Joan and David Berenson’s agreement with Fidelity Brokerage required arbitration of all claims other than ones on behalf of a class.  The Berensons sued and sought class certification.  The parties agreed that the district court could resolve the merits before deciding the class certification motion.  On motion by Fidelity, the court granted summary judgment as to several claims, including the Berensons’ class claims, but denied it as to others.  Fidelity moved to compel arbitration of the non-class claims.  The court ordered arbitration but issued an opinion explaining its earlier refusal of summary judgment as to the remaining claims.

Fidelity appealed because, it argued, the district court’s opinion could prejudice its rights in the arbitration.  The First Circuit disagreed, holding that Fidelity had made its own bed and could now sleep in it:

The court’s October 31 summary judgment opinion was a direct consequence of Fidelity’s agreement to allow the court to try the Berensons’ claims in an exemplar case before certifying a putative class action and its request for summary judgment on all remaining claims in the case.  It was not an effective denial of Fidelity’s petition to compel arbitration on the Berensons’ individual claims; indeed, that arbitration is now proceeding.  Lacking jurisdiction over Fidelity’s interlocutory appeal, we must dismiss it.

Berenson v. National Financial Services LLC, No. 06-1112 (1st Cir. Apr. 27, 2007).

Barry Barnett

The Federal Circuit today did what it does best — reconstrued patent claims and, as a result, reversed a district court’s judgment.  The court also tossed the district court’s conclusion of copyright infringement, holding that the plaintiff failed to establish ownership as a matter of law.  PODS, Inc. v. Porta Stor, Inc., No. 06-1504 (Fed. Cir. Apr. 27, 2007).

The case pitted two moving and storage companies against each other.  PODS accused Porta Stor of infringing a patent on a method and apparatus for lifting and loading or unloading portable storage containers.  PODS also claimed that Porta Stor copied its rental agreement in violation of copyright law.  PODS won on both claims at trial.  But the Federal Circuit rejected the district court’s construction of the PODS patent claim and held that Porta Stor didn’t infringe the patent.  The court also pointed to testimony that an outside lawyer may have created the rental agreement, raising questions as to PODS’s ownership of the copyright in the agreement.  The court thus reversed the judgment for PODS on the patent and copyright claims and remanded for a new trial on the copyright issues only.

Barry Barnett

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Today, the Eleventh Circuit reversed and remanded dismissal of a petition to compel arbitration.  The underlying case involved claims for usury under Georgia law against a "payday loan" company.  A payday loan lasts only two weeks or a month — until the next payday — but earns annual interest rates up to several hundred percent. 

Following its precedent, Tamiami Partners Ltd., ex rel. Tamiami Development Corp. v. Miccosukee Tribe of Indians of Florida, 177 F.3d 1212 (11th Cir. 1999), the court held that the district court should have looked not only at the plaintiff’s pleadings but also the petition to compel arbitration to determine whether federal question jurisdiction existed.  The petition sought a declaratory judgment against the plaintiff — including on his claim under the Georgia version of the federal Racketeer-Influenced anc Corrupt Organizations Act.  Because the plaintiff could have alleged a federal RICO claim, the court held, federal question jurisdiction existed; and the district court erred in dismissing the petition to compel arbitration.  Two judges specially concurred, lamenting that Tamiami remained binding precedent in the Eleventh Circuit. Community State Bank v. Strong, No. 06-11582 (11th Cir. Apr. 27, 2007).

Blawgletter shares the concurrers’ lament.  Tamiami deviated from the rule that, as master of his complaint, the plaintiff may choose not to allege federal claims, and the defendants can’t do anything about it.  Tamiami lets defendants force federal claims on the plaintiff and thus to manufacture federal jurisdiction.  Let’s hope Strong either goes en banc or to the Supremes for correction of the bizarre Tamiami rule.

Barry Barnett

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The New York Court of Appeals ruled today that a competitor can’t defend against a claim for tortiously interfering with contracts binding customers to another competitor by alleging a "generalized economic interest" in soliciting business.  White Plains Coat & Apron, a linen rental company, alleged that Cintas, a competitor, persuaded customers to break their agreements to rent linen only from White Plains for five years.  The court distinguished between interference with prospective contracts and interference with existing ones.  An interest in getting more business may provide a defense for interfering with the former but not with the latter — at least where the thief doesn’t have a pre-existing relationship with the customers it induced to breach.  White Plains Coat & Apron Co., Inc. v. Cintas Corp., No. 32 (N.Y. Apr. 26, 2007).

