Responsibility of the Swiss Manufacturer? - Specific Personal Jurisdiction - U.S. Court of Appeals for the Sixth Circuit, LYNGAAS v. CURADEN AG

 

Responsibility of the Swiss Manufacturer?

Specific Personal Jurisdiction

Alter-Ego Theory

 

Undercapitalization

To Pierce the Corporate Veil

Distribution Agreement

Michigan Law

 

Class Action

Consumer Law

Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227

Unsolicited Advertisement

 

 

Appeal from the United States District Court for the Eastern District of Michigan at Detroit.

 

This case involves two unsolicited fax advertisements received by Brian Lyngaas, D.D.S., in March 2016. Lyngaas asserts, on behalf of himself and all similarly situated class members, that Curaden AG and its U.S. subsidiary, Curaden USA, violated the Telephone Consumer Protection Act (TCPA), 47 U.S.C. § 227, by sending the advertisements.

 

At the summary-judgment stage of the case, the district court ruled that Lyngaas could not pierce the corporate veil to hold Curaden AG liable for Curaden USA’s action, that faxes received by a computer over a telephone line (in addition to faxes received by traditional fax machine) violated the TCPA, and that it had personal jurisdiction over both defendants. Following a bench trial, the district court held that Curaden USA violated the TCPA by sending the two unsolicited fax advertisements to Lyngaas, but that Curaden AG was not liable as a “sender” under the TCPA. The court further held that Lyngaas’s evidence and expert-witness testimony as to the total number of faxes successfully sent by Curaden USA were inadmissible due to unauthenticated fax records. It therefore established a claims-administration process for class members to verify their receipt of Curaden USA’s unsolicited fax advertisements.

 

Both Lyngaas and Curaden USA appeal the judgment of the district court, and both Lyngaas and Curaden AG cross-appeal. For the reasons set forth below, we affirm the judgment of the district court.

 

Lyngaas is a dentist who practices in Livonia, Michigan. On March 8 and again on March 28, 2016, Lyngaas received on his workplace fax machine unsolicited faxes advertising the Curaprox Ultra Soft CS 5460 toothbrush. The toothbrush in question is manufactured by Curaden AG, a privately owned Swiss entity. Curaden USA, an Ohio corporation headquartered in Arizona, is a subsidiary of Curaden AG that promotes Curaden AG products, including the Curaprox Ultra Soft CS 5460 toothbrush, throughout the United States.

 

Although a standard written distribution agreement typically governs the practices of Curaden AG’s subsidiary distributors, Curaden AG and Curaden USA operated instead under an oral agreement. This is because the written distribution agreement was exchanged but never formally executed. But since “everybody had assumed it had been signed,” according to the managing director of Curaden AG, many of the tenets of the standard written distribution agreement have been observed in practice by both entities. For example, Curaden USA was the exclusive distributor of Curaden AG products within the United States, consistent with § 2.1 of the distribution agreement, and Curaden USA “used its best endeavours to promote the sale of the Curaden AG products throughout the Territory,” consistent with § 5.1.

 

Some of the terms of the standard distribution agreement, however, were not observed by Curaden USA. As relevant to this case, Curaden USA never presented its advertising materials to Curaden AG for review or approval, even though § 5.7 and § 5.8 of the distribution agreement gave Curaden AG the right to approve all marketing materials developed by its distributors.

 

Curaden USA planned a fax campaign as part of its marketing efforts. It purchased a target list of thousands of dental professionals’ fax numbers, and Curaden USA employee Diane Hammond created the two fax advertisements at issue in this case. Both advertisements promoted the Curaprox Ultra Soft CS5460 toothbrush and were directed to “dental professionals.” Displayed on the advertisements was Curaden USA’s contact information, including a fax number, phone number, email address, website, and social media accounts, all of which were connected to and exclusively maintained by Curaden USA. The advertisements made no mention of Curaden AG, instead referring all communications to Curaden USA.

 

Curaden USA did not provide the advertisements for review to either Curaden AG or to Richard Thomas, the managing director of Curaden UK and an advisor to all Curaden AG subsidiaries. Rather, on February 23, 2016, Curaden USA’s vice president and managing director Dale Johnson approved the advertisement and directed Hammond to broadcast the faxes. Hammond in turn instructed Curaden USA employee Magen James to send the advertisement to the purchased target list of over 46,000 fax numbers. Curaden USA hired AdMax Marketing, a fax broadcasting company, to send the faxes. AdMax then hired another company, WestFax, to complete the job.

