Supreme Court Resolves Circuit Split re Whether Absence of Probable Cause Must Be Pleaded and Proved for Bivens Claims

Per Hartman v. Moore, --- S. Ct. ----, 2006 WL 1082843 (Apr. 26, 2006):

The Courts of Appeals have divided on the issue of requiring evidence of a lack of probable cause in 42 U.S.C. § 1983 and Bivens retaliatory-prosecution suits. Some Circuits burden plaintiffs with the obligation to show its absence. See, e.g., Wood v. Kesler, 323 F.3d 872, 883 (C.A.11 2003); Keenan v. Tejeda, 290 F.3d 252, 260 (C.A.5 2002); Mozzochi v. Borden, 959 F.2d 1174, 1179-1180 (C.A.2 1992). Others, including the District of Columbia Circuit, impose no such requirement. See, e.g., Poole v. County of Otero, 271 F.3d 955, 961 (C.A.10 2001); Haynesworth v. Miller, 820 F.2d 1245, 1256-1257 (C.A.D.C.1987). We granted certiorari, 545 U.S. ----, 125 S.Ct. 2977, 162 L.Ed.2d 886 (2005), to resolve the Circuit split and now reverse.

. . .

In sum, the complexity of causation in a claim that prosecution was induced by an official bent on retaliation should be addressed specifically in defining the elements of the tort. Probable cause or its absence will be at least an evidentiary issue in practically all such cases. Because showing an absence of probable cause will have high probative force, and can be made mandatory with little or no added cost, it makes sense to require such a showing as an element of a plaintiff's case, and we hold that it must be pleaded and proven. . . .

Souter, J., delivered the opinion of the Court, in which Stevens, Scalia, Kennedy, and Thomas, JJ., joined. Ginsburg, J., filed a dissenting opinion, in which Breyer, J., joined. Roberts, C. J., and Alito, J., took no part in the consideration or decision of the case.


N.D. Oklahoma Notes Circuit Split re Constitutional Test to Apply to DNA-Indexing Statutes

Per Banks v. Gonzalez, 415 F. Supp. 2d 1248 (N.D. Ok. Feb. 14, 2006):

. . . The following quotation from a Third Circuit opinion summarizes the circuit split among courts on this issue in the context of the DNA [Backlog Elimination] Act or similar statutes:

The courts of appeals that have addressed the constitutionality of the DNA Act or of similar state statutes, while unanimous in their decisions to uphold the statutes, are split as to whether to apply the Knights reasonableness standard or the Griffin special needs exception. The Fourth, Fifth and Ninth Circuit Courts of Appeals have utilized a reasonableness standard. See Jones v. Murray, 962 F.2d 302 (4th Cir.1992) (upholding Virginia DNA statute); Groceman v. United States, 354 F.3d 411 (5th Cir.2004) (relying on Knights to uphold the DNA Act); Rise v. Oregon, 59 F.3d 1556 (9th Cir.1995), and United States v. Kincade, 379 F.3d 813 (9th Cir.2004) (en banc, five judges endorsing the reasonableness standard; one, the special needs exception; and five dissenting). The Tenth Circuit Court of Appeals appears to be split. The court first analyzed the issue using a reasonableness analysis to uphold a Colorado DNA statute. See Boling v. Romer, 101 F.3d 1336 (10th Cir.1997 [sic] ) (principally citing Jones and Rise ). However, more recently, and without substantive analysis, the court relied on the special needs doctrine to uphold the DNA Act. See United States v. Kimler, 335 F.3d 1132 (10th Cir.2003). The Second and Seventh Circuit Courts of Appeals have employed the special needs exception. See Roe v. Marcotte, 193 F.3d 72 (2d Cir.1999) (upholding Connecticut DNA statute); Green v. Berge, 354 F.3d 675 (7th Cir.2004) (upholding Wisconsin DNA statute).

United States v. Sczubelek, 402 F.3d 175, 184 (3rd Cir.2005).

. . .

