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CCL President Robert S. Peck served as moderator on November 18 for the “Conversation with the Chief Justices,” a wide-ranging discussion between state supreme court chief justices and members of the National Center for State Courts (NCSC) Lawyers Committee and Corporate Counsel Committees. Peck has served as the moderator for this annual Washington, D.C. event since it was started three years ago. Much of the discussion centered around recent attacks on courts and funding issues, as well as the role of the bar in defending the courts and helping secure adequate funding. The discussion was followed later that evening with the annual Rehnquist Dinner at the Supreme Court of the United States, hosted by Chief Justice John Roberts.

The following morning, Peck chaired the annual meeting of the NCSC Lawyers Committee, where he welcomed new members. The Committee discussed developments in the courts, were briefed by NCSC staff, and discussed future plans. Peck is a former co-chair of the Committee, substituting that morning for the current co-chairs, both of whom had court appearances.

Arguing that the District Court imposed novel requirements for compliance with the Fair Housing Act’s statute of limitations, CCL filed the opening brief for the City of Los Angeles in its Ninth Circuit appeal of a ruling granting summary judgment to defendant Bank of America. The city’s lawsuit accused the bank of steering minority borrowers to more expensive and riskier loans than it offered other borrowers, resulting in foreclosures, lowered property tax revenues, and expenditures for remediation costs.

The District Court granted the bank’s motion for summary judgment. It reasoned that a predatory loan, foreclosure, and economic injury to the city all had to take place within two years of the lawsuit’s filing. The FHA has a two-year statute of limitations that begins to run only after termination of a discriminatory lending practice. The city asserted that the practice at issue did not terminate until nine months after the lawsuit was filed. As a result, the brief argued, the lawsuit was timely.

The evidence adduced showed riskier and more expensive loans issued within the limitations period, fully meeting the requirements of the statute of limitations. There is no requirement, the brief added, that the foreclosure and the economic injury to the city also take place within that period of time. Because evidence demonstrated that foreclosures typically take about three years from closing of the loan, the District Court’s ruling would effectively immunize discriminatory lending from FHA liability, a consequence plainly at odds with the purposes of the housing statute.

CCL President Robert S. Peck serves as counsel of record for Los Angeles in the case. He was joined on the brief by Dean Erwin Chemerinsky of the University of California at Irvine law school, Joel Liberson of Tare Resources, and Elaine Byszewski and Lee Gordon of Hagens Berman. In September, Peck won three decisions from the Eleventh Circuit on behalf of the city of Miami, Florida, where similar lawsuits were filed against Bank of America, Wells Fargo, and Citibank. Peck is also representing Los Angeles in an appeal of another case against Wells Fargo in the Ninth Circuit.

As a member of the board of directors, CCL President Robert S. Peck participated in a meeting of Justice at Stake, a non-partisan judicial watchdog organization that advocates for fair and impartial courts. At the meeting, the Board approved the hiring of a new executive director and reviewed press coverage of the organization’s recent report on campaign spending in judicial elections. Peck serves as board secretary and is a member of the executive committee.

In a civil rights case alleging the rampant use of illegal stop & frisk tactics by Chicago Police, the federal district court for the Northern District of Illinois denied the City’s and the Superintendent of Police’s motions to dismiss the claims brought by more than 50 African-American and Hispanic plaintiffs on behalf of themselves and a class of plaintiffs. The complaint alleges that Chicago Police officers stopped and frisked the plaintiffs and members of the class based on their race or national origin and did so without reasonable suspicion that they were engaged in criminal activity. Working with co-counsel Antonio M. Romanucci, Martin D. Gould & Angela Kurtz with the Chicago firm Romanucci & Blandin, LLC, and Rod Gregory of the Gregory Law Firm in Jacksonville, Florida, CCL’s Robert S. Peck and Valerie M. Nannery prepared many of the successful arguments in the plaintiffs’ opposition to the motions to dismiss.

The district court adopted many of CCL’s arguments and held that the plaintiffs have standing to seek equitable relief and that they have stated claims against the City and the Superintendent in his individual capacity for violations of the plaintiffs’ constitutional rights. The court rejected the City’s argument that the plaintiffs could not seek declaratory and injunctive relief because their past encounters with Chicago Police officers could not establish that they faced a real and immediate threat of future unconstitutional stops and frisks by officers. The court held that held that the plaintiffs’ claims for injunctive relief were plausible based on their allegations of an unconstitutional practice and repeated unconstitutional stops and frisks by Chicago Police of people who were engaged in innocent, lawful conduct. The court also held that the complaint alleged enough factual details to state claims for violations of the plaintiffs’ Fourth and Fourteenth Amendment rights against the City, and against the Superintendent in his individual capacity. Finally, the court rejected the City’s assertion that many of the plaintiffs’ claims were mooted by the City’s separate agreement with the ACLU to change Chicago Police practices. The court wrote that the City’s promise to comply with its agreement with the ACLU, without more, could not moot the plaintiffs’ requests for prospective relief, and that the agreement did not moot the plaintiffs’ claims for damages.

