May 15, 2006

It's hard being a plaintiff...

It's hard being a plaintiff who:

1. files a case in state court,

2. has the defendant remove the case to federal court,

3. moves to remand the case on the ground that you don't seem to meet the requirements for standing in federal court,

4. loses that motion,

5. litigates the case in federal court and ultimately wins in the Court of Appeals,

6. has the Supreme Court grant certiorari and now must argue that you do have standing in order to preserve the victory, and

7. loses when the Supreme Court decides that you don't have standing.

That happened to the plaintiffs in DaimlerChrysler Corp. v. Cuno, decided today. The Court held unanimously that state tax breaks to business don't injure state taxpayers in a sufficiently "concrete and particularized" way to create a "case or controversy," as required by Article III of the Constitution. Standing in state court, where the plaintiffs originally filed, is governed by state law. It remains unanswered whether the states violate the Commerce Clause when they offer tax breaks to lure businesses into the state.

23 comments:

Dave said...

Given that the success of luring businesses with tax incentives is spotty at best it seems rather stupid that government continues this charade.

One would think that if taxes were reduced, economic growth would follow. Politicos don't seem to see it that way.

tdocer said...

I'd cry. No wonder most people hated taking Procedure...

Simon said...

This seems like the poster child case for adding to §1445 all cases where plaintiffs would lack standing in federal court. Otherwise, it's a golden loophope that some defendants can escape through.

Ann Althouse said...

Simon: The plaintiffs would have won the motion to remand if the district court had thought that they lacked standing. There's no need for a legislative change.

Simon said...

I disagree, if only because of the absolutely ludicrous result in this case engendered by permitting such removals. If the argument to amend §1445 did not exist before Cuno, because the question of standing was perhaps fuzzy, surely this bizarre situation is now brought into sharp focus. §1447(c) is clearly an inadequate protection for plaintiffs, as is demonstrated by the bizarre chronology of this case. Right now, the only possible escape route for a plaintiff in a case removed to the Federal courts who doubts their standing in Federal court (it might be remarked that if the plaintiffs believed they had federal standing, they would probably have filed in Federal court in the first place), might be a disingenuous run on §1447(3), and even that escape route is as likely as not to be unavailable in given circumstances.

In light of Cuno -- which, being a formalist, I do not doubt is entirely correct -- I thus have to ask: what is the argument for allowing the defendant to remove the action to a venue where the plaintiffs probably lack standing? Or perhaps I can put it this way: is there a really good argument against amending §1445 as I described above?

Ann Althouse said...

Simon: It's simply the same problem that occurs in all sorts of forms when a decision that the court has subject matter jurisdiction is reversed on appeal. It's just most sympathetic when the plaintiff starts out in state court. I can't even think what change your proposing. The question for the district court would be the same.

Simon said...

I confess that I do not have the details for what I'm proposing, but surely there are ways. Requring both parties to assent to removal would surely remove the problem, although that solution might turn out to be curing cancer by shooting the patient. Perhaps that could be watered down by requiring mutual assent in some classes of action while permitting single-party removal in others. Or perhaps the discretion of the trial court to accept removals should be constrained in some manner, such that the defendant has to surmount an overwhelming burden of proof that the plaintiff has standing. Or perhaps the standard for a §1447(c) remand could be lowered. The point is, I'm open to pursuasion on the details, but the underlying problem, the need for change, seems glaring. It simply cannot make sense that a plaintiff can escape a legal challenge by forcing the defendant into an alternative court where they lack standing to bring the suit. This is, to put it charitably, a more constrained but more obnoxious version of forum shopping.

Don't get me wrong, I hear - and understand - what you're saying; the district court ultimately has to make a judgement as to whether the plaintiff has standing. What's bothering me, I think, is that once the district court has accepted standing enough to take the case, the plaintiffs appear to get locked into the Federal courts; they have to have a way out. Surely, then, you can see why this is a glaring loophole. We see in this case a situation where the plaintiffs were right all along: they didn't file in federal court, they claimed from the outset that they lacked Federal standing, were forced into defending on appeal the standing they knew they lacked, and have ultimately lost in precisely the court system that they declined to file in in the first place. That cannot, as a normative question, be the best way to arrange these matters.

This isn't a Kelo-type case, where the result is not only normatively unjust but an affront to the Constitution; the court's decision is correct, this is what the law is, but in this case, the law is self-evidently unjust. That should be Congress' cue to act.

Marghlar said...

Simon, it seems like any procedure that allows more scrutiny than 1447c already permits would be a real hardship on parties asserting proper standing. Basically, the only remedy that is more effective than the current requirement (district court must consider, even sua sponte) in 1447c, would be to allow for automatic interlocutory appeals of this question (or else require consent, which basically destroys the ability to remand in most cases).

This seems like a lot of additional cost for not that much benefit.

Why treat this so differently than any other jurisdictional question, where the general rule is you can only appeal when final or specially certified?

MadisonMan said...

I guess I'm confused. Can the plaintiff now go back to the state court now that the Supremes have said they shouldn't be in the federal court? Alternatively, can they sue the defendant who made them take this long detour for reimbursement?