In addition to finding that the Knights test is supported by Tenth Circuit law, this Court has considered the reasons articulated by various circuits for applying each respective test. The Court agrees with the reasoning in those circuit cases holding that the Supreme Court's decision in Knights indicates the Supreme Court's willingness to apply a general reasonableness analysis to searches of probationers based on their diminished expectation of privacy, without requiring adherence to a special-needs analysis. See, e.g., Kincade, 379 F.3d at 832 (reasoning that Knights affirmed the possibility that “conditional releasees' diminished expectations of privacy may be sufficient to justify the judicial assessment of a parole or probation search's reasonableness outside the strictures of special needs analysis”). The Court further aligns itself with the reasoning in Kincade that “neither Edmond nor Ferguson condemns suspicionless searches of conditional releasees in the absence of a demonstrable need apart from law enforcement.” Id. (stating that Ferguson itself recognized a distinction between searches of conditional releasees and searches of the general public and laid a framework for a “sound analytic division between these two classes of suspicionless searches”). Accordingly, this Court finds that the Knights totality of the circumstances, or general balancing test, should apply to analysis of the 2004 Amendments. This decision is in accord with the recent trend among circuit courts. See United States v. Sczubelek, 402 F.3d 175, 184 (3d Cir.2005); Padgett v. Donald, 401 F.3d 1273, 1278 (11th Cir.2005); United States v. Kincade, 379 F.3d 813, 832 (9th Cir.2004) (four judges voting to apply Knights reasonableness test). But see Nicholas v. Goord, 430 F.3d 652, 656 (2d Cir.2005) (applying “special needs” analysis because the court declined “to construe Knights as permitting us to apply a general balancing test to suspicionless searches”).


Seventh Circuit Notes Split Re Deference Due to BIA Decisions to Classify Crimes as "Involving Moral Turpitude"

Per Hashish v. Gonzales, 442 F.3d 572 (7th Cir. Mar. 24, 2006):

There is a split among the circuits regarding the level of deference owed to the Board of Immigration Appeals’ decision to classify a particular crime as one “involving moral turpitude.” In Mei v. Ashcroft, 393 F.3d 737, 739 (7th Cir.2004), we found it unnecessary to decide the question because regardless of the level of deference-very great or none at all-the Board's determination that the crime at issue involved moral turpitude had to be upheld. We are in a similar situation here: Absent any deference to the Board of Immigration Appeals’ classification of Mr. Abu Hashish's crimes, we still would reach the conclusion that his crimes of theft are crimes of moral turpitude.


Second Circuit Weighs in on Split re Whether NFIA Creates SMJ Over Claims Against Fiscal Agents

Per Palmieri v. Allstate Ins. Co, --- F.3d ----, 2006 WL 957252 (2d Cir. Apr. 13, 2006):

This contract dispute over a flood insurance policy requires us to determine whether we have jurisdiction to hear claims involving policies issued by private insurers pursuant to the National Flood Insurance Act (“NFIA” or the “Act”), codified at 42 U.S.C. §§ 4001-4129. We hold that 42 U.S.C. § 4072 gives us jurisdiction to hear such claims. . .

. . .

Pursuant to 42 U.S.C. § 4081(a), FEMA created the Write-Your-Own Program (“WYOP”), which allows private insurers, sometimes called “WYO companies,” to issue and administer flood-risk policies under the Government Program. Although FEMA may issue policies directly under the Government Program,more than 90% are written by WYO companies. These private insurers may act as ‘fiscal agents of the United States. . . .

. . .

Section § 4072 states that when “the program is carried out as provided in [42 U.S.C. § 4071], the Director [of Federal Emergency Management Agency (FEMA)] shall be authorized to adjust and make payment of any claims for proved and approved losses covered by flood insurance.” The statute includes the following jurisdictional language:

[U]pon the disallowance by the Director of any such claim, or upon the refusal of the claimant to accept the amount allowed upon any such claim, the claimant, within one year after the date of mailing of notice of disallowance or partial disallowance by the Director, may institute an action against the Director on such claim in the United States district court . . . .

Id. This case requires us to determine whether an action against the Director's fiscal agent [i.e. WYO companies] is “an action against the Director” under § 4072.

In Van Holt [v. Liberty Mut. Fire Ins. Co., 163 F.3d 161 (3d Cir.1998)], the Third Circuit held that § 4072 creates subject-matter jurisdiction for claims against WYO insurance companies. 163 F.3d at 167. . . .

. . .

The Sixth Circuit adopted the reasoning of Van Holt in Gibson [v. Am. Bankers Ins. Co., 289 F.3d 943, 947 (6th Cir.2002)].

. . .

In Downey [v. State Farm Fire & Cas. Co., 266 F.3d 675, 678 (7th Cir.2001)], the Seventh Circuit took a different view of whether 42 U.S.C. § 4072 creates jurisdiction over suits of this kind. See266 F.3d at 679. The court noted that § 4072 grants “original exclusive jurisdiction” in the district court for actions “against the Director” of FEMA, not WYO companies. Id.

