Annual Judges’ Night Dinner to be Held on June 8th

The Cincinnati/Northern Kentucky Chapter of the Federal Bar Association will once again host the annual Judges’ Night Dinner on Wednesday, June 8th.  It is always a great event and often attended by most of the 6th Circuit judges, as well as numerous local district court and magistrate judges.  This year’s featured speaker will be General William Suter, former Clerk of the United States Supreme Court.  If you are interested in attending, please click here for more information.

Judge Jones Publishes An Autobiography

In his new memoir, Answering the Call: An Autobiography of the Modern Struggle to End Racial Discrimination in America, former Sixth Circuit Judge Nathaniel R. Jones recounts his long history fighting for racial equality.  Judge Jones was the first African American assistant U.S. attorney, was the general counsel of the NAACP, and served for 23 years on the Sixth Circuit.  Of particular interest, Judge Jones provides some behind-the-scenes anecdotes from the civil rights cases he litigated before the Sixth Circuit and other courts, and from his experiences in civil rights cases while on the Sixth Circuit.  The book has received strong reviews from the Cincinnati Herald and Kirkus.

Standing on Shifting Ground in the Sixth Circuit

Earlier this week, the Supreme Court remanded Spokeo v. Robins to the Ninth Circuit on grounds that Article III requires “concrete” harm in order to maintain an action in federal court.  We have been following the case here on the blog because, as noted previously, the Ninth Circuit’s decision in Spokeo relied on Sixth Circuit jurisprudence and, in particular, the Sixth Circuit’s decision in Beaudry v. TeleCheck Servs.  As recently as last month, Spokeo’s reliance on Beaudry was also noted by Judge Griffin’s opinion in Brackfield & Assocs. P’ship v. Branch Banking & Tr. Co., which pointed out in a footnote that Congress’s power to create rights of action where the only injury-in-fact is the violation of that statutory right was currently up for debate.

After the Supreme Court’s decision in Spokeo, however, the contours of the standing debate have changed and so has the law in the Sixth Circuit, because Spokeo held that Article III requires a plaintiff to suffer “concrete” harm (which is not a requirement that Congress can erase).  To be sure, just how high of a hurdle this proves to be in practice remains to be seen.  As an initial matter, though, courts in the Sixth Circuit must consider whether the plaintiff has suffered some form of actual harm irrespective of whether or not the statute has been violated with respect to that plaintiff.  In addition, there are also derivative consequences to Spokeo that could ripple through the law.

One such potential area is class certification.  Part of the logic from the Sixth Circuit’s decision in Beaudry involved cases where individual issues of actual harm were not a barrier to class certification because Congress’s statutory scheme provided for statutory damages without proof of actual injury.  Accordingly, in addition to analyzing the plaintiff’s alleged injuries to determine whether they are “concrete,” courts and practitioners in the Sixth Circuit will have to work out Spokeo’s impact on questions of class certification as well.

Sixth Circuit Rejects “Categorical” Approach To Class Action Settlements and Class Counsel Fees

Last week in Gascho, et al. v. Global Fitness Holdings, LLC, the Sixth Circuit addressed a laundry list of objections to a class action settlement on behalf of gym members who had been allegedly incorrectly charged certain fees.  The settlement made ~$15.5 million available to class members and awarded fees of $2.39 million to class counsel.  Among other things, objectors claimed that the settlement was unfair because counsel’s fees were disproportionately high compared to the benefits actually received by class members under the “claims made” approach. A split panel rejected this argument, pointing out that the “fundamental fairness of the amount the class itself received” was not disputed, and that the district court properly used two established methods of calculation: the lodestar method and the “percentage of the fund” method.

The district court had approved class counsel’s lodestar figure based on declarations, despite noting that “more detailed records” would have been “best practice.”  The Sixth Circuit said that this approval would have been “a close question” given the “minimal billing information provided,” but upheld the district court’s decision because the district court cross-checked the amount by calculating the percentage of the benefit to the class that the fee represented: ~21%.  Objectors argued that the lodestar billing information was inadequate and that the percentage of the fund should have been calculated based on the amount class members claimed, which ended up being ~$1.6 million.  By that reasoning, the fee would have been a far greater percentage of the benefit to the class.  Both the majority and the dissent highlighted the differences among approaches in other circuits, and ultimately the panel majority rejected any “categorical rule,” choosing to “leave the determination of how to value the benefit . . . to a district court’s discretion.”

