Friday, November 16, 2012

New Developments in Appellate Courts - State and Federal


Butler v. Sears, 2012 U.S. App. LEXIS 23284 (7th Cir. Ill. Nov. 13, 2012) is an opinion written by Judge Posner in which he writes that predominance is a question of efficiency. A class action is the more efficient procedure for determining liability and damages in a case involving a defect that may have imposed costs on tens of thousands of consumers, yet not a cost to any one of them large enough to justify the expense of an individual suit. If necessary, a determination of liability could be followed by individual hearings to determine the damages sustained by each class member.

Reid v. Doe Run Res. Corp., 2012 U.S. App. LEXIS 23281 (8th Cir. Mo. Nov. 13, 2012) affirmed the denial of a stay pending the outcome of an arbitration. The plaintiff comprised 35 children living near a smelting facility alleging that environmental contamination injured them. The defendant took over the operation from a state-owned company which owned the facility. It removed the case based on 9 U.S.C. § 205, which grants federal jurisdiction of any case that “relates to” a covered arbitration. The parties agreed that the arbitration agreement fell under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards. Defendant removed the case under the Convention, which allows for removal “[w]here the subject matter of an action or proceeding . . . relates to an arbitration agreement or award falling under the Convention.” 9 U.S.C. § 205. The removal right in § 205 is "substantially broader" than that in the general removal statute. The court held that a case may be removed under § 205 if the arbitration could conceivably affect the outcome of the case.

The Federal Arbitration Act requires a district court to issue a stay if an issue in the case is “referable” to arbitration. 9 U.S.C. § 3is made applicable to the Convention by 9 U.S.C. § 208. The children were nonsignatories to the arbitration agreement, but claims made by nonsignatories can be subject to a stay under 9 U.S.C. § 3. In this case, defendant sought a stay, not an arbitration with the children arguing that the court should be more inclined to grant the stay due to the strong policy favoring arbitration.

A nonsignatory attempting to bind a signatory to an arbitration agreement is distinct from a signatory attempting to bind a nonsignatory. Nonsignatories can be bound to an arbitration agreement when they directly benefit from the agreement. The children were not direct beneficiaries of the terms of the agreement, but defendant argued that they benefitted from the agreement by invoking its terms throughout the case. The court disagreed and concluded that the district court properly denied a mandatory stay


American Express Co. v. Italian Colors Restaurant
( is another class arbitration case, involving arbitration clauses prohibiting class arbitration in card acceptance contracts between American Express Company and retail merchant companies like the restaurant serving as lead plaintiff in this putative class action. The Second Circuit Court of Appeals ruled that AmEx could not enforce its arbitration clauses containing a class action waiver against a putative class of retail merchants pursuing statutory antitrust claims. The court considered that the class action waivers were unenforceable because they “would effectively preclude any action seeking to vindicate the statutory rights asserted by the plaintiffs.” It reasoned that the antitrust claims would not be economically rational to pursue individually.