. . .

To hold that a suit against a WYO company is not a suit “against the Director” would be to ignore the structure of the NFIA, under which insurance companies act on behalf of the federal government, and the purpose of the Government Program, which is to ensure that private companies may “serve as administrators for the federal program.” [citation omitted]. . . .

The general design of the Act also evidences an intent to ensure that claims involving the programs it creates are heard in the federal courts. . . .

Accordingly, we join the Third and Sixth Circuits in holding that § 4072 gives rise to jurisdiction over claims against WYO companies.


S.D. Texas Notes Spit re Whether Federal Judge Must Specifically Declare that Sentences Run Consecutively or Concurrently

Per Reese v. Bureau of Prisons, 2006 WL 870802 (S.D. Tex. Apr. 4, 2006):

In most cases, federal district courts have discretion as to whether impose concurrent, or consecutive sentences. 18 U.S.C. § 3584(a); accord United States v. Reyes-Lugo, 238 F.3d 305, 309 (5th Cir.2001). The statute creates a presumption that multiple terms of imprisonment imposed at the same time will run concurrently unless otherwise indicated by the Court, while terms imposed at different times are presumed to run consecutively unless otherwise noted. Id. The Fifth Circuit has held that a district court, pursuant to § 3584(a), may order a federal sentence to run concurrently with an anticipated state sentence. United States v. Hernandez, 234 F.3d 252, 256 (5th Cir.2000) (per curiam) (citations omitted).

Petitioner argues that where the record is silent or ambiguous as to whether the sentence is to be served concurrent or consecutive to another sentence, the judge's intent at the time of sentencing must be examined. (D.E. 2, at 6). He further argues that federal district courts do not have the authority to impose a consecutive sentence upon a not yet imposed state sentence. Id. at 7. To support his argument, petitioner relies on case law from other circuits. Id. One of the authorities cited by petitioner is Romandine v. United States, 206 F.3d 731 (7th Cir.2000), which finds that “[n]either § 3584(a) nor any other statute of which we are aware authorizes a federal judge to declare that his sentence must run consecutively to some sentence that may be imposed in the future.” Id. at 737 (italics in original). However, this same decision notes that there is a circuit split currently on this issue, and further notes that the Fifth Circuit has held that a district court may impose a sentence to be served consecutively to a state sentence that has not yet been imposed. Id. at 738 (citing Brown v. United States, 920 F.2d 1212, 1217 (5th Cir.1991) (per curiam)).

. . .

The Fifth Circuit has declared that “[w]ell-settled federal law presumes that when multiple terms of imprisonment are imposed at different times, they will run consecutively unless the district court specifically orders they run concurrently.” Free v. Miles, 333 F.3d 550, 553 (5th Cir.2003) (per curiam) (italics in original) (holding that state prisoner's state and federal sentences ran consecutively where the district court did not specify otherwise). While a federal district court can take into consideration anticipated sentences from separate state court proceedings when exercising its discretion of whether to impose a concurrent or consecutive federal sentence, the failure of the Court to specify that the sentence run concurrently to the anticipated state sentence results in the designation of a consecutive sentence. “A district court must specify in its sentencing that sentences run concurrently; otherwise, they run consecutively.” Id.

Petitioner has failed to show that his liberty is being restrained in violation of the United States Constitution, treaties, or statutes. The BOP's determination that his sentence was to be served consecutively to his state sentence is based on well-settled federal statutory law that is further supported by Fifth Circuit case law. Additionally, the state trial court's designation that his state sentence was to be served concurrently with his federal sentence is non-binding on the BOP. Leal v. Tombone, 341 F.3d 427, 429 n. 13 (5th Cir.2003) (per curiam).


