Yesterday, the Supreme Court stayed an Ohio district court’s preliminary injunction that would have allowed early in-person (EIP) voting in Ohio to start today. A Sixth Circuit panel upheld the injunction in a lengthy opinion last week, which we covered here. Although Justice Kagan had denied the State of Ohio’ application to intervene as a party in the matter on her own, she referred Secretary of State Husted’s application for a stay to the entire Court, which in turn granted the request 5-4. Justice Kagan herself, along with Justices Ginsburg, Breyer, and Sotomayor, would have denied the stay.
The practical upshots of the stay are: (1) The case has essentially passed from the Sixth Circuit up to the Supreme Court, and Ohio’s application for an en banc rehearing by the Sixth Circuit is no longer necessary. (2) Secretary Husted may now petition the Court for a writ of certiorari (possibly resulting in a Supreme Court decision on the merits of the underlying suit). This could lead to a potential showdown over the Fourteenth Amendment’s interaction with changes to voting laws, as well as the proper interpretation of § 2 of the Voting Rights Act of 1965. (3) According to Secretary Husted’s new directive, issued after the stay, Ohio’s EIP voting will not begin until next week. As a result, there will be no period of simultaneous registration and voting (called the “Golden Week”), and the only Sunday EIP voting option will be November 2. Of course, we will monitor Ohio’s petition for certiorari and any developments in the case, including any expedited review by the Supreme Court.
Two recent Sixth Circuit decisions have filtered into other circuits’ jurisprudence, garnering both supporters and critics. In July, the Third Circuit agreed with the Sixth that the availability of classwide arbitration is a “substantive question of arbitrability,” and thus subject to review by a court rather than an arbitrator. Then, in August, the Eighth Circuit expressly disagreed with the Sixth as to whether guarantors are protected by the Equal Credit Opportunity Act (ECOA).
The Third Circuit encountered the issue of the arbitrability of classwide arbitration clauses in Opalinski v. Robert Half International, Inc. There, the plaintiffs brought a putative class action, alleging that RHI failed to pay them and similarly situated employees overtime in violation of the Fair Labor Standards Act. The district court held that the arbitrator should decide whether the plaintiffs’ agreement with RHI allowed bilateral or classwide arbitration, and RHI appealed the arbitrator’s decision in favor of classwide arbitration. On appeal, the Third Circuit first noted that although a plurality of the Supreme Court in Green Tree Financial Corp. v. Bazzle, 539 U.S. 444 (2003), believed that the availability of classwide arbitration is not a substantive question of arbitrability for a court to decide, the Court has not “squarely decided” the issue. The Third Circuit panel then expressly agreed with the Sixth Circuit’s decision in Reed Elsevier, Inc. v. Crockett, in which the court held that “whether an arbitration agreement permits classwide arbitration is a gateway matter that is presumptively for judicial determination.” (We covered that case here.) Thus, although a plurality of the Supreme Court disagreed with this proposition a decade ago, its subsequent decisions have retreated from that stance, and now two circuits have expressly disagreed with it. Whether the Court will revisit this issue in Opalinski remains to be seen, but we will be watching for further developments.
The issue of whether the ECOA protect “guarantors” as “applicants” confronted the Eighth Circuit in Hawkins v. Community Bank of Raymore. The ECOA prohibits discrimination against applicants for credit on a number of grounds, including marital status. The Federal Reserve’s regulations enforcing the ECOA extend the law’s protections to “guarantors” by including them in the definition of “applicants.” In Hawkins, the plaintiffs (two wives) alleged that Community Bank required them to execute personal guaranties securing loans to their husbands’ development company “solely because they are married to their respective husbands,” in violation of the ECOA. When the company defaulted on the loans and the bank demanded payment from the wives, they sued the bank for “damages and an order declaring that their guaranties were void and unenforceable.” Earlier this year, in RL BB Acquisition, LLC v. Bridgemill Commons Development Group, LLC, the Sixth Circuit held that the Federal Reserve’s regulations including guarantors under the ECOA’s protections were entitled to deference under Chevron because the ECOA itself is ambiguous as to whether third parties can be considered “applicants.” However, in Hawkins, the Eighth Circuit came to the opposite conclusion, holding that the Federal Reserve’s regulations are not entitled to deference because the ECOA clearly and unambiguously excludes third parties who do not directly request credit, including guarantors. The Hawkins decision thus creates a circuit split over the interpretation of a significant federal statute, with potentially far-reaching implications for both commercial and personal credit applicants. We will continue to monitor future decisions on this issue, including whether the Supreme Court decides to resolve this circuit split.