 

(…) After the faxes were transmitted, AdMax invoiced Curaden USA, and Curaden USA paid the invoices.

 

B. Personal jurisdiction over Curaden AG

 

In resolving Curaden AG’s motions to dismiss and for summary judgment, the district court found that it had specific personal jurisdiction over Curaden AG based on Curaden AG’s contacts with the state of Michigan and that, in the alternative, jurisdiction was proper under Rule 4(k)(2) of the Federal Rules of Civil Procedure based on Curaden AG’s contacts with the United States as a whole. But the court then granted summary judgment in favor of Curaden AG on the question of whether Curaden USA served as an “alter ego” of Curaden AG, holding that the court should not pierce the corporate veil to exercise personal jurisdiction over Curaden AG on the basis of Curaden USA’s actions. Lyngaas renews his “alter ego” theory on appeal, whereas Curaden AG again argues that the district court lacked personal jurisdiction over it on any basis.

 

1.   Curaden USA as an alter ego of Curaden AG

 

We agree with the district court’s conclusion that Curaden USA is not Curaden AG’s alter ego. The alter-ego theory can subject a parent company to personal jurisdiction where “the parent company exerts so much control over the subsidiary that the two do not exist as separate entities but are one and the same for purposes of jurisdiction.” Indah v. S.E.C., 661 F.3d 914, 921 (6th Cir. 2011). In the present case, both parties correctly rely on Michigan law in determining whether alter-ego liability applies. See Bd. of Trustees, Sheet Metal Workers’ Nat’l Pension Fund v. Courtad, Inc., No. 12-2738, 2014 WL 3613383, at *3–4 (N.D. Ohio July 18, 2014) (“Outside of labor law or ERISA claims, courts tend not to supplant state corporate liability doctrine with federal common law.”).

 

To pierce the corporate veil under Michigan law, “first, the corporate entity must be a mere instrumentality of another; second, the corporate entity must be used to commit a fraud or wrong; and third, there must have been an unjust loss or injury to the plaintiff.” In re RCS Eng’rd Prods. Co., Inc., 102 F.3d 223, 226 (6th Cir. 1996) (citing Nogueroas v. Maisel & Assocs. of Mich., 369 N.W.2d 492, 498 (Mich. 1985)). Lyngaas argues that the district court erred, first, by not taking Curaden USA’s undercapitalization into full account in the “mere instrumentality” analysis and, second, by using the incorrect standard in requiring Lyngaas to show that Curaden AG “engaged in deliberate wrongful conduct that was either designed to or actually did produce injury.”

 

Regarding undercapitalization, that factor indeed provides at least prima facie weight in favor of finding that Curaden USA was a “mere instrumentality” of Curaden AG because Curaden USA was not profitable, and the evidence is unclear as to what extent Curaden USA paid Curaden AG for the products it purchased. But undercapitalization is just one factor in the analysis. Whether the corporate entity is a “mere instrumentality of another” is determined by analyzing

(1) whether the corporation is undercapitalized, (2) whether separate books are kept, (3) whether there are separate finances for the corporation, (4) whether the corporation is used for fraud or illegality, (5) whether corporate formalities have been followed, and (6) whether the corporation is a sham.

Lim v. Miller Parking Co., 560 B.R. 688, 706 (E.D. Mich. 2016) (quoting Glenn v. TPI Petrol., Inc., 854 N.W.2d 509, 520 (Mich. 2014)).

Lyngaas does not dispute the district court’s findings that “the two companies keep separate books . . . and follow corporate formalities,” nor that “Curaden USA has its own employees and its own offices.” Because the evidence further shows that the plan was for Curaden USA, launched in 2014, to be profitable within eight years, the district court did not err in finding that Curaden USA’s “undercapitalization” was outweighed by the other five factors, none of which supported the finding of an alter-ego relationship. See Needa Parts Mfg., Inc. v. PSNet, Inc., 635 F. Supp. 2d 642, 647 (E.D. Mich. 2009) (“While it may be true that PSNet was an undercapitalized start-up company, it does not follow that the court must rule as a matter of law that PSNet is a mere alter ego of PSNet Communications.”).

