March 21
Berger v. North Carolina State Conf. of NAACP
21-248, 4th Cir.
Preview by Erica Hackett, Online Editor
The issue in this case is whether the President Pro Tempore of the North Carolina State Senate and the Speaker of the State House may intervene in litigation regarding a North Carolina voter ID law. Petitioners are seeking to intervene to represent North Carolina, in addition to the state Attorney General, who is already representing the state’s interest in this litigation. Both the District Court and the 4th Circuit held that they may not intervene on the grounds that there is no evidence that the Attorney General was not acting zealously to defend the state law.
The substance of this proceeding is a lawsuit brought by the North Carolina chapters of the NAACP, seeking to enjoin enforcement of a North Carolina voter ID law that would require all voters show identification and increase the number of poll observers. However, the arguments in this case are not on the merits, and the matter that the Court will consider arises from a civil procedure battle on whether state legislators may intervene in the litigation to represent the state.
At issue here is Rule 24 of the Federal Rules of Civil Procedure. Rule 24 governs intervention in federal cases, allowing parties to intervene when a party “claims an interest relating to the property or transaction that is the subject of the action . . . unless existing parties adequately represent that interest.” Fed. R. Civ. Pro. 24(a)(2) (emphasis added).
The NAACP respondents argue that the North Carolina Attorney General is the existing party who already adequately represents the state interest in defending the voter ID law. Their brief encourages the Court to look to the plain language of Rule 24, in addition to a Congressional statute which provides for intervention in actions “to which the United States or any agency, officer or employee thereof is not a party.” Brief for NAACP Respondents at 1, Berger v. North Carolina State Conf. NAACP, No. 21-248 (U.S. filed Feb. 9, 2022) (quoting 28 U.S.C. § 2403(b)). They note that the Court has previously recognized a presumption that a party adequately represents its own interests, and that presumption is at its “zenith for government officials like the Attorney General.” Brief for NAACP Respondents at 10. The respondents urge the Court to uphold the presumption of adequacy unless there is a showing of bad faith, collusion, or malfeasance—or risk a deluge of attempted interventions in the lower courts for reasons as minor as differing litigation strategies. See Brief for NAACP Respondents at 1.
The petitioners argue that they need not overcome a presumption of adequate representation because of a North Carolina state law that designates the North Carolina Speaker of the House and the President Pro Tempore as “necessary agents to defend state laws in certain categories of cases.” Brief for Petitioners at 16, Berger v. North Carolina State Conf. NAACP, No. 21-248 (U.S. filed Jan. 10, 2022). They argue that the only way to ensure that all of North Carolina’s interests in this litigation are adequately represented is to allow petitioners to intervene, and the Court should not apply Rule 24 in a way that conflicts with North Carolina state law. See Brief for Petitioners at 20–23. Ultimately, they argue for de novo review of the question of their intervention because “the district court abused any discretion it had by applying a presumption of adequate representation.” Brief for Petitioners at 17.
Reading between the lines, Berger is a partisan political battle being waged under the cover of the Rules of Civil Procedure. North Carolina is a state with a divided government—the executive branch is governed by a Democrat who campaigned against voter ID laws, while both houses of the state legislature are controlled by Republicans. The real argument of the petitioners is that the Attorney General will not zealously defend a state law that he is appointed to represent merely because it was enacted by the opposing party. In the respondents’ words, such an assertion is “insulting.” Brief for NAACP Respondents at 2.
The Supreme Court’s decision should help shed light on how Rule 24 intervention is to be interpreted in future cases and what constitutes adequate representation. A broad ruling favoring intervention could lead to long discovery battles by multiple parties on each side, all seeking to intervene, as the Respondents assert in their brief. On the other hand, it would also allow states to put forth partisan actors to defend their laws when they have a divided government, as the Petitioners seek to accomplish here. No matter the outcome, it will likely make for interesting civil procedure case law.
Morgan v. Sundance, Inc.
No. 21-328, 8th Cir.
Preview by Azad Niroomand, Online Editor
The common law of contracts allows for a party to waive their rights provided in a contract. Contractual waiver consists of “the intentional relinquishment or abandonment of a known right.” United States v. Olano, 507 U.S. 725, 733 (1993). The proliferation of arbitration agreements in contracts has presented courts with new questions about waiver and defenses to waiver.
