Sixth Circuit Adds its Voice to the post-Janus Chorus: Good-Faith Defense Applies to Union “Fair-Share” Fees

This post is brought to you thanks to the help of friend-of-the-blog Kirk Mattingly, EIC of the University of Louisville Law Journal. 

On Monday, the Sixth Circuit joined the Seventh and Ninth Circuits by ruling that the so-called “good faith” defense bars § 1983 claims that seek to recover “fair-share” fees collected under valid state law.

In the Supreme Court’s 2018 Janus v. AFSCME decision, the Court overruled a 1977 decision and held fair-share fees violated non-union members’ speech rights “by compelling them to subsidize private speech on matters of substantial public concern.”

An Ohio school teacher, Sarah Lee, relied on Janus to file a § 1983 suit against the Avon Lake Education Association. She sought to recoup the fair-share fees she had been required to pay as a non-member. But the district court recognized the union’s good-faith defense and dismissed.

A unanimous Sixth Circuit panel (Griffin op., Daughtrey, Clay) affirmed. Even assuming Janus applies retroactively, the union, as a private actor, could assert the affirmative defense that it acted in good faith: it followed Ohio law in effect at the time, which was consistent with prevailing Supreme Court precedent specifically allowing for fair-share fees.  The Seventh and Ninth Circuits, plus numerous district courts, have come down in the same way. The Sixth, according to Judge Griffin, “now add[s] our voice to that chorus.”

Opioid Update: Sixth Circuit Stays National Dispensing Discovery—For Now

This post is brought to you thanks to the help of friend-of-the-blog Kirk Mattingly, EIC of the University of Louisville Law Journal. 

Yesterday a Sixth Circuit panel (Siler, Griffin, Kethledge) stayed pharmacies’ production of national opioid dispensing data. With one exception: Ohio data that the court deemed “not so onerous” in light of an upcoming bellwether trial. As the blog reported in January, MDL Judge Polster had ordered the pharmacy defendants to produce nationwide dispensing data going back to 2006—an order opposed by the U.S. Chamber and ACLU alike.

The stay is only temporary, however. The Sixth Circuit paused non-Ohio discovery while it awaits answering briefing (from the plaintiffs and Judge Polster, if he so chooses) in response to the pharmacies’ mandamus petition on the discovery question as well as the defendants’ pleading arguments to strike or dismiss claims.

Stay tuned to the Sixth Circuit Appellate Blog for more appellate activity concerning the opioid MDL.

Opioid Update: Briefing Begins in Interlocutory Appeal of Negotiation-Class Ruling

Several national pharmaceutical distributors and Ohio cities have filed opening briefs in their Sixth Circuit challenge to Judge Polster’s novel “negotiation class” certification order. As this blog covered back in November, the court of appeals (Guy, Griffin, Kethledge) granted interlocutory review of the negotiation procedure.

According to the distributors, the class creates conflicts of interest between plaintiffs’ attorneys participating in both bellwether trials and the negotiation class. And according to the dissenting cities which challenged the order, the intricate certification order puts too much financial pressure on municipalities to settle.

Appellees’ bottomside briefs are due late next month. If the appeal (unlike the first round of bellwether trials) culminates in a decision, the Sixth Circuit should be the first court to review one of the most novel innovations in civil procedure since, say, the very FRCP 23 class-cert rules that appellants contend bar Judge Polster’s invention.

Bells Cannot Be Un-Rung: Gerrymandering Discovery Dispute Moot, Orders Vacated

In a short per curium opinion, the Sixth Circuit held that party officials’ appeal of an order compelling document discovery was moot after the court dismissed the gerrymandering challenge under the Supreme Court’s Rucho v. Common Cause decision.

In its challenge to Ohio’s redistricting, the Randolph Institute compelled discovery from GOP officials and groups for use at trial against Ohio. The Randolph Institute used 61 documents as exhibits and prevailed on its partisan-gerrymandering claims.  But two months later Rucho held gerrymanders were nonjusticiable and the district court dismissed the case against Ohio.  The “party third parties” subject to the discovery order, however, appealed the discovery ruling to the Sixth Circuit in Ohio A. Philip Randolph Institute v. Obhof.

As to the 61 trial docs, the Court of Appeals panel (Guy, Sutton, Griffin) held that “[t]here’s not much a court can do about preserving the confidentiality of information ‘widely available to the public.’” As to the documents that remained confidential, the “third parties have already gotten everything they could ask for,” in light of the Randolph Institute’s unchallenged assertion that it securely destroyed the materials. And as to the GOP’s concern about the use of this information during future litigation:

there is nothing we can do to redress any injury caused by the spread of knowledge itself; those bells cannot be un-rung.  As for the use of that knowledge, concerns about what might happen in a yet-to-be-filed future lawsuit are typically not enough to keep a present dispute live.  That is particularly true here, where the third parties could easily identify illicit use and get a remedy from the court.

