Study on How Judges' Politics Affects Their Application of the Twombly-Iqbal Pleading Rules

Raymond H. Brescia and Edward J. Ohanian, both of Albany have written The Politics of Procedure: An Empirical Analysis of Motion Practice in Civil Rights Litigation Under the New Plausibility Standard, forthcoming in 46 Akron Law Review (2013).   Here's the abstract:

Is civil procedure political?  In May of 2009, the Supreme Court issued its decision in Ashcroft v. Iqbal, which explicitly extended the “plausibility standard,” first articulated in Bell Atlantic v. Twombly two years earlier, to all civil pleadings. That standard requires that pleadings, in order to satisfy Rule 8(a) of the Federal Rules of Civil Procedure, must state a plausible claim for relief. For many, these rulings represented a sea change in civil pleading standards. Where prior Supreme Court precedent had provided that a pleading should not be dismissed “unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim,” the new standard requires that judges utilize their own “judicial experience and common sense” to determine whether claimants have set forth facts sufficient to “nudge their claims across the line from conceivable to plausible.”  In the years since their issuance, this standard has provoked many questions. One such question, which lurks behind all otherwise neutral rules of procedure is the following: could this apparently neutral principle of procedure be subject to political manipulation?  

After Twombly, and again after Iqbal, many expressed fears that the new plausibility standard offered judges too much discretion; a judge could dismiss a case where a plaintiff’s claims did not comport with that judge’s experience and common sense. There was a particular fear that this discretion would have a disparate and adverse impact on civil rights cases: i.e., if members of the federal bench were predisposed to disfavor such claims, they might use these precedents to dismiss civil rights cases too readily. Several years have now passed since the Court issued these decisions, and the district courts have compiled a body of thousands of decisions citing these precedents.  As a result, it is now possible to assess the impact of these decisions on practice in the lower courts, particularly their effect on civil rights cases. The study described here attempted to do just that by looking at outcomes and trends in motions challenging the specificity of the pleadings in over 500 employment and housing discrimination cases over a period of six years (including decisions issued both before and after Twombly and Iqbal). This research reviewed the outcomes in such cases based on a number of metrics, including, most importantly, the political affiliation of the president who appointed the judge issuing each decision reviewed.

The study revealed a statistically significant relationship between the outcomes in civil rights cases and time period (i.e. pre-Twombly, post-Twombly but pre-Iqbal, and post-Iqbal)  where the political affiliation of the president who appointed the judge reaching the decision in each case was Republican. For cases decided by judges appointed by Democrat-affiliated presidents, no such relationship was observed. This paper reports on the findings of this study and discusses their implications.

Watch Senator Franken talk about his plan for a government panel to rate financial instruments

As this CNN piece explains

Credit agencies that rate Wall Street's big banks were blamed for playing a pivotal role in the financial meltdown, but those agencies are still being paid for their work by the very banks they rate. That was one of the root causes of the financial crisis of 2008, according to a bipartisan Senate subcommittee that investigated the crash. Senator Al Franken, D-Minnesota, wants to stop what he calls this "pay to play" rating system. He is meeting with the Security and Exchange Commission [today] to discuss credit rating reform, and the problems with "rate shopping." "Let's say an investment bank created a financial product, say, subprime mortgage-backed securities and they wanted to get a rating on that. So, it would go shop its two different credit rating agencies and make sure that they got a AAA, whoever they picked would give them a AAA," said Franken. "It was sometimes unspoken, but the credit rating agencies knew that they wouldn't get the next gig if they didn't give a AAA." * * * Franken's bill would require an independent board to assign the initial rating of any structured financial product issued by a bank, and assign it to a credit rating agency based on the agency's expertise and track record.

Go here or click on the embedded video below to see Sen. Franken discuss the issue. Definitely worth watching.

 

When Consumer Reports Are Not Used for Credit

by Jeff Sovern

We frequently write here about the Fair Credit Reporting Act because of its application to credit reports.  But in fact, the FCRA applies to many non-credit transactions.  Those transactions typically take one of two forms. In one form someone uses a credit report for something other than a lending decision. For example, many employers use credit reports to decide whether to hire someone. Thus, yesterday's Times included an article, The Long Shadow of Bad Credit in a Job Search, about how people lose their jobs, default on debts because of the job loss, end up with a bad credit report because of the defaults, and then can't get a new job because of the bad credit reports. Some states have responded by limiting the use of credit reports for employment decisions.

The second type of non-credit transaction arises because the FCRA, notwithstanding its name, applies to "consumer reports," and defines "consumer report" as including many reports that have nothing to do with credit. For example, payday lenders would like to know if someone has committed check fraud and landlords want to know if someone has violated a lease provision in the past. "Specialty consumer reports" provide that information.  Because the FCRA applies also to these reports, consumers have the same rights to see the reports and corect errors as they do for credit reports. The CFPB has compiled a list of such specialty consumer report providers here.

UPDATE: Lea Krivinskas Shepard of Loyola of Chicago, has written an article, Toward a Stronger Financial History Antidiscrimination Norm, 53 Boston College Law Review (2012), which discusses the normative debate surrounding employers' use of credit reports.