In this case, the issue presented to the Court is, “Does the arbitration specific requirement that the proponent of a contractual waiver defense prove prejudice violate this Court’s instruction that lower courts must ‘place arbitration agreements on an equal footing with other contracts?’” Brief for Petitioner at i, Morgan v. Sundance, Inc. No. 21-328 (filed Dec. 30, 2021) (quoting AT&T Mobility LLC v. Concepcion, 563 U.S. 333, 339 (2011)).
This case arises from alleged violations of the Fair Labor Standards Act brought by the petitioner Robyn Morgan. Complaint ¶ 26. Morgan and other similarly situated individuals are employed by the Respondent Sundance, Inc, which owns more than 150 Taco Bell franchises. Id. ¶ 1. Petitioners allege that Sundance, Inc., illegally “shifted” their hours, meaning overtime hours were shifted to the next pay cycle to avoid records showing any employee worked more than 40 hours a week. Id. ¶ 15. They also claim that Sundance, Inc. required them to clock out and continue working in order to avoid paying any employee overtime rates. Id. ¶ 24.
Morgan then filed her complain in federal district court in Iowa, while other Sundance employees were bringing similar actions against them. Wood v. Sundance, Inc., No. 2:16-cv-13598 (E.D. Mich. Oct. 7, 2016). Sundance moved to dismiss the complaint as duplicative of the “Wood action” but the Southern District of Iowa denied that motion. The court stated that, because Morgan and other Sundance employees outside of Michigan, where the Wood action was filed, were unable to join that action, it was not duplicative. Morgan v. Sundance, Inc., No. 4:18-CV-316, 2019 WL 5089208, at *4 (S.D. Iowa Mar. 5, 2019). The case then proceeded to mediation, but, when that failed to resolve the matter, Sundance moved to compel individual arbitration of Morgan’s claims. Morgan v. Sundance, Inc., No. 4:18-CV-316-JAJ-HCA, 2019 WL 5089205, at *2–3 (N.D. Iowa June 28, 2019).
The District Court applied the three-part test established in Lewallen v. Green Tree Servicing, LLC, 487 F.3d 1085 (8th Cir. 2007), and determined that Sundance had waived its right to arbitration because (1) they knew of the existence of their right to arbitrate under the contract, (2) Sundance had acted inconsistently with that right by waiting eight months to invoke its right and failing to mention it in its answer, motion to dismiss, or discussions with opposing counsel, and (3) Morgan was prejudiced by “having to defend against Sundance’s motion to dismiss and by spending time preparing for a class wide mediation instead of individual arbitration.” Morgan, No. 4:18-CV-316-JAJ-HCA at *5–8.
On appeal, the eighth circuit reversed finding waiver lacking because of “the absence of a showing of prejudice to Morgan.” Morgan v. Sundance, Inc., 992 F.3d 711, 715 (8th Cir. 2021). The question now facing the court is “whether a party asserting waiver of the right to arbitrate through inconsistent litigation conduct must prove prejudice, and if so, how much.” Petition for Certiorari at 9.
The petitioner here, Robyn Morgan, argues that previous Supreme Court jurisprudence requires that arbitration agreements be treated equal to contracts, and contractual waiver of rights focuses solely on the conduct of waiving party without regard to their effects on others. Brief for Petitioner at 16. Petitioner points out that most states treat waiver as a unilateral act that does not require a showing of prejudice to the other party and that court shave consistently treated contractual wavier as distinct from other doctrines that require a showing of prejudice. Id. at 19, 23. Lastly, they argue that imposing a prejudice requirement and raising the threshold for showing wavier for arbitration agreements is contrary to the Federal Arbitration Act (“FAA”) and the jurisprudence of the Supreme Court. Id. at 32, 45.
Respondent argues that requiring waiver is more consistent with the goals of the FAA and that section 3 of the FAA resolves this issue. Brief for Respondent at 14, Morgan v. Sundance, Inc. No. 21-328 (filed Feb. 04, 2022). They also argue that Sundance’s delay in enforcing their arbitration rights should be governed by the frameworks of laches and estoppel, which do require a showing of prejudice, and not waiver. Id. at 32.
Resolution of this question has the potential to greatly impact labor contracts and the rights of parties subject to arbitration agreements.
March 22
Golan v. Saada
No. 20-1034, 2nd Cir.