Judge Clay dissented, stating that “the district court should not have been so trusting” towards “counsel’s uncorroborated sworn statements,” and that “the district court should have used the $1,593,240 actually paid as the benefit to the class for the calculation of its fee.”

Sixth Circuit Reinstates $15.6 Million Damage Award

On Friday, the Sixth Circuit reinstated a $15.6 million jury verdict awarded to Cranpark, Inc. in its promissory estoppel suit against Rogers Group, Inc. (“RGI”). In 1998, representatives from RGI and James Sabatine, the owner of Hardrives Paving and Construction, Inc. (“Hardrives”), for whom Cranpark is the successor-in-interest, met to discuss a possible joint venture between the companies. However, after Hardrives has purchased a new plant in Youngstown, Ohio, RGI told Sabatine that RGI would no longer be able to participate in the joint venture. Following the collapse of the venture, Hardrives began losing money and, in 2001, Sabatine was forces to enter into an asset purchase agreement with McCourt Construction Company (“McCourt”). Cranpark brought suit against RGI for breach of contract and promissory estoppel.

At the close of evidence, RGI moved for judgment as a matter of law, arguing that Cranpark was not the proper party to the case because Cranpark had sold its rights to bring a cause of action against RGI to McCourt during the asset sale. The district court denied the motion and the jury awarded a verdict in favor on Cranpark on the promissory estoppel claim, awarding $15.6 million in damages. On post-trial motions, however, district court agreed that Cranpark lacked Article III standing and vacated the jury verdict.

On appeal, the Sixth Circuit addressed Cranpark’s claim that when a party transfers its interest in a cause of action, it is not Article III standing that is implicated, but instead Civil Procedure Rule 17’s “real-party-in-interest” requirement. The Sixth Circuit notes that the distinction between the two is significant because the real-party-in-interest requirement is generally viewed as an affirmative defense that can be waived, whereas Article III standing is a plaintiff’s burden and can be raised at any time. The Sixth Circuit concluded that “one who sells his interest in a cause of action is not deprived of Article III standing, but he is susceptible to a real-party-in-interest challenge, at least if the challenge is timely raised.” Because Cranpark’s Article III standing was unaffected by the asset purchase agreement, the district court’s decision was reversed

This case provides a direct answer to the often confused question of whether standing remains despite the fact that a party’s interest in bringing a claim is transferred. The Sixth Circuit held that yes, standing remains, but that the party may be subject to a real-party-in-interest challenge.

Sixth Circuit Rules on $200,000 Back Pay Issue

On Wednesday, the Sixth Circuit issued its decision in Szeinbach v. The Ohio State University. The case centered on Szeinbach’s claim that she was discriminated against while she was employed as a professor with the Ohio State University College of Pharmacy. Szeinbach alleged that she was the victim of discrimination and retaliation stemming from her support of a fellow colleague’s discrimination claim.

Szeinbach brought suit under Title VII of the Civil Rights Act of 1964. After a three-week trial, the jury awarded Szeinbach damages in the amount of $513,368. The award was comprised of $300,000 for compensatory damages, the statutory maximum under 42 U.S.C. § 1981a(b)(3), and $213,368 for back pay, the amount calculated by Szeinbach’s expert. The expert’s calculation of back pay was based on the amount of money that a comparable employee would have made at other schools across the country. Ohio State moved for, and was granted, a remittitur, reducing the damages award by $213,368 – the value of the back pay. The District Court explained the decision by applying the holding from Kaiser v. Buckeye Youth Center, a case from the Southern District of Ohio which held that an award of back pay could not be based on an amount that an employer other than the discriminating defendant itself would have paid.