Fifth Circuit Notes Split re Whether Evidence of a Pending Labor Certification Application Is Good Cause for a Continuance

Per Ali v. Gonzales, 440 F.3d 678 (5th Cir. Feb. 15, 2006):

Ali failed to make a showing before the IJ [Immigration Judge] that his labor certification application was filed on or before April 30, 2001. At his hearing before the IJ on December 2, 2003, Ali claimed that he had a labor certification pending. The IJ granted a seventh continuance until January 6, 2004 and specifically informed Ali that he would need to produce evidence or written applications relating to labor certification before meriting any further relief on that ground. Ali did not do so. Accordingly, the IJ's decision to deny a further continuance was not an abuse of discretion. FN2

Footnote 2: Because there was no showing that Ali's application was timely filed, we again “decline to further address the persuasiveness of the reasoning in Subhan.(Nizar) Ali, 2006 WL 73613, at *3, --- F.3d at ----. We note, however, that there is a Circuit split as to whether evidence of a timely filed, pending labor certification application amounts to good cause for a continuance. The Eleventh Circuit has rejected the Seventh Circuit's position that it does. See Zafar v. United States Atty. Gen., 426 F.3d 1330, 1335-36 (11th Cir.2005); Pirzada v. U.S. Atty. Gen., 2006 WL 167454 (11th Cir. Jan.24, 2006) (unpublished).

Third Circuit Joins Second in Split re Whether the SEC Is a “Person” Under Section 20(a) of Securities Exchange Act

Per SEC v. J.W. Barclay & Co., Inc., --- F.3d ----, 2006 WL 861177 (3d Cir. Apr. 5 2006):

We join the Second Circuit and hold that the SEC is a “person” within the meaning of § 20(a). See First Jersey, 101 F.3d at 1472. We therefore decline to join the Sixth Circuit's contrary holding that the SEC is not a “person” under § 20(a). See Coffey, 493 F.2d at 1318.

The Sixth Circuit in Coffey reasoned that because § 20(b) of the Exchange Act “sets forth the standard of lawfulness to which a controlling person must conform, on penalty of liability in injunction to the SEC or criminal prosecution,” § 20(a) was meant only “to specify the liability of controlling persons to private persons suing to vindicate their interests.” Id. Accordingly, the Sixth Circuit held that the SEC was “not a person under section 20(a)” and that the SEC could not rely on § 20(a) when seeking personal injunctions against corporate officials for a corporation's alleged violations of the securities laws. Id.

Regardless of the merits of this reasoning in 1974, the Sixth Circuit's conclusion that the SEC is not a person under § 20(a) was severely undermined in 1975, when an amendment to the Exchange Act modified the Exchange Act's definition of “person.” See15 U.S.C. § 78c(a)(9) (1975 Amendments). As of 1974, the Exchange Act had defined a “person” as “an individual, a corporation, a partnership, an association, a joint stock company, a business trust, or an unincorporated organization.” The 1975 amendment, however, explicitly expanded the scope of the Exchange Act's definition of a “person” so as to include governments and government agencies, changing it to “a natural person, company, government, or political subdivision, agency, or instrumentality of a government.” Id.

Accordingly, while the Sixth Circuit's limitation of § 20(a) claims to “private persons” may have been supported by the Exchange Act's statutory definition of “person” as of 1974, the Exchange Act's current statutory definition of “person” explicitly includes government agencies such as the SEC. Consequently, we agree with the Second Circuit that the plain language of 15 U.S.C. 78c(a)(9), as amended in 1975, requires our holding that the SEC is a “person” who may bring a claim under § 20(a). See First Jersey, 101 F.3d at 1472.


Sixth Circuit Notes Split re Standard of Review of Debt/Equity Questions in Tax Cases

Per Indmar Products Co., Inc. v. C.I.R., --- F.3d ----, 2006 WL 954183 (6th Cir. April 14, 2006):

The basic question before us is whether the advances made to the company by the stockholders were loans or equity contributions.

. . .

We review the Tax Court's factual findings for “clear error” and its application of law de novo. Vision Info. Servs., LLC v. Comm'r, 419 F.3d 554, 558 (6th Cir.2005); Holmes v. Comm'r, 184 F.3d 536, 543 (6th Cir.1999). The circuits are split on whether the debt/equity question is one of fact or law, or a mixed question of fact and law. Jaques v. Comm'r, 935 F.2d 104, 106-07 (6th Cir.1991) (collecting cases); Roth Steel, 800 F.2d at 629 (collecting cases). Earlier panels of this court have held that the question is one of fact. Jaques, 935 F.2d at 107; Roth Steel, 800 F.2d at 629; Smith v. Comm'r, 370 F.2d 178, 180 (6th Cir.1966).FN1 Accordingly, we review the Tax Court's findings for clear error.


