Testing Liability: The Legacy of Brown v. Superior Court in Products Liability

Now over 25 years old, Brown v. Superior Court established a significant precedent regarding medical products liability, and products liability generally. In addition to its specific holdings, Brown has been credited with articulating the three separate theories of products liability—manufacturing defect, design defect, and failure to warn—at a time when these were often lumped into a single claim of strict products liability. The court in Brown unanimously held that:

1)  Strict products liability for defect design does not apply to prescription drugs,

2)  Strict liability for failure to warn in prescription drug cases is limited to information that was reasonably scientifically known or knowable at the time of distribution, and

3)  The market share theory applied in Sindell v. Abbott Laboratories does not apply to breach of warranty or fraud claims and a defendant is only liable for an apportionment equal to its then market share of the subject product.

In the time since Brown, its blanket restriction on design defect claims, which remains a minority rule, has been expanded in California to all implanted medical devices, such as IUDs, breast implants and artificial joints. Attempts to expand it further to selected non-prescription medical products have so far been unsuccessful, although on a case-by-case basis. Conversely, its ruling on warnings follows the national majority rule and has been applied to products claims generally. The market share theory has not seen wide application, presumably in part because of the restrictions imposed by Brown. For more details regarding the history and legacy of Brown, please see my article in the September 2014 issue of Los Angeles Lawyer, which can be found here.

Copyright 2014 Los Angeles Lawyer. Reprinted with permission.

"I'll Tell You What Really Happened": In the 6th Circuit, Experts Can Contradict Their Clients' Testimony

The weight of expert testimony in product liability cases can hardly be overstated. Because complex questions of scientific and medical causation often hold sway, juries are thirsty for someone to tell them what the evidence means, and thus the inevitable “battle of the experts” ensues. But what happens when an expert tells the jury that the physical evidence means his client’s own recollection of events is wrong? According to the Sixth Circuit Court of Appeals, such expert opinion is not only admissible, but district courts abuse their discretion by excluding it.

In Lee v. Smith & Wesson Corp., 2014 WL 3715084, --- F.3d --- (6th Cir., Jul. 29, 2014), the plaintiff’s testimony was very clear that the third target practice shot he fired from his Smith & Wesson revolver – during which the gun discharged improperly and seriously injured Lee’s face – was no different from the previous two: He had no difficulty with the gun, the cylinder was closed when he fired, and he never touched the thumb latch. His sole causation expert’s opinion, however, was directly contrary: “When Mr. Lee attempted to fire his gun for the third shot, the cylinder failed to fully close and the gun would not fire. Not understanding the problem and as the cylinder appeared to be closed, Mr. Lee pushed on the thumb latch and in so doing was able to cock and fire the gun with the result experienced.”

Defendant Smith & Wesson sought to exclude the opinion of Lee’s expert on the ground that it was fundamentally inconsistent with his client’s testimony and thus irrelevant under Federal Rule of Evidence 702. The district court agreed and granted Smith & Wesson’s motion in limine. Thereafter, Lee agreed to a stipulated dismissal and appealed.

The Sixth Circuit reversed and remanded, holding that “a party is not precluded from proving his case by any relevant evidence, even though that evidence may contradict the testimony of a witness previously called by him.”  Thus, “[e]ven under the deferential abuse-of-discretion standard, the district court’s exclusion of [the expert’s] testimony as inadmissible under Rule 702 was not proper.” The “expert testimony should have been admitted” because the expert “had the appropriate qualifications, he used reliable methods, and his opinion was based on physical evidence from the accident.” As the first two reasons were never challenged, the court’s ruling necessarily turns on the expert opinion’s foundation in the evidence.

The court began, however, by pointing out that the expert’s opinion had support from other testimonial evidence. Specifically, Lee’s friend and another witness each testified that the gun’s cylinder was open in the moments immediately after the third shot. According to the court, “[t]his evidence supports [the expert’s] theory and contradicts Lee’s testimony.” As a result, “a reasonable fact finder could conclude that Lee thought he had closed the chamber but in fact did not, and instead overlooked the opening,” and thus his expert’s opinion based on that predicate “would be highly relevant to determining whether the gun was defective.”

“It is true,” the Sixth Circuit conceded, “that expert testimony should be excluded if it relies on facts that no jury could accept, or relies on the rejection of facts that any jury would be required to accept.” However, the court held, those facts must be grounded in the physical evidence. To illustrate, the Court cited its decision in Greenwell v. Boatwright, 184 F.3d 492, 497-98 (6th Cir. 1999), a motor vehicle collision case in which the plaintiff’s theory – supported by eyewitness testimony – was that the defendant’s truck “fish-tailed,” but the defendant’s expert relied on physical evidence in opining that no fish-tailing occurred. The Greenwell court held that such expert testimony was only properly excluded where the opposing party “present[ed] facts that plainly contradict the physical evidence upon which the expert based his theory of the accident.”

The Court concluded by making an observation that might reasonably be called the loadstar of its analysis: “A tort plaintiff should be able to testify honestly to his memory of what happened and still have his lawyer argue that on the evidence as a whole it is more probable than not that the memory was faulty.”

The Sixth Circuit’s analysis holds a certain logical appeal. It makes sense that an expert could demonstrate from the physical evidence that a witness’s recollection must have been mistaken. On the other hand, only the witness is an expert in his or her own conduct. It therefore seems odd to allow an expert to substitute his own speculative version of events – constructed specifically to support his theory – for the witness’s own contrary recollection, simply because the physical evidence does not absolutely prohibit the expert’s version. It is doubly odd to compel a district court, whose evidentiary rulings are usually granted wide latitude, to admit expert opinion despite testimonial evidence that is directly contradictory. Indeed, the Sixth Circuit’s own use of eyewitness testimony to buttress the expert’s opinion suggests that testimonial evidence is not as irrelevant to the analysis as the Court’s articulated rule would require.

Oddities aside, it remains that, in the Sixth Circuit at least, a party is no longer bound to causation theories that match his own testimony – as long as his expert can explain how the physical evidence supports, or at least does not negate, a contradictory opinion. Although corroborating testimonial evidence is apparently beneficial, as well.

Image courtesy of Flickr by Steve Jurvetson.

Texas Supreme Court Upholds Class Representative's Authority to Dispose of Unclaimed Settlement Proceeds

A sharply divided Texas Supreme Court recently held that unclaimed class action settlement funds may be disposed of in the manner selected by the parties and are not subject to the state’s Unclaimed Property Act. In Highland Homes Ltd. v. The State of Texas, the court considered a settlement between a prominent Texas home builder and a class of subcontractors arising from a dispute over deductions in pay made by the homebuilder to cover the cost of providing adequate liability insurance coverage. The settlement required the defendant to establish a fund to pay claims. Recognizing that some class members might remain unlocated or fail to file a timely claim, the settlement provided that any settlement checks not negotiated within 90 days would be void and that these and any other unclaimed funds would be given to the Nature Conservancy. This type of cy pres settlement procedure has proven controversial recently and some court and commentators have criticized such arrangements. Nevertheless the trial court approved the settlement..

The state of Texas intervened in the case, asserting that the disposition of unclaimed settlement funds violated the Texas Unclaimed Property Act. Under the Act property not claimed within three years is presumed abandoned and is placed in the custody of the Comptroller to hold for the owner. The state argued that regardless of the terms of the settlement, any unclaimed settlement funds must be disposed of according to the statute. The court of appeals agreed with the state and ordered that the undistributed funds be held by the claims administrator for three years and then remitted to the Comptroller.

The Supreme Court reversed. In an opinion authored by Chief Justice Hecht, the five-justice majority reasoned that the Unclaimed Property Act did not apply because the funds were not really unclaimed. The class members had asserted claims and exercised ownership of the funds through the class representative. Once the class was certified the representative has the authority to dispose of any claims including the ability to direct the disposition of funds that could not be paid directly to the class members. 

Justice Devine penned a dissent on behalf of four justices. In their view the class certification rules were trumped by the Unclaimed Property Act because a procedural rule cannot enlarge or diminish any substantive rights. Once the settlement was funded, the dissent reasoned, the proceeds became the property of the individual class members and because subject to the Act.

The Highland Homes opinion upholds the ability of class representatives and defendants to strike class action settlements. If state unclaimed property statutes necessarily apply to all unclaimed settlement proceeds, parties to class litigation will have lost a considerable degree of flexibility in crafting settlements. Cy pres provisions would be difficult or impossible to enforce, as would provisions where the defendant obtains a reversion of the unclaimed funds. While fund-and-claim class action settlement arrangements are subject to some legitimate criticism, especially where the claims process is made unduly burdensome, the inability to use such an arrangement would deprive litigants of what is often a reasonable means of resolving disputes, especially in cases where the scope of actual loss by the class members is in dispute or cannot be readily ascertained. 

