Choosing to file a case in state or federal court is one of the first and most important decisions a litigator makes. The forum will determine the rules lawyers must follow and the way the case will be treated by the court. Bringing a case in the wrong forum can have serious repercussions for the lawyer and the client.
Wisconsin Law Journal editor Tony Anderson met with a panel of seasoned litigators, a federal judge and a UW Law professor to discuss what lawyers need to think about when deciding to handle a case in state or federal court. What follows is part one of their roundtable talk.
|Left to Right: Janet L. Heins, Heins Law Office LLC; John D. Finerty Jr., Michael Best & Friedrich LLP; Ann Althouse, UW Law School; Nora M. Platt, Quarles & Brady LLP; Paul J. Scoptur, Aiken & Scoptur SC; Hon. William C. Griesbach, U.S. District Court, Eastern District of Wisconsin|
WISCONSIN LAW JOURNAL: One of the issues that arose earlier in our discussion had to do with the way the Seventh Circuit handles diversity jurisdiction. About a year ago the Seventh Circuit, in Belleville Catering v. Champaign Market Place, really hammered the attorneys for not bringing the case to the appropriate venue. How is that affecting the way that cases are being brought?
JOHN D. FINERTY JR.: I think there’s a long line of examples from the Seventh Circuit in cases that involve the same type of approach that the Seventh Circuit takes in dealing with cases that shouldn’t be in federal court, not just the case you mentioned. There’s another case that came out of Indiana or the Central District of Illinois that involved a class action wage claim. And Judge (Frank) Easterbrook dismissed the claim, but made the attorneys litigate it back in state court on remand pro-bono.
Those are good hammers for the court to use. I suspect we’ll continue to see cases like that come out of the Seventh Circuit. Lawyers like us who practice in the areas of employment law will see the employment case. But general practitioners may not see it and may still think that a class action theory like that would work well.
Those of us, who have read Judge Easterbrook and Judge (Richard) Posner’s decisions on jurisdictional issues and diversity in particular, know that. Hopefully, we’re not going to make those same mistakes. But there will come a lawyer who’s been practicing in state court and winds up in federal court or for some reason in unfamiliar territory, who may be an otherwise brilliant lawyer, but may not have known about that case and will get stung again.
Hon. William C. Griesbach
The Hon. William C. Griesbach has served as a U.S. District Court judge since his appointment in 2002. Prior to that, he spent seven years on the Brown County Circuit Court bench. A 1979 Marquette University Law School graduate, he also clerked for state Supreme Court Chief Justice Bruce Beilfuss, served as a staff attorney for the 7th Circuit, practiced civil litigation and served as an assistant district attorney.
JANET L. HEINS: I think that sort of speaks to another issue that I’ve been thinking about. There has to be a lot more specialization nowadays, not just in the subject matter area that you practice in, but also in whether you predominantly practice in state or federal court. The systems are so different, both in their rules and in how they administer them, that, if you’re going to practice in federal court, you have to understand fully the rules.
You have to have read all of these cases, and you have to have a healthy fear of Judges Posner and Easterbrook in order to properly represent your clients in that forum. Attorneys really do need to put more emphasis on becoming thoroughly familiar with the particular forum that they’re in.
FINERTY: I think that’s a great point, especially in specialization. One lawyer who I used to work with who I consider a bit of a mentor once told me, "So you want to be a trial lawyer. You’re going to have to learn the Federal Rules of Civil Procedure, the Federal Rules of Appellate Procedure, the local rules for the Eastern District, the state statutes, the state appellate rules, the Supreme Court rules. Then you’re going to have to read every case that’s ever interpreted them and then start working on multidistrict rules, expert witness rules, et cetera, et cetera."
That’s when I decided I’d better get reading. But other attorneys want to litigate occasionally, or they want to be a trial lawyer who tries one or two cases and then moves on. That’s an increasingly risky approach to your career because you may be the subject of a decision someday that other lawyers read.
PAUL J. SCOPTUR: I recently had a case in federal court in Baltimore. But the rules in Baltimore were pretty much different than the rules in the Eastern District of Wisconsin in terms of filings, in terms of disclosures, and things like that. So, like you say, John, you’d better know the rules and you better know where you are. If you’re outside of Wisconsin, or you’re outside of the Seventh Circuit, you have to familiarize yourself with that set of rules.
WLJ: In the Belleville case, one of the other factors was the determination that an LLC must be treated like a partnership rather than a corporation. What impact does that have?
NORA M. PLATT: The impact is you better be darn careful. If you’re considering removing a case, you need to know who your client is, who the other parties are, and you need to examine the jurisdictional basis for diversity jurisdiction. It can’t be a knee jerk. You need to know what you’re doing, because somebody down the line is going to analyze this. And the last thing you want is to have Judge Easterbrook tell you, you screwed up.