The court’s order, which came more than a month before its scheduled hearing on the motions, requires the defendants to answer the complaint, and allows the plaintiffs’ claims to move forward.

On November 5th, CCL Senior Litigation Counsel Valerie M. Nannery attended the meeting of the Advisory Committee on Civil Rules in Salt Lake City, UT, observing the proceedings on behalf of the American Association for Justice. At the meeting, the committee discussed publicity for the pending amendments to the Federal Rules of Civil Procedure, due to go into effect on December 1, 2015, absent action by Congress, as well as potential future amendments.

Much of the meeting focused on an extended discussion on the Rule 23 Subcommittee’s report and its “sketches” of potential amendments to Rule 23, which can be found in the Agenda Book for the meeting. After attending many events and hosting a “mini-conference” in September, the Subcommittee has narrowed its focus, and has moved some issues to the back burner. The Committee has taken a “settlement class” rule off of the agenda, and has put “ascertainability” and Rule 68 on hold. The Committee also approved taking cy pres and “issue classes” off of the agenda. The Subcommittee is focusing on six issues for potential amendments to be submitted for approval in Spring 2016: (1) Frontloading of issues to be submitted to the court before notice is sent to the class in cases involving a proposed settlement; (2) clarifying that an order directing notice to the class prior to certification of a settlement class is not appealable under Rule 23(f); (3) Clarifying that Rule 23(e)(1) notice triggers the opt-out period; (4) modernizing the rule concerning notice in (b)(3) classes to specifically include notice by electronic means; (5) revising the rules related to objectors to class action settlements; and (6) providing a condensed list of settlement approval criteria. The Advisory Committee will get feedback on these issues at the January 2016 Standing Committee meeting in Phoenix, AZ, and will revisit and potentially approve any proposed amendments to Rule 23 at its Spring 2016 meeting in Jacksonville, FL.

The Advisory Committee also engaged in a long discussion of pilot projects in civil litigation. The Committee discussed ways to implement pilot projects in federal courts, and which models to utilize. Some of these pilot projects involve increased mandatory disclosures and less discovery, short discovery cut offs and/or placing cases in “tracks” depending on their complexity. While “the charge for the subcommittee is to investigate pilot projects already completed in other locations and to recommend possible pilot projects for federal court,” several Advisory Committee members voiced the opinion that the purpose of studying pilot projects should be to propose new rule amendments implementing some of the procedures used in some pilot projects. While new rules to not appear to be in the offing at the moment, we could see proposed amendments on these issues in the future.

One of the members of the Committee brought up an article written by Professor Suja Thomas for Law360, and the letters she sent to judges and to the committees of the Judicial Conference of the United States, regarding the propriety of using the Duke Center for Judicial Studies’ “Discovery Proportionality Guidelines and Practices,” 99 Judicature, no.3, Winter 2015, at 47-60, to train federal judges on the interpretation of the amendments to Fed. R. Civ. P. 26(b), and the propriety of federal courts hosting events co-sponsored by the Duke Center and the ABA Section of Litigation, titled “Hello ‘Proportionality,’ Goodbye ‘Reasonably Calculated’: Reinventing Case Management and Discovery Under the ​2015 Civil Rules Amendments.” Federal judges and their clerks are invited to attend these events for free. The Duke Center’s Guidelines were also used at a training of federal magistrate judges by the Federal Judicial Center in the spring of 2015.

Several current and former members of the Civil Rules Advisory Committee participated in the Duke Center’s November 2014 “Bench-Bar-Academy Distinguished Lawyers’ Series” Conference on “Implementing the Proportionality Standard,” and also participated in the development of the Duke Center’s Guidelines, and will be panelists at the events co-sponsored by the Duke Center. The November 2014 Conference itself promoted the “key component” of the input of these federal judges, and said its stated goal was to “provide authoritative guidance on implementing the proportionality standard.” The current and former chairs of the Advisory Committee, and the chair of the Standing Committee responded that “the Duke guidelines and any presentation at the conferences do not come with the imprimatur of the Rules Committees,” and “The Duke Center, like other groups, is free to hold conferences or propose guidelines with respect to the rules or any other area of law. But they are not entitled to communicate, or suggest, that they bear the stamp of approval of the Rules Committees.” However, Professor Thomas’ article points out that the involvement of current and former members of the committees of the Judicial Conference in this private interpretation of the amendments makes the Duke Center’s process and its Guidelines appear “official,” even though they are not the law.

CCL President Robert S. Peck told Delaware trial lawyers that the recent state supreme court decision abrogating the collateral source rule in Medicare cases relied on questionable premises that can undermine the application of the rule in other cases if not challenged in a carefully constructed series of cases at a continuing legal education seminar Oct. 30. Peck was the featured speaker at the seminar and then joined a panel discussion after his opening remarks.