Image courtesy of Flickr by J.R.

The Adverse Amicus: Does Court Acceptance of Factual Assertions Require a More Active Response?

The September 1 issue of the New York Times reports on an upcoming article on the role of amicus curiae briefs in shaping Supreme Court opinions. The article, authored by William and Mary professor, Allison Orr Larsen, addresses the tendency of Supreme Court Justices to cite factual assertions made by amici. These assertions may inject matters into the Court’s decision making process that were not placed before the trial court and may not have received the vetting that a factual assertion by a party has received. While various Justices have warned against resorting to such off-the-record facts, Professor Larsen has turned up a number of instances where Supreme Court opinions have cited amicus briefs for various factual matters—including instances where the briefs themselves provide no further authority for backing up the claim.

The acceptance of and reliance upon friend-of-the-court briefs varies greatly among the appellate courts. Texas, for example, takes a rather welcoming attitude towards such briefs. In jurisdictions where a robust amicus practice is allowed, Professor Larsen’s work suggests that litigants should take claims made in amicus briefs seriously. Where a claim lacks a basis in the record it may be necessary to move the court to strike that portion of the brief and to remind the court of its responsibility to judge the case based upon the record before it, not the assertions of an interested “friend.”

Fifth Circuit Applies Punitive Damages Limitations to Statutory Civil Penalties

It’s not uncommon for state and federal regulatory schemes to provide for an award of statutory civil penalties to deter and punish certain conduct that it is difficult to monetize in a suit for damages. Frequently penalties may be assessed on a per-violation or per-day basis, permitting an astronomical award that bears little relation to the actual harm sustained by the persons for whose benefit the statute has been enacted. The Telephone Consumer Protection Act with its $500 per violation penalty for sending unsolicited fax advertisements is perhaps the best well known of these statutes but numerous others appear in the United States Code and among the state statutes.

Since these penalties are not intended primarily to compensate the victim of the unlawful practice and exist largely for the public purposes of punishing conduct deemed socially unacceptable the question arises of whether laws governing punitive damages awards constrain the courts in determining the total amount of punitive damages that may be awarded.

In Forte v. Wal-Mart Stores [pdf] four optometrists alleged that Wal-Mart had violated the Texas Optometry Act by writing into lease agreements with the optometrists a provision providing a minimum number of hours that the optometrists’ in-store offices would be opened. The optometrists conceded that they had sustained no damages but the jury awarded them nearly 4 million, amounting to a civil penalty of $1000 per day for each day the offending leases were in effect. The district court entered a remittitur reducing the civil penalty to approximately $1.4 million.

The Fifth Circuit reversed the civil penalty award under Chapter 41 of the Texas Civil Practice and Remedies Code, which governs the award of punitive damages. The court applied the Code’s definition of punitive damages which encompass any damages awarded as a penalty but not for compensatory purposes. The Optometry Act’s penalty provisions were specifically penal and nature and were not intended as compensation. The Fifth Circuit distinguished the case from a prior holding that had held Chapter 41 did not extend to civil penalties for the filing of false liens because in the prior case statutory damages provision expressly mentioned punitive damages indicating that the statutory penalty itself was no considered punitive damages by the legislature and because the statutory damages provision in the false liens case was not characterized as a penalty.

The Fifth Circuit then determined that the punitive damages cap under Chapter 41 was zero because the Chapter provided that punitive damage could only be recovered when the plaintiff received some non-nominal award of actual damages.

The result of the holding is dramatic. In effect, Chapter 41’s general provision that punitive damages may not be recovered in the absence of actual damages is permitted to trump a specific statutory provision allowing for the recovery of a civil penalty in the absence of actual damages. It will be necessary to carefully examine every Texas statute providing for a civil penalty to determine whether it is subject to Chapter 41’s zero cap.

Because Wal-Mart prevailed on its statutory argument the Fifth Circuit was not required to rule upon the interesting constitutional question of whether Due Process constrains a state’s ability to impose a civil penalty disproportionate to the actual harm caused by the unlawful activity. If Due Process limits a jury’s ability to award punitive damages to some reasonable ratio of the actual damages, it would seem that the legislature’s ability to meet out punishment through civil penalties is similarly limited.

Florida High Court to Decide If Party Must Object to a Fundamentally Inconsistent Verdict to Preserve Issue

We, the jury, return the following verdict:
1. Did Defendants place the product 
    on the market with a design defect,
    which was a legal cause of the
    decedent’s death?
    YES _______ NO X
2.  Was there negligence on the part of
     Defendants which was a legal cause of
     decedent’s death?
     YES X NO ________

The Florida Supreme Court has accepted review of a Third District case involving whether a party waives a challenge to a fundamentally inconsistent verdict by failing to object before the jury is discharged.  See Coba v. Tricam Indus., Inc., No. SC12-2624. The Third District decided that a waiver does not occur under these circumstances.  To view the Third District’s opinion, click here.

After Robert Coba, a civil engineer, died from a falling from a ladder, his estate sued Tricam, the ladder manufacturer, and Home Depot, the seller, for strict liability and negligence.  The verdict form contained the following two interrogatories:

(1) Did Defendants, Tricam Industries and/or Home Depot, place the ladder on the market with a design defect, which was a legal cause of Roberto Coba’s death?

(2) Was there negligence on the part of Defendants, Tricam Industries and/or Home Depot, which was a legal cause of Roberto Coba’s death?

Because plaintiff’s products liability theory at trial was based on a design defect only, the jury inconsistently found that there was no design defect, but that the defendants’ negligence was the legal cause of the Coba’s death.  After the jury was discharged, defendants moved to set aside the verdict, claiming that there was insufficient evidence to sustain the jury’s negligence finding. The trial court denied the motion.

On appeal, the Third District found that the trial court erred in denying defendants’ motion to set aside the verdict in accordance with their motion for directed verdict. The court acknowledged that normally, a party would have waived their objection to a purportedly inconsistent verdict if they failed to object before the jury was discharged. The court, however, held that an exception to this rule exists where the inconsistency “is of a fundamental nature.”

The court relied on the Fourth District’s 2004 opinion in Nissan Motor Co. v. Alvarez and the Fifth District’s 1985 decision in American Catamaran Racing Ass’n v. McCollister—both factually similar cases where the jury was presented with a similar verdict form. In both decisions, the district courts considered the fact that the only evidence of negligence that had been introduced related to the alleged design defect. Because both juries found that there was no defect, the Fourth and Fifth Districts held that a concurrent finding of negligence could not be sustained. The Third District adopted the reasoning in these cases to hold that a party does not have to object to such a fundamentally inconsistent verdict.

The court also stated there was no need to remand for a new trial because the jury had already decided on the only evidence that had been presented—specifically, the alleged design defect. Because no other evidence had been introduced to support any other cause of action, the Third District held that no issue remained to be resolved.

Senior Judge Schwartz dissented in part, reasoning that defendants had waived their right to complain of an inconsistent verdict because they failed to request that the inconsistency be resolved after the verdict was returned. Judge Schwartz further explained that even if this were not the case, he believed that the appropriate remedy is to grant a new trial so that a jury—not the court—can resolve the inconsistency.

This article will be updated once the Florida Supreme Court decides the case.


Florida High Court to Decide Whether Statute of Frauds Applies to Oral Agreement to Split Lottery Winnings



On June 20, 2014, the Florida Supreme Court accepted review of a Fifth District decision that certified the following question of great public importance:

Is an oral agreement to play the lottery and split the proceeds in the event a winning ticket is purchased unenforceable under the statute of frauds when: there is no time agreed for the complete performance of the agreement; the parties intended the agreement to extend for longer than one year and it did extend for a period of fourteen years; and it clearly appears from the surrounding circumstances and the object to be accomplished that the oral agreement would last longer than one year.

See Browning v. Poirier, No. SC13-2416. To view the Fifth District’s opinion click here.

Howard Browning and Lynn Poirier lived together as a couple between 1991 and 2009.  In 1993, the couple orally agreed that they would split the winnings of any lottery tickets purchased by either of them while they remained in a relationship. In  2007, Poirier purchased a winning ticket and received $1 million dollars less taxes. Poirier, however, refused to give Browning half of the proceeds. Browning in turn sued for breach of an oral contract and unjust enrichment, seeking half of Poirier’s winnings. Poirier moved for directed verdict on both causes of actions, claiming the statute of frauds as a defense. The trial court granted Poirier’s motion on both counts, entering final judgment in favor of Poirier.