Because this litigation has been around the Second Circuit Court of Appeals for a while, Justice Sotomayor took no part in the consideration or decision on the certiorari petition. She will likely also recuse herself from participating in the Supreme Court’s merits review.
Lefemine v. Wideman, 2012 U.S. LEXIS 8566 (U.S. Nov. 5, 2012) concerned the award of attorney’s fees in a suit alleging unconstitutional conduct by government officials.  It reversed the Fourth Circuit for holding that a plaintiff who secured a permanent injunction but no monetary damages was not a “prevailing party” under 42 U. S. C. §1988, because the injunction ordered the defendant officials to change their behavior in a way that directly benefited the plaintiff.
ABA Capital Mkts. Corp. v. Provincial De Reaseguros C.A., 2012 Fla. App. LEXIS 19155 (Fla. 3d DCA Nov. 7, 2012) stated that even though the order failed to set forth the trial court’s analysis of the Kinney factors, there was no per se rule requiring a remand provided such an adequate analysis during the hearing itself can support affirmance of an otherwise insufficient order.  See Smith Barney, Inc. v. Potter, 725 So. 2d 1223, 1225 (Fla. 4th DCA 1999). See also Ramirez, 1-4 Florida Civil Procedure § 4-13, fn. 281-84.  Here, the trial court conducted two hearings and both parties’ positions were made abundantly clear during these hearings, and were considered by the trial court.  It affirmed the trial court in this action by a Venezuelan plaintiff against a British Virgin Island defendant based on the main witness and president of defendant residing in Miami and other witnesses from Venezuela having already made several trips to Miami for the litigation and agreeing to continue doing so.
Espresso Disposition Corp. v. Santana Sales & Mktg. Group, 2012 Fla. App. LEXIS 19608 (Fla. 3d DCA November 14, 2012) enforced a mandatory forum selection clause.  The trial court apparently ruled that the clause was inserted by mutual mistake, but instead of discussing the issue, the opinion sardonically explained, first that “[t]here is absolutely no set of facts that Appellee could plead and prove to demonstrate that Illinois state courts do not exist;” and second, that the origin of “cutting and pasting” came “from the traditional practice of manuscript-editing whereby writers used to cut paragraphs from a page with ‘editing scissors.’”
Powell v. Madison County Sheriff's Dep’t, 2012 Fla. App. LEXIS 19141 (Fla. 1st DCA Nov. 7, 2012) affirmed the dismissal of a complaint for failure to serve within 120 days per FRCP 1.070(j), even though the statute of limitations had expired, because more than a year had passed without service.  Although the court recognized the policy preferring actions to proceed to the merits, here the trial court did not abuse its discretion where it balanced that policy against the preclusive effect of the statute of limitations, which protects from having to defend stale claims.  See Ramirez, 1-6 Florida Civil Procedure § 6-4.
Cardiosonx Labs., Inc. v. Aguadilla Med. Servs., 2012 Fla. App. LEXIS 19604 (Fla. 3d DCA November 14, 2012) reversed the trial court for refusing to consider a previously served motion to set aside a default prior to ruling on a motion for final judgment based on the default. As a matter of law the trial court had to resolve the pending motion to set aside clerk’s default prior to entry of Final Judgment in plaintiff’s favor.
First Protective Ins. Co. v. Schneider Family P’ship, 2012 Fla. App. LEXIS 19701 (Fla. 2d DCA November 14, 2012) rejected the argument that under Fla. Stat. § 627.7015(7) (2005), and Florida Administrative Code Rule 69J-2.003(10) (2005)2, the insured was not required to participate in an appraisal because only an insured can choose appraisal after an unsuccessful mediation.  Instead, the court reasoned contract § 627.7015 provides an alternative procedure for resolution of disputed property insurance claims. The purpose of the statute is to use mediation to resolve insurance claim disputes before resorting to the appraisal process or litigation. Under the version of the statute in effect when the parties entered into the contract, the insured was not required to submit to an appraisal before suing the insurer if the insurer requested mediation and the results of the mediation were rejected by either party. Here, it was the insured, not the insurer, who requested mediation. Because the statute did not address a situation where the insured requests mediation and the parties cannot reach an agreement, the court concluded that under the statute the insurer was entitled to pursue an appraisal pursuant to the terms of the contract.
Everhome Mortg. Co. v. Janssen, 2012 Fla. App. LEXIS 19703 (Fla. 2d DCA November 14, 2012) reversed an order vacating a final judgment under rule 1.540(b)(4), because the court lacked jurisdiction as plaintiff was not the holder of the mortgage when it filed suit and thus lacked standing.  The court explained that possession of the note determined standing and the holder of the original note endorsed in blank has standing.  Further, even if plaintiff lacked standing when it filed suit, the final judgment was merely voidable, not void, and a voidable judgment may not be set aside under rule 1.540(b)(4).
Rooker v. Ford Motor Co., 2012 Fla. App. LEXIS 19712 (Fla. 2d DCA November 14, 2012) reversed summary judgment granted in favor of defendant. The allegations contained in the complaint asserted design defects that caused the accident and the injuries plaintiff allegedly suffered. Even if plaintiff’s negligence caused the accident that resulted in the vehicle’s rolling over, the allegations that the defective design of the roof structure and the occupant restraint devices caused the injuries she suffered in the accident remained to be decided. Just because the alleged defect in the vehicle may not have been the cause of the accident, Ford may still be liable for the injuries caused by the other defects alleged.
Highway 46 Holdings, LLC v. Myers, 2012 Fla. App. LEXIS 19548 (Fla. 5th DCA Nov. 9, 2012) explained that once an injunction is entered, a party seeking relief may choose to file a direct appeal within 30 days or a motion to dissolve the injunction at any time under rule 1.610(d). The procedural posture chosen by the party has a direct effect on whether an appellate court can conduct a plenary review of the matter. In cases where the enjoined party takes a direct appeal from an ex parte injunction and does not file a motion to dissolve, there is no factual record and the appellate court is constrained to review only the legal sufficiency of the order, the complaint, and any supporting documents.
If a motion to dissolve an ex parte temporary injunction is filed and a hearing on the motion is held, the party who obtained the injunction bears the burden of going forward with evidence to establish a prima facie case to support the injunctive relief, and the appellate court may review the factual basis for the injunction. If the enjoined party takes a direct appeal after notice and a hearing without moving to dissolve, an appellate court may consider the underlying factual matters because there is a record of the evidence and testimony presented upon which the trial court based its decision to grant the temporary injunction. 
But a motion to dissolve is necessary only where an ex parte temporary injunction was issued. If proper notice was provided and an evidentiary hearing conducted prior to issuance of the temporary injunction, an appeal should be filed to review the propriety of the temporary injunction; in this instance, a motion to dissolve is limited to raising only new matters and a trial court will not abuse its discretion in denying the motion if the enjoined party does not establish that a change in conditions justifies dissolution.

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