On appeal to the Sixth Circuit, the decision to grant Ohio State’s motion for a remittitur was affirmed, with the Court explaining that Szeinbach had failed to establish, with reasonable certainty, that she was entitled to back pay. But the Sixth Circuit rejected the district court’s application of Kaiser, opting to adopt the Fifth Circuit’s interpretation of the proper method for calculating back pay as articulated in Nassar v. Univ. of Texas Sw. Med. Ctr.

The ramification of the Sixth Circuit’s decision in Szeinbach v. The Ohio State University could be significant. After the Sixth Circuit’s holding on Wednesday, plaintiffs alleging discrimination under 42 U.S.C. § 2000e–5(g) of Title VII and seeking back pay, may, in certain circumstances, look to the salaries of other employers to determine the appropriate level of back pay rather than being limited to the salary offered at the discriminating employer. We will keep a close eye on district court activity to see how the ramifications from this case unfold.

Bank’s Public Disclosure of Customer Data Didn’t Violate Right to Financial Privacy Act

The Right to Financial Privacy Act prohibits banks from “provid[ing] to any Government authority access to . . . or the information contained in” customer financial records, except under certain specified conditions, and grants a private right of action to customers to enforce the prohibition.  Last week, in Brackfield  & Assocs. P’ship, et al. v. Branch Banking & Tr. Co., the Sixth Circuit rejected a customer’s attempt to sue its bank under the RFPA where the bank had accidentally made the customer’s records public.

The plaintiff argued that the bank’s accidental inclusion of its records in a public filing made them available to the government (among others) and thereby violated the RFPA.  In an unpublished—and therefore technically non-binding—opinion, the Sixth Circuit rejected this “imaginative statutory argument,” holding that general public disclosure did not constitute “provid[ing]” records to the government and that, in the context of the entire statute, the phrase “access to” was limited to situations where government authorities were actually attempting to obtain customer records. Therefore, the court concluded that plaintiff was not injured-in-fact under the statute and affirmed dismissal.

Notwithstanding the Sixth Circuit’s narrow interpretation of the RFPA in this case, institutions should continue to guard carefully against accidental leaks of customer information to avoid RFPA and other potential liability.

Sixth Circuit Tackles Two Questions of First Impression Under CAFA

On Wednesday, the Sixth Circuit decided two issues of first impression, both of which related to the Class Action Fairness Act (“CAFA”). Graiser v. Visionworks of America, Inc., the plaintiff alleged that the company’s “buy one get one free” advertisement was misleading. The plaintiff waited until six months after its complaint to tell the defendant they were seeking to create a class of all individuals affected by the advertisement.  Within thirty days of that notice, Visionworks calculated potential damages to be over the $5 million threshold requirement for removal under CAFA. Visionworks then removed the case and the plaintiff argued that the 30 day window for removal had expired long before.

The Sixth Circuit identifies two questions of first impression from these facts:  (1) what documents trigger § 1446(b)(3)’s thirty-day clock for removal under CAFA? and (2) whether there are multiple thirty-day removal clocks if there is justification for removal under CAFA? With respect to the first question, the Sixth Circuit took the position adopted by the First, Second, Seventh, and Ninth Circuits that “the thirty-day clock of § 1446(b) begin[s] to run only when the defendant receives a document from the plaintiff from which the defendant can unambiguously ascertain CAFA jurisdiction.” The court noted that this rule leaves open the chance that a defendant could ignore information in their possession that supports removability until it is determined that removal is the favorable option. To avoid this, the court points out that a Plaintiff would need only provide a defendant with a document indicating removability, and the clock would start. The court therefore found that the removal was timely based on the timing of the plaintiffs’ notice, regardless of when the defendant might have learned that removal was possible.

For the second question, the Sixth Circuit adopted the Ninth Circuit reasoning that “a defendant may remove a case from state court within thirty days of ascertaining that the action is removable under CAFA, even if an earlier pleading … revealed an alternative basis for federal jurisdiction.”

With this opinion, the Sixth Circuit joins other circuits to emphasize that CAFA was meant to encourage removal to federal court and to frustrate efforts by plaintiffs to avoid removal under CAFA by filing ambiguous or vague complaints hiding the full scope of their claims.