Rehearing the case en banc, the Fifth District held that Poirier was entitled to a directed verdict on the breach of contract claim because the couple’s agreement was voided by the statute of frauds. Citing the Florida Supreme Court case of Yates v. Ball, the district court explained that an oral contract with no specified date for performance is subject to the statute of frauds if it is clear that the parties intended for it to last longer than one year.  The district court highlighted that Browning and Poirier’s lottery agreement was to extend until the couple’s relationship ended. The court stated that any suggestion that the couple had intended for their relationship—and thereby, the lottery agreement—to end within one year was belied by the evidence indicating their intention for a long-term commitment. Ultimately, the district court certified this issue to the supreme court.

The Fifth District reversed the trial court’s judgment on Browning’s claim for unjust enrichment. Because Browning testified that he had given Poirier the money to purchase the winning ticket with the implied understanding that they would share the proceeds, the district court held that a directed verdict should not have been granted in Poirer’s favor.

Judges Torpy and Griffin dissented in part.  They agreed that the directed verdict on the unjust enrichment count was error, but characterized the majority’s conclusion on the contract claim as ignoring the plain language of the statute, stating that it only considers contracts which clearly cannot—as opposed to likely will not—be performed within one year. Browning made a similar argument in his initial brief to the supreme court, contending that the qualifying rule articulated in Yates contradicts the plain language of the statute of frauds and improperly brings the subject contract within its reach.

This article will be updated once this Court decides the case.

Image courtesy of Flickr by Mark Ou.




Florida High Court to Decide Which Test Governs Component Parts Doctrine


On April 8, 2014, the Florida Supreme Court heard oral arguments in an asbestos case concerning the liability of a defendant who has sold a component part to a manufacturer who then incorporates the part into its own products.  See Aubin v. Union Carbide Corp., No. SC12-2075.  On review was a decision from the Third District Court of Appeal which held that the Third Restatement of Torts’ component parts doctrine was the governing standard, expressly rejecting the Second Restatement’s test.   See Union Carbide Corp. v. Aubin, 97 So. 3d 886 (Fla. 3d DCA 2012).  To view the district court opinion click here and to view the supreme court oral argument click here.

Aubin worked as a superintendent at his father’s construction company from 1972 to 1974. During this time, he routinely handled and was exposed to joint compounds and ceiling textures. One of the ingredients in these materials was a chrysotile asbestos product mined, processed, and sold by Carbide. After contracting mesothelioma, Aubin filed suit alleging negligence and strict liability as a result of design, manufacturing, and warning defects.

The Third District held that the trial court had erred in: (1) deciding that Aubin’s claims were governed by the Second Restatement’s “consumer expectations” test as opposed to the Third Restatement “risk-utility/risk-benefit” test, (2) denying Carbide’s motion for directed verdict on the design defect claim, and (3) failing to instruct the jury that Carbide could have discharged its duty to warn end-users by adequately warning the intermediary manufacturer.

The district court disagreed that its own precedent in Kohler v. Marcotte—which adopts the Third Restatement’s component parts doctrine—was not binding because the Florida Supreme Court had previously adopted the Second (rather than the Third) Restatement.  The district court stated that absent overruling from the supreme court, the Third Restatement’s test controls in the Third District.  That test provides that a component part seller or distributor is liable when: (a) the component is defective in itself and the defect causes the harm; or (b) the seller or distributor substantially participates in the integration of the component into the design of the product; and (c) the integration of the component causes the product to be defective; and (d) the defect in  the product causes the harm.

Focusing on the first “avenue” of liability under the Third Restatement, the district court held that Aubin’s design defect claim failed because he did not establish how the design of the product caused his harm—specifically, that its design caused the product to be more dangerous than raw chrysotile asbestos is in its natural state.  

The Third District also acknowledged that there was no general rule for determining whether a manufacturer may rely on an intermediary to warn end-users, thereby discharging its own duty to warn. Citing the Third Restatement’s comments, the court stated that the inquiry was controlled by a reasonableness standard and included factors such as the gravity of the product’s risk, the likelihood that the intermediary will convey the warning, and the feasibility of warning the end-user. The court also referenced the “learned intermediary” doctrine—which considers the intermediary’s education, knowledge, expertise, and relationship with the end-user—as an informative (but not dispositive) factor. Therefore, the court affirmed the trial court’s finding that there was sufficient evidence to create a factual issue over Aubin’s claim that product had a defective warning.

After acknowledging that a manufacturer’s duty to warn may be discharged by reasonable reliance on an intermediary, the court also held that it was error for the trial court to not have incorporated this into the jury instructions.

Aubin later moved to certify direct conflict, claiming that the Third District’s decision directly conflicted with Fourth District precedent applying the Second Restatement. The court denied Aubin’s motion, explaining that the outcome of its decision would have been the same under the Second Restatement, because the pertinent tests were comparable.


Image courtesy of Flickr by Aaron Suggs.


Governor Brown Taps Cuellar to Fill Latest Vacancy on California Supreme Court


Governor Jerry Brown has nominated Stanford law professor Mariano-Florentino Cuellar to fill the most recent vacancy on the California Supreme Court created by the impending retirement of Justice Marvin Baxter. Cuellar is “a renowned scholar who has served two presidents and made significant contributions to both political science and law,” Brown said.  “His vast knowledge and even temperament will – without question – add further luster to our highest court.”

Cuellar was born in Matamoros, Mexico. As a child he crossed the border each day to attend Catholic school in Brownsville, Texas, until he and his family relocated to California’s Imperial Valley when he was 14. After earning a bachelor’s degree from Harvard in 3 years (magna cum laude, 1993), he received a Master’s degree in political science from Stanford in 1996, followed by a law degree from Yale in 1997, and his Ph.D. in political science from Stanford in 2000. He then served as law clerk to Chief Judge Mary M. Schroeder of the United States Court of Appeals for the Ninth Circuit. 

Since the culmination of his clerkship in 2001, Cuellar has been a professor at Stanford. He is currently the Stanley Morrison Professor of Law at Stanford Law School, as well as the Director of Stanford’s Freeman Spogli Institute for International Studies, where he is also a Senior Fellow. According to his faculty biography, his work at Stanford involves “the intersection of law, public policy, and political science.” His courses deal with issues of administrative law, regulation and bureaucracy, executive power, and national security. 

Professor Cuellar’s tenure at Stanford has included governmental, as well as academic, endeavors. In fact, even before he assumed his faculty position at Stanford, he interrupted his Ph.D. program to serve as Senior Advisor to the Under Secretary (Enforcement) of the Treasury from 1997 to 1999, focusing on financial crime enforcement, terrorism financing countermeasures, immigration, and border security. In 2008 and 2009, he served as Co-Chair of the Immigration Policy Working Group for the Obama-Biden Transition Project, where he worked to formulate policies on immigration, borders, and refugees. In 2009 and 2010, he served as Special Assistant to the President for Justice and Regulatory Policy, leading the White House Domestic Policy Council’s work on criminal justice and drug policy; civil rights and liberties; immigration, borders, and refugees; public health and safety; rural development and agriculture policy; and regulatory reform. 

From 2011 to 2013, Cuellar co-chaired the National Equity and Excellence Commission, instituted by Congress to seek ways to improve the performance of public schools. He is currently an Obama appointee to the Council of the Administrative Conference of the United States, which monitors the fairness and efficiency of federal regulatory programs. He is also a board member of the American Constitution Society, often described as a progressive counterpart to the conservative Federalist Society, and the Constitution Project, a non-profit think tank that builds bipartisan consensus on constitutional and legal issues.

Beyond Stanford, Professor Cuellar is associated with the Council on Foreign Relations, the American Bar Association, the La Raza Lawyers’ Association of California, and the National Hispanic Bar Association, among others.  He is married to former Santa Clara County Superior Court Judge Lucy H. Koh, who is now a federal district court judge for the Northern District of California pursuant to an appointment by President Obama.

Because Cuellar has not served on the bench, glimpses of his prospective judicial outlook must be gleaned from his writings and his appearances in the media. A brief survey of his publications reflects an interest and expertise in national and international matters:

  • Governing Security: The Hidden Origins of American Security Agencies, Stanford: Stanford University Press, 2013.
  • “Securing” the Nation: Law, Politics, and Organization at the Federal Security Agency, 1939-1953, 76 U. Chi. L. Rev. 587 (2009) (arguing that American public law is driven by 1) how the executive branch defines national security and 2) how politicians compete to control public organizations that implement the law, and analyzing the intersection of those dynamics by investigation the history of the U.S. Federal Security Agency and drawing perspectives from separation of powers, organization theory, and the study of American political development.)
  • The Political Economies of Criminal Justice, 75 U. Chi. L. Rev. 941 (2008) (responding to the proposition that politicians increasingly govern by framing social policy choices as criminal justice problems, and concluding that “reshaping the [crime-governance connection] to achieve more defensible social goals is a subtle enterprise. Sensible changes in criminal justice could almost certainly yield an acceptable social equilibrium less dependent on incarceration.”)
  • Auditing Executive Discretion, 82 Notre Dame L. Rev. 227 (2006) (proposing an audit framework similar to “sample adjudication of class action” in lieu of the deferential or non-existent judicial review of executive decision-making and reaching 3 conclusions: “(1) Judicial review fails to constrain a broad range of discretionary executive decisions subject to mistakes or malfeasance. (2) The limitations of traditional judicial review do not imply that discretionary executive branch decisions should be immune from some form of review. (3) Arguments for broad executive discretion are often radically underdeveloped and fail to withstand scrutiny.”)
  • The International Criminal Court and the Political Economy of Antitreaty Discourse, 55 Stanford L. Rev. 1597 (May 2003) (arguing that the United States objects to the ICC on “process-oriented” grounds because a “focus on procedure sounds marginally more principled to international audiences than a brute realist assertion that American interests are best served by keeping unfettered control of military decisions.” “Yet this comes with costs: It elides the debate over the value of the brute realist position that American military power should be subject to few meaningful constraints and instead makes it look like the most important question is about the procedural shortcomings of a court that is precisely meant to address the arbitrariness in international criminal justice that critics use to assail it.”)

