Sixth Circuit Clarifies Where to Appeal in a Transferred CaseLast month, the Sixth Circuit subtly deepened a circuit split over a significant question of appellate jurisdiction within the federal courts: When a lawsuit begins in one U.S. district court but is transferred to a second district court within another federal circuit before reaching a final judgment, which court of appeals has jurisdiction to review the first district court’s interlocutory decisions?

In Kalama v. Matson Navigation Co., Inc., a panel of the Sixth Circuit answered: Appellate jurisdiction exists in the court of appeals encompassing the transferee district court, where the case reaches a final judgment.  The Kalama appeal arose out of convoluted multidistrict litigation.  The plaintiffs initially brought the underlying lawsuit in the Northern District of Ohio.  The action was eventually transferred to the Eastern District of Pennsylvania, which dismissed some, but not all, defendants from the lawsuit.  The Eastern District of Pennsylvania then re-transferred the case back to the Northern District of Ohio.  The case reached a final judgment when the Northern District of Ohio dismissed the remaining defendants.  Several plaintiffs then appealed only the Eastern District of Pennsylvania’s dismissal to the Sixth Circuit, which encompasses Ohio, but not Pennsylvania.

The Kalama appeal put the Sixth Circuit in the strange position of reviewing an order that arose in a district court outside of its territorial jurisdiction.  Such a situation arises infrequently for good reason.  Federal courts may only exercise jurisdiction to the extent authorized by Congress.  One such jurisdictional authorization, codified at 28 U.S.C. § 1294, provides that “appeals from reviewable decisions of the district . . . courts shall be taken . . . to the court of appeals for the circuit embracing the district.”  Under a straightforward reading of § 1294, the Eastern District of Pennsylvania’s decision should have been appealed to the Third Circuit, not the Sixth.

Yet the Sixth Circuit did not take that position in Kalama.  Instead, it held that it may review a non-final order issued by a district court outside of the Sixth Circuit if the case eventually reaches a final judgment within the Sixth Circuit.  Under the court’s reasoning, all previous non-final orders “merge” with the final judgment and become appealable in the court of appeals embracing the district court that issues the final judgment.  The Seventh, D.C., Fourth, and Second Circuits also follow this theory.

While this “merger” theory appears to contradict § 1294, in the Sixth Circuit’s opinion that is not so.  In Kalama, the court followed the D.C. Circuit by expressly adopting an interpretation of § 1294 that comports with the merger theory.  According to the Sixth Circuit, a “reviewable” decision is synonymous with an “appealable” decision.  A non-final order, such as the partial dismissal in Kalama, is not “reviewable”—that is, appealable—until the case reaches a final judgment.  Thus, under the Sixth Circuit’s interpretation, § 1294 authorizes appeal of a non-final order to the court of appeals embracing the district court that ends up reaching a final judgment.  In Kalama, that court was the Sixth Circuit.

The Tenth and Eleventh Circuits disagree.  Both have rejected the merger theory, and both hold that, under the plain language of § 1294, any decision arising in a district court within a sister court of appeals must be appealed to that court of appeals.  According to the Tenth and Eleventh Circuits, “reviewable” is not synonymous with “immediately appealable.”

Furthermore, neither court minds that this interpretation can practically leave a party without the opportunity to appeal a decision.  For example, imagine that you are representing a defendant in an action initially filed in Colorado (a Tenth Circuit state), but recently consolidated into multidistrict litigation in Alabama (an Eleventh Circuit state).  The Alabama district court denies your motion for summary judgment and refuses your request for the court to certify its decision for immediate review under 28 U.S.C. § 1292(b).  You have no right to appeal the district court’s interlocutory decision at this stage.  Next, the district court in Alabama re-transfers your case to the district court in Colorado for trial, where you lose.  Now, you would want to appeal the Alabama court’s initial denial of your motion for summary judgment, but the Tenth Circuit’s interpretation of § 1294 prevents it.  You are left without an avenue to appeal the decision.

Luckily for practitioners within the Sixth Circuit, including Tennessee, this conundrum should not arise under the rule announced in Kalama.  As long as a case reaches final judgment within the Sixth Circuit, any interlocutory decisions may safely be appealed to the Sixth Circuit.  However, practitioners should keep their guard up when a case is transferred out of the Sixth Circuit to the Tenth or Eleventh.  In that circumstance, it is prudent to make every effort available to get an unfavorable, interlocutory decision reviewed before transfer—through either Rule 54(b) or § 1292(b), or by seeking an extraordinary writ—because the opportunity may be lost post-transfer.