Barry Barnett

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The Fourth Circuit held today that a disability plan under the Employee Retirement Income Security Act cannot begin the running of a limitations period before the plan participant’s ability to file a lawsuit arises.  The plan before the court put the participant in a Catch-22 situation — she had to sue within three years of when she had to file a proof of claim, but she couldn’t sue until the insurer denied her claim.  Concluding that the three-year limitations period didn’t start until denial of the claim, the court affirmed a judgment in the participant’s favor.  The decision had the effect of giving the participant the full three years from the date of denial.  One judge dissented.  White v. Sun Life Assurance Co., Nos. 06-1285 & 06-1491 (4th Cir. Apr. 26, 2007).

Barry Barnett

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Blawgletter doesn’t embarrass easy, mind you, but a recent post by International Lawyer Coach Janet Moore brought color to our cheeks.  Thank you, Janet.

Janet indeed earned rave reviews for her Rainmaking Basics in a Global Economy training at Susman Godfrey‘s Dallas office retreat a couple weeks ago.  She even inspired Blawgletter to take a DiSC personality test.  (Yikes!)  If you need inspiration in your law practice, you can’t do better than Janet Moore.

Barry Barnett

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The Sixth Circuit today overturned dismissal of a claim that DaimlerChrysler Vans engaged in price discrimination by furnishing promotional services to some dealers but not to others.  The plaintiff, a Freightliner truck dealer, alleged that DaimlerChrysler Vans sold its "Sprinter" line of vans to Freightliner dealers and Dodge dealers but provided "BusinessLink" services only to the latter.  BusinessLink allowed end-users to get service priority at the dealerships.  The court held that the discriminatory treatment may violate section 13(d) or (e) of the Robinson-Patman Act and accordingly reversed dismissal of the price discrimination claim under Rule 12(b)(6).  Freightliner of Knoxville, Inc. v. DaimlerChrysler Vans, LLC, No. 06-6054 (6th Cir. Apr. 26, 2007).

Barry Barnett

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The Ninth Circuit held today that a bankruptcy court, before confirming a plan of reorganization, must take account of a creditor’s pending litigation that may result in a post-confirmation recovery of damages from the debtor.  The 2-1 decision suggests that the bankruptcy court must at least estimate the value of the creditor’s claim to determine plan feasibility.  In re Harbin (Sherman v. Harbin), No. 04-56799 & 04-56865 (9th Cir. Apr. 25, 2007).

Note:  The original post said that the bankruptcy court must estimate a debtor’s claim against a creditor.  The opinion in fact deals with estimation of a creditor’s claim against the debtor.  Our bad.

Barry Barnett

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Today, the Fifth Circuit reversed an order remanding a class action case, which arose out of Hurricane Katrina, to Orleans Parish, Louisiana, because the plaintiff failed to show the Louisiana citizenship of two-thirds of class members under the Class Action Fairness Act.  The plaintiff alleged that an infirmary and hospital in New Orleans caused injury and death by providing defective and unreasonably dangerous facilities for patients.  The court held that evidence of class members’ primary billing addresses fell short of establishing the elements of citizenship — domicile plus intent to stay there indefinitely — because the plaintiff didn’t also provide evidence that the infirmary and hospital patients meant to stay at their billing addresses as of the time the plaintiff sued, 10 months after Katrina.  The court accordingly ordered the district court to keep the case.  Preston v. Tenet Healthsystem Memorial Medical Center, Inc., No. 07-30132 (5th Cir. Apr. 25, 2007).

Preston may turn on the unique fact, of which the court appears to take judicial notice, of "mass evacuation" from New Orleans after Katrina.  Blawgletter so hopes.

Barry Barnett

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An Archway Cookies truck rear-ended a slow-moving and malfunctioning Greyhound bus as its driver tried to make the next off-ramp.  Greyhound sued Archway for bus damages.  The district court, after a bench trial, assessed 85 percent of fault to Archway and 15 percent to Greyhound.  Archway complained on appeal that the district court should have imposed sanctions on Greyhound for failing to preserve an in-bus electronic control module (ECM) that contained data about the bus’s condition before the collision.  The Eighth Circuit upheld the district court’s refusal of "spoliation" sanctions, noting that Greyhound didn’t erase the ECM data — the engine manufacturer (inexplicably) did after Greyhound sent the ECM to it before filing the lawsuit.  "The ultimate focus for imposing sanctions for spoliation of evidence is the intentional destruction of evidence indicating a desire to suppress the truth, not the prospect of litigation."  Greyhound Lines, Inc. v. Wade, No. 06-1875 (8th Cir. Apr. 24, 2007).

Now, Blawgletter has devoured a sweet and chewie Archway cookie or two and confesses to liking them very much.  But Archway’s spoliation argument strikes us as far less tasty.  What did Archway expect the district court to do anyway — instruct itself to think ill of Greyhound for allowing one of its buses to get in the way of a cookie delivery vehicle?  C’m’on.  Have a cookie, guys.

Barry Barnett

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