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Thursday, August 28, 2008

Why do courts keep getting this stuff wrong?

Before my current video evidence fascination, the focus of my procedure scholarship had been the distinction between subject matter jurisdiction and substantive merits in federal question cases. I have tried to construct arguments for clear distinctions between them, where jurisdiction should not be affected by the ultimate validity of the claim under substantive federal law. In particular, my argument was that merits (and not jurisdiction) turns on the question "who can sue who for what conduct and what remedy." We also can put it in Hohfeldian terms--merits alone turn on whether the applicable law imposes a duty on defendants and grants rights to plaintiffs as to some conduct. Thus, when a plaintiff's claim fails because the applicable federal law does not reach and regulate the actors and/or conduct at issue based on the facts and evidence adduced, that claim fails on its merits, not for want of subject matter jurisdiction.

So I continue to be disheartened by cases such as In re DRAM Antitrust Litigation from the Ninth Circuit, where the court found that the FTAIA was not satisfied in the factual situation at issue, then dismissed for lack of subject matter jurisdiction, rather than for failure to state a claim or summary judgment.

The Sherman Antitrust Act and the Foreign Trade Antitrust Improvements Act ("FTAIA") is a central example that I have used in several articles on this subject. The Sherman Act prohibits contracts in restraint of trade affecting commerce. Under the FTAIA (enacted in 1982), contracts and agreements in restraint of purely foreign trade are excluded from the Sherman Act's coverage (i.e., are not prohibited by the Sherman Act), unless they have a direct and foreseeable affect on non-foreign interstate commerce. So if a claim is brought based on restraint of foreign trade and the plaintiff cannot prove a direct and foreseeable affect on non-foreign interstate commerce, the plaintiff loses. But, and here is the key, the plaintiff loses because the substantive federal law was not violated by the conduct and actors at issue--the claim failed on the merits. The plaintiff could not sue this defendant for this conduct. The plaintiff had no right under substantive federal law to be free from purely foreign restraints of trade and the defendant had not duty under substantive federal law to refrain from conduct that imposed a purely foreign restraint of trade.

But the plaintiff does not lose because the court lacked subject matter jurisdiction, because the relevant jurisdictional statutes were satisfied. After all, the court had jurisdiction for any claims arising under the laws of the United States or, more particularly, claims arising under laws regulating commerce. This claim did arise under the Sherman Act, in that the plaintiff brought a claim into court seeking relief on a claim that existed by virtue of federal law and was made possible by federal law. That the claim failed under the statute (because some element was not satisfied on the facts) should not affect jurisdiction Indeed, if the failure of the plaintiff's claim deprives the court of jurisdiction in the type FTAIA case at issue here, then every failure of a federal statutory or constitutional claim must become a jurisdictional defeat--which no one ever has said is the case.

Interestingly, Judge Noonan concurred (agreeing to a jurisdictional dismissal), but captured the merits/jurisdiction line. He wrote "[I]s has been the judgment of Congress and the Supreme Court that the economic interests of consumers outside the United States are normally not something that American law is intended to protect." Exactly. Substantive federal antitrust law does not protect those economic interests--it does not grant consumers outside the U.S. rights against foreign conduct. This is all about the reach of substantive federal law; it has nothing to do with the adjudicative authority of federal courts.

It all seems so simple, but the courts keep missing it. Maybe that is how law professors stay in business.

Posted by Howard Wasserman on August 28, 2008 at 10:13 AM in Law and Politics | Permalink


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The most important practical difference is the jury right. Jurisdictional facts, if in dispute, are resolved by judges, while most merits facts (at least in actions for monetary relief) are resolved by the jury. The manner of litigating issues (which includes, but goes beyond, timing) is affected. Beyond that, this is largely about formalism and keeping distinct ideas and concepts distinct. People with more of a jurisprudential than I (notably Perry Dane of Rutgers) have done a good job explaining why it is a mistake to over-expand the concept of jurisdiction.

Posted by: Howard Wasserman | Aug 31, 2008 2:19:10 PM

I apologize for forgetting about this thread for a couple days. I like your analysis and find fascinating the philosophical distinction between subject matter and failure to state a claim. But I guess, to me, it is just a question of why it matters in a particular instance. In personal jurisdiction, the court focuses only on that until it is found or not found. The same can be true with certain types of immunity. Thus, the label can allow certain disputes to end more quickly where the court is focused solely on jurisdiction. Are there practical considerations that you find problematic in other scenarios?

Posted by: Gregory Klein | Aug 31, 2008 12:34:18 PM

Gregory: No, I believe (although I recognize that I do not have doctrine on my side on this) it best describes the relationship between a sovereign and those who encounter the sovereign in the real world and the question of whether the sovereign can be liable for the harms it causes in the real world--a merits question of who can sue whom for what conduct.

Posted by: Howard Wasserman | Aug 29, 2008 12:31:35 AM

Howard, What do you mean in the last sentence by "going to the identity of liable parties?" Doesn't subject matter jurisdiction best factually describe the relationship between a court and a sovereign? Do you view the statutory waivers of immunity the same as any other statute creating a cause of action?

Posted by: Gregory Klein | Aug 29, 2008 12:05:03 AM

The two areas I have/am focused on, besides antitrust, were 1) employment discrimination (SCOTUS just resolved the circuit split that the definition of employer is merits) and 2) the ministerial exemption to Title VII (current circuit split). But the issue arises under just about any federal law--an element gets labeled jurisdictional and it snowballs from there.

You are right about the FTCA--that is the one that keeps getting thrown at me and that clearly flies in the face of my normative arguments. The discretionary function exception is a good example of where they get confused; another is the question of whether the conduct was in the scope of the officer's employment (which unavoidably entails whether the officer actually committed the conduct at issue). Part of the problem with the FTCA is the way it is drafted--Congress made a category error in the way it wrote the statute, so courts find their hands tied. Another problem is the (I believe mistaken) conception of sovereign immunity as jurisdictional, when I believe it is better understood as going to the identity of liable parties.

Posted by: Howard Wasserman | Aug 28, 2008 1:08:01 PM

Howard, I wonder if you could comment on some other areas where this arises. In FTCA litigation, it is common for claims to be dismissed for lack of subject matter jurisdiction, even though that conclusion turns on the finding that the relevant agency conduct was "discretionary". And the FTCA only grants jurisdiction to hear claims regarding non-discretionary decisions.

I've always though this seemed like overkill. Basically, the plaintiff loses because the agency has not - under the FTCA - done anything wrongful. I point this out in class, but have never thought this circumlocution had broader significance.

If I'm not mistaken, some religious freedom cases have also been sent away on purportedly jurisdictional grounds, which seems similarly strange to me. And, some state sovereign immunity statutes work as do the FTCA. Perhaps readers can identify other examples.

If the remedy is described jurisdictionally, does this distinction matter? Thanks.

Posted by: Adam Scales | Aug 28, 2008 11:28:12 AM

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