Cuellar’s appearances in the media have often revolved around his role in shaping the Obama Administration’s immigration policy. His appointment to President Obama’s Immigration Policy Working Group was interpreted by experts as confirmation that President Obama was committed to comprehensive immigration reform. Cuellar observed earlier this year that such reform “is more likely now than it has been in decades.” 

Cuellar’s own experience with immigration shapes his views on the subject now. He told The Stanford Daily last year that “when you grow up on the border, you realize that a legal demarcation has such a huge effect in distinguishing one country from another, for example, and the whole structure of law shapes who’s a citizen and therefore who counts in one society for another.” He recounted to Stanford Magazine being stopped by a law enforcement agent while jogging along the border in Calexico when he was 16, and being asked to provide his papers. He described the encounter as reflecting the “duality” of law enforcement, whose role is to protect, yet who can also spark fear in the community it polices. He acknowledges, though, that moving to the U.S. with a green card gave him “a clear sense that even the very imperfect country I was joining was an extraordinary place.”

Cuellar has also spoken out about “the problem of staggering education inequity.” “Our nation’s stated commitments to academic excellence,” he has written, “are often eloquent but, without more, an insufficient response to challenges at home and globally.” He has also criticized leaders who “decry but tolerate disparities in student outcomes that are not only unfair, but socially and economically dangerous.” 

Pervading his opinions on these and other topics, however, is a fundamental realism. He describes the core of all his research efforts as “trying to look at how societies and legal systems and organizations take on problems that are so difficult to solve that nobody can really expect that they’re likely to be completely solved – ever.” His conclusion: “The world is as messy and complicated as it is beautiful and full of possibility.” As a result, says Hoover Institution Senior Fellow Abraham Sofaer, Cuellar is “not an ideologue,” but is “interested in … practical solutions.” According to Sofaer, a legal adviser to the U.S. Department of State during Ronald Reagan’s and George H.W. Bush’s presidencies, he and Cuellar “could serve in the same administration.”

Justice Marvin Baxter, whose position Cuellar has been nominated to fill, is widely regarded as the court’s most conservative justice. On the other hand, Cuellar was described by Hank Greely, another law professor at Stanford, as “certainly to the left of the middle of the American political spectrum.” Greely qualified his description, however, by noting that Cuellar is “fundamentally a pragmatist.” Thus, while Cuellar’s nomination will likely pull the overall outlook of the Court leftward, its new ideological center may be more moderate than Cuellar’s bona fides might indicate. Moreover, Governor Brown’s second consecutive appointment to the state’s highest bench of an academic with no judicial experience (former U.C. Berkley law professor Goodwin Liu was the first) suggests the Court’s new makeup will include a willingness to approach issues from a fresh perspective and, at any rate, an intellectual bent.

Before Cuellar can take his place on the state’s highest bench, his nomination must be approved by California’s Commission on Judicial Appointments, and by the electorate on the upcoming November ballot.

Image courtesy of Flickr by Lauren Mitchell.

Florida High Court Poised to Clarify Harmless Error Standard in Civil Appeals



On June 20, 2012, the Florida Supreme Court accepted review of a Fourth District Court of Appeal case that certified the following question of great public importance: “In a civil appeal, shall error be held harmless where it is more likely than not that the error did not contribute to the judgment?”  See Special v. West Boca West Med. Ctr., No. SC11-2511.  To view the district court opinion click here. 

The Estate of the Susan Special sued Dr. Ivo Baux, his related corporations, and West Boca Medical Center, Inc., alleging negligence in administering her anesthesia and in responding to her cardiopulmonary arrests during her cesarean delivery.  The defendants denied the allegations, claiming that her death was a result of amniotic fluid embolus, an allergic reaction caused by a mother’s blood mixing with amniotic fluid. Sitting en banc, the Fourth District held that the trial judge had abused his discretion by disallowing the estate’s cross-examination of a defense expert who testified as to the cause of death. The main issue, therefore, was whether the denial of the cross-examination was harmless error.

The district court reviewed the history of the harmless error rule under Florida law, examining two types of tests: (1) the “but-for,” “correct result” test, which focuses on whether the outcome of the trial would have been different but for the error, and (2) the “effect on the fact finder” test, which focuses on whether there is a reasonable possibility that the error influenced the trier of fact and contributed to the verdict—even if the verdict would have been the same without the error.

The Fourth District described the effect of the Florida Supreme Court’s decision in State v. DiGuilio in 1986, which “firmly established an ‘effect on the fact finder’ harmless error test for criminal cases.” The court explained that the supreme court adopted the DiGuilio test in subsequent civil cases—even though it did not explicitly declare that it was doing so—and that the burden of proving the harmlessness of an error had been placed on the party who improperly introduced the evidence and benefitted from the error.

The court explained that, absent specific guidance from the supreme court, the district courts had relied on varying standards for deciding harmless error in civil cases. The most stringent test, used primarily in the Fourth District, asks whether the result would have been different but for the error. A second test, used in the First and Third Districts, asks whether the result may have been different but for the error. The third test, used primarily in the Second District, asks whether it is reasonably probable that the appellant would have obtained a more favorable verdict without the error.

The Fourth District held that it was receding from those cases that applied the more stringent, outcome-determinative “but-for” test for harmless error. The court adopted a new standard, holding that error is harmless when the error more likely than not did not contribute to the judgment.  Applying this newly-adopted standard, the Fourth District affirmed the judgment below, concluding that it was more likely than not that disallowing the cross-examination of the defendant’s expert did not contribute to the jury’s verdict.

The parties completed their briefing on December 19, 2012.  The Court held oral argument on April 3, 2013.  To view the oral argument video click here.   This article will be updated once the Court decides the case.

 Image courtesy of Flickr by Duncan Hull.

Florida Supreme Court Strikes Down Red Light Ordinances as Preempted by State Law

On June 12, 2014, the Florida Supreme Court decided two cases that involved whether municipal ordinances imposing penalties for red light violations detected by devices using cameras were invalid because they were preempted by state law. See Mason v. City of Aventura, No. SC12-644; City of Orlando v. Udowychenko, No. SC12-1471. At issue in the cases was the operation of ordinances prior to July 1, 2010, the effective date of the Mark Wandall Traffic Safety Act, which authorized the use of the red light traffic infraction detectors by local governments and the Florida Department of Highway Safety and Motor Vehicles.

In both cases, plaintiffs challenged the validity of the municipal ordinances in order to set aside fines imposed per the ordinances, arguing that section 316.008(1)(w), Florida Statutes (2008), which specifically grants “local authorities [authority for] regulating, restricting, or monitoring traffic by security devices or personnel on public streets and highways.” In City of Aventura v. Mason, 89 So. 3d 233 (Fla. 3d DCA 2011), the Third District held that Aventura’s ordinance was a valid exercise of municipal power under section 316.008(1)(w). In City of Orlando v. Udowychenko, 98 So. 3d 589 (Fla. 5th DCA 2012), the Fifth District held that Orlando’s ordinance was invalid because it was expressly and impliedly preempted by state law. The Fifth District ruled that the imposition of penalties for running a red light other than those specifically provided for by state statute does not fall under section 316.008(1)(w)’s authority. The Fifth District certified conflict with the Third District’s decision. 

The Court explained that while a municipality is given broad authority to enact ordinances, such ordinances must yield to state statutes. Preemption of local ordinances by state law may be accomplished by either express or implied preemption. Chapter 316, Florida Statutes (2008), regulates traffic throughout the state and contains two broad preemption provisions. Section 316.002 provides, “It is unlawful for any local authority to pass or to attempt to enforce any ordinance in conflict with the provisions of this chapter.” Section 316.007 provides, “No local authority shall enact or enforce any ordinance on a matter covered by this chapter unless expressly authorized.”