John D. Finerty Jr.
John D. Finerty Jr. is a trial lawyer and partner in the Litigation Practice Group at Michael Best & Friedrich LLP in Milwaukee. His areas of experience include complex litigation involving corporate, environmental, tax, labor and employment matters. He graduated from Marquette University Law School in 1992 and received his M.A. in Economics from UWM in 1999.
HON. WILLIAM C. GRIESBACH: Judges read these decisions too, and they don’t want to be the judge who presided over a trial that went all the way and then they discovered there was no jurisdiction. So when I see LLC in a caption and it’s a diversity case, the next thing that should go out from me is a request of whoever represents that party asking where the members of this LLC are, in what states are they citizens, do we have complete diversity here?
Those cases are wonderful in the sense that they certainly teach a lesson. They teach a lesson and underline it and emphasize it several times, so hopefully it is not likely to happen again.
FINERTY: It certainly seemed like the parties in the case, because they didn’t disclose LLC members and then eventually there was a trust involved and they didn’t want to disclose the trust beneficiaries was there something that they didn’t want the public to know about who might have been the beneficiary of the trust or who might have been a member in an LLC? In a corporation, you can have many shareholders and you don’t need to make those types of disclosures.
WLJ: How do you handle that when you’re defending somebody?
FINERTY: You’re going to have to prepare them that, if they’re an LLC and the tack we’re taking is diversity jurisdiction, this is going to be a matter of public record.
People like Rick Romell from the Milwaukee Journal Sentinel are going to be over at the courthouse poring through the files when there’s a new case filed. And if there’s anything interesting, you’d better tell me now.
PLATT: I would tend to agree with John that you have to know your client. You have to trust your client to tell you the facts, and you need to know what the story is with the other parties.
WLJ: Early on, John was talking about lawyers trying to shoehorn cases by reaching that $75,000 mark. When you’re starting out in a case, how do you know what the cost is going to be? And how do you know what things you can include to get to that dollar amount?
FINERTY: I think the case law is fairly well enough developed that you know what items go into the jurisdictional calculations and which ones don’t. First, you look to see if there’s a good faith amount put in the complaint. In a lot of personal injury cases in state court, that’s not going to be the case. Because generally there is an amount alleged due that will be determined at trial as opposed to a specific amount.
GRIESBACH: The other thing you sometimes see is … the nondiverse defendant. You look for the local defendant so you can avoid removal and diversity jurisdiction.
Janet L. Heins
Janet L. Heins has a solo practice in Mequon representing plaintiffs in employment matters. She graduated from the University of Wisconsin Law School in 1991. Heins served on the board of directors for the Association for Women Lawyers and a co-chair of the Wisconsin Employment Lawyers Association.
It’s fine to do that as long as you have a legitimate claim against that nondiverse defendant. Sometimes you see the defense of a fraudulent joinder raised where they’ll seek to remove anyhow and argue that this is a fraudulent joinder of a local defendant in an effort to defeat federal jurisdiction. That’s more likely to occur than a plaintiff exaggerating damages in an effort to get into federal court.
HEINS: In terms of diversity jurisdiction, it’s not even just at the time the case is filed. I had a case that I wanted to keep in state court. And shortly after the case was filed one of the individual defendants moved to another state, which gave the defense complete diversity. So then they were able to remove it. It’s something you have to look at throughout the case.
ANN ALTHOUSE: Don’t you judge it on the day that the case is filed?
FINERTY: No. You have one year.
HEINS: Right. And this occurred like within a month after the case was filed. They created diversity jurisdiction.
ALTHOUSE: That doesn’t sound right to me.
GRIESBACH: I thought it was determined as of the date of filing.
ALTHOUSE: I don’t think you have the option to move.
GRIESBACH: Otherwise, there would be a lot more movement.
HEINS: It may just be a quirk of my particular case.
WLJ: What about differences in the way that discovery is handled between the state and federal courts? Is that something that is a consideration?
PLATT: My experience has been and this, again, goes back to, I think, the more formalistic application of the rules in federal court that people tend to behave much better during discovery in federal court than my experience has been in state court. In state court cases, I routinely have situations where the other side simply fails to respond to discovery demands.
If you go to the judge after a couple of weeks, or a month, or even a couple of months of chasing and calling, the judge is still going to want you to go back and try to work it out. My experience has been that the state court judges are very reluctant to get involved in discovery disputes.
Paul J. Scoptur
Paul J. Scoptur, of Aiken & Scoptur SC in Milwaukee, has been a civil trial lawyer representing plaintiffs since graduating from Marquette University Law School in 1978. Scoptur is a long-time Wisconsin Academy of Trial Lawyers board member. He serves as an adjunct professor of law at Marquette University law School and has taught at the University of Wisconsin Law School.