Preview by Charlotte Cuccia, Online Editor
In Golan v. Saada, the Supreme Court will determine if district courts are required to consider ameliorative measures that would reduce the risk of a child’s return to their home country when that return has been found to pose a grave risk of harm to the child.
Under the Hague Convention on the Civil Aspects of International Child Abduction (“Convention”), if a child is wrongfully taken from their country of habitual residence, they must be returned to that country to resolve disputes of custody. Convention arts. 1, 3, 4, 12. The exception to this rule is if a court determines that there is a grave risk that returning the child would expose them to harm. Convention art. 13(b).
Petitioner Narkis Golan, a U.S. citizen, and Respondent Isacco Saada, an Italian citizen, married in 2015 and had one child together in 2016, referred to in court filings as “B.A.S.,” who is a dual citizen of the United States and Italy. Brief for Petitioner at 7, Golan v. Saada, No. 20-1034 (U.S. filed Jan. 19, 2022). Throughout their marriage, Saada frequently subjected Golan to domestic abuse, often in the presence of B.A.S. In 2018, Golan traveled to the United States with B.A.S for a wedding and alleges that Saada “threatened to kill [her] or permanently take B.A.S from her.” Id. at 3. Golan stayed in the United States with B.A.S in a domestic-violence shelter in New York.
Saada filed a petition seeking the return of his son to Italy under the Convention, and the United States District Court for the Eastern District of New York granted the petition. The district court determined that, because of the Saada’s history of domestic violence against Golan and the presence of B.A.S during much of the abuse, that returning B.A.S to Italy would subject him to a grave risk of harm. Id.
However, the district court granted Saada’s petition for return to Italy, despite this finding, after examining ameliorative measures that could be put in place to alleviate the risk. Brief for the United States as Amicus Curiae Supporting Vacatur at 7, Golan v. Saada, No. 20-1034 (U.S. filed Jan. 26, 2022). These measures included a protective order against Saada, court-ordered parenting classes and therapy, and mandating supervised visits between Saada and B.A.S. Id. The Second Circuit affirmed Saada’s petition for B.A.S’s return under these measures and “upheld the district court’s determination that there existed sufficiently guaranteed ameliorative measures that would remedy the grave risk of harm to B.A.S. upon his return to Italy.” Id. at 9.
Golan argues that consideration of these ameliorative measures is not required under the Convention, arguing first that the actual text of the Convention does not require consideration of these measures and that the mandatory consideration is inconsistent with the purposes and history of the Convention. Brief for Petitioner at 21, 23. The United States supports Golan’s argument, finding that the Second Circuit’s categorical rule is at odds with the State Department’s longstanding view which is that consideration may be “appropriate in individual cases but is not required across the board.” Brief for the United States at 10–11. Rather than require the district court to exhaust every possible ameliorative measure to secure a path of return, the United States argues that, after finding grave risk, court has discretion to order or deny return based on the individual case. Id. at 12. Saada, however, argues that consideration of ameliorative measures is consistent with the Convention’s presumption “that it is in the child’s best interest to have custody determinations made in the country of habitual residence.” Brief for Respondent at 12, Golan v. Saada, No. 20-1034 (U.S. filed Feb. 18, 2022).
This case has drawn the attention of those who appreciate the delicate and complex nature of domestic violence cases and child abduction cases. Various organizations who work with survivors and victims of domestic violence have filed amici briefs in favor of the Petitioner, while organizations who have filed briefs in support of the Respondent argue that the dangers of international abduction and wrongful removal of children should be reason enough for caution.
The Supreme Court will decide if ameliorative measures to reduce the risk of a child returning home must be considered by courts under the Hague Convention, which could have longstanding impacts in the ever-complicated intersection of domestic violence and child abduction, especially across international borders.
March 23
ZF Automotive US, Inc. v. Luxshare, Ltd.*
21-401. E.D. Mich. OT 2021
Preview by Yiho Kim, Online Editor
In ZF Automotive US, Inc. v. Luxshare, Ltd., the Court is set to resolve a circuit split and answer the statutory interpretation question of whether a private, non-governmental arbitral tribunal presiding over purely commercial matters between private parties qualifies as a “foreign or international tribunal” under 28 U.S.C. § 1782(a). Captioned “Assistance to foreign and international tribunals and to litigants before such tribunals,” Subsection 1782(a) authorizes a district court to compel a person or entity to produce evidence for use in a “proceeding in a foreign or international tribunal.” 28. U.S.C. § 1782(a).
