Evolution of the Sixth Circuit Approach to §1292(b) Petitions for Interlocutory Appeals

In our previous post, we discussed the difficulties of succeeding with a Section 1292(b) petition in both the district court in the circuit court.  We also noted that while the Sixth Circuit’s rate of acceptance of orders already certified by district courts has been higher than average for federal circuit courts.  We then reviewed decision from the past few years, and found that the Sixth Circuit has recently been accepting for appeal about 90% of orders certified under §1292(b).  This post describes why we think this is happening.

Reviewing recent decisions, we believe the underlying reason for this change is that many panels of the Sixth Circuit are now holding that the traditional three-factor test, which is based on the statutory language, should be treated “as guiding criteria rather than jurisdictional requisites.” In re Trump, 874 F.3d 948, 951 (6th Cir. 2017) (adding italics while quoting 16 Wright & Miller, Federal Practice and Procedure §3930 (3d ed. 2002).  In short, the traditional three factor asked if the order presented an unsettled question of law the resolution of which would advance the litigation.  Adopting the approach explained by Wright & Miller, the circuit has begun explicitly considering “prudential” factors that were previously implicit, understated, or even sometimes ignored.  And because the district courts tend to place more importance on the practicalities of §1292(b) certification, recent Sixth Circuit decisions appear to be deferring to the lower court more often on whether accepting the appeal would materially advance the litigation.

Having both appellate and trial courts in agreement on interlocutory appeals is an unqualified good for both courts and litigants.  Circuit courts should generally defer to the lower courts, who have the best perspective on whether an immediate appeal would be efficient for the litigation, just as they defer to trial courts on all kinds of case management issues.  Appellate courts can instead focus on whether the issue is actually an undecided legal issue, and then resolve the issue.  Whether the court of appeals ultimately agrees with the lower court on the merits of the issues is less important, from a systemic perspective, than whether they agree on which kinds of issues should be subject to a 1292(b) appeal.

 

A Sea Change for 1292(b) Interlocutory Appeals in the Sixth Circuit

It’s been almost a decade since this blog discussed the likelihood that the Sixth Circuit would accept a discretionary appeal under 18 U.S.C. §1292(b).   That the section that gives a district court the discretion to certify an order for appeal if the issue involves an important question of law for which there is substantial ground for difference of opinion and where its resolution will efficiently advance the litigation.  The appellate court also has discretion whether to accept review of the certified order.  Section 1292(b) appeals are especially helpful in complex cases to correct early errors on questions of law that, if left until after final judgment, might otherwise require the parties to re-do years of expensive litigation.

Conventional wisdom was that district courts rarely granted certifications, and that appellate courts often rejected even those appeals.  For example, one study found that between 1986 and 2000 district courts in the First Circuit granted less than half of certification motions, and that the circuit court then rejected half of the certifications.  Other studies found even lower rates of success with appellate courts, on par with the low success rates for certified questions of state law.  When we conducted our own study, we were surprised to find that the Sixth Circuit was far more generous than other circuits, taking around 70% of the orders that were certified by district courts between 2008 to 2010.

But we have significant success utilizing §1292(b) appeals in the Sixth Circuit and elsewhere in the past few years, causing us to wonder if things had changed.  The scholarly literature appears to show that the circuit courts are not granting more interlocutory appeals than before, so this may be more a matter of skill or luck than a change in approach.

When we did our own survey of cases in the Sixth Circuit over the past couple of years, we found a significant difference—the Sixth Circuit has now been accepting an impressive 90% of petitions from orders certified by the district court.  We have not seen a change in the difficulty of getting a district court to certify an order for appeal (which remains an uphill battle).   So once you get a certification from the lower court, the chances of turning that certification into an interlocutory appeal in the Sixth Circuit are much better than in the past.

In the next post, we’ll explore potential reasons for this recent evolution of practice.