Is It Worth Fighting For (Recusal)?: The Tennessee Supreme Court Clarifies Judicial Canons on Personal Knowledge and Independent InvestigationsIn 2012, Jeanie Holsclaw filed an action against Ivy Hall Nursing Home, Inc. for retaliatory discharge.  Following several years of extensive discovery and the recusal of two trial judges, Ivy Hall sought to have a certified rehabilitation counselor examine Holsclaw.  At the hearing on Ivy Hall’s motion to examine Holsclaw, the judge informed the parties for the first time that she had called the director of the rehabilitation counselor program at the University of Tennessee to “understand what [a rehabilitation counselor] might or might not be able to testify to [based on] their background [and] education.”  Neither of the parties raised an objection at the hearing, but Ivy Hall filed a motion for the trial court judge to recuse herself after obtaining a copy of the transcript.  The trial court judge denied Ivy Hall’s motion to recuse, explaining that she had “done no investigation of [Ivy Hall’s] expert witness whatsoever” and that her “action would not lead a reasonable person to question [her] ability to be impartial.”

In a divided decision, the Tennessee Court of Appeals concluded that, based on Canons 2.11 and 2.9 of the Tennessee Code of Judicial Conduct, the trial court judge should have recused herself.  Specifically, the majority’s decision concluded that “even though [the court] f[ound] no malice in the trial judge’s well-meaning, but misguided action,” the personal knowledge gained from the extrajudicial conversation created an “appearance of impropriety,” thereby necessitating recusal.

In a per curiam opinion, the Tennessee Supreme Court reversed the Court of Appeals and addressed two important questions:  (1) What constitutes “personal knowledge” of a case under Canon 2.11?; and (2) At what point does a judge’s independent investigation create an “appearance of impropriety” whereby the “judge’s impartiality might reasonably be questioned”?

Relying primarily on a Minnesota Supreme Court decision, the Tennessee Supreme Court explained that “personal knowledge” is knowledge derived from “a close relationship between the judge and some substantive fact of a case,” such as where the judge knows of incriminating evidence against a particular defendant as a result of the judge’s role as a former prosecutor.  Conversely, “personal knowledge” does not include information a judge learns “in the course of her general judicial capacity.”  The Court indicated that the trial court judge here did not come close to having “personal knowledge” of the case because she “did not seek this information for the purpose of discrediting a party or a witness, or even for the purpose of ruling on whether to allow a particular certified rehabilitation counselor to testify as an expert.”  Instead, she contacted the director at the University of Tennessee to know “whether such an expert potentially would be able to provide information helpful to resolving the issues in the case and also because the trial judge was considering naming a court-appointed expert.”

The Court, however, found that the trial judge violated Canon 2.9 – which prohibits a judge from engaging in ex parte communications and independent investigations – by contacting a non-party, concerning a pending matter, and outside the presence of the parties.  But this does not end the inquiry for recusal.  Recusal is only required when “the trial judge’s impartiality might reasonably be questioned” – a question, according the Court, that the Court of Appeals failed to consider separately.  On this point, the Court found, “nothing in the record leads us to the conclusion that a person of ordinary prudence . . . would question whether [the trial judge] can be impartial in the proceedings.”  The Court also noted that, “importantly, the trial judge ultimately allowed [Ivy Hall’s] proposed expert to examine [Holsclaw] again.”

Writing the sole dissent, Justice Page departed with the decision only on the question of “appearance of impropriety.”  In particular, Justice Page concluded that because the trial judge’s ex parte communication “could have potential impact on the trial court’s decision-making process,” it “create[d] an appearance of impropriety.”  Justice Page further noted that the trial court judge’s decision to allow the expert’s examination of Holsclaw did not “alleviate the perception of impropriety created by her contacting an outside source ex parte and off the record.”

