Posts categorized as "Motions to Dismiss"

What do courts mean by ripeness and mootness?

When courts talk about ripeness and mootness they are referring to whether it is too early (the case is not yet ripe) or too late (the case is moot) for courts to decide the case.  If a case is ripe the court is saying it is the right time to decide the case.  If you look at the U.S. Constitution you will see that federal courts can only decide actual "cases and controversies" - - when a case is ripe and we have the right parties then the case is an actual case or controversy.  The basic principle is that courts should issue decisions that will affect the parties.  

Courts should not issue hypothetical decisions as to what should happen if certain events were to occur in the future or hypothetical decisions as to what should have happened in the past.

Here is an example of where a case is not yet ripe.  Let's say a plaintiff wants to build a store on a certain piece of property.  But the city in which the plaintiff wants to build the store must first decide whether to allow the plaintiff to build the store or not.  In October the plaintiff learns that the city will probably reject his application.  The city will issue its final decision in November.  Can the plaintiff sue the city in October?  Probably not.  The case is not ripe because the city has not issued its final decision.  The plaintiff did not suffer any harm yet and is only predicting that he will suffer some harm in the future.

Mootness is where the court is not in a position to provide any relief - - it's too late.  This can happen if a law changes or if there is a change in the parties' status.  A famous example of a case that the Supreme Court declared moot was where a plaintiff sued after he was denied admission to a law school.  Later he was admitted to the law school.  When the case came to the Supreme Court the plaintiff was already finishing his final year of law school.  The Supreme Court said it could not decide the case because the case was moot.  The plaintiff would never apply to the law school again -  - the plaintiff no longer had a personal interest in the outcome of the case.

If you are trying to decide whether a case is moot or not, ask yourself, "Is the plaintiff still injured?  Is it possible that the plaintiff could be harmed by the defendant in the same way again?"  If the answer to both questions is "No" then the case is probably moot.  



Extraterritorial Application of US Law: Liu Meng-Lin v. Siemens AG

As a general rule, US law does not apply outside the territorial jurisdiction of the United States.  A recent decision by the Second Circuit Court of Appeals (Liu Meng-Lin v. Siemens AG) provides a helpful illustration.   As a reminder, the Second Circuit Court of Appeals is a federal appellate court that decides appeals from  Connecticut, New York, and Vermont district courts.   The Second Circuit is particularly influential with respect to securities laws because it hears cases on appeal from New York, including the federal court in Manhattan.

After the 2008 financial crisis Congress passed a law called the Dodd-Frank Act.  Among many other things, the Dodd-Frank Act provides protection for whistleblowers - - persons who report securities law violations by their companies.    The Dodd-Frank Act prohibits companies from retaliating against employees who report certain types of violations of US law.  

The plaintiff in this case sued his former employer, arguing that the company illegally fired him after he internally reported corrupt practices by the company.  He complained that by firing him, the company violated the Dodd-Frank Act's protection for whistleblowers.

But the district court dismissed his case and the Second Circuit affirmed the district court's decision.  Why? The plaintiff was a foreigner (non-US citizen) working for a foreign company and all of the conduct at issue in the case occurred overseas.  Specifically:

  1. The foreign company's allegedly corrupt activity occurred outside the United States (in North Korea and China).
  2. The plaintiff reported the activity overseas.
  3. The allegedly illegal retaliation occurred overseas.

According to the Second Circuit, the only connection to the United States was that the foreign company was listed on the New York Stock Exchange.  The Second Circuit, citing recent Supreme Court decisions, explained that because Congress did not clearly intend whistleblower protection laws to apply extraterritorially, the plaintiff's case must be dismissed.

Here is a video discussing the case:




What does it mean if a plaintiff has "standing" or "lacks standing" to challenge a law's Constitutionality?

Standing means that a person has a legal capacity to sue.  

Before a person can sue to challenge a law as unconstitutional that person must meet certain requirements.  He must have suffered an injury, or be in danger of suffering an injury as a result of the law.  Also, the Court must be able to provide some sort of remedy or help for the plaintiff if the Court finds in favor of the plaintiff.

As a practical matter this generally means that a person cannot claim that a law is unconstitutional on behalf of another person.  Only a person who has actually been injured as a result of the allegedly unconstitutional law or government action has the right to sue.  There are some exceptions to this rule which I'll discuss in a future post.  If you take a US bar examination you might find that at least one of the questions on Constitutional law will focus on standing.  

For now, here is a short video:  





Why do judges sometimes write in their decisions that they are assuming all the well-pleaded facts in the plaintiff's Complaint to be true?

 At the early stages of a case a defendant can move to dismiss - - which means to ask the court to dismiss a case, if the plaintiff's Complaint is legally insufficient.  Remember, the Complaint is the plaintiff's document in which the plaintiff explains why he is suing the defendant.  The judge will usually assume that the allegations in the Complaint are true when ruling on the motion to dismiss.    