The Pandemic Didn’t Slow Down the Sixth Circuit

We keep up on statistics important to our clients, such as the time it takes to decide appeals, and we were especially interested to see how the pandemic had affected the Sixth Circuit.  Our gut feeling was that things might have slowed down a little in more complicated cases, but that the circuit had generally kept on top of things overall.  So we were not surprised to learn from the Judiciary’s latest statistics that the average time to decide cases from the notice of appeal until the decision, across all the circuits, had slowed by almost a month to 9.7 months.  Many circuits, including the Sixth, have specifically worked for years to streamline the appellate process, shaving the average time to decide an appeal from 11.7 months in 2010 to 7.7 months in 2017, so this backsliding is a little disheartening.

But good news for those of us in the Sixth Circuit, as the pandemic did not slow down the court at all.  The average time was 7.9 months in the year ending March 2020—and it remained at 7.9 months in the year ending March 2021.  That’s a remarkable achievement, and one we certainly appreciate, when most circuits had to slow down their decision-making during the pandemic.  It did not hurt, however, that the Sixth Circuit had every seat filled during those twelve months, and had twelve siting senior judges at the same time.  The Circuit has not been continuously full for an entire year since 2012, and is currently near its all-time record for the number of active senior judges.

Parties should take the above numbers with a grain of salt, as appeals often take much longer.  The statistics are skewed by appeals that are dismissed for lack of jurisdiction, settled or dismissed by the parties, or consolidated with other appeals—and so only take weeks or a couple months.  In other appeals, months may be required to obtain the transcripts or other record items, briefing schedules may be extended by each party, the appeal may be stayed for circuit mediation or the need to supplement the record, and motions can take months to resolve.  Complex appeals that involve oral argument and result in a signed, published decision also usually take longer to decide.  A good appellate attorney can evaluate these variables in individual cases, but even then it is still only approximate.  In the meantime, we’ll make do with these statistics.

Decision about a zoning dispute yields insights for both Federal Courts and appellate practice

The Sixth Circuit’s recent decision in Benalcazar v. Genoa Township, — F.3d — (6th Cir. June 10, 2021), provides a nugget in the law of Federal Courts regarding consent decrees. It’s also interesting from an appellate-practice perspective.

The case concerned a zoning dispute. Landowners in an Ohio township sought to rezone their rural acreage for development. The township agreed, but individual residents of the township did not. They utilized state law to pass a referendum that prevented the rezoning. Then landowners responded by suing the township in federal court, alleging that they were being deprived of their rights under the Due Process and Equal Protection Clauses. When the township and the landowners agreed to settle the federal case through a consent decree, the district court permitted the individual residents to intervene. They did, and moved to dismiss the suit. The district court granted their motion only in part and then approved the consent decree, and the residents appealed.

On appeal, the principal question presented was whether a legitimate federal court dispute existed, since that’s a necessary predicate for a consent decree. And how should the court go about answering that question? Continue Reading

Sixth Circuit Joins Four Other Circuits in Restricting Plaintiffs’ Standing to Bring Claims under the Fair and Accurate Credit Transactions Act (“FACTA”)

More than a decade ago, Congress attempted to address a novel threat that was then only in its nascent stages: identity theft.  The Fair and Accurate Credit Transactions Act of 2003 (“FACTA”) provided consumers with several tools to protect their identity, including the ability to request free annual credit reports from the three major credit reporting agencies and to place fraud alerts on their credit files if they suspected they had been the victims of identity theft.  The Act also prohibited businesses from printing more than the last five digits of a customer’s credit card number (or the expiration date) on a receipt.  Anyone who has used a credit card over the past decade has undoubtedly seen Congress’s handiwork in the truncated account number (“***********12345”) that appears on most credit card receipts—preventing would-be fraudsters from stealing credit card numbers from discarded or misplaced receipts.

On Tuesday, the Sixth Circuit became the latest court to address what happens when a merchant fails to truncate a credit card number as directed by Congress.  In Thomas v. TOMS King (Ohio) LLC, the plaintiff alleged that defendants provided her with a receipt that included both the first six and the last four digits of her credit card number.  On behalf of herself and other similarly situated customers, she brought suit for violation of 15 U.S.C. 1681c(g)(1), which specifically prohibits any person who “accepts credit cards or debit cards for the transaction of business” from “print[ing] more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.”  Under FACTA, any person who willfully violates this provision is liable for actual damages or statutory damages ranging from $100 to $1000, plus punitive damages and attorney’s fees.  See 15 U.S.C. § 1681n(a)(1)(A).