Section 316.075 contains rules governing the conduct of drivers and pedestrians relating to traffic control signal devices. One rule is that “vehicular traffic facing a steady red signal shall stop before entering . . . .” Any violation of the rules contained in section 316.075 “is a non-criminal traffic infraction, punishable pursuant to Chapter 318.” Chapter 318, Florida Statutes (2008), sets forth the rules governing the handling of traffic infractions, including the issue of penalties. Chapter 318 also contains a preemption provision regarding fines which states, “Notwithstanding any general or special law, or municipal or county ordinance, additional fees, fines, surcharges, or costs other than the court costs and surcharges assessed under s. 318.18(11)(13) and (18) may not be added to the civil traffic penalties assessed in this Chapter.”

Each of the ordinances at issue in the underlying cases handles red light violations in an entirely different manner than the system established under Chapters 316 and 318. Chapter 316 provides that local ordinances on “a matter covered by” the chapter are preempted, unless an ordinance is “expressly authorized” by the statute. The subject ordinances – in providing for the punishment of red light violations – relate to matters “covered by” Chapter 316. Thus, the ordinances can be sustained as a valid exercise of municipal authority only if they are expressly authorized by statute. 

The Court held, contrary to the arguments advanced by the municipalities, that section 316.008(1)(w)’s grant of authority for “regulating, restricting, or monitoring traffic by security devices” does not explicitly provide authority for local governments to adopt measures for the punishment of conduct that is already subject to punishment under Chapters 316 and 318. Thus, the Court held, the Orlando and Aventura ordinances are expressly preempted by state law. 

The Court quashed the decision of the Third District in City of Aventura and approved the decision of the Fifth District in City of Orlando. Justice Pariente wrote a dissenting opinion, in which Justice Quince concurred.

Image courtesy of Flickr by Heather.

When Numbers Lie: The Limits of Statistical Methodology in California Class Action Management

Courts that oversee class actions can use class sampling and other statistical methods to manage litigation involving large numbers of plaintiffs and the vast amount of data associated with them. In California, however, those methods must be reliable, and cannot strip defendants of the right to litigate affirmative defenses.

The California Supreme Court recently announced its decision in Duran v. U.S. Bank National Association, 2014 WL 2219042, finding that the trial court had abused its discretion in managing a class action employee misclassification case. The Court criticized various aspects of the trial court’s plan, but focused significant attention on the faulty statistical methods utilized by the trial court to assess both liability and damages. Additionally, the Supreme Court found that the trial court’s plan prevented U.S. Bank (“USB”) from litigating its affirmative defenses.   In a 43-page opinion that will likely have implications in class action case management beyond the employment context, the Supreme Court held that “[a] trial plan that relies on statistical sampling must be developed with expert input and must afford the defendant an opportunity to impeach the model or otherwise show its liability is reduced.”


In Duran, USB business banking officers (BBOs) sued their employer, asserting that they had been misclassified as exempt employees who were not entitled to overtime. USB had classified them as outside sales employees exempt under California Labor Code Section 1170, which requires such employees to spend more than 50% of their workday in sales outside of the office. The trial court certified a class of 260 BBOs.

After certification, USB proposed dividing the class members into groups and appointing special masters to conduct individual hearings on liability and damages. Plaintiffs, on the other hand, proposed using a class-wide survey and random sampling.  Rejecting both USB’s and Plaintiffs’ proposal, the trial court devised its own plan to select a random group of 20 class members plus the 2 class representatives (the “Random Witness Group” or “RWG”) who would testify at trial and determine both liability and damages for USB, and to then extrapolate those outcomes to the class as a whole.

USB objected repeatedly to the trial court’s management of the case, and unsuccessfully moved to decertify the class due to the predomination of individual issues. Once trial began on liability, the trial court refused to accept any evidence related to the classification of any class member not in the RWG. On the issue of liability, USB sought to offer evidence that some class members worked outside the office more than 50% of the time, and therefore had been properly classified. Because those class members were not in the RWG, however, the court refused to allow USB to present any of that evidence.

In criticizing the trial court’s approach, the Supreme Court focused first on the certification and trial management plan. Not only does the trial court have to consider the predominance of common issues, it also must “conclude that litigation of individual issues, including those arising from affirmative defenses can be managed fairly and efficiently.” If a class is certified and then proves unmanageable, the trial court has a duty to decertify. 

The Supreme Court also criticized the trial court for “rigidly adhering to its flawed trial plan and excluding relevant evidence central to the defense.” By using a small statistical sampling to determine liability – an individual issue driven by the number of hours spent in the office – not just damages, it glossed over the potential that USB was not liable to some of the BBOs. In short, the trial court “did not manage individual issues.  It ignored them.”

As to the flawed trial plan, the Supreme Court highlighted several rulings that compromised the randomness of the RWG. First, while 20 of the class members were chosen by the court, the RWG also included the two named plaintiffs, who had been selected by class counsel. In fact, the named plaintiffs had been substituted several times, based on friendliness to the class’s position. The Supreme Court noted that the inclusion of the 2 named plaintiffs was the opposite of random, and skewed the sample in favor of the plaintiffs. Additionally, there was no explanation by the trial court of whether or how it had determined that twenty plaintiffs was an appropriate sample size for the RWG.

The Court also pointed out that, after the RWG was selected, the Plaintiffs amended the complaint. This in turn led the trial court to allow an additional opt-out opportunity for class members who no longer wanted to be a part of the class under the amended complaint.   In the RWG, 4 out of 20 opted out (20%), while only 5 of the remaining 250 members opted out (2%).  Such a large discrepancy in opt-out rates was “very unlikely to be attributable to random chance,” according to USB’s expert. When USB investigated the RWG class opt-outs, some of the RWG members who had opted out said that class counsel had encouraged them to do so, further calling the randomness of the sample into question.

As for the use of statistical sampling, the Supreme Court noted that “the court’s attempt to implement random sampling was beset by numerous problems.”  While not going so far as to say that sampling is never permissible, the Supreme Court laid out how the trial court failed to use sampling properly and protect parties’ rights. Specifically, the sample size was too small, not random, and had intolerably large margins of error – for example, 43.3% as to estimated overtime.

The Duran opinion makes clear that – whatever the methods used by courts to make class actions manageable – individual issues must be fairly managed, and, when a court utilizes statistical sampling, the sample “must be representative and the results obtained must be sufficiently reliable to satisfy concerns of fundamental fairness.” This focus on the fairness and reliability of class action management methods raises parallels to the United States Supreme Court’s Daubert opinion’s focus on the relevance and reliability of expert testimony. Just as Daubert seeks to avoid undue intrusion into the parties’ rights to call whichever scientific expert they see fit while ensuring that the resulting testimony is still scientific, so Duran seeks to avoid unnecessarily limiting trial court’s discretion to manage unwieldy litigation, while ensuring that the methods employed are still fundamentally fair. And while Daubert and Duran apply to plaintiff and defense equally, the nature of the two sides approaches to litigation suggest that Duran will evolve into authority widely perceived as defense-friendly.

Image courtesy of Flickr by LendingMemo.com.

Illinois Supreme Court Debates Automatic Revocation of Certain Health Professionals' Licenses

Our reports on the oral arguments of the May term of the Illinois Supreme Court conclude this morning with Consiglio v. Department of Financial and Professional Regulation. Consiglio involves a constitutional challenge to amendments the General Assembly enacted in 2011 to the Department of Professional Regulation Act. The amendments provide that a health care worker’s license is automatically revoked without a hearing when the individual: (1) is convicted of a criminal act automatically requiring registration as a sex offender; (2) is convicted of a criminal battery against any patient committed in the course of care or treatment; (3) has been convicted of a forcible felony; or (4) is required as part of a criminal sentence to register as a sex offender. Our detailed discussion of the facts and lower court decisions in Consiglio is here.

The plaintiffs are three general physicians and one chiropractic physician. They filed separate actions in Cook County challenging the statute. All four complaints were dismissed for failure to state a claim. On appeal, the plaintiffs argued that the statute: (1) offended substantive and procedural due process; (2) constituted double jeopardy; (3) violated the ex post facto clause; (4) offended the separation of powers clause by abridging the Department’s discretion and the judiciary’s power of review; (5) violated the contracts clause; (6) violated the proportionate penalties clause; (7) was barred by res judicata as a result of the Department’s previous disciplinary orders in their various cases; and (8) unfairly deprived them of vested limitations and repose defenses. Division One of the First District rejected each of the plaintiffs’ challenges, affirming the judgments of dismissal.