In a decision generating interest both the locally and nationally a three-judge panel of the Sixth Circuit upheld a preliminary injunction which reinstates Ohio’s early in-person (EIP) voting period of 35 days (from 28 days) and allows county officials to adopt additional EIP hours. In doing so, the panel upheld the district court’s analysis that Ohio’s interest in preventing voter fraud, reducing election cost, and maintaining election uniformity were not sufficient to justify the burden imposed on minorities and low-income voters through the reduced availability of EIP voting. Specifically, the panel held that the district court properly applied the flexible Anderson-Burdick balancing test to the plaintiffs’ Equal Protection challenge, and that the “undisputed” record supported the district court’s injunction. The panel also held that the district court properly found the plaintiffs likely to succeed on their challenge of the EIP restrictions under § 2 of the Voting Rights Act of 1965.
With only 39 days to go until the election and early voting now set to begin on Tuesday, Ohio officials have petitioned the Sixth Circuit for en banc review of the dispute. As of this morning, that petition is still pending. Ohio officials have also asked the Supreme Court to intervene, which, as of this morning, is also pending. This highly salient dispute remains a fluid situation with a ticking clock that could turn in any number of directions. But for now, the polls open on Tuesday.
The Judicial Conference Committee on Rules of Practice and Procedure recently released their September report on proposed amendments to the Federal Rules of Civil Procedure. The new rules are now under review by the Supreme Court. Before the Court is a significant amendment to Rule 37(e) designed to “establish greater uniformity in how federal courts respond to the loss of ESI [electronically stored information].”
Since the current Rule 37(e)’s adoption, and given the proliferation of both ESI and requests for spoliation sanctions for the loss of ESI, the Rules Committee has recognized that “a more detailed response to problems arising from the loss of [ESI] is required.” The problem, as the Committee observes, is a lack of uniformity among the circuits about how and when Rule 37 sanctions – particularly adverse inference jury instructions – are imposed on a party for the destruction or loss of ESI. In deciding when to impose an adverse inference instruction as a result of the loss of ESI, many circuits have adopted the second prong of the test from the Second Circuit’s 2002 Residential Funding case: the ESI must have been destroyed “with a culpable state of mind.” The crux of the issue, however, is what level of culpability is required in order to obtain the adverse inference instruction. Some circuits hold that a court may impose an adverse inference instruction if a party destroyed ESI “negligently,” whereas some demand a showing of “gross negligence” or even “bad faith” to merit the sanction. (The Sixth Circuit adopted the negligence standard for adverse inference sanctions under Rule 37 in Beaven v. U.S. Department of Justice, 622 F.3d 540 (2010) and recently reaffirmed this standard in Stocker v. United States, 705 F.3d 225 (2013)).
The Committee argues that this wide range of culpable states of mind “has resulted in a tendency to over preserve ESI” because parties face serious sanctions if a court determines – in hindsight – that their destruction of ESI was negligent. In response, proposed Rule 37(e)(2) “eliminates the circuit split on when a court may give an adverse inference jury instruction for the loss of ESI” and adopts a heightened standard for the level of culpability necessary to issue an such an instruction. The new Rule 37(e)(2) allows an adverse inference instruction only upon a finding that a party “acted with the intent to deprive another party of the information’s use in the litigation” (emphasis added). Thus, under the new Rule 37 (if adopted by Congress and the Supreme Court), the mere negligence standard from Residential Funding and Beaven will no longer warrant the issuance of an adverse inference instruction.
We have previously reported on potential changes to the Federal Rules of Appellate Procedure with respect to word limits for briefs, so the pending rule changes could have a significant impact on practice within the Circuit if adopted.
