The Fourth Circuit Says Don't Do This

In a case decided last week, McKenzie v. Hall, the Fourth Circuit sent a clear message that it does not tolerate Motions to Strike.  The Appellants had filed such a Motion to strike portions of an adversary's brief which they said were objectionable.

The Court struck back, quoting a Seventh Circuit decision, Redwood v. Dobson, 476 F.3d 462, 471 (7th Cir. 2007), and holding that:

  • "Motions to strike sentences or sections out of briefs waste everyone’s time. . . ."
  • "Motions to strike words, sentences, or sections out of briefs serve no purpose except to aggravate the opponent. . . . -- and . . .  this goal is not one the judicial system will help any litigant achieve."
  • "Motions to strike disserve the interest of judicial economy. The aggravation comes at an unacceptable cost in judicial time."

Op. 9 & n.3.

The proper way to deal with an objectionable brief is not a Motion to Strike.  The Court said that:

The Federal Rules of Appellate Procedure provide a means to contest the accuracy of the other side’s statement of facts: that means is a brief (or reply brief, if the contested statement appears in the appellee’s brief), not a motion to strike.

Id.  (emphasis added).

In case you were wondering, there's no provision for a Motion to Strike in the Federal Rules of Appellate Procedure.
 

Hurricane Sandy Reaches The North Carolina Business Court

North Carolina has had more than its fair share of hurricanes over the years, but Hurricane Sandy, which hit New Jersey and New York City, even reached the North Carolina Business Court.

It came in the most mundane of motions, one to expand the word limitation for a brief.  The Order is in Gusinsky as Trustee for the Vladimir Gusinsky Living Trust v. Duke.  

The Motion was filed by the Plaintiffs on the same day an overly long brief was filed.  That violates Business Court Rule 15.8, which says that:

Requests for expansion of word limitations shall be made five (5) business days prior to filing the brief for which expansion of word limitations is sought. Requests for expansion of word limitations that are filed simultaneously with the brief shall be denied.

But this Motion was granted notwithstanding the untimely filing.  Why?  Plaintiff's counsel said that they couldn't comply with the Rule due "to communication issues among counsel caused by Hurricane Sandy."  Order 4.  Plaintiff;s counsel are located in New York City.

Judge Jolly recognized the havoc caused by the storm, saying:

The court acknowledges that Hurricane Sandy caused flooding, power outages and devastating damage along the East Coast of the United States, and the court is sensitive to issues created by this natural disaster. However, the court encourages counsel to recognize that compliance with the BCR promotes efficiency and fairness in case administration.

Op.h 4 & n.1.

In this case, though, the hurricane trumped the Business Court Rules.  But don't look for this pass to be given out again.  That was a thousand year storm.  Follow the Rules in the absence of severe weather conditions.

 

 

 

How NOT to Quash An Out Of State Subpoena

You've gone through the laborious process of getting a subpoena issued in another state for production of documents.  You've had a commission issued by the Superior Court and you've hired out-of-state counsel to get the subpoena.

But now, opposing counsel shows up in North Carolina Superior Court and moves to quash the subpoena issued in another state by way of a North Carolina commission.

What do you do?  Not what the Plaintiff did in Capital Resources, LLC v. Chelda, Inc., decided this week by the NC Court of Appeals.  Capital persuaded the NC judge to enter a Protective Order quashing several out-of-state subpoenas.  In addition, the Protective Order directed that it should be served on each recipient of the subpoenas and on each clerk of court issuing the subpoenas.

The Court of Appeals, through Judge Stephens, said that "a superior court judge in this State does not have any authority over the courts of other states, and thus could not quash subpoenas issued by such courts."  Op. 13.

The orders quashing the subpoenas were "void and of no effect."  Op. 13.  They were so void that Judge Stephens said that the out-of-state courts "could simply have ignored" them.  Id.

By like measure, the party pursuing the subpoeanas has to seek their enforcement in the foreign courts.  The Court held that:

Had [the party issuing the subpoeanas] wished to proceed with its attempt to obtain documents under the . . . subpoenas, [it] could have requested those out-of-state courts to notify the subpoena recipients that Judge Levinson’s order was to no effect. To the extent the entities in question failed to comply with the subpoenas, [Its] remedy was to initiate contempt or other proceedings in those states’ courts as
provided for by their rules of civil procedure. Had [it] thus obtained any documents it felt relevant to this action, it could have attempted to introduce such in this case.

