cle early case assessment, discovery, and mediation/adr december 14, 2014 phillip g. eckenrode hahn...

CLEEarly Case Assessment, Discovery, and Mediation/ADRDecember 14, 2014

Phillip G. EckenrodeHahn Loeser & Parks LLP

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What We Won’t Cover

EARLY CASE ASSESSMENT


VALUING YOUR OPPONENT’S CASE


Injunctive Relief?

Rule 65 – Ohio/Federal Rules of Civil Procedure


In what forum will this case be heard?

Removal to Federal Court

28 U.S.C. sec. 1441

“Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.”


Why remove?

• Avoid out-of-state Defendant getting “homered” in state court.

• Provide opportunity for Defendant to have dispute heard by Court considered to be better equipped to handle certain disputes.

• Greater supervision of discovery and early-case issues by federal Magistrate Judge.


Diversity Jurisdiction

28 U.S.C. sec. 1332(a)

(a)The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between

(1)citizens of different States;

***


BUT...28 U.S.C. § 1441(b) Removal Based on Diversity of Citizenship.— ***(2)A civil action otherwise removable solely on the basis of the jurisdiction under section 1332(a) of this title may not be removed if any of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought.

NOT JURISDICTIONAL


Hypothetical


• Following a tragic car accident which claimed the lives of two people and seriously injured three others, the owner of the vehicle (who had loaned the car to the now-deceased) sought coverage from their car insurance company.

• Policy provided coverage for bodily injuries up to a “single limit” of $100,000, and $25,000 per accident.


• Policy holder sought the full $100,000 limit.

• Insurance company disagreed that was applicable, and offered $25,000 for the “per accident” limit for uninsured motorists’ coverage.

• Policy holder files suit against the insurance company, claiming that its interpretation of coverage was incorrect, and that $100,000 in coverage should be provided.


• Insurance company removes to federal court for the Northern District of Ohio.

• Claimed the amount in controversy was $100,000.

• While the case was in the District Court, neither party challenged the Court’s jurisdiction over the case.

• District Court granted summary judgment to the insurance company.


• You are the career law clerk for the Honorable Gene Yuss, Sixth Circuit Court of Appeals Judge.

• What do you do recommend first be done with this case?


Freeland v. Liberty Mutual, 632 F.3d 250 (6th Cir. 2011)

“The penny is easily the most neglected piece of U.S. currency. Pennies tend to sit at the bottom of change jars or vanish into the cracks between couch cushions. Vending machines and parking meters will not accept them. Many people refuse to bend down to pick up a penny off the ground, deeming the reward not worth the effort. *** In this case, however, the penny gets a rare moment in the spotlight. The amount in controversy in this declaratory judgment action is exactly one penny short of the jurisdictional minimum of the federal courts.”


28 U.S.C. sec. 1332(a)

(a)The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs...


But the policyholders never challenged the Court’s jurisdiction below!


Court has "an independent obligation to determine whether subject-matter jurisdiction exists, even in the absence of a challenge from any party.“ Freeland, at 252.


OHIO R. CIV. P. 8. General Rules of Pleading

(A) Claims for relief. *** If the party seeks more than twenty-five thousand dollars, the party shall so state in the pleading but shall not specify in the demand for judgment the amount of recovery sought, unless the claim is based upon an instrument required to be attached pursuant to Civ. R. 10.


Prayer for relief:

“As a result of Defendant’s tortious conduct and intentional breaches of its contracts with Plaintiff, Plaintiff is entitled to damages in excess of $25,000, in an amount to be proven at trial.”


OHIO R. CIV. P. 8. General Rules of Pleading

(A) Claims for relief. *** If the party seeks more than twenty-five thousand dollars, the party shall so state in the pleading but shall not specify in the demand for judgment the amount of recovery sought, unless the claim is based upon an instrument required to be attached pursuant to Civ. R. 10.


Paragraph 26 of the Complaint:

“Following Defendant’s breach of the supply contract, Plaintiff was required to find replacement parts on short notice, which required Plaintiff to pay $277,000 more than it should have had Defendant performed.