Whereas, in federal court, the rules are stricter. You have initial disclosures that are required under Rule 26. Therefore, I think more information gets put on the table in the first place. The litigants generally have a healthy respect for what may happen in the event of a motion to compel. It seems to me that people try harder to avoid those motions and to work together and to meet deadlines, and it just results in a cleaner process.
The federal rules have, effectively, a presumption that, if you bring a motion to compel and it’s granted, the court should award fees and costs. I’ve seen that happen in some cases that I’ve been part of where, once the judge grants your motion, the other side has a pretty high duty to show that there was some really good reason why they didn’t produce the discovery.
WLJ: Earlier, we mentioned the differences between Daubert and Frye. Let’s elaborate on that.
SCOPTUR: Daubert is much more restrictive in terms of expert testimony. And I think the defense is using actually, some plaintiffs are using Daubert, too as a tool with experts. I think that Daubert is being used very effectively by the defense bar in terms of blocking experts.
Whereas, if you’re going to take the Frye rule or the state court rule, basically the judge is the gatekeeper. If it’s going to help the jury, generally speaking the judge will allow the testimony. From a plaintiff’s perspective, it’s easier to get an expert testimony in under the Frye test as opposed to the Daubert test.
Recently, in Wisconsin, there was a bill that was in front of the Legislature to impose the Daubert standard here in the state courts, and that wasn’t going anywhere. But in federal court it’s a problem.
GRIESBACH: The Daubert rule does add another procedural obstacle to a plaintiff usually getting their case to the jury. Even if you prevail on the Daubert hearing, you’ve now had to go through perhaps a motion hearing, perhaps an evidentiary hearing, and incur the expense, the time, the effort and the concern about whether you’re going to prevail or not in getting that expert in front of the jury.
The Wisconsin rule is much more relaxed. Almost anyone’s an expert. It’s not that general, but you have a much wider range of experts and a much lower threshold under 807.02 than you do under Rule 702.
PLATT: I spoke a little bit to my preference as to the use of Daubert in the federal courts previously. The Frye rule is not a bad thing when you look at it in the abstract. The standard under Frye is a theory generally accepted in the community, which is not all that different from the Daubert standard, if you look at them just on their faces. It’s all in the application.
Ann Althouse is a professor at the University of Wisconsin Law School. She received her J.D. from New York University School of Law in 1981. Her academic interests include constitutional law, federalism, and the jurisdiction of courts. Prior to joining the UW Law School faculty, she clerked for a U.S. District Court judge and practiced litigation.
The case law in Wisconsin is pretty thin if you’re trying to get an expert excluded. You basically have to have an expert who is literally a bozo in order to keep him out.
Even then, sometimes they still get to testify. So my strong preference if it’s going to be an expert-intensive case is to have the advantage of being able to test the experts using the Daubert standards.
GRIESBACH: A trial judge will have a lot more discretion in the state system. The danger is keeping the expert out in the state system probably more than allowing the expert testimony in. The state system relies much more on cross-examination and the common sense of the jury to sort through what the federal system refers to as junk science or bad experts. And Daubert clearly expresses a preference for the court performing a more exacting scrutiny of expert testimony before it’s placed in front of the jury.
SCOPTUR: I have a question. It’s something that I’ve seen much more frequently lately, and I wonder what all your experiences are. When Wisconsin state courts went to the mediation systems, the judges basically got out of the settlement or mediation discussions.
In the four or five most recent experiences I’ve had in federal court, the judge has gotten the federal magistrate involved. I had this case in Baltimore if you all remember the water taxi that tipped over in the harbor I represented one of the families that lost a daughter.
We had a mediation with the federal magistrate that lasted from 9:00 in the morning till 3:30 in the morning the next day. It was a 16-hour mediation straight through. We got the case resolved, and the magistrate really did a great job.
I see the federal courts being much more hands-on mediation-oriented as opposed to the state court judges who really don’t get involved in it anymore, unlike the old days. How do you all see that?
HEINS: I’d say that’s very true. I’ve had a lot of good luck with the three magistrate judges we have here in the Eastern District mediating cases. The additional benefit to the litigants in the federal court mediation process through use of a magistrate is that it’s at no charge to the parties. Whereas, in the state court system, the parties are on their own to find a mediator and pay them their hourly rate, which can be a significant disincentive for the parties to mediate.
Another advantage to either the judge or the magistrate judge doing the mediation in federal court is that clients have the opportunity to tell their side of the story to a judge. So that is a significant benefit to the parties so that they feel that they got their day in court, whether or not they actually had to go through the whole process or were able to resolve it through mediation.
GRIESBACH: That’s another change that I noticed in the federal system mediation is built right into the system. The magistrate judges in the Eastern District are trained mediators, and they’re available without cost. I usually offer that at the scheduling conference. If both parties believe that mediation is appropriate, we do have a magistrate judge assigned to the case. I enter an order referring the case to the magistrate judge if you’re interested.