Although there was no dispute that the receipts issued by defendants technically violated FACTA, the question before the court was whether plaintiff had alleged a “concrete injury” sufficient to confer standing in federal court.  Plaintiff did not allege that her credit card number had actually been stolen (or that anyone else had even seen the receipt, for that matter).  Instead, she claimed that printing both the first six and last four digits of her credit card number on the receipt increased her risk of identity theft, and required her to take additional steps (e.g., saving the receipt) to protect herself from credit card fraud.

The Sixth Circuit rejected plaintiff’s claims, holding that she had failed to allege a concrete injury sufficient to confer standing.  In the court’s view, plaintiff had not established that disclosing the first six digits of her credit card number (which revealed only the issuer of the card) increased her risk of identity theft—even if doing so did technically violate the statute.  In the absence of allegations linking this statutory violation to an actual risk of identity theft—and given the fact that the receipt itself had not been lost, stolen, or even seen by a third party—the court concluded that plaintiff had not sufficiently alleged a concrete injury to support standing.

In so holding, the Sixth Circuit joined four other circuits (the Second, Third, Ninth, and Eleventh Circuits) in concluding that technical violations of FACTA’s truncation requirement, without more, do not confer Article III standing.  See Katz v. Donna Karan Co. Store, LLC, 872 F.3d 114 (2d Cir. 2017); Kamal v. J. Crew Grp., Inc., 918 F.3d 102 (3d Cir. 2019); Noble v. Nev. Checker Cab Corp., 726 F. App’x 582 (9th Cir. 2018); Muransky v. Godiva Chocolatier, Inc., 979 F.3d 917 (11th Cir. 2020) (en banc).  The D.C. Circuit reached the opposite conclusion in Jeffries v. Volume Servs. Am., 928 F.3d 1059 (D.C. Cir. 2019).  The receipt in that case, however, displayed all sixteen digits of the plaintiff’s credit card number plus its expiration date, and thus presented the “nightmare scenario” that FACTA was designed to prevent.  Id. at 1066.

The Sixth Circuit’s decision is a helpful reminder that not every violation of a federal statute satisfies the injury-in-fact requirement necessary for standing in federal court.  As Judge Suhrheinrich concluded (writing for the panel), “The bottom line in these cases, as in the one before us now, is that statutory-injury-for-injury’s sake does not satisfy Article III’s injury in fact requirement.”

A copy of the panel’s decision is available here.

In appreciation of a chief judge’s quiet leadership

The office of chief judge for any federal court is tricky. It involves a great deal of extra administrative work as well as the expectation—from the title, at least—that one is somehow “in charge” of the court. Yet the chief judge’s vote has no more weight than that of his or her colleagues, and because one assumes the role through seniority, not election, a chief judge lacks even the ability to rely on any kind of perceived mandate. The institution that the chief judge is supposed to lead, moreover, includes lots of colleagues with lifetime appointments!

The recent tenure of R. Guy Cole, Jr. as Chief Judge of the United States Court of Appeals for the Sixth Circuit—a term that he concluded last week—well illustrates one way that a chief judge can influence the court he leads, notwithstanding the challenges inherent in the position: by setting the tone for the court. Anyone who has litigated before Judge Cole or who has met him outside of court knows that, in addition to being a brilliant jurist, he is among the kindest, gentlest, and most courteous, respectful, and down-to-earth people—not just among federal judges, but generally.

His demeanor and approach have benefited the Sixth Circuit immensely during his time as chief judge. Particularly for a court that, as an institution, has sometimes struggled with its internal dynamics, Judge Cole’s tone has been a balm. The job of chief judge is generally pretty thankless, but Judge Cole deserves all of our thanks for his leadership these last nearly seven years.