When a president serves two terms (as the last three have), they can have a significant impact of the face of the federal judiciary. An analysis by the New York Times focuses on President Obama’s federal appellate legacy. Interestingly, in looking at all of the circuits, only four (out of 13, including the Federal Circuit) now have majorities of active judges who were appointed by Republican presidents – and one of those is the Sixth Circuit. President Obama has only had the opportunity to make two appointments to the Sixth Circuit (Judges Stranch and Donald), although there is currently an open seat for Kentucky based on Judge Martin’s retirement. Only the Fifth Circuit, with two vacancies, has more than one vacancy right now – most are at zero or one. We will continue to monitor any developments related to the potential Kentucky nomination.
Judge R. Guy Cole, Jr. became the Chief Judge of the Sixth Circuit on August 15. Prior to his nomination to the Sixth Circuit, Chief Judge Cole had a diverse range of experience, including both public service and private practice: a litigator at the United States Department of Justice, a law firm partner, and a bankruptcy judge. For years, Chief Judge Cole, whose chambers are in Columbus, Ohio, has also taught courses on habeas and the fourteenth amendment at the Ohio State University’s Moritz College of Law.
The role of Chief Judge typically means increased administrative responsibilities in exchange for a reduced case load. Not only will Chief Judge Cole will be the second chief judge in a row from Ohio, he will be the second chief judge in a row to have previously served as a bankruptcy judge, a role which also required managing a very complex docket system requiring quick decisions on major issues. We look forward to seeing what changes Chief Judge Cole implements during his tenure.
In Burgett v. Troy-Bilt, LLC, the Sixth Circuit affirmed summary judgment on behalf of the defendant in a products liability case after the district court struck the plaintiff’s expert under Daubert. The key question in this case was the appropriateness of the expert’s qualifications. The plaintiff’s expert had sought to opine on electrical issues, biomechanical issues, and human factors. On the latter two points, the expert admitted that he was not an expert by educational training, and therefore the Sixth Circuit had little trouble upholding the district court’s decision to exclude his testimony in these areas. On the electrical issues question, it was “a much closer call.” On the one hand, the Court emphasized the limited training by the expert on electrical issues and how remote it was, but on the other, it acknowledged that plaintiffs “only needed a witness who met the ‘minimal qualifications’ requirement – not one who could teach a graduate seminar on the subject.” In this dispute over the malfunctioning of a lawn mower, the Court suggested that a lawn mower repairman would likely have been able to opine on the manufacturing defect but struggled to decide whether this forensic engineer and accident reconstructionist could pass Daubert muster. At the end of the day, the Court punted on the question because it found that summary judgment was proper even if the expert’s testimony was considered.
The decision prompted an interesting concurrence from Judge Stranch, who wrote separately to address “the apparent confusion here and in a number of cases regarding the admissibility of expert testimony. This recurring issue arises at the intersection of the expert requirements of qualification, relevance, and reliability and the nature of our adversary system.” Building on the struggles in the majority opinion, Judge Stranch would have found the expert qualified to testify on the electrical issues because the qualification inquiry does not ask whether the expert was the best expert, but simply whether the expert possesses minimal qualifications. Assuming appropriate qualifications, the proposed expert must still offer testimony that is reliable and relevant. Judge Stranch emphasized that the qualifications of the expert should not be confused with the reliability of the proposed testimony.
As the Court is taking a closer look at Daubert and related issues over the last several years, it is difficult to say that the Court’s jurisprudence has progressed in a linear fashion. Part of this is because of the abuse of discretion standard and the fact that some of the opinions are reviewing decisions to admit expert testimony where as others are dealing with exclusions. Judge Stranch aptly notes confusion surrounding some of these issues, it remains to be seen how that confusion will be alleviated. One possibility would be that the Court could take a significant Daubert decision en banc, but the difficulty often is finding one that would be useful for broad pronouncements rather than heavily fact-dependent. In the meantime, however, we will continue to monitor how the Sixth Circuit’s Daubert decisions evolve.
Yesterday, the Sixth Circuit issued an order in EEOC v. Ford Motor Company granting rehearing en banc in the case and vacating the panel decision. As we previously explained, the divided panel decision carried significant repercussions for employers, and attracted significant attention across the country. The en banc review signals that the Court may change course on this issue, and it will likely be argued at the Court’s traditional December en banc hearing. Another interesting side note is that Judge McKeague dissented from the panel result, and as we noted at the last en banc hearing , Judge McKeague dissented in the last two cases that the Sixth Circuit heard en banc.
