Appellate Law & Practice

CA1: Puerto Rican insurance liquidation fight ends

MRCo, Inc. v. Juarbe-Jimenez , No. 07-1614.  The plaintiff sued Banco Popular and the insurance commissioner of Puerto Rico as “liquidator of the Plan de Salud de la Federación de Maestros de Puerto Rico.”  The plaintiff then settled with Banco Popular. The underlying facts are fairly complicated.  I find them interesting, but they would bore most people. But, what you need to know, is that there were proceedings in Puerto Rico’s “liquidation court” and “P.R. Law Ann. tit. 26, § 4021 precluded actions against the Commissioner during the pendency of the proceeding in the Liquidation Court.”  The District Court denied a motion for summary judgment, but granted a motion to dismiss under Puerto Rican law. 

A translation of the relevant statute reads:

Upon issuance of an order appointing a liquidator of a domestic insurer or of an alien insurer domiciled in Puerto Rico, no action at law shall be brought against the insurer or the liquidator, whether in Puerto Rico or elsewhere, nor shall an action of that nature be maintained or entered after issuance of such order.

The most important thing is that the plaintiff argues that the Puerto Rican statute attempts to divest a federal court of jurisdiction.  But the First say that the statute only impacts substantive rights and not actual jurisdiction. 

The First also reproduces the statute it in the original Spanish.  The first concludes that this statute bar equitable actions as well as legal ones (it discusses the meaning of “equity” in Spanish).  It also rejects the argument that since the plaintiff claims to be seeking monies from the liquidator (rather than the proceeding), that it claims are its own, this doesn’t apply.

An Easter Egg in the DTA: Does it Apply to the CAAF?

While the lay people have been crowing about the “suspension” of habeas corpus (which probably never happened), some lawyers have made the argument that 28 USC 2241 (e)(2), does not remove the jurisdiction of the US Court of Appeals for the Armed Forces (an “Article I Court” staffed by civilian judges -- but if you don't know that you should not be reading this blog).  Some firms called Baker and McKenzie and Kramer Levin Naftalis & Frankel filed a petition for mandamus and prohibition, etc.  (Remember the old days when people would be intimidated by the likes of Cully Stimson.)  You can read the brief on the National Institute of Military Justice’s Website here.  NIMJ is also looking to hire two people in DC. 

CA1: domicile fight requires evidentiary hearing

Padilla-Mangual v. Pavia Hospital, No. 07-1447.  Every now and then there is a question of whether someone’s “domicile” is for diversity purposes.  Anyway, the District Court dismissed without holding an evidentiary hearing, seemingly relying on the fact that he filed another complaint in Puerto Rico state court that claimed that he was a resident of Puerto Rico (as opposed to Florida).  If he was really a resident of Puerto Rico, diversity would be destroyed.  The First says that the filing and the fact he didn’t take an “affirmative step” such as opening a bank account really isn’t dispositive.  Instead, there is a “presumption of continuing domicile” and this is a very fact-bound decision.  So, relying just on documents was an abuse of discretion.  And, it remands for an evidentiary hearing, discovery, or whatever.

(For some reason the First writes “negligent medical treatment” rather than “malpractice.”  I am sure that they know the difference under Puerto Rican law.  I wonder if the underlying case involves actual negligent treatment.)

CA1: the First says that 28 U.S.C. § 2254(d) is constitutional, because it isn’t a rule of decision

Evans v. Thompson,  No. 07-1014.  The First Circuit takes a position on AEDPA: That it is constitutional in terms of the ways it limits a District Court’s ability to interpret the constitution.  I can’t say I am surprised.

I am a little bemused at the logic it relies on: because “lower” Federal Court (i.e. not the Supreme Court) are created as per Congress then Congress can restrict the jurisdiction of said courts.  There might be ways to save AEDPA, but this isn’t one of them.  Restricting the grounds upon which habeas can be granted is a rule of decision, not a restriction upon the power of courts.  If, for example, Congress divided up Massachusetts into two federal judicial districts, then, one could argue that the Eastern District of Massachusetts wouldn’t have jurisdiction over a convict in the western part of the state.  Okay, the First screwed this up.  But, despite this pathetic analysis, the First does admit some things: that the gap between “erroneous” and “unreasonable” is “narrow.”  It seems to enumerate the areas that fall into this gap.