Even though the GOP couldn’t un-ring the bell with respect to the underlying knowledge, however, the news was not all bad for the appellants.  The court vacated the trial court’s discovery orders under the Munsingwear doctrine, refusing to “compel the losing party to live with the precedential and preclusive effects of the adverse ruling without having had the change to appeal it.”

Opioid Update: MDL Defendants Return to the Sixth Circuit

After a lull in appellate proceedings, one of the nation’s most closely watched cases (non-impeachment category) has returned to the Sixth Circuit, at least temporarily.

Several chain drug stores that filled opioid prescriptions have filed a mandamus petition challenging Judge Polster’s order to produce “transactional dispensing data for the entire United States” from 2006 forward. That order, the pharmacies complain, treats MDL proceedings as exempt from the normal application of the Federal Rules of Civil Procedure. This is particularly problematic here, the petition implores, given the privacy interests implicated by prescription-drug patterns.

A strange set of bedfellows agree: the ACLU and the U.S. Chamber of Commerce both filed amicus briefs in support of the drug stores’ petition. In a brief filed by friends-of-the-blog Josh Fougere, Robert Keeling, Jax Fradette, Emmanuel Hampton, and an upstart named Carter Phillips, the Chamber (joined by the National Association of Chain Drug Stores), underscored the applicability of Federal Rule 26(b)(1)’s proportionality rule, which (they say) commands the trial judge to account for the costs and risks of producing nationwide prescription data.

Meanwhile, the ACLU highlighted the “serious privacy concerns raised by the district court’s discovery order requiring production of the prescription records of many millions of Americans from across the nation.”

“Because the prescription records at issue—which appear to include both opioids and a host of other commonly prescribed medications, such as Xanax, Adderall, and buprenorphine—can reveal highly sensitive information about patients’ underlying medical conditions, their disclosure implicates patients’ rights under the Due Process Clause and the Fourth Amendment.” — ACLU brief

One question for the Sixth Circuit (already answered by Judge Polster on a reconsideration motion) is whether it’s appropriate to produce nationwide information now, when the parties are preparing for bellwether trials involving only Ohio’s Cuyahoga and Summit Counties.

Relatedly, Judge Polster recently moved the bellwether trial date back from Oct. 12 to Nov. 9, 2020.

Stay tuned to the Sixth Circuit Appellate Blog for more appellate activity concerning the opioid MDL.

Supreme Court Affirms Sixth Circuit: Bankruptcy Stay-Relief Denials Immediately Appealable

In a unanimous decision affirming the Sixth Circuit, the Supreme Court held that creditors have 14 days to appeal a bankruptcy court’s denial of relief from the automatic stay. In one of the term’s first decisions, Justice Ginsburg’s opinion in Ritzen Group, Inc. v. Jackson Masonry, LLC agreed with Judge Thapar’s conclusion that the denial of relief ended “a distinct proceeding terminating in a final, appealable order.” Thus Ritzen Group’s notice of appeal came too late.

As careful Sixth Circuit blog-readers no doubt understand, the filing of a federal bankruptcy petition imposes an automatic stay in all creditor litigation outside the umbrella of the bankruptcy proceedings. This means that a plaintiff-creditor’s state court lawsuit for breach of a land-sale contract, like that of the plaintiff in Ritzen, is automatically paused when the debtor files a bankruptcy petition. Any creditor affected by this automatic stay may ask the bankruptcy court to un-pause other proceedings by requesting relief from the stay.

As both Justice Ginsburg and Judge Thapar noted, allowing other proceedings and stay appeals can efficiently narrow the bankruptcy resolution:

  • RBG: “controversies adjudicated during the life of a bankruptcy case may be linked, one dependent on the outcome of another. Delaying appeal until the termination of the entire bankruptcy case, therefore, could have this untoward consequence: Reversal of a decision made early on could require the bankruptcy court to unravel later adjudications rendered in reliance on an earlier decision.”
  • ART: “a bankruptcy case is like a jigsaw puzzle, and the claims against the bankrupt debtor are the pieces. To complete the puzzle, one must ‘start by putting some of the pieces firmly in place.’” (citing John Hennigan, Jr., Toward Regularizing Appealability in Bankruptcy , 12 Bankr. Dev. J. 583, 601 (1996)).