The court remains fortunate that Judge Cole has now passed the baton to Jeffrey S. Sutton as the new chief judge because Judge Sutton’s kind, thoughtful, and considerate style is well suited to build on the legacy of his predecessor. Perhaps it’s time to add “wise chief judges for the Sixth Circuit” to the lengthy list of things Columbus, Ohio does well.

Practical Pointers for Certifying Questions to State Courts

Prior posts have discussed the comparative rarity of certified questions of state law in the Sixth Circuit (here and here).  This post gives practical pointers to improve your odds of success with certified questions both in the Sixth Circuit and in the state courts.

The decision to ask a federal court to certify a question to a state supreme court should be made as early as possible.  Many of the state and federal requirements require significant planning, as the foundation of a successful certification is often laid in the first few months.  Given that a certified question can be rejected by either state or federal courts, litigants should review the requirements of both courts before moving a federal court for certification (see, e.g., Ohio S. Ct. Prac. R. 9.01; Mich. Ct. R. 7.308; Ky. R. Civ. P. 76.37; Tenn. Sup. Ct. R. 23).  Below are the five chief factors that courts consider when seeking to certify a question of state law:

  • Case origin. Plaintiffs that chose to file in federal rather than state court may find the courts skeptical, based on the idea (fair or unfair) that a case raising an important issue of state law should have stayed in state court, and to avoid forum-shopping.  Defendants that removed a case to federal court may find the same problem when seeking certification.
  • State of the facts. Certification is most appropriate where a case’s factual record is fully developed enough to both allow the court to consider the question in context, and also to ensure that the question is actually necessary and dispositive to an important issue in the case.  State courts usually require that all pertinent factual questions be resolved.  When moving to seek certification, the best practice is to include a fair and complete summary of the pertinent facts.  State courts sometimes reject certified questions because they seem based on fact patters that are too abstract, theoretical, or simply unlikely to recur.
  • Timing on certification. Courts frown on parties that seek certification on a question only after losing on that question before the district court.  Because the factual record may not be complete until later in a case, counsel should seek certification immediately as soon as the record appears to be sufficiently factually developed for the court to answer the question.  This sometimes means seeking certification at the motion to dismiss stage, or at summary judgment, even if the court seems unlikely to actually certify the question until a later stage of the case.
  • The question itself. The closer a question is to a new, unsettled, and pure legal question, the easier it will be to certify.  But equally more important is whether a reasonably clear answer can be extrapolated from existing law.  The Sixth Circuit will not certify a question that appears relatively straightforward under current state law.  The more that a question reflects value judgments and issues of public policy, the more desirable it is to have an answer from the state court.  Similarly, your chances of success increase if you can show that the question is of considerable or broad importance or application.
  • Procedural rules: Certified questions are a procedural minefield.  State courts have refused to take certified questions where the federal court’s order failed to designate a moving party, where the moving party did not quickly brief the issue (even when lacking a scheduling order), where the federal court’s order did not contain a recitation of the facts, where the parties did not provide the record, and for a host of other reasons—some of which seem contradictory.  That’s all to say litigants need to be exceedingly careful.

Following these guidelines will maximize the chances of success, though the odds are still awfully long in the Sixth Circuit as we explained earlier.  If anyone has had success in inducing the state and federal courts to move faster on certification – other than providing everything the courts need in a concise and clear fashion, of course – we’d love to hear from you.

Invited Error, Erie, and Pleading Standards – What to Make of Smith v. General Motors?

The Sixth Circuit handed down a recent decision, Smith v. General Motors, that, on its face, could be construed as having a wide-reaching impact on the pleading standard for certain product-liability and fraud claims.  But the panel was careful to disclose the larger, admittedly “odd” context of the case, making it difficult to discern just how far Smith’s holding might reach.

Smith involved allegedly defective dashboards in certain GM vehicles.  Plaintiffs alleged that these GM dashboards were prone to cracking and that, in theory, such cracking could “lead to an airbag malfunction or shrapnel spray during a crash,” though no plaintiff claimed to have actually been injured by the alleged defect.  (Slip Op. at 3–4.)

