Recently in Procedure Category

Marc Herrmann notes that judges have unrealistic expectations regarding e-discovery. Of course, they're encouraged to have such unrealistic expectations by plaintiffs' lawyers in asymmetric discovery cases. Acting as if a mere snap of the fingers can result in the full production of electronic documents means that judges can treat the normal frictions of failure as evidence of bad-faith that could lead to sanctions precluding a defendant from defending itself at trial. And if those consequences are a possibility, then that means that defendants can't risk spending less than top dollar on discovery, meaning that plaintiffs' lawyers have additional leverage to extract rents in nuisance settlements. Add the incentives of insurers indifferent between paying defense lawyers and paying plaintiffs' lawyers, and now any case that can get past the motion to dismiss stage is worth millions, no matter how meritless, and more if the court exercises its discretion to let discovery proceed while to motion to dismiss is pending. So it's of mild concern when a law professor argues (via Steinman) that whether to stay discovery while a motion to dismiss is pending should be adjudicated on a multi-factor-test case-by-case basis, pooh-poohing the costs of discovery, or the incentives of plaintiffs to increase the costs of discovery. Under such a regime, even bringing a case that can't survive a motion to dismiss would be profitable. Among the factors missing from Kevin Lynch's analysis: the incentive of judges to permit discovery to go forward and refuse to rule on a motion to dismiss, hoping that this creates an incentive to settle that gets cases off the docket.

We had noted a trend of courts being willing to use 28 U.S.C. §1920, which permits cost-shifting of the expenses of "making copies," to the much greater costs of e-discovery by broadly construing the meaning of "making copies." In the first appellate decision on the topic, Race Tires America v. Hoosier Racing Tire Corp., the Third Circuit has rejected that broad interpretation, and held that only $30,000 of a $365,000 e-discovery expense fell within the parameters of §1920. The opinion has interesting language on the expense of e-discovery in the first footnote. More at WSJ Law Blog.

Relatedly: Professor William Hubbard testifies about the costs of discovery, with particular attention paid to the long tail.

Also relatedly: Steve Susman argues for "mutual disarmament" in the discovery game. Of course, that sort of voluntary agreement is only possible in the scenario where anticipated discovery costs are not asymmetric.

Fed. R. Civ. Proc. 53 permits a judge to appoint a "special master" to resolve complicated pretrial matters that the judge does not have time to do; most state courts have similar procedures. Such special masters are typically experienced attorneys who charge the full billing rate of experienced attorneys; rather than being put out for competitive bid, judges often pick a friend for the lucrative assignment. The existence of a rule as a safety valve allows courts to handle heavier dockets, but that in itself has its own distorting effects. A judge has reduced incentive to narrow the scope of discovery; heck, the privilege log disputes alone can generate hundreds of thousands of dollars, and create unreasonable standards that add tremendous expense to litigation beyond what is paid to the special master.

A recent scandal in New York reported by the Daily News suggests other possible problems: in 1999, Manhattan Supreme Court Justice Sherry Klein Heitler appointed Laraine Pacheco special master in a series of asbestos cases, and in 2005, Pacheco was making $368,000 a year overseeing settlement discussions. Pacheco lost her lucrative position last week when it was learned that she had overbilled parties—including city and state taxpayers—$400,000. Pacheco had previously come under fire for wanting to hold these settlement discussions near her vacation home in Tucson, Arizona, inviting lawyers to do so as a junket (and suggesting they shop at her daughter's jewelry store).

This is an area that merits much more study by the legal reform community.

A new report by Josh Wright finds, says the Pennsylvania Record,

that Philadelphia courts host an especially large number of cases and have a larger docket than expected; Philadelphia plaintiffs are less likely to settle than plaintiffs in other state courts; and Philadelphia plaintiffs are disproportionately likely to prefer jury trials.

"These findings are consistent with a conclusion that Philadelphia courts demonstrate a marked and meaningful preference for plaintiffs, consistent with both the Complex Litigation Center's intention of inviting 'business' from other courts and criticisms that Philadelphia's courts provide a unique combination of advantages for plaintiffs," the study states.

The Complex Litigation Center handles mass tort cases such as asbestos lawsuits and other drug litigation or similar cases. It was designed to streamline mass tort cases and simplify resolution, but instead seems to have created a climate "inviting" to business from plaintiffs in other jurisdictions, the study states.