Seventh and Second Circuits Split re Whether RFRA Amended the ADEA’s Ministerial Exception

BNA’s The United States Law Week (Volume 74 Number 38, Fri., Apr. 11, 2006, Page 1598, ISSN 1522-4317) is reporting on Tomic v. Catholic Diocese of Peoria, --- F.3d ----, 2006 WL 851640 (7th Cir. Apr. 4 2006):

"The First Amendment-based ministerial exception [to the Age Discrimination in Employment Act] precludes federal court adjudication of a church music director's age discrimination suit against the Roman Catholic diocese that dismissed him, the U.S. Court of Appeals for the Seventh Circuit held April 4 . . . . In so ruling, [the Seventh Circuit] took the opportunity to voice disagreement with the Second Circuit's recent conclusion . . . that the Religious Freedom Restoration Act amended the Age Discrimination in Employment Act to eliminate the ministerial exception."

In Tomic, the Seventh Circuit stated:

After the oral argument in this case, the Second Circuit held (over dissent) that the Religious Freedom Restoration Act [(RFRA)], 42 U.S.C. §§ 2000bb et seq. (which in the wake of City of Boerne v. Flores, 521 U.S. 507, 117 S.Ct. 2157, 138 L.Ed.2d 624 (1997), is limited to federal action, O'Bryan v. Bureau of Prisons, 349 F.3d 399, 401 (7th Cir.2003)) amended the [Age Discrimination in Employment Act (ADEA)] to wipe out the ministerial exception and substitute RFRA's standard, which requires deciding whether a particular law imposes a substantial burden on religious activity. Hankins v. Lyght, 438 F.3d 163, 169 (2d Cir.2006). The decision would if sound invalidate the many decisions in this and other circuits recognizing the ministerial exception to federal employment discrimination law. The decision is unsound. RFRA is applicable only to suits to which the government is a party. See 42 U.S.C. §§ 2000bb-1(b), (c); Worldwide Church of God v. Philadelphia Church of God, Inc., 227 F.3d 1110, 1120-21 (9th Cir.2000); Sutton v. Providence St. Joseph Medical Center, 192 F.3d 826, 834-35 (9th Cir.1999). “A person whose religious exercise has been burdened in violation of this section may assert that violation as a claim or defense in a judicial proceeding and obtain appropriate relief against a government.”42 U.S.C. § 2000bb-1(c).

It is hardly to be imagined, moreover, that in seeking to broaden the protection of religious rights, Congress, dropping nary a hint, wiped out a long-established doctrine that gives greater protection to religious autonomy than RFRA does. Indeed a serious constitutional issue would be presented if Congress by stripping away the ministerial exception required federal courts to decide religious questions. The exception is based on the establishment and free-exercise clauses of the First Amendment, see, e.g., Combs v. Central Texas Annual Conference of United Methodist Church, supra, 173 F.3d at 350; Rayburn v. General Conference of Seventh-Day Adventists, 772 F.2d 1164, 1169 (4th Cir.1985), which place tight limits on governmental authority to regulate religion. In the Catholic Bishop case, the majority adopted a strained interpretation of the National Labor Relations Act in order to avoid confronting this constitutional issue. The dissent thought the strain too great, but did not deny the existence of such an issue, or intimate a view on how it should be resolved. 440 U.S. at 517-18, 99 S.Ct. 1313.

BNA subscribers can view the article on Tomic by clicking here.


S.D.N.Y. Notes Split Within Second Circuit re Amount of Time Sufficient to Infer Knowledge of Plaintiff’s Protected Activity

Per Campbell v. Home Depot U.S.A., Inc., http://www.blogger.com/ (S.D.N.Y. Mar. 30, 2006):

As for indirect evidence, it is here that lack of knowledge of protected activity on the part of the employees responsible for the alleged adverse employment action may be relevant "as some evidence of a lack of a causal connection." Gordon, 232 F.3d at 117. Where there is no proof of direct knowledge about a plaintiff's protected activity, knowledge can be inferred from circumstantial evidence or from evidence that "an agent is acting explicitly or implicitly upon the orders of a superior who has the requisite knowledge." Id. . . .

Thus, Plaintiff may only rely upon temporal proximity to prove causation. Plaintiff was terminated approximately four months after she engaged in protected activity. "The cases that accept mere temporal proximity between an employer's knowledge of protected activity and an adverse employment action as sufficient evidence of causality to establish a prima facie case uniformly hold that the temporal proximity must be 'very close." ' Clark County School Dist. v. Breeden, 532 U.S. 268, 273 (2001) (citing O'Neal v. Ferguson Constr. Co., 237 F.3d 1248, 1253 (10th Cir.2001)).