Takeaways

For judges, this decision is good news in the sense that it provides guidance on when recusal may or may not be appropriate.  It also suggests that trial court judges could avoid this whole problem by relying on the exception in Canon 2.9(A)(2) to ex parte communications with outside experts by providing the parties prior notice and a chance to respond to the advice received.  For litigants, this decision most likely forecloses potential avenues for filing a motion to recuse by setting a high bar for what constitutes “impartiality [that] might reasonably be questioned.”  Indeed, the Court found nothing to question the impartiality of the trial judge in this case.  Then again, if the ultimate goal is to have a case handled by an impartial judge, then this decision will most likely result in more transparency with judges disclosing to the parties any contemplated contact with experts in order to avoid any appearance of impartiality.

Edmund SauerAlthough Tennessee appellate decisions are readily available, information about how those decisions will affect businesses, legal practice, and people in the state is scarce. We are pleased to introduce our new blog to help fill that information gap — Tennessee Appellate Review. By providing commentary and insights on federal and state appellate news and developments in Tennessee, we aim to make the Tennessee Appellate Review blog a helpful resource for our clients and the Tennessee legal community.

Bradley’s Tennessee Appellate Team has extensive experience handling hundreds of appeals in federal and state appellate courts. Together, we will analyze important pending cases and appellate decisions and assess their importance.

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Bad News/Good News: The Courts Don’t Care About Your SecretsIt used to be fairly simply to share a secret with a federal court in Tennessee by filing a sensitive document “under seal.” It isn’t anymore. The courts don’t care about keeping your secrets, at least not as much as they care about preserving public access to the courts.

Before a recent trio of Sixth Circuit opinions, a motion to file sensitive business information “under seal” might only involve a single page or even a single sentence citing an agreement between the parties. When used in moderation (and even when not used in moderation), those perfunctory motions were routinely granted by the courts. As a result, many cases went forward with significant documents that were available to the parties and the court, but not the public. From the perspective of litigants and trial courts, it was easy and efficient. But according to the Sixth Circuit, it was wrong.

Last summer, starting with Shane Group, Inc. v. Blue Cross Blue Shield of Michigan, the Sixth Circuit reminded the lower courts that only a few narrow categories of information—true trade secrets, information covered by a recognized privilege, and information protected by statute (e.g., taxpayer IDs and protected health information)—are entitled to a judicial seal. Otherwise, the public courts are just that: public. The substantive standards in Shane Group are nothing new—they come directly from a 1983 decision, Brown & Williamson Tobacco Corp. v. FTC —but the renewed emphasis still represents a fundamental change to the practice of Tennessee’s federal courts.

The Sixth Circuit added new procedural requirements to reinforce the old substantive standard, and they’re working. Any order sealing records must explain how the document in question satisfies Shane Group. So, moving forward, any litigant seeking a seal must do that legal and factual work for the district court. And, looking backward, every generic, one-page order is vulnerable. The Sixth Circuit has vacated those orders on its own when it encounters them on appeal, and district courts have been issuing “show cause” orders requiring parties to justify pre-Shane Group seals as a part of routine case management.

The bad news for litigants is this: The courts don’t care about protecting your run-of-the-mill secrets. So, if you have documents under seal in federal courts in Tennessee (or elsewhere in the Sixth Circuit), don’t expect them to stay that way.

The good news is the same: The courts don’t care about revealing your secrets either. Accordingly, now that they cannot promise to keep your secrets, district judges and magistrate judges seem open to working with litigants to keep unnecessary secrets out of the courts’ records to begin with. Generally, the courts are happy to help the parties find ways to document the relevant facts while leaving voluminous, largely irrelevant, and commercially sensitive documents to the side.

Everyone has secrets. If yours are under seal in the federal courts, you should be preparing a Shane Group strategy now. Your show cause order is coming. If your secrets aren’t under seal yet, you need to have a Shane Group strategy for discovery and motion practice. We’ll address both of those topics in future posts.

Important Changes to the Tennessee Rules of Appellate Procedure: Six Things You Need to KnowEffective July 1, 2017, the Tennessee Rules of Appellate Procedure have changed.  Many of these changes were implemented to reflect the appellate court clerk’s implementation of electronic filing this year.  Here’s what you need to know:

1. The notice of appeal now must be filed with the Court of Appeals: Rules 3 and 4 now require parties to file a timely notice of appeal in the appellate court, replacing the long-standing rule that the notice is filed in the trial court.  As a result, the notice of appeal now must include a list of the parties upon whom notice of docketing of appeal is required by Rule 5.  Additionally, the clerk of the appellate clerk will now send a copy of all filed notices of appeal to the trial court and trial court’s clerk.