"While this may provide additional work for Pennsylvania lawyers, it also increases the cost of operating the civil justice system in Philadelphia and Pennsylvania more generally - a cost borne by the state's consumers and businesses," Wright's study concludes.

H.B. 1552, pending in the Pennsylvania legislature, would require suits to be filed in the county where the injury occurred. Plaintiffs' lawyers claim that the bill is unconstitutional because the legislature doesn't have authority to regulate civil procedure.

Robert Ambrogi writes of two recent cases where experts retained by or on behalf of Stan Chesley essentially disavowed their testimony after being confronted with unpleasant facts that had been kept from them in drafting their testimony. My Point of Law post on the subject is quoted.

A creative insight from Andrew Blair-Stanek in the Florida Law Review (via Volokh):

The Supreme Court's 2007 decision in Bell Atlantic Corp. v. Twombly has baffled and mystified both practitioners and scholars, casting aside the well-settled rule for evaluating motions to dismiss in favor of an amorphous "plausibility" standard. This Article argues that Twombly was not revolutionary but simply part of the Court's ever-expanding application of the familiar three-factor Mathews v. Eldridge test. Misused discovery can deprive litigants of property and liberty interests, and in some cases Mathews requires the safeguard of dismissing the complaint. This Article's insight explains Twombly's origins and structure, while also suggesting a source for lower courts to draw on in developing post-Twombly jurisprudence.

An interesting implication is that loosened pleading standards are not permissible without loser-pays.

It's well known that patent trolls forum-shop to get their cases in the Marshall courthouse of the Eastern District of Texas, to the point of setting up empty offices in the neighborhood to create venue. But, surprisingly, I've never seen a complete explanation written why. Let me do so.

1) Only two judges sit in the Marshall division. Correctly or incorrectly, they are perceived as judges who rarely grant summary judgment, and let juries decide issues. Moreover, judge-shopping is possible: one of the judges has a close relative in private practice, creating strategic disqualification opportunities. (Judge David Folsom's announced retirement may or may not change this dynamic, depending on who is appointed to replace him.)

2) The Eastern District of Texas is perceived to have plaintiff-friendly juries. (Only 20% of the population holds a bachelor's degree, meaning that technically complicated cases may well get decided on grounds other than the science.) The actual quantitative trial win-loss record of patent plaintiffs in the E.D. Tex. isn't so spectacular in recent years, which leads some to call the idea of plaintiff-friendly juries a myth. But that quantitative record needs to be discounted because, qualitatively, much poorer cases get to the jury in the Eastern District than elsewhere. (That said, adjustment of defense trial tactics in recent years seems to have had some effect.) And once plaintiffs do win, the juries tend to be on the high side on the damages calculations.

3) The Eastern District of Texas, like many other federal districts, has a "rocket docket": local civil rules of procedure for patent cases expedite the consideration of such cases. There's nothing inherently wrong with this, but the effect is a benefit for patent plaintiffs. A patent plaintiff who has its act together will have its ducks in a row pre-filing: all of its research, experts, and infringement theory of the case prepared. In most litigation, it's the plaintiffs who need discovery the most: lots of document discovery to find smoking guns, lots of depositions to induce witnesses into saying things that can be perceived as damaging admissions. Plaintiffs need discovery in patent cases, too, especially if they're hoping to prove "willfulness," but defendants need discovery more. Defendants will be working from scratch, and hoping to find evidence to invalidate a patent. An expedited discovery schedule makes that more difficult. An expedited discovery schedule also requires a larger team of litigators, because limited bandwidth makes lean staffing inadvisable. This has the potential to make a case more expensive than it would be with a longer schedule, both in terms of cash flow and because there's more wasted and duplicated effort conveying information when one is coordinating a larger team of attorneys, though there is the countervailing effect of the impossibility of no-stone-left-unturned/scorched-earth litigation that can take place with a conventional litigation schedule.

4) The remoteness of the Marshall location raises litigation costs considerably. Every 15-hour round-trip by a senior litigator having to change planes in Atlanta adds $10,000 or more to the bill. This, combined with the decreased likelihood of resolving the litigation through motion practice rather than expensive trials, and the increased costs of the rocket docket, means that there's an in terrorem effect from simply bringing the lawsuit: the patent troll can offer to settle for far less than the cost of litigation, and the defendant, who does not collect the full social value from invalidating a bad patent, often does not have the incentive to keep fighting.