Counsel for three separate plaintiffs/appellants argued before the Supreme Court. The first counsel began by arguing that the statute requires the Department to revoke the same license as that involved in the disciplinary actions based upon the same conduct. But the judicial decree in those previous actions vested the plaintiffs’ rights to be free of further punishment. Justice Burke asked whether one wasn’t civil and the other criminal. Counsel responded that both the disciplinary and the revocation proceedings were administrative. Justice Burke asked whether counsel’s client was convicted of a criminal offense. Counsel responded that it was a misdemeanor. Justice Burke asked whether there was a conflict between Section 21/05-165 of the Professional Regulation Act, requiring permanent revocation for certain offenses, and Section 22A-20 of the Medical Practice Act, which gives discretionary power to the Department to decide whether or not to revoke a license for sexual misconduct. Counsel responded that the Medical Practice Act gave the Department substantial discretion in dealing with his client. They exercised it, he relied on it, served a substantial suspension, paid a substantial fine, and his rights are now vested. Justice Burke asked what the vested right was. Counsel responded that the vested right was confirmed by Allied Bridge & Construction Co. v. McKibbin, a 1942 case from the Illinois Supreme Court. Justice Burke suggested that the Allied Bridge decision stood for the proposition that no vested right was involved in professional licensing because the license was subject to ongoing regulation and legislation. Counsel responded that the rule of Allied Bridge has nothing to do with licensing. Justice Burke asked whether Allied Bridge involved an issue subject to ongoing regulation, just as here. Counsel agreed, but argued that the opinion also says that a right derived from a judicial decree is vested. Justice Burke asked whether it was vested forever, and counsel said yes. Justice Burke asked whether that meant a doctor was no longer subject to regulation. Counsel answered that the doctor was protected against further penalties for past events. That right has been adjudicated. Justice Thomas asked why the statute couldn’t be seen as a new eligibility requirement. Counsel responded that was one thing in relation to those who did not yet have a conviction, but as to his client, a new eligibility requirement couldn’t effectively relitigate the past case. Justice Thomas asked whether there was anything the state can do to prevent sex offenders from practicing medicine. Counsel responded that his client is not a sex offender; he was convicted of simple misdemeanor battery. The State has taken action, counsel continued – they held a hearing and put him on probation, and the matter is closed as to those criminal convictions. Justice Burke asked what about the present perfect tense of the statute “has been” convicted? Counsel responded that the statute affected a vested right, previously adjudicated. The act is punitive in nature and cannot be applied retroactively.

Counsel for the second plaintiff/appellant followed. Counsel explained that her client had been convicted in relation to a 1999 incident. The new statute effectively revived a dead, time-barred claim, in violation of fundamental due process. Justice Burke asked whether the plaintiffs’ licenses were revoked under the Medical Practice Act or the Professional Regulation Law. Counsel answered that the Appellate Court had recognized that the action was time-barred under the Medical Practice Act, but had proceeded anyway by illogical reasoning. Justice Burke asked whether counsel agreed that time bar defenses don’t apply to proceedings under the Professional Regulation Law. Counsel disagreed – the time bar defense applies because of her client’s vested right. The mere fact that the legislature created a separate statute without a limitations period has no bearing on whether the statute of limitations applies. The legislature can prescribe additional requirements for professional licensure, but not if they interfere with a vested right. Justice Thomas noted the Appellate Court’s point that the statute couldn’t be being applied retroactively since that would mean that plaintiffs had practiced medicine without a license. Counsel explained that there is a fatal flaw in defendants’ argument that they are promoting a prospective application of the statute based on antecedent events. The Court has said that a statute is being applied retroactively if one of three things are true: (1) the law attaches new legal consequences to events before the enactment; (2) it impairs vested rights acquired under existing law; or (3) it impairs rights the party possessed before he acted. Justice Theis asked what the vested right is. Counsel answered that the vested right was not in retaining the license, but rather in the right to claim a time defense against further impairments based upon the past events. Justice Theis asked whether that was a property right, and counsel said yes. Justice Thomas asked again whether there was anything the State can do to prevent all convicted sex offenders from practicing medicine in Illinois. Counsel answered that the legislature is free to restrict sex offenders’ licenses going forward. Justice Thomas suggested that counsel was saying no, there’s nothing they can do to bar all convicted sex offenders. Counsel answered that the legislature cannot interfere with a vested right. Justice Thomas asked whether counsel disputed that that’s exactly what the legislature intended to do. Counsel responded that the legislature probably would have preferred the statute to apply to everyone, but that’s not on the face of the statute. Justice Burke argued that the Court had said in Rios v. Jones that the State has a compelling interest in licensing. Counsel answered that Rios didn’t deal with a vested property right. Justice Thomas asked whether counsel had said that the statute doesn’t plainly apply to every sex offender. Counsel said that was correct; a conviction was the triggering event which provided the Department of Professional Regulation with the authority to revoke the license. But the statute says nothing about retroactivity. Justice Thomas pointed out that the statute doesn’t say “on or after the effective date,” and counsel agreed.

Counsel for the third and final plaintiff/appellant followed. Counsel argued that the statute deprives his client of procedural due process by mandating permanent revocation without a hearing for battery of a patient during the course of treatment. But there is no such crime as battery of a patient during the course of treatment; whether the victim is a patient is a question of fact, and whether the crime occurred during the course of treatment is a question of fact. And the law is clear that the State cannot unilaterally decide questions of fact. Justice Burke asked whether any of the three statutory exceptions to revocation – (1) the charges have been dropped; (2) the licensee was not convicted; or (3) the conviction has been vacated, overturned or reversed - applied to counsel’s client, and counsel agreed that they had not. Justice Burke pointed out that those are the only statutory exceptions to revocation and counsel said that was exactly his point – so the statute was facially unconstitutional. Justice Burke asked whether there was a due process hearing at the trial. Counsel agreed that there was, but pointed out that the factual questions in the statute – was the victim a patient, and did the battery occur in the course of treatment – were not issues in that proceeding. Therefore, pursuant to Connecticut v. Doe and Goss v. Lopez, the State could not decide the unresolved questions of fact unilaterally without violating due process. Justice Thomas asked whether plaintiff’s argument fails if the Court doesn’t consider the right to practice medicine a vested right. Counsel argued that the plaintiffs certainly do have a vested right. Justice Thomas asked whether it has to be a vested right for procedural due process to apply. Counsel answered that the people affected by the statute weren’t only doctors. Justice Thomas asked whether the risk of erroneous revocation was low since it was based on a criminal conviction, and whether that entered into the analysis. Counsel disputed whether the risk of erroneous deprivation was low, and once again argued that the State can’t unilaterally decide questions of fact. If the statute mandated revocation for anyone convicted of battery, that might be a different case. There was no such crime as being convicted of battery of a patient in the course of treatment, so the State was deciding factual questions on its own.

Counsel for the State rose next. Counsel argued that the plaintiffs’ theory that the statute operated retroactively operated from a mistaken premise. In fact, she argued, the statute merely creates new eligibility requirements for holding any of the affected licenses from the date the statute became effective forward. The error stems from confusion over the standards set forth in Landsgraf v. USI Film Products, counsel argued. The statute doesn’t need language expressly making it retroactive since it doesn’t operate that way. Retroactivity is attaching new consequences to completed events. The statute neither impacted the plaintiffs’ convictions nor increased their sentences. Nor does it retroactively cancel their licenses, making them liable for unauthorized practice of medicine. Rather, it draws upon an antecedent event to change the forward-looking criteria for eligibility. Justice Burke noted that plaintiffs argue they have a vested right to keep their licenses after the convictions were adjudicated and disciplinary penalties fully served. Counsel responded that they have no vested right to be free of new eligibility requirements for all time. The Chief Justice asked about Allied Bridge. Counsel answered that Allied Bridge is really a separation of powers case, holding that a legislature cannot undo a court’s judgment. That’s not what’s happening here, counsel suggested. Justice Theis noted that the statute is automatically triggered and the license is revoked without a hearing based upon a conviction for battery of a patient during the course of treatment – how are those facts proved up? Counsel answered that the Department has regulations to carry out the statutory mandate. A notice is sent to the doctor, and he or she has 20 days to respond with documentation showing that they fit under a statutory exception. Justice Theis asked whether there was a hearing giving an opportunity to debate the facts. Counsel answered that there is a paper hearing, and if the doctor disagrees with the Department’s final decision, he or she can seek court intervention. Justice Theis asked whether, within the regulations themselves, there was an opportunity for a hearing, or any burden on the state to show that the victim was a patient, or the battery occurred in the context of patient care. Counsel again said that there is a paper hearing which can address those issues. Short of that, the doctor would need to go to court. Justice Theis asked whether, if the Department rejected a doctor’s showing, administrative review was the proper avenue to seek further review. Counsel answered that review is by petition for writ of certiorari. Justice Kilbride asked if there is any form of administrative review within the agency, and counsel said there is not. Justice Kilbride asked whether counsel’s term “paper hearing” referred merely to a review of the papers submitted – was there any face to face proceeding? Counsel responded no. Counsel then turned to the issue of ex post facto. Counsel argued that the statute neither operated retroactively, nor was license regulation a punishment. Justice Theis asked counsel to address the plaintiffs’ argument about having a vested right in the time bar defense, and counsel answered that while plaintiffs might have a vested right to be free of further discipline in connection with their incidents, they had none to be free of new licensure eligibility requirements.