Amount in controversy not just decided by money damages.

1.Cost of complying with an injunction.2.Value of injunctive/equitable relief.


“Applying this principle, where a party seeks a declaratory judgment, the amount in controversy is not necessarily the money judgment sought or recovered, but rather the value of the consequences which may result from the litigation.” Freeland


Examples

Lomree, Inc. v. Pan Gas Storage, LLC, 499 Fed. Appx. 417 (6th Cir. 2012) (costs of complying with injunctive relief – free gas for so long as the land is used as a storage field – would “quickly surpass” $75,000 from either party’s view point”).


Examples

Jarrett-Cooper v. United Airlines, Inc., 2014 U.S. App. LEXIS (6th Cir. Dec. 3, 2014)

• Travel agent sues after airline repeatedly fails to honor tickets purchased on behalf of her clients.

• “Jarrett-Cooper and her clients sought ambiguous injunctive relief and damages that ultimately aggregated to $53,360.06—satisfying the jurisdictional requirements of the state court but falling well short of the $75,000 amount-in-controversy threshold for diversity jurisdiction in the federal courts. “


Examples


• United removed the case to federal court - initially aggregating Jarrett-Cooper's damage claims with "the value of the injunctive relief . . . (i.e., the value of the continued existence of their business serving entertainers, professional athletes, and touring theater groups)" to clear the $75,000 threshold .

• Plaintiff sought remand.


Examples


• United submitted a declaration from its employee that stated it would cost “well over $75,000” to revise its ticket fraud procedure to address the alleged claims made by the plaintiffs.

• United “contended that the injunction Jarrett-Cooper requested would force it to completely overhaul its worldwide operations and retrain "all personnel involved in its credit card and fraud protection department," at a cost far exceeding $75,000.”


Examples


“United never proved the amount in controversy by any standard because it never demonstrated a logical connection between its speculative amount and the actual controversy. Its preference for a federal forum cannot expand the subject matter jurisdiction of the federal courts beyond the limits set by Congress. We therefore reverse the district court's denial of Jarrett-Cooper's motion to remand, vacate the district court's subsequent orders for lack of jurisdiction, and remand the case with instruction to grant the remand motion.”

Amount in Controversy in State Court

Ohio Constitution

§ 4.01 In whom power vested

“The judicial power of the state is vested in a supreme court, courts of appeals, courts of common pleas and divisions thereof, and such other courts inferior to the Supreme Court as may from time to time be established by law.”

Amount in Controversy in State Court

Municipal Court - Ohio Revised Code § 1901.17• Up to $15,000

Small Claims Court - Ohio Revised Code § 1925.01• $3,000 and under

DISCOVERY

Timing of Discovery

Federal Court

No discovery until 26(f) conference with the parties and Rule 16 scheduling conference with Magistrate Judge.

26(f) Report

Timing of Discovery

Ohio State Court

Timing of Discovery

Ohio State Court

• Discovery can proceed as soon as the complaint is filed.

• No initial disclosure requirements like in federal court.

• Local rules may factor in.

Timing of Discovery

Franklin County Local Rule 43

PROPORTIONALITY

Proportionality of Discovery

Federal Rule 26(b)(2)(C)(iii)

Court can limit discovery if it determines that “the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.”


The Way, Int’l v. Executive Risk Indemnity, Inc., S.D. Ohio No. 3:07-cv-294, 2009 U.S. Dist. LEXIS 90221 (Jan. 27, 2009) (“[D]iscovery must be proportional, as well as relevant, to the lawsuit, and must be tailored to the case at hand.”)


So what’s the big deal?


Federal Rule 26(b)(2)(C)(iii)

Court can limit discovery if it determines that “the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues.”


Advisory Committee on the Federal Rules of Civil Procedure


“Although the rule now directs that the court “must” limit discovery, on its own and without motion, it cannot be said to have realized the hopes of its authors. Surveys produced...indicate that excessive discovery occurs in a worrisome number of cases, particularly those that are complex, involve high stakes, and generate contentious adversary behavior. The number of these cases and the burdens they impose present serious problems. These problems have not yet been solved.”