GM moved to dismiss plaintiffs’ complaint, relying in part on Mross v. General Motors Co., No. 15-C-0435, 2016 WL 4497300 (E.D. Wis. Aug. 25, 2016), a case involving the same dashboard defect, in which the district court concluded that a complaint must allege the defendant knew both “that the dashboards were likely to crack and that this defect posed the safety concerns alleged in the complaint.”  Importantly, the plaintiffs in Smith agreed with GM that Mross set forth the correct legal framework, and even “urged” the district court to follow it.  (Slip. Op. at 5.)

The district court accepted the parties’ invitation to follow Mross, and concluded—consistent with Mross’s requirement that a plaintiff plead not only that a defendant knew of the defect, but also knew of the safety risk posed by that defect—that plaintiffs’ claims had to be dismissed.

On appeal, plaintiffs regretted their reliance on Mross, but the panel (Suhrheinrich, Stranch, Nalbandian) held them to their bargain, finding that the invited-error doctrine precluded plaintiffs from arguing that the Mross standard didn’t govern their claims. (Slip Op. at 9.)  Indeed, it was the invited-error doctrine that convinced Judge Stranch to concur in the judgment, despite her concerns that a Mross­-type standard unfairly “saddl[es] Plaintiffs with an additional burden at the pleading stage.” (Slip Op. at 20–23, Stranch, J., concurring.)

There were also “messy choice-of-law issues” that the court was able to side-step without issuing an opinion on any state’s particular substantive law. Still, it is notable that the panel endorsed Mross’s reasoning, finding support for its holding in the Restatement (Second) of Torts. According to the panel, Mross’s holding that a defendant must know of the defect and its safety risk “flows logically from the text of the Restatement, which only requires disclosure of facts basic to a transaction if a person ‘knows that [another person] is about to enter [a transaction] under a mistake as to them.’” (Slip Op. at 12 (quoting Restatement (Second) of Torts § 551(2)(e)).  If plaintiffs’ alleged harm was the failure to disclose the safety risk, the panel questioned how GM could be liable for the failure to disclose that risk—the “fact basic to the transaction” that GM allegedly withheld—unless GM knew about it.

It is on this point that the concurrence sharply differs, and questions whether Mross’s holding is correct. In fact, Judge Stranch thought Mross an “outlier” and, contrary to the panel, argued that Mross did not “flo[w] logically from” the Restatement. (Slip Op. at 22.)

What, then, to make of Smith v. General Motors?  Perhaps most important is the panel’s detailed discussion of pleading standards, offering practitioners some concrete examples of (and potential analogies for) what does (or does not) meet Rule 12(b)(6) and Rule 9(b) requirements. (Slip Op. at 13–19.)  But in light of the invited-error basis of the court’s ruling, the concurrence maintains that the panel’s opinion does not amount to the Sixth Circuit adopting Mross’s rule.  (Slip Op. at 20, Stranch, J., concurring, (“The Seventh Circuit (the court to which the Mross plaintiffs could have appealed) has not clearly adopted Mross’s rule. Nor have we, either before this case or as a result of it.”).)  It thus remains to be seen what effect this “odd” case has on pleading standards for tort claims in the circuit.  (Slip Op. at 2.)

Sixth Circuit concludes that the Kentucky Billboard Act violates the First Amendment.

The Kentucky Billboard Act requires a permit for billboards that advertise off-site activities—but no permit is required for on-site billboard advertising. Lion’s Den, an “adult superstore” that sought to advertise to interstate drivers with a billboard on a neighbor’s property, challenged the law as a violation of its rights under the First and Fourteenth Amendments. The district court agreed with Lion’s Den and enjoined enforcement of the Act. Recently, the Sixth Circuit affirmed.

Judge Sutton’s opinion for the court proceeded from the proposition that government regulation of speech based on its content is constitutional only if the regulation satisfies strict scrutiny. The on-site/off-site distinction is content-based: to know which rules apply to a billboard, one has to know the message on the billboard. Continue Reading

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