Counsel for the second plaintiff led off rebuttal arguments. She stated that plaintiffs were not arguing that there is a vested right to be free of license requirements. The defendants conceded that there is a vested right to the time bar defense. Counsel argued that previous case law on prospective statutes based on antecedent events had not involved any vested rights. Counsel concluded by repeating the three factors that make a statute retroactive: (1) it attaches new legal consequences to an Act; (2) it impairs a vested right; or (3) it impairs rights the party had when he or she acted. The plaintiffs had a right – which the defendants conceded, according to counsel - to be free of further discipline once their disciplinary period had been completed. Fundamental principles of finality and predictability would be substantially impaired if the Court affirmed.

Counsel for the first plaintiff offered rebuttal next. He said that the defendants were talking about eligibility requirements, but in fact, the Department was revoking licenses, an inherently disciplinary act. Calling the action an eligibility requirement doesn’t affect the application of Allied Bridge, counsel argued. Counsel concluded by insisting that the “paper hearing” referred to by counsel for the State simply doesn’t exist.

Counsel for the third plaintiff briefly concluded the argument. He argued that defendants were saying that the State could resolve the facts on its own. But in fact, if there were factual disputes which needed to be decided to apply the statute, under Goss v. Lopez it was a due process violation for the State to decide them unilaterally.

We expect Consiglio to be decided in four to five months. 

Image courtesy of Flickr by umjanedoan.

Illinois Supreme Court Debates Constitutionality of Red-Light Ordinance

Our reports on the oral arguments of the Illinois Supreme Court’s May term continue with Keating v. City of Chicago. Keating poses an important question for Illinois motorists: are municipal red light ordinances constitutional? Our detailed summary of the facts and lower court holdings in Keating is here.

Chicago has had a red light ordinance since July 2003. By 2006, questions had arisen as to whether such ordinances were permitted by Illinois law regarding the powers of county and local governments. As a result, the state legislature passed an enabling act, specifically authorizing red light camera programs in Cook, DuPage, Kane, Lake, Madison, McHenry, St. Clair and Will Counties. Although the 2003 ordinance has stayed in place in the years since, Chicago did not reenact its ordinance following the enabling act.

Most of the plaintiffs in Keating are registered vehicle owners who received red light violation citations from the City of Chicago. Plaintiffs’ challenge to the ordinance is built around two principal arguments: (1) that the City lacked home rule authority to enact the ordinance; and (2) that the enabling act was unconstitutional special legislation. The Circuit Court granted the City’s motion to dismiss, holding that two plaintiffs lacked standing, that the enabling act was not special legislation, and that the voluntary payment doctrine barred all claims since the plaintiffs had paid their fines.

On appeal, the plaintiffs focused on four arguments: (1) the enabling act is unconstitutional; (2) the ordinance was void in excess of home rule authority and the enabling act did not and could not legalize it; (3) even if the enabling act might otherwise have legalized the ordinance, the City failed to reenact it; and (4) the voluntary payment doctrine did not apply.

The home rule argument turns on an interesting question: does the red light ordinance relate to “the movement of vehicles,” or constitute an automated device “for the purpose of recording [a vehicle’s] speed”? If so, the ordinance is likely invalid, with or without the enabling act. Or does it merely “regulat[e] traffic by means of . . . traffic control signals,” which is within local authorities’ powers? The Appellate Court held that the ordinance did not relate to “the movement of vehicles,” and was therefore within the City’s home rule authority. The Court further held that limiting the ordinance to the most populous counties with the heaviest traffic was a reasonable limitation, meaning that the enabling act was not unconstitutional special legislation. Finally, the Court held that in view of the significant penalties attending non-payment, the plaintiffs’ payment of the fines did not waive their claim.

Counsel for the plaintiffs began with the initial issue: did the City of Chicago have the authority to enact its red light ordinance. Justice Thomas asked what was wrong with the argument that the ordinance is a supplement to, rather than an alternative to, the statewide Vehicle Code provisions. Counsel answered that it destroyed uniformity of enforcement in several ways, including by ticketing the owner rather than the driver, and by providing for administrative enforcement. Calling a red light camera’s photo a representation of a static moment in time doesn’t mean it doesn’t relate to the movement of the vehicle, counsel argued. The most frequent violation is failing to stop before entering the intersection – it’s not a violation by the owner. Counsel argued that it’s the lack of uniformity that makes the ordinance invalid. Justice Karmeier asked whether counsel objected to the concept of the owner paying rather than the alleged violator. Counsel answered that while the plaintiffs weren’t raising it as a separate issue, the plaintiffs think it’s indicative of a lack of uniformity.

Counsel then turned to the second issue, the enabling act. Counsel argued that the enabling act is both plainly local and creates a closed-end class of these eight counties. Justice Thomas asked whether anything in the legislative history suggested that the statute was designed to cover high traffic jurisdictions. Counsel answered that the legislative history cut in plaintiffs’ favor. In fact, the eight counties covered aren’t the most populous districts. The enabling act had been introduced twice as a general law, it didn’t pass, and then the legislature limited it to eight counties. Chief Justice Garman asked how the statute closes the class. Counsel answered that nobody else can become a covered county. The Chief asked about the argument that the eight counties were the highest traffic areas, and counsel answered that there was no rational connection between the small and large towns in the covered counties. Further, there were other areas with bigger problems which did not fall in the covered counties. Justice Theis cited to an earlier challenge to a fuel tax statute singling out three counties. Counsel answered that the case was distinguishable – the operation of that statute was at the town level, while the enabling act operated at the municipal level. Justice Theis asked why that mattered. Counsel explained that a statute had to be rational and non-local in order to be valid. The Court has refused in two different cases to approve statutes that classify by county but operate at the municipal level. Justice Karmeier asked whether the classification was rational because the eight counties were contiguous to large areas. Counsel answered that the plaintiffs have cited municipalities that are closer to Chicago, but not covered. There was no rational explanation for the division in the statute for a bill operating at the municipal level.

Counsel then briefly turned to the third issue, the proposition that even if the enabling act is constitutional, it couldn’t retroactively validate the 2003 Chicago ordinance. Counsel pointed out that while the enabling act said cities “may enact” a red-light ordinance, Chicago had never reenacted its three year old ordinance. Justice Thomas asked whether all plaintiffs were issued their tickets after the enabling act, and counsel agreed that was so. Justice Kilbride asked about the defendant’s claim that the ordinance had been reenacted. Counsel answered that the statute had been amended three times after the enabling act, but two had been purely cosmetic, and none had fully reenacted the ordinance.

Counsel for the City was up next. Rational basis was the proper standard of review for the enabling act, counsel argued; indeed, the Court would have to overrule a considerable body of precedent to apply anything else. Counsel insisted that there was a clear rational basis for the statute – these locations are different from the rest of the state. The legislature could have rationally concluded that these eight counties are where the risk of red light violations is greatest. Justice Thomas asked whether it was of any consequence that Winnebago County was omitted. Counsel argued that Winnebago County was reasonably distinguishable – it was not a Chicago collar county, nor was it close to St. Louis or Chicago. Counsel argued that Winnebago County may have an equilibrium between law enforcement resources and red light violations. Justice Theis noted that although counsel’s argument focused on county location and population, the plaintiff’s argument was that the law was operating at the municipality level – and some of the affected municipalities were very small. Counsel answered that even the small towns were differently situated because they were located in areas where municipalities were closely packed and heavily trafficked. The Chief Justice asked how it impacted the analysis that the ordinance is aimed at vehicle owners rather than drivers. Counsel answered that the ordinance was complementary to traditional enforcement, rather that substituting for enforcement through first-hand observation. Indeed, the statute cannot be applied when a police officer is present to observe the violation. Justice Karmeier asked whether an officer present to see a violation could simply ignore it and let the camera do its job. Counsel answered that the ordinance merely provides a defense if an officer is present – it doesn’t say that the officer does or doesn’t have to write the ticket. Counsel then turned to the issue of preemption. Preemption is an on-off switch, counsel argued. There was no express intent to preempt in the enabling act. According to counsel, the statute contains exemptions for local ordinances conflicting with the Vehicle Code. Since the ordinance doesn’t apply if an officer is present, there is no conflict and no preemption. Even if the ordinance was preempted when it was originally enacted in 2003, when the legislature passed the enabling act three years later, the ordinance sprang back to life.