Lack of diversity in Supreme Court bar

A little off-point perhaps, but this blog often provides information on Supreme Court advocacy and decisions, and so I thought our readers might be interested in this AP story about the lack of diversity among those who argue before the Supreme Court. Here's a short excerpt:

In roughly 75 hours of arguments at the Supreme Court since October, only one African-American lawyer appeared before the justices, and for just over 11 minutes. The numbers were marginally better for Hispanic lawyers. Four of them argued for a total of 1 hour, 45 minutes. Women were better represented, accounting for just over 17 percent of the arguments before the justices. In an era when three women, a Hispanic and an African-American sit on the court and white men constitute a bare majority of the nine justices, the court is more diverse than the lawyers who argue before it.

 

Supreme Court decides Dan's City v. Pelkey preemption case in favor of the injured plaintiff

A victory for a plaintiff! The Supreme Court has decided Dans City v Pelkey opinion, unanimously affirming the no-preemption ruling of the New Hampshire Supreme Court. Here's the begininng of Justice Ginsburg's opinion, which sums things up nicely:

This case concerns the preemptive scope of a provision of the Federal Aviation Administration Authorization Act of 1994 (FAAAA or Act) applicable to motor carriers. Codified at 49 U. S. C. §14501(c)(1), the provision reads:

“[A] State . . . may not enact or enforce a law, regulation, or other provision having the force and effect oflaw related to a price, route, or service of any motorcarrier . . . with respect to the transportation of property.”

Plaintiff-respondent Robert Pelkey brought suit under New Hampshire law against defendant-petitioner Dan’s City Used Cars (Dan’s City), a towing company. Pelkey al-leged that Dan’s City took custody of his car after towing it without Pelkey’s knowledge, failed to notify him of its plan to auction the car, held an auction despite Pelkey’s communication that he wanted to arrange for the car’s return, and eventually traded the car away without compensating Pelkey for the loss of his vehicle.

Disposal of abandoned vehicles by a “storage company” is regulated by chapter 262 of the New Hampshire Revised Statutes Annotated. See N. H. Rev. Stat. Ann. §§262:31 to 262:40–c (West 2004 and 2012 West Cum. Supp.). Dan’s City relied on those laws to dispose of Pelkey’s vehicle for nonpayment of towing and storage fees. According to Pelkey, however, Dan’s City failed to comply with New Hampshire’s provisions governing the sale of stored vehicles and the application of sale proceeds. Pelkey charged that Dan’s City’s disposal of his car without following the requirements contained in chapter 262 violated the New Hampshire Consumer Protection Act, §358–A:2 (West 2009), as well as Dan’s City’s statutory and common-law duties as bailee to exercise reasonable care while in possession of a bailor’s property.

We hold, in accord with the New Hampshire Supreme Court, that state-law claims stemming from the storageand disposal of a car, once towing has ended, are not sufficiently connected to a motor carrier’s service with respect to the transportation of property to warrant pre-emption under §14501(c)(1). The New Hampshire law in point regulates no towing services, no carriage of property. Instead, it trains on custodians of stored vehicles seeking to sell them. Congress did not displace the State’s regulation of that activity by any federal prescription.

Court denies cert in Zinni

Good news: this morning the Supreme Court denied a debt collector's cert. petition in Convergent Outsourcing v. Zinni, a case Greg reviewed in detail last week here.

 

More Evidence That Consumers Can't Provide Consumer Protection

by Jeff Sovern

Traditional consumer protection rules drew on law and economics models that assumed that consumers were rational and that when consumer markets functioned poorly, all that needed to be done was give rational consumers the ability to protect themselves. For example, the Truth in Lending Act's focus on disclosures presupposes that rational consumers would read them and use them to make appropriate decisions.  More recently, the 2003 FACTA Act amended the Fair Credit Reporting Act to allow consumers to obtain a free copy of their credit report each year from each of the big three credit bureaus.  Again, rational consumers should take advantage of that opportunity to protect themselves from identity thieves. 

But behavioral law and economics has shown that consumers are often irrational in predictable ways.  To the extent that law-makers fail to take these irrationalities into account in formulating rules, the rules will fall short of what is needed to protect consumers.  More recent laws, like 2009's Credit CARD Act and 2010's Dodd-Frank Act have used some of these insights to create rules which fit real consumers better (my co-author, Dee Pridgen, wrote about this in her paper, Sea Changes in Consumer Financial Protection: Stronger Bureau and Stronger Laws, 13 Wyoming Law Review (2013)). 

As for the specific examples I noted above, I have previously written about failures of disclosure, as have plenty of others.  But what about the right to obtain free credit reports?  It turns out that less than 20% of consumers check their credit report annually, according to the CFPB.  In other words, more than 80% of consumers are not taking an easy, free opportunity to determine if they have been victims of identity theft (I wonder how many readers of this blog post fall into that category). 

So if the vast majority of consumers do not protect themselves, the government has a choice in making rules: it can continue to depend on consumers to protect themselves, knowing that many will not and therefore will not be protected, or it can provide protections that do not depend on consumers to act.   

