Commercial Litigation and Arbitration

Federal Practice Developments 2009

Federal Practice Developments 2009

Gregory P. Joseph*

This article focuses on significant developments in federal practice in 2009. It supplements two earlier articles, Supreme Court on Federal Practice 2009, 77 U.S.L.W. 2787 (June 30, 2009), and Circuit Splits, Nat’l L.J., April 13, 2009, at 18.

No Interlocutory Appeal of Privilege Decisions. Resolving a Circuit split, the Supreme Court declined to extend the collateral order doctrine to allow interlocutory appeals of district court orders overruling assertions of attorney-client privilege, in Mohawk Indus. v. Carpenter, 2009 U.S. LEXIS 8942 (Dec. 8, 2009). The Court pointed to “rulemaking, ‘not expansion by court decision,’ as the preferred means for determining whether and when prejudgment orders should be immediately appealable.” Under Mohawk, interlocutory review of adverse privilege determinations may be obtained only via 28 U.S.C. § 1292(b), mandamus, or suffering contempt.

December 1, 2009 Rules Amendments. Principal changes to the Federal Rules of Civil Procedure effective December 1, 2009 include:

  1. A complaint can be amended as of right for only 21 days after a motion to dismiss is filed. Previously, the right to amend extended indefinitely until an answer was filed. The 21-day clock starts when a motion to dismiss, to strike or for a more definite statement, is filed. (This regime applies to all claim-asserting pleadings, including counterclaims, cross-claims and third-party claims.) Rule 15(a)(1)(B).
  2. Conversely, an answer no longer closes the pleadings — the plaintiff has 21 days to amend as of right after the answer is filed.

  3. The method for counting time under the Federal Rules, local rules and court orders has changed. (Rule 6).
    • Intervening weekends and holidays are now counted. Rule 6(a)(1)(B).
    • New rules for counting hours (e.g., under a court order) have been added. Rule 6(a)(2).
    • 3 extra days for service by mail continues, and the new computation rule may afford more than 3 extra days. First, you compute the time set forth in the Rules, including, if the last day is a weekend or holiday, the extension to the next business day. Second, you add 3 days. Rule 6(d).

  4. A motion for summary judgment may be filed immediately. The former 20-day waiting period is gone. Rule 56(c)(1)(A).
  5. District judges may issue provisional rulings after a notice of appeal is filed. Rule 62.1.

Voluntary Dismissal. Rule 41(a)(1)(A)(ii) authorizes voluntary dismissal of an action by filing “a stipulation of dismissal signed by all parties who have appeared.” What if the district court has previously dismissed some parties who had previously appeared — are their signatures essential? The Sixth Circuit answered that question in the affirmative in Anderson-Tully Co. v. Federal Ins. Co., 2009 U.S. App. LEXIS 21141 (6th Cir. Sept. 23, 2009), holding that, absent signatures from all who have appeared, a court order is necessary to dismiss the action and start the appellate clock.

Futility of Amendment. When confronted with a motion to amend that tenders an infirm proposed amended complaint, should the district court consider only the tendered pleading or other possible amendments? In Panther Partners, Inc. v. Ikanos Commc’ns, Inc., 2009 U.S. App. LEXIS 20652 (2d Cir. Sept. 17, 2009), the Second Circuit ruled that, “[a]lthough courts commonly look to proposed amendments to determine futility, courts need not determine futility based only on an assessment of the proposed amendments. . . . Instead, courts may consider all possible amendments when determining futility.” Note that this is stated in permissive, not mandatory, terms, although the Second Circuit did vacate the denial of a motion to reconsider denial of a motion for leave to amend.

Intervention: Piggyback Standing. Piggyback standing permits an intervenor to intervene in an existing action on the basis of an existing party’s standing, without establishing independent Article III standing. Is the doctrine applicable if the district court has retained jurisdiction over a matter, as to enforce a settlement, but there is no active dispute among the parties? The Tenth Circuit ruled that the doctrine does not apply in such circumstances, in City of Colo. Springs v. Climax Molybdenum Co., 2009 U.S. App. LEXIS 25854 (10th Cir. Nov. 25, 2009) (“a proposed intervenor may not establish piggyback standing where the existing parties are not seeking judicial resolution of an active dispute among themselves”).

