” or an “unfair surprise.” The plurality declined to overrule Auer and a “long line of precedents” finding no “special justification.” In Kisor's case, the Federal Circuit found the VA’s regulation ambiguous before applying all its interpretive tools and assumed too fast that deference should apply. View "Kisor v. Wilkie" on Justia Law

Scott Township passed an ordinance requiring that “[a]ll cemeteries . . . be kept open and accessible to the general public during daylight hours.” Knick, whose 90-acre rural property has a small family graveyard, was notified that she was violating the ordinance. Knick sought declaratory relief, arguing that the ordinance caused a taking of her property, but did not bring an inverse condemnation action. The Township withdrew the violation notice and stayed enforcement of the ordinance. The state court declined to rule on Knick’s suit. Knick filed a federal action under 42 U.S.C. 1983, alleging that the ordinance violated the Takings Clause. The Third Circuit affirmed the dismissal of her claim, citing Supreme Court precedent (Williamson County) that property owners must seek just compensation under state law in state court before bringing a federal claim under section 1983. The Supreme Court reversed. A government violates the Takings Clause when it takes property without compensation; a property owner may bring a Fifth Amendment claim under section 1983 at that time. The Court noted that two years after the Williamson County decision, it returned to its traditional understanding of the Fifth Amendment in deciding First English Evangelical Lutheran Church. A property owner acquires a right to compensation immediately upon an uncompensated taking because the taking itself violates the Fifth Amendment. The Court expressly overruled the state-litigation requirement as "poor reasoning" resulting from the circumstances in which the issue reached the Court. The requirement was unworkable in practice because the “preclusion trap” prevented takings plaintiffs from ever bringing their claims in federal court. There are no reliance interests on the state-litigation requirement. If post-taking compensation remedies are available, governments need not fear that federal courts will invalidate their regulations as unconstitutional. View "Knick v. Township of Scott" on Justia Law

McDonough processed ballots as a board of elections commissioner in a Troy, New York primary election. Smith was specially appointed to investigate and to prosecute a case of forged absentee ballots in that election. McDonough alleges that Smith fabricated evidence against him and used it to secure an indictment and at two trials before McDonough’s December 21, 2012 acquittal. On December 18, 2015, McDonough sued Smith under 42 U.S.C. 1983, asserting fabrication of evidence. The Second Circuit affirmed the dismissal of the suit as untimely under a three-year limitations period.The Supreme Court reversed. The statute of limitations began to run when the criminal proceedings against McDonough terminated in his favor—when he was acquitted at the end of his second trial. An accrual analysis begins with identifying the specific constitutional right at issue--here, an assumed due process right not to be deprived of liberty as a result of a government official’s fabrication of evidence. Accrual questions are often decided by referring to common-law principles governing analogous torts. The most analogous common-law tort is malicious prosecution, which accrues only once the underlying criminal proceedings have resolved in the plaintiff’s favor. McDonough could not bring his section 1983 fabricated-evidence claim before favorable termination of his prosecution. The Court cited concerns with avoiding parallel litigation and conflicting judgments and that prosecutions regularly last nearly as long as—or even longer than—the limitations period. View "McDonough v. Smith" on Justia Law

PDR compiles information about prescription drugs. Its producer sent health care providers faxes stating that they could reserve a free copy of a new e-book PDR. A recipient filed a putative class action, claiming that the fax was an “unsolicited advertisement” prohibited by the Telephone Consumer Protection Act, 47 U.S.C. 227(b)(1)(C). The Fourth Circuit vacated the dismissal of the suit, reasoning that the district court was required to adopt the interpretation of “unsolicited advertisement” set forth in a 2006 FCC Order: “any offer of a free good or service.” The court noted that the Hobbs Act provides that courts of appeals have “exclusive jurisdiction to enjoin, set aside, suspend ... or to determine the validity of” certain “final orders of the Federal Communication Commission,” in a challenge filed within 60 days after the entry of the order, 28 U.S.C. 2342(1). The Supreme Court vacated and remanded for consideration of preliminary questions that were not considered below. Is the Order the equivalent of a “legislative rule,” issued by an agency pursuant to statutory authority, having the “force and effect of law” or is it the equivalent of an “interpretive rule,” which simply advises the public of the agency’s construction of the statutes and rules it administers? If the Order is the equivalent of an “interpretive rule,” a district court may not be required to adhere to it. In addition, did the Hobbs Act’s exclusive-review provision afford a “prior” and “adequate” opportunity to seek judicial review of the Order under 5 U.S.C. 703? If not, the Administrative Procedure Act may permit PDR to challenge its validity in this enforcement proceeding. View "PDR Network, LLC v. Carlton Harris Chiropractic, Inc." on Justia Law