Genesis Aftermath: Can an Email Moot a Plaintiff's Claim?

by Greg Beck

As Brian Wolfman previously noted on this blog, the Supreme Court's holding in Genesis HealthCare v. Symczyk—that a defendant's settlement offer to a named plaintiff defeated certification of a collective action—was based on an highly questionable assumption: that a rejected offer of judgment under Federal Rule of Civil Procedure 68 mooted the named plaintiff's individual claim. Though noting a circuit split on that question, the Court declined to resolve it because the plaintiff had conceded the point below. Now, the Supreme Court is poised to announce whether it will grant certiorari in Convergent Outsourcing v. Zinni, a case involving only a non-class claim that the petitioner debt collector argues presents the question left open in Genesis. As our firm and Public Citizen argue (here and here), petitioners are wrong about that. But the Court has already twice held the case, and that gives at least some reason for concern. Absent another hold, we should learn the Court's decision on Monday.

Unlike Genesis, the sole question in Zinni is whether the defendant's rejected settlement offer mooted the plaintiff's individual claim. The debt collector successfully argued in the district court that sending an email to the plaintiff's counsel offering $1,001 in statutory damages ($1 more than the maximum statutory damages under the plaintiff's Fair Debt Collection Practices Act claim) plus "reasonable" attorneys' fees mooted the case. In an appeal consolidated with two similar FDCPA decisions, the Eleventh Circuit reversed, holding that in the absence of an offer of an enforceable judgment, the defendant's offer—even if accepted—would not have provided the plaintiff with complete relief. As the court explained, Zinni’s acceptance of the offer would have left him with nothing more than the defendant's “promise to pay,” which at most would have entitled him to pursue a breach of contract suit in state court. (In fact, Zinni's counsel has repeatedly been forced to bring such suits against debt collectors who reneged on similar settlement agreements.)

The defendant filed a petition for certiorari, which, in a coincidence of timing, was originally set to be conferenced just days after Genesis was decided. Seizing on the decision, the defendant in a last-minute supplemental brief argued that Zinni presents the perfect opportunity to answer the question left unresolved in Genesis: whether "an unaccepted offer that fully satisfies a plaintiff's claim is sufficient to render the claim moot." But, as we explain in our response, the Eleventh Circuit's decision in Zinni never decided that question. On the contrary, the decision was based on the court's conclusion that, in the absence of an offer of judgment, the defendant's offer would not have fully satisfied the plaintiff's claim.

The defendant's position that an informal offer of less than full relief is sufficient to moot a case is therefore far more extreme even than the position vehemently rejected by the four dissenters in Genesis. If accepted, it would give defendants the power to unilaterally deprive federal courts of jurisdiction merely by sending an email. Even if the plaintiff accepted the offer, the district court would lack jurisdiction to enforce the settlement or even to determine the "reasonable" attorneys' fees provided by its terms. And a plaintiff who, like Zinni, rejected the offer would be left in an even worse position, with neither a settlement agreement nor enforceable judgment and thus without any means to obtain relief on his claims.

Although its decision to twice hold the petition is worrisome, the Court is unlikely to endorse such a result.

Jon Stewart on MERS and wrongful foreclosures

Here.

Guest Post: "Protect Music and Sports Fans from Ticket Industry Abuses"

by John Breyault, Vice President, Public Policy, Telecommunications and Fraud, National Consumer League

Protect Music and Sports Fans from Ticket Industry Abuses

When Beyonce recently announced her highly-anticipated “Mrs. Carter Show” tour, fans waited eagerly for the moment tickets went on sale. But at the magic moment, thousands of fans were disappointed to learn the show had sold out in seconds.

Was this just a simple case of too much demand for too little supply, just luck of the draw since not everyone could “win” in the contest for a limited number of tickets?  But the reality of today’s ticket marketplace is neither that simple nor that fair. 

In fact, the ticketing procedures for the multibillion dollar sports and entertainment industry have become the antithesis of the fair marketplace that consumers have a right to expect, especially when so many concerts and games take place in taxpayer-subsidized facilities.

Instant sellouts like Beyonce’s occur in part because a large number of tickets are set aside for paid fan club and premium credit card “pre-sales” and for industry insider VIPs, leaving thousands of regular fans disappointed each time.  Sometimes, those pre-sale and VIP tickets are the ones that end up on resale websites. And ordinary fans are left with the sinking feeling that they never did have a chance to buy those tickets at face value in the first place.

In Nashville, for example, an investigative news unit revealed that only 1,001 of 14,000 tickets were offered to the general public for a recent Justin Bieber concert.  The overwhelming majority of the 14,000 seat arena was earmarked for pre-sales, available only to privileged premium credit card holders and paid fan club members.  Often, professional scalpers sign-up for multiple fan club memberships or use multiple American Express cards to gain access to pre-sale tickets to sell on the secondary market.

What's worse, the investigation found an entire block of tickets held back from the public were then resold above face value by Bieber's own tour, or as the local news headline put it: "Documents Show Bieber is Scalping His Own Tickets."