Yesterday, the Sixth Circuit tried to bring some clarity to the role of res judicata in arbitration proceedings. W. J. O’Neil Company v. Shepley, Bullfinch, Richardson & Abbott, Inc. In a construction project gone awry, the W.J. O’Neil Company sued its construction manager in state court but the parties ended up in arbitration. The two defendants in this case did not have a direct contract with O’Neil but also ended up in the arbitration on indemnity claims. In the arbitration, however, O’Neil did not assert claims against the defendants in this action, and it ultimately prevailed in the case against the construction manager. After the arbitration, O’Neil set its sights on the defendants. Although the district court dismissed the case based on res judicata, the Sixth Circuit, in a divided decision, reversed.
The Court began by wrestling with whether Michigan or federal law governed the res judicata analysis, acknowledging, “the issue is underdeveloped and murky when it involves an unreviewed arbitration award.” In the end, the Sixth Circuit elected not to resolve the thorny choice of law question based on general agreement between the parties that federal and Michigan law were largely uniform.
The Court then explained that it was aware of no circuit that had held that an unreviewed arbitration award bars later litigation of a claim not subject to the arbitration. Because the arbitrator’s authority derives from the contract, “it makes little sense to allow an arbitration proceeding or award to preclude a claim the arbitrator had no authority to decide.” As a result, the Court concluded that “res judicata yields where the claims sought to be precluded were not subject to the arbitration.” The majority then turned to an analysis of the contractual relationship between the parties and found the lack of the contract between O’Neil and the defendants significant to its determination that any claims between those parties were non-arbitrable. It reached its finding notwithstanding the fact that all of the parties were involved in the previous arbitration; according to the majority, simply because the parties were all there that did not compel O’Neil to raise claims against the defendants.
Judge McKeague dissented, emphasizing some of the practical realities of the problem created by O’Neil’s failure to bring claims in the arbitration. He emphasized the length and complexity of the hearings and that O’Neil and the defendants were actively hostile to each other in the arbitration. He also would have found a contractual basis for the arbitration because the contract between O’Neil and the arbitration defendant had a “flow-through” provision that operated to bind the present defendants.
As this case illustrates, arbitration preclusion rules are not always a portrait of clarity. This opinion has significance because of its efforts to clarify some of these issues within the Circuit. It also provides a good road map for parties arbitrating claims and evaluating potential res judicata implications.
This week, the Sixth Circuit issued a pair of significant criminal decisions. In the first, U.S. v. Mateen , the Court issued its en banc decision in this criminal sentencing case concerning offenses against a minor. We initially reported on the en banc hearing here. The en banc decision was unanimous (with Judge Clay concurring) and per curiam (an unusual disposition for an en banc decision). What was also interesting about the result was that the Court was unanimous notwithstanding the fact that the panel result was divided. That means that all of the judges were able to coalesce around the result in this case notwithstanding previous differences of opinion. The en banc Court vacated the judgment and remanded to the district court for resentencing, after a disposition on the grammatical “rule of the last antecedent.”
The case that may attract more attention, however, is the Court’s opinion from yesterday in U.S. v. Miller , more commonly known as the Amish haircutting case. The case involved assaults in certain Amish communities that were ultimately prosecuted as hate crimes. After several individuals were convicted, they appealed, and the Sixth Circuit, in a divided opinion, reversed. There is a very interesting Commerce Clause issue posed by this case, but the majority ended up not addressing it based on its reversal premised on the jury instructions. The Court found that an intervening U.S. Supreme Court decision, Burrage v. U.S., 134 S. Ct. 881 (2014), rendered the instructions given by the district court erroneous. In light of the Supreme Court’s decision, the victim’s protected characteristic must be a but-for cause behind the defendants’ decision to act. While the government sought to salvage the trial result based on harmless error, the majority was not persuaded. Acknowledging that some religious discord undoubtedly influenced the assaults, the Court nevertheless explained “untangling the role of religion, family, personality and other issues in the assaults was the point of the trial.” Judge Sargus (sitting by designation from the Southern District of Ohio) dissented, criticizing the majority’s interpretation of the statute. This case received national attention, and it is now headed back for another trial. Stay tuned.