Simon said...

The problem here, as I see it, is that you're talking about a situation where a plaintiff has a case that could have been filed in the Federal court, but the plaintiff has declined to do so, quite possibly because they doubt their standing therein. The frustration for these guys must be palpable: because one Judge bought that they may have standing, their lawsuit has been diverted into the Federal court system - which they may well have specifically chosen to avoid - and then derailed over precisely the lack of standing that made them file in state court in the first place.

I'm not really intending to suggest a change in the appeals procedure, so much as I'm talking about making it somewhat harder for a defendant to remove the action to the federal courts in the first place, although as a fallback position, I guess an interlocutory appeal on the court's granting of removal might be an acceptable approach. For the most part, surely the defendant should have to answer the claims in the court in which they're filed, and go through the normal appeals process?

Ann Althouse said...

Simon: It's really just giving the defendant the same access to federal court that the plaintiff has. If either party wants federal court, they can go to federal court (except in a diversity case filed in the defendant's home state).

Madisonman: Yes, assuming the plaintiffs meet the state law doctrine of standing.

Marghlar said...

But Simon, it seems like you are attacking removal in general, then, not just the standing question.

I think that where, as here, there is a federal question at stake, a policy favoring removal into federal court makes good sense. I wouldn't sacrifice the broader gains of having more federal questions be decided by federal judges, solely to avoid the occasional erroneous standing decision by a district judge. Seems too much like throwing out the baby with the bathwater to me.

Ann Althouse said...

Simon, another thing, the plaintiffs should have tried harder to establish that there was no standing. They failed to win the motion to remand. It wasn't really too difficult.

Jacob said...

How did this post escape being titled "It's Hard Out Here For A Plaintiff"

nunzio said...

"They failed to win the motion to remand. It wasn't really too difficult."

Spoken like a law professor. For those practicioners out there, many federal judges will deny motions to remand on close call issues, like this one, because motions to remand are generally not appealable so when in doubt they'll deny the remand, no matter how hard the plaintiffs try.

Richard Fagin said...

Simon: the result wasn't unjust - the trial court just got the law wrong. I realize that's small consolation to the plaintiff after appeal all the way to the Supreme Court but the trial courts do get it wrong from time to time.

Standing is one of the more important doctrines of constitutional law. It substantially reduces the use of courts to resolve political disputes.

Maxine Weiss said...

Ann, where does the demurrer come in? (Like I even know what I'm talking about?)

I always thought that it's just standard procedure to churn out a demurrer right after the complaint, and see if that sticks.

In California, demurrers are very standard, and usually upheld.

Peace, Maxine

Ann Althouse said...

Nunzio: The cynical view here doesn't really add up. The judge denying the motion is creating a lot of extra work for himself that will only be for nothing if there is no jurisdiction.

chsw10605 said...

First, please translate s.1445 for the non-lawyers reading this blog. Second, would I correctly assume that a state vs. state suit would settle this Commerce Clause matter? After all, SCOTUS might reason (and I have not read the opinion in this case as I am not a lawyer) that voters have no standing for a Federal lawsuit as their remedy is to vote out the state officials proffering largesse (or not enough largesse) to lure businesses.

chsw10605

Simon said...

Marghlar / Ann - until I have a more concrete proposal on exactly what I'm suggesting as a replacement, I suppose I'll have to quietly demur. ;)

Richard - the result is unjust in the sense that the case should never have been removable the Federal courts. That doesn't mean that the Supreme Court got this case wrong; it did everything right. It's the trial court that erred, and it has cost the plaintiffs huge amounts of time and money. Are you telling me that "[s]tanding is one of the more important doctrines of constitutional law" because you think I don't know that?

chsw10605 - in very simple terms, if you sue someone in state court over an issue that could be litigated in Federal court, the person you sue can apply to the Federal courts to remove the case from the state courts and take it up in the Federal court, whether you like it or not (this despite the fact that you declined to file the action in Federal court, presumably for good reason). §1445 defines those actions which are precluded from removal. I'm not sure I understand why your not being a lawyer prevents you from reading the court's opinion?

Richard Fagin said...

Simon: No, I wasn't commenting on your knowledge of standing doctrine. I just wanted to remind readers from the National Wildlife Federation, &c. who love to sue the Secretary of the Interior and the EPA administrator because they don't like the government's environmental policies, among other miscreants who need an occasional wallop over the head with standing doctrine.

The other point was sometimes you just get shafted in court, even when you're right. That's an inevitable element of having disputes resolved by mere human beings. Doesn't make it fair, but that's life.

Simon said...

Richard -
In that case, I apologize. :)

Hey said...

RF:

You mispoke: it's not that "sometimes you just get shafted in court, even when you're right", rather it's that you ALWAYS get shafted in court. Unless of course you're a lawyer ;)

I'd hope that the plaintiffs have a good chance in state court, as they won in a less promising federal jurisdiction. Hopefully they'll also be able to get the whole bad faith removal tacked on to their judgement, though the US is too unfriendly to awarding costs.