Justice Ginsburg’s opinion began with the Court’s prior finality ruling in Bullard v. Blue Hills Bank, 575 U.S. 496 (2015), while Judge Thapar’s (Sutton and McKeague joining) began with the text of the bankruptcy appeals statute, 28 U.S.C. § 158(a). But both ended in the same place: once a court rules on the motion for relief, parties have 14 days to appeal the bankruptcy court’s decision before they lose that right. Fed. R. Bankr. P. 8002(a). Given the lack of clarity that previously prevailed in the lower courts, the unanimous affirmance should provide welcome certainty for future creditors—if not for Ritzen Group here.

 

Judge Nathaniel Jones, 1926-2020.

Judge Nathaniel Jones passed away yesterday.  He was a Cincinnati icon, having served as the first African American AUSA in the Northern District of Ohio, leading the civil rights litigation efforts of the NAACP during the 1970s, and serving on the Sixth Circuit for more than twenty years.  For those wishing to review his career, there are already a number of moving obituaries available online as is his autobiography.

As I knew him, in the last years of his life, Judge Jones was kind, generous with his time, and courteous in a way that few now are.  You could not talk to him without coming away with the impression that here was one of the great and the good.  Our profession can lead us to become prickly, self-aggrandizing, and quick to judge others.  But Judge Jones came away from his legal battles with both strength and charity.  We will miss him.

“PLEASE READ IT CAREFULLY,” Sixth Circuit reminds policyholders

Ohio law requires courts to interpret ambiguous insurance-policy language against the drafter and in favor of policyholders. But if the language is clear and unambiguous (not to mention in a bold and ALLCAPS and super-big font), then courts apply the plain and ordinary meaning.

On the basis of that second rule of construction, Judge Readler, for a unanimous panel (Batchelder & Donald, JJ.), affirmed dismissal of a putative class action in Richelson v. Liberty Insurance. The Sixth Circuit Appellate Blog has a sister (re)insurance publication (perhaps more of a distant cousin?) which recently covered that decision. You can find that analysis here, with a good but provocative tip thrown in free of charge: It’s always a good idea to read your insurance policy.

 

No Valentine for “Very Busy” Cardiologist Convicted of Fraud

After examining the body of evidence presented during trial, the Sixth Circuit refused to prescribe a new healthcare-fraud trial for Dr. Anis Chalhoub. A jury convicted the London (Ky.) cardiologist under 18 U.S.C. § 1347 for billing Medicare and other insurers for unnecessarily implanted pacemakers.  Although “some of the government’s tactics here leave something to be desired,” a unanimous panel in US v. Chalhoub affirmed.

The government deployed an array of weapons from the arsenal available to health care fraud investigators nowadays.  Data mining demonstrated that Dr. Chalhoub “had no trouble staying busy,” performing 853 stress tests in a year, while 75% of U.S. cardiologists performed 336 or fewer.

The prosecution’s lead expert reviewed 31 of Dr. Chalhoub’s procedures and testified that 27 were unnecessary.  One of the other testifying cardiologists recounted turning off or turning down the pacemakers in 20 unnamed patients of Dr. Chalhoub, compared to 1 of 5,000+ pacemakers he had turned off during his career.

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Circuit Split: University Harassment Claim Requires Further Student-on-Student Harassment

The Sixth Circuit has weighed in on an issue that has divided the circuits: to state a claim under Title IX for “student-on-student sexual harassment,” must a victim actually experience further sexual harassment after the school learns of the prior harassment? Or is it enough that the victim is vulnerable to further harassment?

In Kollaritsch v. Michigan State, the Sixth Circuit (Batchelder op.; Thapar and Rogers joining and concurring separately) sided with the majority of circuits, which have required the victim to actually experience further harassment in order to show the school’s unreasonably indifferent response to “pervasive” sexual harassment “caused” further harassment.

The split stems from the Supreme Court’s 5-4 decision in Davis v. Monroe County Board of Education, 526 U.S. 629 (1999) (O’Connor, J.). The Sixth Circuit explained that, under Davis, a claim for student-on-student sexual harassment is comprised of “separate-but-related torts by separate-and-unrelated tortfeasors: (1) ‘actionable harassment’ by a student; and (2) a deliberate-indifference intentional tort by the school.”

What has divided the courts is the type of injury that must result from the school’s deliberate-indifference. Davis held that “the deliberate indifference must, at a minimum, cause students to undergo harassment or make them liable or vulnerable to it.” Davis, 526 U.S. at 645 (emphasis added).

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