 

Lyngaas also fails to point to any other telling signs of undercapitalization, such as leaving creditors unpaid or using Curaden USA as the parent company’s bank account. Cf. Laborers’ Pension Trust Fund v. Sidney Weinberger Homes, Inc., 872 F.2d 702, 705 (6th Cir. 1988) (piercing the corporate veil where the individual defendant paid corporate expenses out of his own pocket, the corporation paid the individual’s personal expenses, the individual withdrew money from the corporation and left creditors unpaid, and the financial records were inadequate); Grass Lake All Seasons Resort v. United States, 2005 WL 2095890, at *13 (E.D. Mich. Aug. 29, 2005) (piercing the corporate veil where the individual defendant looted the corporation for personal use, did not have his own bank account or property in his own name, and used the company to avoid paying taxes for over ten years).

 

As to whether “the manner of use effected a fraud or wrong on the complainant . . . , it is not necessary to prove that the owner caused the entity to directly harm the complainant; it is sufficient that the owner exercised his or her control over the entity in such a manner as to wrong the complainant.” Green v. Ziegelman, 873 N.W.2d 794, 807 (Mich. Ct. App. 2015). Lyngaas states the correct standard, but points to no evidence showing how Curaden AG exercised its control over Curaden USA in such a manner as to wrong him or to pursue some unlawful end. See Seasword v. Hilti, Inc., 537 N.W.2d 221, 224 (Mich. 1995) (holding that the corporate veil “may be pierced only where an otherwise separate corporate existence has been used to subvert justice or cause a result that is contrary to some other clearly overriding public policy”)

 

2.   Personal jurisdiction over Curaden AG due to its contacts with the United States

 

This leads us to the question of whether there is some other basis for personal jurisdiction over Curaden AG. The district court held that, pursuant to Rule 4(k)(2) of the Federal Rules of Civil Procedure, it had personal jurisdiction over Curaden AG due to Curaden AG’s contacts with the United States as a whole. Notably, Curaden AG does not offer any argument to the contrary. Rule 4(k)(2) “acts as a sort of federal long-arm statute,” Sunshine Distrib., Inc. v. Sports Auth. Mich., Inc., 157 F. Supp. 2d 779, 788 (E.D. Mich. 2001).

 

To establish that jurisdiction is proper under Rule 4(k)(2), “(1) the cause of action must arise under federal law; (2) the defendant must not be subject to the personal jurisdiction of any state court of general jurisdiction; and (3) the federal court’s exercise of personal jurisdiction must comport with due process.” Plixer Int’l, Inc. v. Scrutinizer GmbH, 905 F.3d 1, 6 (1st Cir. 2018); see also Cent. States, Se. & Sw. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 940 (7th Cir. 2000) (similar). There is no dispute that the first two requirements are met here: this is a federal-question case and Curaden AG has pointed to no state where it could properly be sued. See Adams v. Unione Mediterranea Di Sicurta, 364 F.3d 646, 651 (5th Cir. 2004) (“So long as a defendant does not concede to jurisdiction in another state, a court may use 4(k)(2) to confer jurisdiction.” (citing ISI Int’l, Inc. v. Borden Ladner Gervais LLP, 256 F.3d 548, 552 (7th Cir. 2001))). The remaining question is whether personal jurisdiction comports with due process.

 

Because this is a federal-question case in federal court, the due process requirements emanate from the Fifth rather than the Fourteenth Amendment. Sunshine Distrib., 157 F. Supp. 2d at 788. But they “are the same as with any other personal jurisdiction inquiry, i.e. relatedness, purposeful availment, and reasonableness, only in reference to the United States as a whole, rather than a particular state.” Id. (citing Cent. States, 230 F.3d at 941–42).