In Stayton v. Delaware Health Corp., decided June 12, 2015, the Delaware Supreme Court departed from the state’s historic treatment of the collateral source rule on the notion that, unlike private insurance, the plaintiff is not deprived of the benefit of the bargain, having not negotiated medical care discounts through an insurer. Instead, it found that the discount afforded through Medicare was for the benefit of the taxpayer. Yet, the decision, Peck said, ignored the various forms of Medicare coverage, some of which require beneficiaries to pay month premiums and contract through private insurers. While defendants have already begun to argue that the Stayton decision should be expanded to Medicaid and other instances where benefits have traditionally been treated as collateral sources, an expanded rule implicates the jury-trial, open-courts, and equal-protection rights guaranteed by the Delaware Constitution. CCL is already involved in one case where Stayton’s application to Medicaid benefits is at issue and awaiting a trial court’s determination.

The Pennsylvania Supreme Court held on Oct. 27, 2015 that a nursing home that had required arbitration of disputes “in accordance with the National Arbitration Forum Code of Procedure” could not compel arbitration of claims of abuse and neglect. Wert v. Manorcare of Carlisle, Pa., LLC, No. 62 MAP 2014.

When plaintiff admitted her mother into defendant’s skilled nursing facility, she signed an agreement that all disputes be resolved by arbitration exclusively “in accordance with the National Arbitration Forum Code of Procedure.” Within six months, plaintiff’s mother died, allegedly due to abuse and neglect. Plaintiff filed suit and the nursing home filed preliminary objections, seeking to enforce the arbitration agreement. The trial court overruled the objections, finding the agreement unenforceable because NAF had entered into a consent decree in 2009 that barred it from administering arbitrations of consumer disputes. The court held that this provision was integral to the agreement and was therefore not severable from the remainder of the arbitration agreement. The Pennsylania Superior Court affirmed, and the Pennsylvania Supreme Court granted review.

The American Association for Justice filed an amicus curiae brief supporting plaintiff, authored by CCL Senior Counsel Jeffrey R. White. The brief emphasized that the nursing home was not simply asking the court for a substitute arbitrator, but for an alternative arbitral forum and administrator, which would require extensive rewriting of the parties’ agreement. Moreover, § 5 of the Federal Arbitration Act, which the nursing home heavily relied upon as authority for appointing a substitute arbitrator, does not authorize the court to appoint a substitute arbitral forum.

The Pennsylvania Supreme Court affirmed in a 3-2 decision. The court found the NAF designation integral and non-severable, “[d]oing otherwise would require this Court to rewrite the Agreement.” The court noted AAJ’s argument regarding the scope of § 5 of the FAA, but found it unnecessary to reach that issue. “Regardless of whether Section five may apply where there is a lapse in the administrator, by its own rules, the NAF must administer its code unless the parties agree to the contrary.” The court also held that plaintiff’s own testimony that she did not read the agreement was not relevant to whether the NAF designation was integral. “[P]remising the integrality of a contractual term on the subjective understanding of a far less sophisticated non-drafting party is ill-advised public policy that would further distort an already lopsided balance of power.”

In a case held in abeyance during the pendency of CCL’s successful Eleventh Circuit appeal on behalf of the City of Miami, Florida, the City of Miami Gardens filed an amended complaint, asserting that Wells Fargo Bank had violated the Federal Housing Act by steering minority borrowers to more expensive and riskier loan products than they qualified for, resulting in foreclosures of properties, the loss of tax revenues for the city, and additional expenses in remediating neighborhoods and properties in the areas of the city affected by foreclosures. In response, Wells Fargo made a motion to dismiss the amended complaint, arguing that the handful of loans identified as within the statute of limitations period had not yet created any damage to the city and, thus, did not qualify as being within the statute of limitations.  In the alternative, the Wells Fargo motion sought a more definite statement.

In a responsive brief filed by CCL October 26 on behalf of Miami Gardens, CCL argued that the FHA states that the limitations period does not begin to run as long as the impermissible conduct continues. Thus, any improper steering that continues into the limitations period satisfies the statute of limitations and allows prior loans to come within the limitations period for consideration by the court. In addition, the brief points out that the average length of time between a loan closing and foreclosure in these situations is greater than three years. As a result loans within the two-year statute of limitations period are unlikely to move into foreclosure. Besides, the brief points out, it is the misconduct and not the damage that is examined for statute-of-limitations purposes.  The brief was written by CCL’s Valerie Nannery and Robert S. Peck, Joel Liberson of Trial and Appellate Resources, and Lance Hartke and Sara Clasby Engel of Harke Clasby & Bushman.

CCL attorneys participated in the quarterly meetings of AAJ’s committees and Board of Governors in Washington, DC. During the Legal Affairs Committee meeting, discussions centered around developments on federal and state court rules and cases of interest pending in the Supreme Court of the United States. Participating in the meeting and providing background information to the committee members were CCL attorneys Valerie Nannery, Jeffrey White, and Robert Peck.

CCL President Robert S. Peck chaired the Fall Board of Overseers meeting of the RAND Institute for Civil Justice in Pentagon City, Virginia on October 22. The ICJ is a think tank that conducts empirical research of issues affecting the civil justice system. During the meeting, members of the board were treated to previews of some of that ongoing research. Former Mississippi Governor Haley Barbour spoke at the board diner that evening about his experiences in dealing with a disaster after Hurricane Katrina struck. Peck is serving an unprecedented third year as chair of the board.