CA1 and CAFED: No relief for the really screwed by erroneous imprisonment

An alert reader (that has nothing to do with the case) points me to this unpublished case from the Federal Circuit.  As avid readers may know, “Bolduc v. US, No. 03-2081, holds that District Courts lack jurisdiction under the FTCA for what amounts to a case of mistaken identity resulting in the plaintiffs spending eight years in prison” (our coverage from March 23, 2005 here).”  Today, in an unpublished decision, a Federal Circuit panel splits (what’s up with that?) as to whether a claim under 28 U.S.C. §§ 1495 (damages for false imprisonment) and 2513 for his unjust conviction and imprisonment is timely by six days.  Read the case.  This guy gets no satisfaction anywhere.  All of his arguments as to why the statute of limitations are tolled, or the case was constructively transferred are rejected.  But, the dissent argues that the record isn’t clear as to exactly why his conviction was reversed.

CA1: stipulations and the FLSA (and personal liability)

Chao v. Hotel Oasis, Inc., No. 06-1021 affirms the judgment of the district court in a wage and hour dispute in an FLSA case.  The hotel seems to have not only paid people below minimum wage, but maintained two sets of books.  During pre-trial proceedings, the government and the defendant stipulated that 1) the hotel was currently in compliance; but 2) the hotel was subject to the FLSA because it’s annual dollar value was over $500,000.  The stipulation wasn’t in writing or signed by the parties, but the District Court memorialized it in an order that wasn’t objected to.  Then the hotel tried to back out of the stipulation, arguing that its lawyer didn’t have authority to enter into it, and later that it was mistakenly entered into.  During a prolonged trial, the defendants again tried to argue that there simply wasn’t evidence that the hotel was that big.  Also, the District Court precluded the defendant from introducing “Rule 1006" summaries of expert testimony regarding the hotel’s “annual dollar value” because, amongst other things, the underlying expert testimony was inadmissible, since the expert reports had not been disclosed.  The District Court even says it gave the defendants a chance to show that the stipulation was wrong, but they didn’t do it, and told the parties that they could file a “joint proffer” of the “Rule 1006" summaries, so the First could have a complete record.  The First holds that the order (memorializing the stipulation) became the “law of the case.”  Also, the First (I think, properly) rejects and argument that the stipulation can’t confer subject matter jurisdiction on the court, because, the $500,000 threshold isn’t jurisdictional.  But, strangely, it quotes Arbaugh v. Y & H Corp., 546 U.S. 500, 511 (2006), which the First has always used to screw people suing the government.  See here, here, and here.  At least, this time, it gets it right: Congress didn’t say the $500,000 limit was jurisdictional, therefore, it ain’t.

The District Court also entered an order holding the president personally liable as an employer under the FLSA.  The First affirms this.  It provides a review of its caselaw, and holds that since “He was the president of the corporation, and he had ultimate control over the business's day-to-day operations. In particular, it is undisputed that Lugo was the corporate officer principally in charge of directing employment practices, such as hiring and firing employees, requiring employees to attend meetings unpaid, and setting employees' wages and schedules” he has to pay.

CA2: not proper to use ancillary jurisdiction against KPMG

For some reason, I didn’t post the 5/23 decision in which the Second Circuit reversed Judge Kaplan’s decision to use his ancillary jurisdiction to allow (upper middle class) criminal defendants to proceed civilly against their former employer breaching their agreement to pay their attorneys fees. Our earlier coverage was here.

Essentially the court holds:

While we do not exclude the possibility of a legitimate ancillary proceeding involving a non-party to the primary litigation, we believe that the requisite compelling circumstances will be rare, as the need for such a proceeding generally will be far less pressing than in cases involving parties already before the court.  In the present matter, the prejudice to KPMG is clear, and the need for the ancillary proceeding is entirely speculative.