Op. 14.

It's pretty clear that the federal practice is the same.  FRCP 45(c)(3) gives the power to quash a subpoena to the "issuing court."  The issuing court is also given the power to "hold in contempt" a person who fails "without adequate excuse to obey the subpoena,"  FRCP 45(e).

On a related issue, Judge Diaz of the Business Court held four years ago in Hilb Rogal & Hobbs Co. v. Sellars (unpublished) that a North Carolina court has no power to order an out-of-state resident to comply with a subpoena.

 

 

 

 

Tags:

Class Action Defendant Waived Right To Compel Arbitration After Class Action Certification

You probably remember the earlier opinion in Elliott v. KB Home, Inc., in which Judge Jolly certified a class action against the homebuilder KB Home over the improper installation of HardiePlank siding.

Last week, the Business Court ruled in another opinion in the case (2012 NCBC 55) that KB Home had waived its right to seek arbitration of those claims.  The waiver resulted from KB Homes'  delay in asserting its arbitration rights and the expense incurred by the Plaintiffs in litigating in court.

The standard for waiver was set out by the North Carolina Supreme Court in Servomation Corp. v. Hickory Constr. Co., 316 N.C. 543, 544 (1986).  Waiver of the right to compel arbitration occurs when the party with the arbitration right "acts inconsistently with arbitration, and the party opposing arbitration can show it has been prejudiced as a result."  Op. 35.

As for prejudice, that results: 

if [the plaintiff] [a] is forced to bear the expense of a long trial, [b] it loses helpful evidence, [c] it takes steps in litigation to its detriment or expends significant amounts of money on the litigation, or [d] its opponent makes use of judicial discovery procedures not available in arbitration.

Op. 35 (quoting Servomation Corp., supra, at 544).

The Plaintiffs in the KB Homes case had incurred fees and expenses of approximately $100,000 in litigating their claim by participating in four hearings and taking twenty depositions.  Judge Jolly said that:

KB Home's delayed attempt to enforce the arbitration provisions only after Plaintiffs have expended material amounts of time and resources in pursuing their Claims would be prejudicial to Plaintiffs.  Such time and resources were expended after KB Home's right to arbitrate accrued and could have been avoided through an earlier demand for arbitration. KB Home could have demanded arbitration as early as 2008, well before the named Plaintiffs actively litigated the Claims. Permitting KB Home to enforce its arbitration rights now would be inconsistent with the principles of waiver outlined in Servomation.

Op. 39.

The interesting issue from a class action perspective was whether the waiver of the right to arbitration ran to the unnamed class members.  KB Homes said that it couldn't have asserted its arbitration rights against the unnamed class members until the class was certified and that it hadn't delayed in moving to compel arbitration as to them.  

Judge Jolly rejected that argument, saying that it reeked of "gamesmanship."  Op. 41 & n.37.  He ruled that  ruling otherwise would give the Defendant a "second bite at the apple" chance to relitigate the class certification decision with the unnamed plaintiffs.  He relied on an unpublished decision on the point, Kingsbury v. U.S. Greenfiber, 2012 U.S. Dist. LEXIS 94854 (C.D. Cal. 2012).  In Kingsbury, the court stated:

[T]o accept [defendant's arguments and compel arbitration] would be to condone gamesmanship in the class certification process. A defendant could wait in the weeds and delay asserting its arbitration rights. It could file motions to dismiss, litigate the named plaintiff's legal theories, and oppose class certification motions. If and when a class is finally certified, the defendant could simply assert its arbitration rights and defeat certification of the previously-certified class. In the interests of the fair and efficient administration of justice, the Court cannot accept [defendant's] position.

The Business Court adopted the Kingsbury holding "for the same considerations of fairness and the efficient administration of justice."  Op. 41 & n.37.

This isn't the first time that the Business Court has considered a waiver of arbitration issue. Judge Tennille did so ten years ago, in  Polo Ralph Lauren Corp. v. Gulf Insurance Co., 2001 NCBC 3 (N.C. Super. Ct. Jan. 31, 2001) and found that a party had not waived its right to arbitration by pursuing discovery in the court proceeding.