"[The Second Circuit] has not drawn a bright line to define the outer limits beyond which a temporal relationship is too attenuated to establish a causal relationship between the exercise of a federal constitutional right and an allegedly retaliatory action." Gorman-Bakos v. Cornell Co-op Extension, 252 F.3d 545, 554 (2d Cir.2001). Moreover, courts within the Second Circuit are divided as to whether a four-month gap is close enough. See Rivera v. Potter, 03 Civ.1991, 2005 WL 236490, at *7 (S.D.N.Y. Jan. 31, 2005) (one-month gap insufficient where plaintiff failed to proffer any evidence that his supervisors were aware of his protected activity); Reuland v. Hynes, 01 Civ. 5661, 2004 WL 1354467, at *11 (S.D.N.Y. June 17, 2004) (four-and-one-half-month gap sufficient to sustain inference of causation); Cobian v. New York City, 99 Civ. 10533, 2000 WL 1782744, at *18 (S.D.N.Y. Dec. 6, 2000) (four-month gap too long to sustain inference of causation); Alston, 14 F.Supp.2d at 312-13 (one-month gap sufficient to sustain an inference even where defendants denied knowledge of plaintiff's protected activity). However, it bears noting that, in Breeden, supra, the Supreme Court favorably cited two circuit court decisions which held that a three to four month gap between the plaintiff's protected activity and defendant's alleged retaliation was insufficient to draw an inference of causation. Breeden, 532 U.S. at 273-74 (citing Richmond v. ONEOK, Inc., 120 F.3d 205, 209 (10th Cir.1997) (3-month period insufficient); Hughes v. Derwinski, 967 F.2d 1168, 1174-75 (7th Cir.1992) (4-month period insufficient)).

Here, the facts in a light most favorable to the Plaintiff are: there was a four-month gap between her protected activity and termination, and that Plaintiff has admitted that she does not know whether Ms. Williams had knowledge of Plaintiff's protected activity. There also is no evidence that the decision-making supervisors who terminated Plaintiff (and the three other employees) knew about Plaintiff's protected activity. Based on these facts, there is a strong argument that there is insufficient evidence to infer a causal connection between Plaintiff's protected act and her termination. . . .


S.D.N.Y. Notes Split re Whether FSIA Applies to Individuals, Does Not Reach Issue

Per Kensington Intern. Ltd. v. Societe Nationale des Petroles du Congo, 2006 WL 846351 (S.D.N.Y. Mr. 31, 2006):

Itoua argues that he is a foreign sovereign who is immune under the FSIA, yet there is a circuit split as to whether the FSIA even applies to individuals. Compare Enahoro et al. v. Abubakar, 408 F.3d 877, 882 (7th Cir.2005) (FSIA may not apply to individuals) with Velasco v. Gov't of Indon. et al., 370 F.3d 392, 402 (4th Cir.2004) (FSIA may apply to individuals). Because the Court of Appeals for the Second Circuit has not clearly addressed this issue, I normally would need to determine whether Itoua was acting in his official capacity to be entitled to immunity if his acts do not fall under the commercial activity exception. Here, it is not necessary to make that determination because Kensington has sufficiently alleged that Itoua's acts--through his capacity as SNPC's Chief Executive during the relevant time period, Compl. ¶ 9--fall under the commercial activity exception in the same way that SNPC's acts do. Thus, regardless of whether he acted in his official capacity, Itoua is not immune under the FSIA because of the commercial activity exception.


University of Chicago Law Review Publishes Student Comment on Circuit Split re Reviewability of Post-SLUSA Removal Remand Orders

The University of Chicago Law Review has just published a student comment by Stephen J. Cowen entitled Appellate Review of SLUSA Remands After CAFA, 73 U Chicago L. Rev. 321 (2006), which discusses the circuit split regarding the reviewability of SLUSA-removed remand orders in reference to CAFA. Here’s an excerpt from the Introduction:

This Term, the Supreme Court will resolve a circuit split that has emerged over the reviewability of a SLUSA remand order. The stakes for litigants are high. Allowing review gives defendants further protection from discovery and another chance that a court will dismiss the claims as preempted. Denying review means the case will proceed in state court and that discovery will commence.