Petitioner ZF Automotive US, Inc. (ZF) is a “Michigan-based automotive parts and manufacturer and indirect subsidiary of a German corporation headquartered in Germany.” Brief for Petitioners at 9, ZF Automotive US, Inc. v. Luxshare, Ltd., No. 21-401, (U.S. filed Jan. 24, 2022). In 2017, ZF sold two business units to Respondent Luxshare, a Chinese limited liability company based out of Hong Kong. Brief for Petitioners at 9. The parties agreed that all disputes arising out of the transaction would be subject to arbitration in Germany by the German Institution of Arbitration (DIS), a private, non-governmental arbitral body, in accordance with DIS’s Arbitration Rules. Brief for Petitioners at 9; Brief for Respondent at 4, ZF Automotive US, Inc. v. Luxshare, Ltd., No. 21-401, (U.S. filed Feb. 23, 2022). Luxshare later found out that Petitioners ZF and two of its officers had purposely hid material negative information that “inflated the purchase price by hundreds of millions of dollars.” Brief for Respondent at 4.
Planning to initiate arbitration proceedings under DIS, Luxshare sought evidence to prove fraud by Petitioners and filed a discovery application to the district court under Section 1782 in the Eastern District of Michigan. The district court ordered limited discovery to proceed based on Sixth Circuit precedent which held that a commercial arbitral body qualifies as a “foreign or international tribunal” under Section 1782—a view relied on by the Fourth Circuit in reaching the same conclusion. See Abdul Latif Jameel Transportation Co. v. FedEx Corp., 939 F.3d 710 (6th Cir. 2019); see also Servotronics, Inc. v. Boeing Co., 954 F.3d 209 (4th Cir. 2020). The Court granted certiorari after staying the district court’s orders. Brief for Petitioner at 13.
In their briefs, each party points to ordinary meaning of the words “foreign,” “international,” “tribunal,” and their combinations, as wells as various canons of statutory construction to argue its position. Brief for Petitioners at 3–5; Brief for Respondent 6–11. Echoing the Second, Fifth, and Seventh Circuits, ZF points to ordinary meaning, statutory context, and history in arguing that Section 1782 is limited only to arbitrations before foreign governmental entities and excludes private arbitrations. Brief for Petitioners at 15. On the other hand, Respondent Luxshare follows the Fourth and Sixth Circuits’ understanding and answers that statutory text, context, and structure, as well as legislative history confirms that Subsection 1782(a) encompasses foreign commercial arbitral tribunals, such as DIS. Brief for Respondent at 12, 31.
An interesting possible implication of the case is the potential role of corpus linguistics, an analytical tool that uses vast databases (or corpora) to determine how certain words or phrases were used at the time they were used in statutes. James C. Phillips & Jesse Egbert, A Corpus Linguistic Analysis of “Foreign Tribunal” 12, SSRN (2022), https://papers.ssrn.com/sol3/papers.cfm?abstract_id= 4052948. Using corpus linguistics, Phillips and Egbert—professors of law and applied linguistics, respectively—found that out of 259 instances the term “foreign tribunal” was used across “ordinary American English, U.S. Supreme Court opinions, federal court opinions, the U.S. Code, and U.S. legal scholarship,” there were only “three debatable instances” where the term was used in a “private/non-government-sense of ‘tribunal’” Id. at 25; Reply Brief for Petitioners at 5, ZF Automotive US, Inc. v. Luxshare, Ltd., No. 21-401, (U.S. filed Mar. 11, 2022).
Corpus linguistics has been referenced a handful of times by the Supreme Court, including in Muscarello v. U.S., 524 U.S. 125 (1998) and Facebook, Inc. v. Duguid, 141 S.Ct. 1163 (2021). However, it has never been formally used in an opinion. If the Court decides to rely on this analytical tool in reaching a decision, it may mark the Court’s dipping its proverbial toe in the waters of modern analytics.
†This case is consolidated with AlixPartners, LLC v. Fund for Protection of Investor Rights in Foreign States, which presents a similar but disparate issue of whether an investor-state arbitration conducted by a private body pursuant to an international treaty agreement constitutes an “international tribunal” under Subsection 1782(a). In re Fund for Protection of Investor Rights in Foreign States v. AlixPartners, LLC, No. 20-2653 (2d Cir. 2021).