In an extraordinary two-sentence order in Jewel v. NSA, the Ninth Circuit has accepted for filing an ex parte in camera classified brief that the plaintiffs will not be allowed to see. You'd think the government would be grateful for this seemingly unprecedented breach of due process, but they have instead doubled down to warn the judges not to ask any questions that would disclose information from that brief in public. [Politico]

If the Ninth Circuit is going to adopt such a policy, they should at least justify it with an opinion. Because that order is presumptively illegal. As we've previously quoted Judge Easterbrook in Union Oil Co. of California v. Leavell, 220 F.3d 562, 567-68 (7th Cir. 2002):

"Even disputes about claims of national security are litigated in the open. Briefs in the Pentagon Papers case, New York Times Co. v. United States, 403 U.S. 713, 91 S.Ct. 2140, 29 L.Ed.2d 822 (1971), and the hydrogen bomb plans case, United States v. Progressive, Inc., 467 F.Supp. 990, rehearing denied, 486 F.Supp. 5 (W.D.Wis.), appeal dismissed, 610 F.2d 819 (7th Cir.1979), were available to the press. ... Judicial proceedings are public rather than private property, U.S. Bancorp Mortgage Co. v. Bonner Mall Partnership, 513 U.S. 18, 27-29, 115 S.Ct. 386, 130 L.Ed.2d 233 (1994); In re Memorial Hospital of Iowa County, Inc., 862 F.2d 1299, 1302-03 (7th Cir.1988), and the third-party effects that justify the subsidy of the judicial system also justify making records and decisions as open as possible. What happens in the halls of government is presumptively public business. Judges deliberate in private but issue public decisions after public arguments based on public records. The political branches of government claim legitimacy by election, judges by reason. Any step that withdraws an element of the judicial process from public view makes the ensuing decision look more like fiat, which requires compelling justification."

The circumscribed public oral argument will be held August 31, 2011, but the Ninth Circuit website doesn't yet indicate whether it will be in San Francisco or Pasadena.

Cecil (FJC) et al., Motions to Dismiss for Failure to State a Claim after Iqbal: Report to the Judicial Conference Advisory Committee on Civil Rules:

This report presents the findings of a Federal Judicial Center study on the filing and resolution of motions to dismiss for failure to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. The study was requested by the Judicial Conference Advisory Committee on Civil Rules. The study compared motion activity in 23 federal district courts in 2006 and 2010 and included an assessment of the outcome of motions in orders that do not appear in the computerized legal reference systems such as Westlaw. Statistical models were used to control for such factors as differences in levels of motion activity in individual federal district courts and types of cases.

After excluding cases filed by prisoners and pro se parties, and after controlling for differences in motion activity across federal district courts and across types of cases and for the presence of an amended complaint, we found the following: There was a general increase from 2006 to 2010 in the rate of filing of motions to dismiss for failure to state a claim (see infra section III.A); In general, there was no increase in the rate of grants of motions to dismiss without leave to amend. There was, in particular, no increase in the rate of grants of motions to dismiss without leave to amend in civil rights cases and employment discrimination cases (see infra section III.B.1); Only in cases challenging mortgage loans on both federal and state law grounds did we find an increase in the rate of grants of motions to dismiss without leave to amend. Many of these cases were removed from state to federal court. This category of cases tripled in number during the relevant period in response to events in the housing market (see infra section III.B.1). There is no reason to believe that the rate of dismissals without leave to amend would have been lower in 2006 had such cases existed then; There was no increase from 2006 to 2010 in the rate at which a grant of a motion to dismiss terminated the case (see infra section III.B.1).

Of course, there could be hidden effects that the study is not picking up. Some judges are going to be resistant to Twombly and Iqbal; others were already applying a heightened standard of review of complaints before Twombly (recall that Twombly itself involved an appeal to the Second Circuit from a plaintiff who had had his complaint dismissed). And the mix of cases that are going to be brought post-Twombly are different. We will still see cases dismissed because of lawyers pushing the envelope and failing to create new law. But, after Twombly, the hypothetical 100-page complaint alleging wildly implausible conspiracies is much more likely to be filed by a deranged pro se than a lawyer who cares about adhering to ethical standards. Meritless implausible complaints that would have been filed in 2005 are less likely to be filed in 2011, but it's hard to say that that is a bad thing.

Russell Jackson analyzes recent Supreme Court and lower-court personal jurisdiction jurisprudence.