Of the circuits to consider the question, two have read the statute restricting appeal of most remands to prevent appellate review of SLUSA-removed remand orders. However, relying on Supreme Court case law decided after those circuit decisions, the Seventh Circuit has held that, for a remand order that is issued after the district court determined that removal was appropriate, the district court has subject matter jurisdiction over whether the claim is preempted by SLUSA. The Seventh Circuit reasoned that, because the district courts have jurisdiction over the preemption decision, the determination itself and a subsequent remand order are "unaffected by § 1447(d)" and so are reviewable by an appellate court.

This Comment attempts to resolve the circuit split over whether district court determinations of SLUSA preemption are reviewable at the appellate level. The Comment considers the impact of an analogous body of law-- the Class Action Fairness Act of 2005 (CAFA)--on the split. The Comment argues that CAFA reflects clear congressional intent favoring review for statutory schemes that, like SLUSA, grant federal courts jurisdiction in class action cases. Moreover, CAFA's treatment of remands suggests that these kinds of remands are what the Supreme Court has termed "claim-processing" rules rather than "jurisdictional" rules, and so review is not barred. The Comment further argues that allowing review of SLUSA remands is consistent with Supreme Court precedent, the statutes governing federal jurisdiction, and the purpose of SLUSA itself.

Part I briefly reviews the history of SLUSA, as well as the relevant rules governing removal, remands, appeals, and federal question jurisdiction. Part II explores the circuit split that has emerged over the appealability of SLUSA remands, evaluates the arguments on each side of the split, and concludes that the Supreme Court's decisions in Kontrick v Ryan and Scarborough v Principi are not dispositive on the issue. Part III argues that CAFA provides additional support in favor of review. The Comment concludes that allowing federal appellate review will better serve SLUSA's goal of creating uniform standards in securities class actions and that review will not create a burdensome increase in federal courts' caseloads nor cause undue delays in state court litigation.


Petition for Cert. Filed to Settle Circuit Split re application of 28 U.S.C. § 1367 to Bankruptcy Jurisdiction

Per Petition for Writ of Certiorari, Sasson v. Sokoloff, 2006 WL 655063 (Mar. 10, 2006) (No. 05-1171):

The current grant of jurisdiction to the federal district courts over bankruptcy matters was enacted as part of the Bankruptcy Reform Act of 1978, Pub. L. No. 95-598, 92 Stat. 2549, and is codified at section 1334 of title 28. As relevant here, section 1334(b) grants the district courts "original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b).

There is a deep and longstanding circuit split on the question whether the grant of "related to" jurisdiction in section 1334 precludes the bankruptcy courts from exercising supplemental jurisdiction under section 1367. The Third, Fifth, Seventh, and Eleventh Circuits have held that bankruptcy courts cannot exercise section 1367's supplemental jurisdiction. See supra p. 5 n.1. As the Fifth Circuit reasoned: "Congress has gone to great lengths to determine what proceedings may be tried by bankruptcy courts, and the exercise of ancillary and pendent jurisdiction could subsume the more restrictive 'relate[d] to' and 'arising in' jurisdiction, such that the latter would be rendered substantially, if not entirely, superfluous." Walker v. Cadle Co. (In re Walker), 51 F.3d 562, 573 (5th Cir. 1995) (internal quotation omitted); see also Bass v. Denney (In re Bass), 171 F.3d 1016, 1024 (5th Cir. 1999) (same). The Third, Seventh, and Eleventh Circuits have reached the same conclusion. See Bobroff v. Continental Bank (In re Bobroff), 766 F.2d 797, 802 (3d Cir. 1985); Wisconsin Dep't of Indus., Labor & Human Relations v. Marine Bank Monroe (In re Kubly), 818 F.2d 643, 645 (7th Cir. 1987); Miller v. Kemira (In re Lemco Gypsum, Inc.), 910 F.2d 784, 789 (11th Cir. 1990).

By contrast, the Second and Ninth Circuits have permitted bankruptcy courts to exercise the broader form of supplemental jurisdiction granted to the district courts by section 1367. As the Ninth Circuit explained in the decision below: "at present, the bankruptcy court's 'related to' jurisdiction also includes the district court's supplemental jurisdiction pursuant to 28 U.S.C. § 1367." Pet. App. 5a; see also Klein v. Civale & Trovato, Inc. (In re Lionel Corp.), 29 F.3d 88, 92 (2d Cir. 1994) ("The bankruptcy court had jurisdiction over the Owners' claims against CTI under principles of supplemental jurisdiction. See 28 U.S.C. § 1367.").