Supreme Court Affirmation Leaves More Questions than Answers

Two weeks ago, the jurisprudential ramifications of Justice Scalia’s passing were felt. The incomplete Court decided Hawkins v. Community Bank of Raymore, a case from the Eighth Circuit questioning whether a guarantor is an “applicant” as defined in the Equal Credit Opportunity Act. The Eighth Circuit decision in Hawkins, which held that a guarantor is unambiguously not an applicant, is in direct conflict with the Sixth Circuit’s decision in a factually similar case: RL BB Acquisition, LLC v. Bridgemill Commons Dev. Grp., LLC. However, the Supreme Court, equally divided, affirmed the decision of the Eighth Circuit, a decision that fails to answer the underlying questions regarding the ECOA.

At the core of the Hawkins and Bridgemill cases are a challenge to the ECOA provision that gave standing to “applicants” in the credit process to seek remedy for inappropriate marital status discrimination.  In each case, the plaintiffs were the spouse of individuals who were seeking to get financing from a bank. In each case, the spouse was required guarantee the commercial loan simply because of their status as a spouse, a practice that, the plaintiff argued, constitutes improper marital status discrimination. However, the financial institutions argued that only applicants have standing under the ECOA and that the language of the statute was unambiguous: guarantors are not applicants. The banks’ argument directly challenged prior regulation by the Federal Reserve Board, which found the statute ambiguous regarding the issue drafted regulation that included guarantors as applicants. Central to each case are the questions whether the guarantor is an applicant under the ECOA and whether the Federal Reserve Board had the authority to interpret the statute as saying that guarantors are applicants.

The Eighth Circuit, whose opinion held that the guarantors are not applicants and that, because the ECOA language is unambiguous, the Federal Reserve Board did not have the authority to regulate the issue. Conversely, the Sixth Circuit found that the statutory language was ambiguous and that the Federal Reserve Board was making an appropriate interpretation of the statutory language by deciding that guarantors are applicants. The Sixth Circuit opinion has not been appealed to the Supreme Court.

Because of the nature of the affirmation, the Hawkins affirmation does not carry any precedential value. Additionally, this issue is likely to arise again and the four-four split indicates that any new appointment to the Supreme Court will be the deciding voice of the court. Given the implication of Sixth Circuit jurisprudence, the issue carries significant weight and we will continue to monitor the Supreme Court’s actions.

The Connection between Caseload and Per Curiam Circuit Court Opinions

Nearly two years ago, we commented on the increasing frequency with which federal courts of appeals issue per curiam, and often short and unsigned, opinions. Specifically, we noted that the use of such opinions had increased significantly 2013, year over year. This increase was consistent with the general modern trend toward per curiam opinion.   This post investigates whether that trend has continued.

After a few years of increases, there was a sharp decrease in the number of per curiam opinions in 2015.

chart

In our last post, we wondered whether increasingly common use of per curiam opinions was largely a result of a rising appellate caseload.  We are not surprised, therefore, to find that this sharp decrease in per curiam opinions corresponds to a decrease in the total number of case terminations. However, we were more interested in the relationship between the year-over-year change between total cases terminated and the number of per curiam opinions. Our research indicated that from 2014 to 2015 the total number of opinions fell by 5.8%. However, over the same time, the number of per curiam opinions issued by the circuit courts fell by over 12%. Additionally, the total number of per curiam opinions, as a percentage of terminated cases, decreased from nearly 4% to just over 3%. While this research is far from scientific and the sample size is likely too small to draw any predictive conclusions, our results seems to support for the idea that more terminations means that the judges will engage in a disproportionately higher number of per curiam opinions. Conversely, as we recognized in this research, fewer terminated opinions leave more time for judges to author signed opinions which disproportionately decreases the need for and occurrence of per curiam opinions.

Our research of per curiam opinions also included circuit specific data and revealed significant variation between the frequencies with which the various circuit courts author per curiam opinions. The Fourth Circuit (5%), Fifth Circuit (5%), and Eleventh Circuit (7%) produced the highest percentage of per curiam opinions as a percentage of total cases terminated while the Second Circuit (.15%) had just a handful.  The Sixth Circuit, which uses per curiam opinions in only 3% of its decisions, falls squarely in the middle.

 

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