Declaratory Judgment. The district court enjoys substantial discretion to dismiss or stay a claim seeking a declaratory judgment, even though it possesses subject matter jurisdiction over the claim, under the Wilton/Brillhart abstention doctrine. There is a split in the Circuits as to whether or in what way Wilton/Brillhart applies to actions in which both declaratory and non-declaratory relief is sought. Some Circuits hold the doctrine inapplicable if any non-frivolous claim for non-declaratory relief is asserted. Another applies the “essence of the lawsuit” approach, under which the district court may abstain from non-declaratory claims under Wilton/Brillhart if the essence of the suit is a declaratory judgment action. The Seventh Circuit, in R.R. Street & Co. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA., 569 F.3d 711 (7th Cir. 2009), followed a third approach (that of the Ninth Circuit):

Where state and federal proceedings are parallel and the federal suit contains claims for both declaratory and non-declaratory relief, the district court should determine whether the claims seeking non-declaratory relief are independent of the declaratory claim. If they are not, the court can exercise its discretion under Wilton/Brillhartand abstain from hearing the entire action. But if they are, the Wilton/Brillhart doctrine does not apply and, subject to the presence of exceptional circumstances under the Colorado River doctrine, the court must hear the independent non-declaratory claims. The district court then should retain the declaratory claim under Wilton/Brillhart (along with any dependent non-declaratory claims) in order to avoid piecemeal litigation.

Arbitration. Under the Supreme Court’s decision in Hall Street Assocs. v. Mattel, Inc., 552 U.S. 576 (2008), judicial review of arbitration awards under the Federal Arbitration Act (FAA) is extremely limited, but the Court did not bar parties from agreeing to expanded review under state law. The Third Circuit concluded that a clear agreement to that effect is required, holding a generic choice of law provision insufficient to opt out of the FAA and expand the scope of appellate review pursuant to state law, in Oberwager v. McKenchnie Ltd., 2009 U.S. App. LEXIS 23006 (3d Cir. Oct. 20, 2009).

Once an arbitration award is reduced to judgment, the FAA alone no longer governs judicial power. The judgment is subject to at least limited judicial modification, pursuant to Fed. R. Civ. P. 60(b). In AIG Baker Sterling Heights, LLC v. Am. Multi-Cinema, Inc., 579 F.3d 1268 (11th Cir. 2009), while acknowledging that “that courts cannot use Rule 60(b) to modify or vacate an arbitration award or, perhaps, to grant relief from a judgment confirming an award for reasons covered in sections 10 or 11 of the FAA,” the Eleventh Circuit affirmed a district court’s modification of a judgment based on an arbitration award to account for partial satisfaction after entry of the award, pursuant to Rule 60(b)(5).

The power of arbitrators to award sanctions was the focus of the Second Circuit in ReliaStar Life Ins. Co. v. EMC Nat’l Life Co., 564 F.3d 81 (2d Cir. 2009). It ruled that, if the parties sign a broad arbitration clause, the panel is authorized to impose monetary sanctions, including attorney's fees, even if the arbitration agreement otherwise excludes the power to award fees.

Under the FAA, an order denying a motion to stay litigation in deference to arbitration is immediately appealable (9 U.S.C. § 16(a)(1)(A)). Outside the FAA, there is a Circuit split as to whether an order denying a stay of litigation is immediately appealable. The Seventh Circuit, in Sherwood v. Marquette Transp. Co., 2009 U.S. App. LEXIS 25581 (7th Cir. Nov. 23, 2009), held that such an order is not immediately appealable because “[a]n arbitration agreement is a specialized forum-selection clause,” and a district court’s refusal to stay, dismiss or transfer an action under a forum selection clause is not appealable under Lauro Lines s.r.l. v. Chasser, 490 U.S. 495 (1989).

Multidistrict Litigation. There are three approaches applied by the courts of appeals to determine when an MDL transferor court (i.e., the court in which suit was commenced) may review the pretrial decisions of a transferee MDL court (i.e., the court conducting MDL proceedings). Some courts apply a bright-line rule that a transferor court cannot overrule an MDL court. Others apply a substantial-deference test. The Fifth Circuit, in In re Ford Motor Co., 580 F.3d 308 (5th Cir. 2009), concluded that the better view is to apply the law-of-the-case doctrine, precluding overturning the MDL court’s earlier decision unless (i) the evidence is substantially different, (ii) controlling authority has since changed, or (iii) the earlier decision was clearly erroneous and would work manifest injustice.

Pendent Appellate Jurisdiction. Under Swint v. Chambers County Comm'n, 514 U.S. 35 (2005), pendent appellate jurisdiction over an unappealable interlocutory order may exist if it is “inextricably intertwined” with an appealable interlocutory order. The Fifth Circuit had an appealable interlocutory order before it — denial of a preliminary injunction — in Byrum v. Landreth, 566 F.3d 442 (5th Cir. 2009). The question was whether that conferred pendent appellate jurisdiction over an order denying summary judgment. The Fifth Circuit held that it did not, even though the facts and law underlying the two orders were the same, because denial of summary judgment motion did not “entirely foreclose [the losing party] from possible eventual success.”


back*Mr. Joseph, of Gregory P. Joseph Law Offices LLC, New York, is the President-Elect of the American College of Trial Lawyers and a past Chair of the Section of Litigation of the American Bar Association. He can be reached at

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