Transitional Period: Recognizing that practitioners and pro se parties will need time to adjust to this rule change, the Rules provide a one-year transitional period, to expire on June 29, 2018.  During this period, if a party attempts to file a notice of appeal with the trial court, the trial court clerk will immediately notify the party that the notice must be filed with the appellate court clerk.  If the filing would have been timely if filed correctly, the party will have 20 additional days to file the notice with the appellate court clerk.  If the notice is filed within that period, it will still be considered timely.

2. Fees for appeal are due when the notice of appeal is filed: Under the new Rule 6, when the appellant files a notice of appeal “or other initiating document,” the appellant must (1) pay the appellate court’s taxes and fees, (2) establish an exemption, or (3) apply for or prove indigency under Rule 18.  If an appellant’s appeal is dismissed and another party wishes to litigate appellate issues in the same case, that party must also comply with the rules for payment of fees and taxes.

The changes to the rule also apply to interlocutory and extraordinary appeals and appeals from administrative agencies.

All references to bonds for costs on appeal, a mainstay of the old rule, have been removed.  The rule change, however, does not relieve an appellant of its responsibility to pay fees to the trial court clerk, including statutory fees due to the clerk for preparation of the record.

3. The Rules now explicitly state the appellate court’s authority to designate the title given to the appellate action: As previously, the default title for the appellate action will be the one given in the trial court, unless that title did not include the appellant’s name (Tenn. R. App. P. 5(c)).  In that case, the name of the party, identified as appellant, is to be added to the title unless otherwise directed by the court.

4. An application for an interlocutory or extraordinary appeal now must contain an appendix: To facilitate efficient review, Rule 9(d) now requires that any application for an interlocutory appeal be accompanied by an appendix containing the order appealed from, the trial court’s statement of reasons, and other necessary portions of the record.  Rule 10(c) similarly requires that an application for an extraordinary appeal contain an appendix with copies of any order or opinion relevant to the questions presented in the application, any supporting affidavits, and other necessary parts of the record.  For either type of application, the statement of facts must include “appropriate references to the documents contained in the appendix.”

Any other party that files an answer in opposition to either type of application must file its own appendix if there are other parts of the record it desires the appellate court to consider.  The answer’s statement of facts may reference either party’s appendix.  As previously, another party may file an answer to an application for interlocutory appeal as of right within 10 days of the application being filed, but other parties must wait for the court’s invitation to file an answer to an application for an extraordinary appeal.

5. An application for permission to appeal to the Tennessee Supreme Court must have appropriate references to the record: Like the above amendments to Rules 9 and 10, the Advisory Committee intended that this would assist the appellate courts in efficiently reviewing applications.  The requirement of appropriate references extends to both the application and answer.  The provision concerning appeal bonds has been repealed.

6. The length of facsimile filings has been increased from 10 to 50 pages. See Tenn. R. App. P. 20(A)(b)(6).

Sixth Circuit Puts Brakes on Pleading RequirementsUnless you have been under a rock for the past couple of years—or just actively avoid federal court—you are well aware of the impact of Iqbal and Twombly on pleading a cause of action in federal court. Depending on which side of a case you find yourself, you may believe that those decisions ask too much from plaintiffs at the beginning of the case, just the right amount, or even possibly too little. Regardless of where you find yourself in that debate, there is no doubt that those decisions raised the bar for pleading. Thus, we all stop and take notice when an appellate court warns that a district court has demanded too much from a plaintiff. That is exactly what happened in a recent decision by the Sixth Circuit.

In Jackson v. Ford Motor Co., the plaintiff and her husband were traveling down U.S. Highway 70 when the couple lost control of their 2012 Ford Focus. The wife survived the crash, but the husband did not. The plaintiff brought suit against Ford, alleging a defect in the vehicle’s “Electronic Power Assisted Steering” (“EPAS”) system. Ford ultimately moved to dismiss, and the district court granted Ford’s motion.