Types of Written Discovery

Requests for Admissions (Rule 36)

• Rule 36(A)(1) provides that a matter on which an admission is sought “is admitted unless” within the proscribed period to respond, it is specifically denied. (“Self-executing”)

• (B) Effect of admission. Any matter admitted under this rule is conclusively established unless the court on motion permits withdrawal or amendment of the admission.



Grenga v. Youngstown State

• YSU had until November 10th to serve written answers or objections to the requests for admissions.

• YSU put the responses in the regular mail on November 8th, but were not received by plaintiff until November 13th.

• Plaintiff claimed that he was entitled to summary judgment based on the failure to respond in time and that the matters should be deemed admitted.



Grenga v. Youngstown State

• Thankfully for YSU, the Court (correctly) held that service of the responses was completed by putting them in the mail, not based on when they were actually received.

• You don’t want to have to litigate this!

• Methods of service



Samaan v. Walker, 10th Dist. No. 07AP-767, 2008-Ohio-5370 (Oct. 16, 2008)

• Plaintiff sued for conspiracy, fraud, breach of contract, and other claims.

• March 16th: Defendant’s counsel sent RFAs – admit that Ds didn’t make false statements, didn’t intend to mislead, didn’t engage in a conspiracy, etc.

• April 12th: Plaintiff filed his reponses with the Court, generally denying all of them.

• No certificate of service.




• May 4th: Defendant moves for summary judgment, relying on RFAs which he claimed Plaintiff never answered.

• Summary judgment granted.

• Summary judgment affirmed.




• Court held Rule 36 “does not require that a party file responses to requests for admissions with the court, but, rather, the rule requires that they be served upon the requesting party. Given that responses are not required to be filed, the act of doing so is, in essence, a nullity, and it is the service of those responses that is the critical act that must occur within the time specified. Accordingly, because defaulted admissions become facts, which may be used to support a motion for summary judgment, we do not find that the trial court erred in considering Samaan's defaulted admissions as competent Civ.R. 56 evidence.”



Waste-of-time RFAs v. Helpful RFAs

• Admit that you breached the contract.

• Admit that you caused the Plaintiff damages.

• Admit that you are Satan.

• Admit that the contract attached to the Complaint as Exhibit A is a true and accurate copy of the original.

• Admit that, between 2003-2010, Jim Smith was the Vice President for Human Resources for XYZ Corp.

• Admit that Plaintiff is no longer employed by ABC, Inc.


Interrogatories (Rule 33)

• Only type of discovery with a numerical limit (but see S.D. Ohio Local Rule 36.1)

• Ohio Rules of Civil Procedure – 40

• Federal Rules of Civil Procedure – 25

• Subparts / Multi-part questions

• Both rules contain language regarding subparts.

• Ohio: “For purposes of this rule, any subpart propounded under an interrogatory shall be considered a separate interrogatory.”

• Federal: Limit is 25 “including all discrete subparts.”



• “When the number of interrogatories exceeds forty without leave of court, the party upon whom the interrogatories have been served need only answer or object to the first forty interrogatories.” Ohio Civ. R. 33(A)(3).

• No motion for protective order required – leave must be filed to go over.

• The court may protect a party from annoyance, embarrassment, oppression and undue burden or expense. Ohio Civ. R. 26(C).

• The court may act to prevent “fishing expeditions.” Drawl v. Cleveland Orthopedic Center, 107 Ohio App.3d 272, 277-78, 668 N.E.2d 924 (11th Dist. 1995).



• Only type of discovery response that must be verified by the client.

• “Each interrogatory shall be answered separately and fully in writing under oath, unless it is objected to, in which event the reasons for objection shall be stated in lieu of an answer.” (Ohio R. Civ. P. 33(A)(3)) (emphasis added).

• Your understanding of the facts versus your client’s.