For example, let's say Paul sues Debby because Debby beat him at a game of tennis and Paul feels sad.  Obviously this is a very silly case, there is no legal remedy for Paul if he lost a tennis match even if his feelings were hurt.  If Debby moves to dismiss the judge will assume for purposes of the motion that everything in the Complaint is true.  Yes, Debby beat Paul at tennis and yes Paul's feelings were hurt.  But even assuming everything in the Complaint is true Paul can't sue Debby for winning a tennis match so the judge will grant Debby's motion to dismiss.

Especially in federal courts you will often see that judges will not accept every allegation as true - - only "well pleaded" allegations.  This can mean different things depending on the case but as a general rule the judge should not accept implausible allegations as true nor does a judge have to accept conclusory statements as true. For example, if Paul alleges that Debby uses magic powers to hurt and confuse him, the judge should not accept this allegation as true because it is implausible.  Also, if a Complaint simply alleges "Debby committed a tortious act resulting in damage to Paul" with no supporting allegations, the judge should not accept this conclusory allegation as true.  

If the court denies a motion to dismiss the case will continue.  Although the judge assumed the allegations were true on a motion to dismiss, at later stages of the case  - - summary judgment or trial - - the court or the jury will not assume the allegations are true.   The plaintiff must prove her case.  

What does it mean when a court denies a defendant's motion to dismiss? The plaintiff wins?

When students from other countries read a U.S. court decision where a judge "denies a motion to dismiss," it may appear that the judge is ruling that the plaintiff won her case.  That's not accurate.

In a civil litigation when a judge denies a defendant's motion to dismiss, the case will continue instead of ending early.   The plaintiff did not win the case.  On the other hand, the defendant failed to convince the judge that the case (or at least one of the claims in the case) must end.

A defendant typically brings a motion to dismiss early in the case.  The defendant is asking the judge to end the case because there is a significant problem.  For example, a defendant may argue that the plaintiff's Complaint has important defects.  The defendant also might argue that the court lacks personal or subject matter jurisdiction.  

 For example, let's say Patty sues David for fraud in a United States federal court.

Rule 9 of the Federal Rules of Civil Procedure requires Patty to include additional detail in her Complaint because she is alleging fraud.   Patty must allege when, where, and how the fraud took place.  If the Complaint does not have this detail David could ask the judge to dismiss the case.  David wants the judge to end Patty's fraud case.

If the judge denies David's motion Patty's case will continue  to the next stage of the litigation.  But Patty has not won her case.

As a practical matter, perhaps David will be more willing to settle the case because the judge denied his motion to dismiss.  But the case is not over - - Patty must still prove her claims if the case goes to trial.


City of Providence v. BATS: Section 6 Liability for Stock Exchanges

Another interesting aspect about the City of Providence v. BATS lawsuit is that the complaint alleges that stock exchanges are liable to the putative class of plaintiffs under Section 6 of the Securities Exchange Act of 1934. Section 6 requires stock exchanges to have rules against fraudulent and manipulative practices and to be able to enforce those rules.  According to the complaint, the stock exchanges not only failed to enforce their rules against fraud but the exchanges, together with brokerage firms and high frequency traders, defrauded slower traders.

Lawsuits against stock exchanges for violations of Section 6 are rare.  In one case from 1976, Carr v. New York Stock Exchange, a California federal court held  "that a failure in the exercise of reasonable diligence may be found only if the Exchange knew or had reasonable cause to know of a violation or suspected violation of a securities law, regulation or rule, or Exchange rule, and failed to proceed with requisite due care in view of the seriousness of the violation, pertinent SEC policies, the rules and practices of the Exchange, and the interests of the member firms, their security holders and the public customers of the Exchange." (italics added)  The Court held that whether the stock exchange was liable in that case was a question for a jury.

The Carr decision is not binding on the City of Providence court and we're a long way from any decision but it's something to consider.  



What happens after a federal court grants a motion to dismiss?

The answer is that it depends on the type of motion the court granted.  Here are a few examples:

If a federal court grants a motion to dismiss for lack of subject matter jurisdiction (Rule 12(b)(1)), then the case is over in federal court.  The case will have to start all over again in state court.

If a federal court demises for lack of personal jurisdiction (Rule 12(b)(2)), then the case will have to start all over again in a court that has personal jurisdiction.

If a court dismisses a case under Rule 12(b)(6) - - failure to state a claim - -  then there are two possibilities.  The court can give the plaintiff a chance to amend the complaint or the court can end the case.

For example, let's say the complaint is just missing a few details that the court believes should be included in the complaint.  The court should give the plaintiff another chance, or even several chances, to amend the complaint.  The court is essentially saying, "Try to fix the complaint."

 If the court decides that there is no hope that the plaintiff can fix the complaint the court will dismiss with prejudice - - meaning the case is over.  For example, let's say Paul sues Declan because Declan is a better basketball player.  That's a silly lawsuit and Paul can't possibly win.  The court will dismiss with prejudice and Paul won't get any chances to  fix his complaint.