In rebuttal, counsel for the plaintiffs argued that the Court has held that an invalid local statute or ordinance cannot be retroactively validated by a subsequent statute. Counsel for the City claims that the general assembly knew that home rule municipalities already had authority to enact red light ordinances, and that’s why the enabling act has a limited class of counties to which it applies. But if the power is inherent in home rule, why bother passing the enabling act at all?

Although there are high-profile exceptions – most recently with Kanerva last week – the Illinois Supreme Court tends to be somewhat skeptical of constitutional challenges. Nevertheless, the questioning pattern in Keating did not clearly signal the Court’s inclinations about the plaintiffs’ various constitutional challenges to the red-light ordinance.

We expect Keating to be decided in the mid-to-late fall.

Image courtesy of Flickr by Karoly Lorentey.

Illinois Supreme Court Debates Effect of Failure to Register as Debt Collector

Our reports on the oral arguments during the May term of the Illinois Supreme Court continue with a direct appeal pursuant to Supreme Court Rule 302 – LVNV Funding v. Trice.

LVNV began when the defendant used a credit card to pay for plumbing services. When the defendant failed to pay the credit card issuer the full amount of the charge, the issuer sold its interest in the account to the plaintiff, who sued the defendant to collect the debt.  The matter went to trial with the defendant appearing pro se, and judgment for the plaintiff was entered. After trial, the defendant hired counsel. The new attorney moved to vacate the judgment on the grounds that the plaintiff had never registered as a collection agency under state law, making the judgment void (the plaintiff had gotten its license after filing the suit, but before entry of judgment). The plaintiff responded that the trial court had jurisdiction over the parties and the subject matter, and that was all that was needed to make the judgment not void.

The case went up on appeal for the first time in 2011. The Third Division of the First District found that both buying the debt from the issuer and suing the defendant would be criminal acts if the plaintiff was not licensed, the Court held. The Court remanded for the sole purpose of determining when the plaintiff had become licensed. Instead, the Circuit Court entered an order on remand striking down the licensing statute on constitutional grounds. As a result, the second appeal came directly to the Supreme Court.

Counsel for the defendant began the oral argument. Counsel argued three points: (1) the statutory licensing law prohibits anyone from operating in the state without a license, and imposes criminal and civil penalties for violators; (2) the legislature has declared a strong public policy regarding the business of debt collection, finding that the business affects the public welfare and should be regulated for the protection of debtors; and (3) previous precedent recognizes a distinction between failure to license as a business and the unlicensed practice of law with respect to the appropriate remedy. Justice Burke asked whether the Act expressly states that judgments are void if the plaintiff is unlicensed, and counsel answered that that result was mandated by the Court’s nullity rule. Justice Burke asked whether the defendant gets a windfall if the judgment is unenforceable. Counsel answered that the legislature has made the judgment that a party cannot sue without a license. Unlicensed debt collection is contrary to the public welfare, and since the plaintiff was unlicensed at the time it sued the defendant, the voidness rule applied.

Counsel for the State, which had intervened to argue the constitutionality of the licensing statute, followed. Counsel argued that the case was somewhat unusual, in that not even the defendant was defending the Circuit Court’s holding on the grounds the Court relied upon. There can be no equal protection violation where a statute doesn’t distinguish between similarly situated parties, counsel argued. Nor was the statute arbitrary or irrational simply because the conduct prohibited was unlikely to lead to physical injury or death given the long tradition of financial crimes. The plaintiff had argued that the statute was void for vagueness in that it was impossible to know what was and what was not “debt collection.” Counsel for the State disagreed. Counsel pointed out that there is a distinction between ordinary statutory ambiguity and constitutional vagueness. Ambiguity exists when multiple reasonable readings exist, but it only rises to the level of a constitutional problem when a statute is entirely incapable of intelligent interpretation. The dormant commerce clause argument failed, since the statute doesn’t treat in-state and out-of-state commerce differently.

This leaves only the rational basis argument, according to counsel. The FTC has documented abuses in the debt collection industry, including specifically in litigation, counsel argued. Most lawsuits end in default judgments, and some collectors play the odds, hoping enough people won’t bother to defend their suits that they’ll come out ahead. Since nobody was defending the Circuit Court’s judgment, counsel suggested that the Court summarily vacate the decision and remand the case for resolution of the defendant’s remaining arguments. This was appropriate, counsel argued, because otherwise the defendant would be in effect bootstrapping a Rule 308 appeal through Rule 302, getting a number of non-constitutional issues before the Court through a non-substantial constitutional appeal. Counsel disputed the defendant’s argument that the ethical rules governing attorneys were a sufficient check on litigation abuse, arguing that there is evidence to the contrary. Nevertheless, counsel argued, it was not necessary that the legislature’s action be narrowly tailored to the problem in this constitutional context.

Counsel for the plaintiff followed. Counsel argued that the case should have ended at the Appellate Court since only subject matter and personal jurisdiction defects make a judgment entirely void – not failure to license. The nullity rule applying to corporations is an exception to that principle, but since an attorney filed the complaint, the nullity rule was inapplicable. Counsel argued that all four factors cited in previous Supreme Court cases regarding the nullity rule favor the plaintiff here – the lawsuit was filed without knowledge of the licensing requirement and the plaintiff acted diligently in correcting the mistake. Justice Thomas asked whether the Court should assess the constitutional argument and remand the rest. Counsel answered that the lower court had already ruled on nullity, so there was nothing to remand. The plaintiff merely buys debt and hires attorneys to file lawsuits, counsel argued; it was not a traditional collection agency. Justice Theis suggested that since a lawyer is acting on behalf of the client, the argument is that it’s the plaintiff contacting and suing the debtor. Counsel answered that before 2008, only a debt buyer “with recourse” was subject to the Act. In 2008, the legislature removed the words “with recourse,” but still, nothing in the Act suggests that filing a lawsuit necessarily is debt collection. Justice Karmeier asked counsel whether he was defending the constitutionality rulings of the trial court, and counsel said yes, in part. Justice Karmeier asked whether counsel’s non-constitutional issues still needed to be litigated. Counsel argued that the State hadn’t specified where it proposed to remand the matter to. Everything the plaintiff briefed was argued and decided in either the Circuit or Appellate Court. Justice Kilbride asked whether the trial court had decided the non-constitutional issues, and counsel answered that the court’s view was if you file a lawsuit, you’re a debt collector. Justice Kilbride explained that he was trying to determine whether the decision below complied with Supreme Court Rule 18, requiring that a case be decided if possible on non-constitutional grounds before reaching the constitutional issues. Counsel answered that the trial court had concluded that it was stuck with the Appellate Court holding, and the plaintiff clearly was a debt collector. Justice Thomas asked why the Court shouldn’t hold the statute constitutional under the rational basis test. Counsel argued that the statute was unconstitutional because there was no reasonable way for a party to know when it was violating the law. Here, the Department had advised the plaintiff that it didn’t need to register, and that the 2013 amendment to the statute had been needed because the law was unclear. Federal District Court judges have adopted the plaintiff’s position about the meaning of the statute, counsel argued. Counsel concluded by suggesting that the Court should merely hold that the judgment was not void, and that was the end of the case.

Counsel for the defendant began rebuttal arguments by arguing that the plaintiff had conceded that the constitutional holdings below were wrong. Justice Thomas asked how public welfare is promoted by counsel’s interpretation. Counsel answered that maintaining the regulatory system over the industry was very important; debt buyers wanted to be out from under the statute merely by hiring counsel, but that wasn’t the intent of the legislature. Chief Justice Garman asked whether any violations of the law had been shown beyond the lack of a license. Counsel answered that at the outset of the lawsuit, there had been a dispute as to whether the defendant actually owed the debt.

Counsel for the State ended the argument, arguing that the easiest resolution was to vacate the judgment and remand the case. The plaintiff has not defended the Circuit Court’s reasoning, counsel argued; it was offering a “better” version of the Court’s rational basis argument. Counsel once again suggested that the best approach to mandatory jurisdiction Rule 302 cases is to dispose of an insubstantial constitutional argument and remand the rest to ensure that Rule 302 doesn’t become a vehicle for a lot of other issues to come up. Counsel asked whether there was a problem with the rulings on the issues the Court would be sending back. Counsel responded that the application of the statute hasn’t been passed on. Justice Thomas pointed out that counsel for the State was at odds with everyone else in the case urging the Court to resolve all issues. Counsel answered that he understood the impulse to seek complete resolution, but the case now presents nine different issues. Counsel argued again that it was more appropriate to send the non-constitutional issues back. Justice Karmeier asked whether, if the Court merely decided constitutionality and remanded the rest, the case goes back to the trial court in the same posture it was in following the first appeal. Counsel said yes – the Circuit Court would be able to consider the issue of whether the statute applied.

We expect LVNV Funding to be decided in four to five months.

Image courtesy of Flickr by Jason Taellious