• Leave sufficient prep time between your draft and consultation with your client.


Request for Production/Inspection (Rule 34)

• Typically in the form of document requests.

• Like with other responses, opportunity to make objections based on scope, proportionality, harassment, premature, etc.

• Request for Inspection (computers, equipment, accident site)


Third-party/non-party discovery (Rule 45)

Subpoenas

• Where can they be served?

• Ohio Courts – Ohio

• Federal Courts – Recent changes to Federal Rule 45(a)(2)

• “A subpoena must issue from the court where the action is pending.”



(3) Quashing or Modifying a Subpoena.

(A) When Required. On timely motion, the court for the district where compliance is required must quash or modify a subpoena that...

(B) When Permitted. To protect a person subject to or affected by a subpoena, the court for the district where compliance is required may, on motion, quash or modify the subpoena if it requires...



• If case is in Ohio, subpoena can be sent anywhere in Ohio.

• If discovery required outside of Ohio, default requirement is letters rogatory process.

• Consult specific states re: Uniform Depositions and Discovery Act.

• Ohio Revised Code 2319.09

• Depositions only


Uniform Deposition and Discovery Act

SECTION 3. ISSUANCE OF SUBPOENA.(a) To request issuance of a subpoena under this section, a party must submit a foreignsubpoena to a clerk of court in the [county, district, circuit, or parish] in which discovery issought to be conducted in this state. A request for the issuance of a subpoena under this act does not constitute an appearance in the courts of this state.

(b) When a party submits a foreign subpoena to a clerk of court in this state, the clerk, inaccordance with that court’s procedure, shall promptly issue a subpoena for service upon the person to which the foreign subpoena is directed.

(c) A subpoena under subsection (b) must:

(A) incorporate the terms used in the foreign subpoena; and

(B) contain or be accompanied by the names, addresses, and telephone numbers ofall counsel of record in the proceeding to which the subpoena relates and of any party notrepresented by counsel.

Discovery Disputes

• Federal/Ohio Rule 37

• “Meet and confer” obligations

• Also incorporated into local rules

• S.D. Ohio Local Rule 37.1

Discovery Disputes

MEDIATION/ADR

Mediation/ADR

Client Management

Mediation/ADR

Papering the Settlement Agreement

Mediation/ADR

Tsakanikas v. Nationstar Mortgage, LLC, S.D. Ohio No. 2:12-cv-176, 2013 U.S. Dist. LEXIS 86808 (S.D. Ohio June 20, 2013).

• Homeowners sued lenders for violations of the Truth In Lending Act, Fair Debt Collection Practices Act, and Ohio Consumer Sales Practices Act.

• Mediation – mediator reported case was settled.

• Ultimately the Plaintiffs took the position that there was no settlement. Defendants moved to enforce the settlement.

Mediation/ADR


• “Defendants' reasoning is straightforward. They explain that after the parties had reached an agreement settling this case and after the mediator had left, counsel for Plaintiffs raised for the first time a request that Defendants agree to ask credit reporting agencies to remove all negative history about the loan. Defendants' counsel indicated that this had not been part of the settlement agreement but stated that the request would still be forwarded to Defendants. Defendants ultimately balked at changing the credit reports, which apparently prompted Plaintiffs to refuse to sign the written memorialization of their settlement and execute related releases.”

Mediation/ADR


• “Plaintiffs admit that only after the mediation "Plaintiffs realized they had not discussed everything they had intended to cover.“ This is not evidence of ongoing settlement talks. Rather, it is an admission of apparent negligence if Plaintiffs indeed intended for the credit reporting issue to be the potentially dealbreaking component of their settlement. Plaintiffs did not raise credit reporting when it was logical to do so—at the mediation, before a settlement had been reached—and hindsight regrets will not suffice to unilaterally reopen or throw out concluded negotiations. If Defendants do not want to permit after the fact changes as a courtesy, they need not do so.”

cle early case assessment, discovery, and mediation/adr december 14, 2014 phillip g. eckenrode hahn...

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