But I was not a settling judge when I was in state court, and I’m not at federal court either for a couple of reasons. By the time I took the bench in state court and still in federal court, mediation had become the norm. Most cases went through mediation before the parties were at a pretrial with me. By that time, it seems to me they’ve exhausted their efforts.
Nora M. Platt
Nora M. Platt’s litigation practice at Quarles & Brady LLP includes defense of toxic tort, environmental, product liability and general commercial matters. Platt graduated magna cum laude from Marquette University Law School in 1992. She is a member of the ABA’s Litigation, Liability Litigation, and Tort and Insurance Practice sections.
Second, I think to be the kind of settler who calls up the attorneys and says "We’re going to settle this case; I know what it’s worth; this is what it’s worth, and this is what you’ll pay," it seems to me is presumptuous on my part. Some judges can pull it off.
For those reasons, pretrial conferences in my court were simply, "Okay, let’s tend to the housekeeping matters, any issues anyone anticipates, how long a trial, what kind of voir dire, those types of issues."
WLJ: I’d like to go around the table and just ask you if you have final thoughts.
ALTHOUSE: I talk to students a lot about making good strategic decisions, and they don’t always get to talk to lawyers about it. I’m interested in hearing from you. I would ask you what you feel students are missing when they show up and start to practice and what misperceptions they get in law school.
HEINS: My area in particular is so dynamic and so changing that I think the most important thing for people to keep in mind is that they have to be very careful about keeping up to date, not only in the rules and the particularities of the courts as we’ve been discussing, but also in the subject area of the law. If we had this discussion once a year for the next 10 years, people’s answers would change dramatically over that time.
The strategic choice of state versus federal court is always going to depend on what your facts are, who your parties are, what your expertise is. That changes over time so that you just have to be keeping yourself up to date and be apprised of all the new developments and try to make the very best choice you can for that client at that time.
PLATT: Whether you’re choosing state court or federal court, or whether you don’t have a choice in the matter, you can’t go wrong if you know the rules and respect the rules and play by the rules.
There’s been some talk here today about state court being looser in its application of the rules and federal court being stricter. And while that is true as a general proposition, I think that new lawyers are going to gain respect much more quickly if they play within the rules rather than trying to see how far that they can stretch them.
SCOPTUR: I’m going to put my law professor hat on because I teach at the law school, too. The one thing I really try to tell my students is the practical aspects. You can have all the theory, you can have all the book knowledge in the world, but you have to know the rules. You have to know the practicalities of the rules. You have to know how you apply those rules in practice.
A lot of times it’s common sense. But you better know what rules you’re playing under. You better be able to follow those rules, and you better use the common sense and the practicalities as opposed to all the book smarts and the theory stuff that’s out there.
FINERTY: It seems as though the art of pleading, the study of removal issues and jurisdiction has almost become a subspecialty in itself. Every law firm seems to have one or two people who, whenever there’s a removal question or a jurisdiction question, they’re the go-to lawyers because they’ve got a file of removal petitions that they’ve done or cases that they’ve studied or law review articles that they’ve written.
I think that’s a tremendously important area of the law because it gets to the end game of the case. That is one of the pieces of advice that they teach in law school about how to prepare for trial is you write your closing argument first. That gives you the theme of the trial. It gives you the summary of your evidence, and then you build from that.
Oftentimes, we teach trial lawyers in our firm that you can write your closing argument when you receive the complaint. Picture what the case is going to be about.
Picture what the last paragraph is that you’re going to read to the jury from your closing argument, or the last 10 sentences you’re going to give t
o the jury in your closing argument, then work backwards from there.
Do you want to be in federal court? Do you want to be in state court? Do you want a lot of discovery? Do you not care about discovery? Do you have experts? Are experts unimportant? Do you need an expert to establish an element of the claim and if you lose a Daubert hearing, you’re out? Those are all of the types of issues that you begin to think about.
GRIESBACH: This may be just echoing what others have said. But preparation is the important thing. When you’re talking about starting a case, before you even write that closing argument, you want to look at the jury instruction on the kind of claim you are bringing. Then you want to envision where you have to go to be able to establish those elements, what are the bricks you need.
When I say "preparation," that means not only knowing the substantive law you have to know those procedural rules, so that you can do what you want to do. Also, you need to anticipate what are going to be the objections, what are going to be the roadblocks, and be prepared to address those as well.
You might be able to decide very early on that this case is going to end up in federal court there’s no other way around it. Then you’re going to really want to concentrate on what the rules are, making sure you are familiar with them.
Thank you to Gramann Reporting Limited for sponsoring this roundtable session. Gramann provided the services of Bobbi Peterson, RPR, to take down and transcribe the session. This article was edited for grammar, content and space.