The division in the district courts and bankruptcy courts is equally pronounced, with more than a dozen cases on each side of the issue. In addition, the disagreement among the courts on this issue has received a great deal of scholarly attention. See Susan Block-Lieb, The Case Against Supplemental Jurisdiction: A Constitutional, Statutory and Policy Analysis, 62 Fordham L. Rev. 721, 756 (1994) ("the majority of courts that have addressed the issue have concluded that ... bankruptcy courts are empowered to exercise supplemental bankruptcy jurisdiction"); Ralph Brubaker, On the Nature of Federal Bankruptcy Jurisdiction: A General Statutory and Constitutional Theory, 41 Wm. & Mary L. Rev. 743, 928 (2000) ("many courts have concluded more recently that bankruptcy courts have no 'supplemental' bankruptcy jurisdiction whatsoever"); see also William L. Norton, Jr., 1 Norton Bankr. Law & Practice 2d, § 4:70 (2005) (noting both that "it has been held that § 1367(a) may be invoked as a basis for the exercise of jurisdiction by the bankruptcy court" and that "[u]nder developing case law, it appears that a bankruptcy court cannot exercise supplemental jurisdiction"). This Court should grant certiorari to resolve this entrenched division of authority among the courts of appeals.

The Ninth Circuit held in the case upon which the Petition is based, In re Sasson, 424 F.3d 864 (9th Sept. 13, 2005):

In addition to continuation of the bankruptcy court's pre-Code jurisdiction and the specific grant of new powers, the Bankruptcy Code provided for the exercise of "original but not exclusive jurisdiction of all civil proceedings arising under title 11, or arising in or related to cases under title 11." 28 U.S.C. § 1334(b). A bankruptcy court's "related to" jurisdiction is very broad, "including nearly every matter directly or indirectly related to the bankruptcy." Mann v. Alexander Dawson (In re Mann), 907 F.2d 923, 926 n. 4 (9th Cir.1990). The bankruptcy court's "related to" jurisdiction granted by the Bankruptcy Code derives directly from the Bankruptcy Clause, which grants Congress the power "[t]o establish ... uniform Laws on the subject of Bankruptcies throughout the United States." U.S. Const., art. 1, § 8. Congress expanded the Bankruptcy Court's Article I jurisdiction by granting federal district courts with "original and exclusive jurisdiction of all cases under title 11." 28 U.S.C. § 1334(a). Thus, at present, the bankruptcy court's "related to" jurisdiction also includes the district court's supplemental jurisdiction pursuant to 28 U.S.C. § 1367 "over all other claims that are so related to claims in the action within [the court's] original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." See Montana v. Goldin (In re Pegasus Gold Corp.), 394 F.3d 1189, 1195 (9th Cir.2005); Sec. Farms v. Int'l Bhd. of Teamsters, 124 F.3d 999, 1008 n. 5 (9th Cir.1997).


Fourth Circuit Notes Circuit Split re Whether Bankruptcy Law “Property of the Estate” Includes Property the Debtor Fraudulently Transferred

Per In re French, 440 F.3d 145 (4th Cir. Feb. 14, 2006) in Note 2:

The circuits are divided as to whether "property of the estate" encompasses property that a debtor has fraudulently transferred. If it does--as the Fifth Circuit has held, see Cullen Ctr. Bank & Trust v. Hensley (In re Criswell), 102 F.3d 1411, 1417 (5th Cir.1997); Am. Nat'l Bank v. MortgageAmerica Corp. (In re MortgageAmera Corp.), 714 F.2d 1266, 1275 (5th Cir.1983)--then the Bahamian property here falls squarely within § 541's definition of "property of the estate," and that provision's clear incorporation of foreign property would obviously rebut the presumption against extraterritoriality. However, not every court has agreed with the Fifth Circuit's conclusion that "property of the estate" includes property that could be, but has not yet been, recovered as the object of a fraudulent transfer. Instead, other courts have concluded that property held by third-party transferees only becomes "property of the estate" after it has been avoided and recovered. See In re Saunders, 101 B.R. 303, 304-05 (Bankr.N.D.Fla.1989); see also FDIC v. Hirsch (In re Colonial Realty Co.), 980 F.2d 125, 131 (2d Cir.1992); Dunes Hotel Assocs. v. Hyatt Corp., 245 B.R. 492, 504-05 (D.S.C.2000). Because we hold that § 548 applies to the transfer in this case even assuming that § 541's definition of "property of the estate" does not by itself extend to the Bahamian property, we need not join this dispute.

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