Tnx. WCCPB.  That said, the indictment might be dismissed.  See here for that order.  See our earlier coverage here and here.

CA1: Younger abstention in a lien fight

Rossi et al v. Gemma et al., 06-2020 & 06-2021 (5/31/07). This case concludes that Younger abstention is warranted (see Younger v. Harris, 401 U.S. 37 (1971)). Anyway, what began as a lien enforcement proceeding (see Gem Plumbing & Heating Co. v. Rossi, 867 A.2d 798, 800, 818 (R.I. 2005) holding that Rhode Island’s mechanic’s lien statute was constitutional after it was amended in reaction to the lower state court proceedings), and was followed by a § 1983 action in a federal court, raising similar “but not necessarily identical issues” is now sitting in two places. The lien enforcement proceeding is in Superior Court where there are still statutory arguments regarding the validity of the lien left to be resolved, and the § 1983 action is here, after being dismissed on  Rooker-Feldman grounds by the District Court. This § 1983 action now also seeks to recover monies paid into the state court (by naming the clerk of the court) – and another § 1983 lawsuit as well against the lienholder.

If you keep reading, you will get the gift of knowledge.  Or something.

CA1: a strange jurisdictional ruling (and speciality visas)

Royal Siam Corp. v. Ridge (Chertoff), No. 06-1947. The government, denied a petition for renewal of a nonimmigrant specialty occupation visa.  The petitioner was Thai and had a degree in business administration.  The employer was an “upscale” Thai restaurant in Puerto Rico.  Let’s face it folks, people with degrees in “business” are pretty common and CIS’s position is reasonable.  On the merits, the petitioner’s loses.  What is strange, however, is the rest of the decision.  (There is some discussion about language proficiency and degree requirements.)

The petitioner went to District Court, proceeding under the Administrative Procedure Act (APA), 5 U.S.C. §§ 701-706.  After a remand, the petitioners lost on summary judgment.  The District Court wasn’t that satisfied with the government’s work.  But, did work though the government’s position and found that CIS did find a marriage to an American to be fraudulent. 

What is strange about this case, is that there is a real question under the REAL ID Act about whether the District Court had jurisdiction or not, but the First chooses to “bypass” it.  Selya piles up on a bunch of big words and absolutely no reasoning to find a “crevice” to get to the merits.  I can’t understand what the hell he did because he sent his clerks out to find new words.  Take a look (with citations omitted):

CA1: How a big company snookered itself into a bad posture at arbitration (and jurisdiction on appeal)

Berenson v. National Financial Services, No. 06-1112.  This involves a dispute between parties with an agreement to arbitrate that covers most disputes, but not class actions.  The District Court determined that “it would adjudicate the merits of the Berensons' claims before addressing the issues of class certification. All parties agreed to this arrangement.”  While a motion for class certification was pending, the District Court granted a number of motions for summary judgment in part, including the class-action claims, stating that he would issue a full decision later.   Thereafter NFS moved to compel arbitration.  That motion was granted.  Then the judge issued a complete “summary judgment memorandum and order, explaining its earlier ruling” which was partially favorable to the plaintiffs.  NFS seizes on this and holds that such explanatory order actually rescinded the arbitration order, NFS claims that it can now seek interlocutory review under the Federal Arbitration Act, 9 U.S.C. § 16 (a)(1)(B).  But the First disagrees, and basically says that NFS brought this on itself by agreeing to go to the merits and is seeking to use the Supreme Court’s decision in AT&T Techs., Inc. v. Communications Workers of Am., 475 U.S. 643, 648 (1986) as a “sword” rather than a shield.”  So, the First lacks jurisdiction over the appeal.

The subject matter is interesting because it involves all the problems with electronic payment systems that allow people (like myself) to pay all sorts of bills from their computer.  There are different variants of them, which can, from time to time deprive people of interest, which the plaintiffs argued violated the the EFTA – 15 U.S.C. § 1693.

Barry Barnett comments here.