The issue before the Sixth Circuit was simple: Did the plaintiff allege sufficient facts to establish proximate cause? In short, a unanimous panel found that the plaintiff did. The crux of the decision fell on two of the three factors required for establishing proximate cause in a products liability case—namely, was the alleged defect a substantial factor in causing the accident and was the accident reasonably foreseeable. What is particularly interesting is that plaintiff satisfied the substantial-factor element based on the “apparent litany of other accidents identified by [the plaintiff] where the EPAS system allegedly failed” and the alleged “dart[ing] [of the vehicle] left across the center line into oncoming traffic.” The court, likewise, found very few allegations necessary to satisfy the second foreseeability prong, relying mostly on allegations concerning potentially defective components of the EPAS system.

This decision could be dismissed as a niche matter involving causation for products liability cases in Tennessee, or part of the line of cases specific to EPAS system litigation. However, I submit that such a narrow view would be a mistake.  Indeed, the court noted early on that it had “followed the standard set forth in Iqbal and Twombly in other products liability cases.” Rather, I think that the court made its intention quite clear that “causal weaknesses will more often be fodder for a summary-judgment motion” than a motion to dismiss.

The takeaway from Jackson probably will not be clear for a while. However, I think it is a fair assumption that Jackson might start appearing in responses to motions to dismiss, especially in products liability cases. The real question is whether this decision will have broader implications in terms of pleading causation. Needless to say, Jackson is a case to watch.

Tennessee Supreme Court Lowers the Bar on Collateral EstoppelIn Bowen ex rel. John Doe v. Arnold, the Tennessee Supreme Court abandoned the traditional mutuality requirement for both offensive and defensive collateral estoppel, removing one traditional hurdle for parties seeking to assert the doctrine.

The plaintiff brought the lawsuit on behalf of her young son after he was molested while participating in a mentorship program sponsored by the Boys and Girls Club of Middle Tennessee in partnership with Big Brothers Big Sisters of Tennessee. A jury convicted the child’s mentor, William Arnold, of three counts of rape of a child. The plaintiff brought a civil suit against Mr. Arnold and the sponsoring organizations.

Following Mr. Arnold’s criminal conviction, the plaintiff filed a motion for partial summary judgment against Mr. Arnold asserting that he was collaterally estopped from relitigating in the civil suit “whether he raped and sexually battered” the child. Mr. Arnold argued, among other things, that he should not be estopped from relitigating that issue because plaintiff had not satisfied the strict mutuality requirement of collateral estoppel. Under this requirement, a party can only assert collateral estoppel if they were a party to the first action or in privity with the party in the first action. Mr. Arnold argued that because the plaintiff was not a party to the criminal suit and was not in privity with the state of Tennessee, the strict mutuality requirement prevented the application of collateral estoppel in this case.

The trial court disagreed with Mr. Arnold. The trial court granted the plaintiff’s motion for partial summary judgment and concluded that the plaintiff was in privity with the state of Tennessee. The trial court also granted Mr. Arnold permission to seek an interlocutory appeal. The Court of Appeals, however, declined his application. Mr. Arnold subsequently filed an application to appeal to the Tennessee Supreme Court. The court granted the application in order to “determine whether the mutuality requirement should be abolished or modified in Tennessee.”

After examining the history of the doctrine as well as decisions from other jurisdictions, including two United States Supreme Court cases rejecting the mutuality requirement for both offensive and defensive collateral estoppel, the court joined the majority of jurisdictions in rejecting the strict mutuality requirement because “the traditional mutuality requirement has outlived its usefulness and should be abandoned.”

Going forward, the court concluded that when considering whether to apply offensive or defense collateral estoppel in a particular case, Tennessee judges should follow the general approach adopted by section 29 of the Restatement (Second) of Judgments. Section 29 generally precludes parties from relitigating previously decided issues as long as the party against whom collateral estoppel is asserted had a full and fair opportunity to litigate the issue in the first action or some other circumstance justifies providing the party with a second opportunity to relitigate the issue. Applying these factors to the case at bar, the court held that Mr. Arnold should be collaterally estopped from relitigating the underlying criminal conduct.

By abolishing the mutuality requirement, the court made it significantly easier for parties seeking to assert collateral estoppel against other parties. Under the flexible restatement approach that is now the law in Tennessee, courts will have considerable discretion in determining whether non-mutual collateral estoppel should apply in a particular case. Parties seeking to assert collateral estoppel against another will now only have to show that the party had a full and fair opportunity to litigate the issue in a prior proceeding.