 

Curaden AG purposefully availed itself of the American market by launching Curaden USA here. And it mandated that Curaden USA “use its best endeavours to promote the sale of the Products throughout the United States.” Finally, although it did not exercise its right of prior approval over Curaden USA’s marketing materials in this case, Curaden AG nevertheless retains such a right. Curaden AG, in short, made a deliberate decision to target and exploit American markets, thus showing purposeful availment. See Sunshine Distrib., 157 F. Supp. 2d at 789 (holding that the defendant purposefully availed itself of the American market where it “not only sought out and negotiated a licensing agreement with Razor U.S.A. to distribute its products throughout North America, including the United States,” but also “essentially created Razor U.S.A. for this sole purpose”); see also J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 885 (2011) (noting that J. McIntyre directed marketing and sales efforts at the United States when it contracted with a U.S. distributor to sell its machines in the country).

 

The next consideration is whether Lyngaas’s TCPA claims arise out of—or relate to— Curaden AG’s contacts with the United States. This court’s standard for meeting that requirement is “lenient.” See Bird v. Parsons, 289 F.3d 865, 875 (6th Cir. 2002). “If a defendant’s contacts with the forum state are related to the operative facts of the controversy, then an action will be deemed to have arisen from those contacts.” CompuServe, Inc. v. Patterson, 89 F.3d 1257, 1267 (6th Cir. 1996).

 

Lyngaas’s alleged injuries caused by the fax advertisements “relate to” Curaden AG’s creation of its U.S. subsidiary and its direction for the subsidiary to promote Curaden AG’s products throughout the United States. Curaden AG is correct, as we discuss later, that it was not the “sender” of the faxes for purposes of TCPA liability. But the standard here is not so stringent, and it is met when “the operative facts are at least marginally related to the alleged contacts” between the defendant and the forum. Bird, 289 F.3d at 875. That standard is clearly met here.

 

The final consideration is whether the exercise of jurisdiction over Curaden AG would be reasonable, such that it would “comport with traditional notions of fair play and substantial justice.” CompuServe, 89 F.3d at 1268. An inference arises that the third factor is satisfied if, as here, the first two factors are met. Id. But where the case involves a “non-resident alien defendant,” the court must give “special weight to the ‘unique burdens placed upon one who must defend oneself in a foreign legal system.’” Theunissen v. Matthews, 935 F.2d 1454, 1460 (6th Cir. 1991) (emphasis in original) (quoting Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 114 (1987)).

 

We recognize that the burden on Curaden AG is high because it had no prior contact with the U.S. federal-court system. But that burden is nonetheless outweighed by other factors. First, the United States has an interest in enforcing federal laws. Second, Lyngaas’s interest in obtaining relief is particularly high given that Curaden USA is not profitable and is unlikely to be profitable in the immediate future. Cf. City of Monroe Emps. Ret. Sys. v. Bridgestone Corp., 399 F.3d 651, 666 (6th Cir. 2005) (finding the interests of the United States and class plaintiffs to be “relatively light” where the court’s jurisdiction over the key defendants was already conceded and “the marginal addition of one of the defendants would add little or nothing to the potential recovery should the plaintiffs ultimately prevail on the merits and be awarded damages”). We therefore conclude that the district court’s exercise of personal jurisdiction over Curaden AG is reasonable, and that it comports with due process. And because the district court properly exercised personal jurisdiction over Curaden AG due to Curaden AG’s contacts with the United States as a whole, we need not reach the question of whether the court has personal jurisdiction over Curaden AG due to the latter’s contacts with Michigan alone.

 

C. Curaden AG’s liability under the TCPA

 

Having decided that personal jurisdiction over Curaden AG exists, we will now examine whether the district court erred in concluding that Curaden AG was not a “sender” for purposes of TCPA liability. The TCPA makes it “unlawful for any person within the United States . . . to use any telephone facsimile machine, computer, or other device to send, to a telephone facsimile machine, an unsolicited advertisement.” 47 U.S.C. § 227(b)(1)(C). In 2006, the Federal Communications Commission (“FCC”) promulgated regulations that defined the “sender” of a fax as “the person or entity on whose behalf a facsimile unsolicited advertisement is sent or whose goods or services are advertised or promoted in the unsolicited advertisement.” 47 C.F.R. § 64.1200(f)(10).

 

(…) In sum, the TCPA does not impose strict liability on a manufacturer simply because its products wind up on the face of an unsolicited fax advertisement; the manufacturer must independently fit the role of a “sender.”

 

(…) But the present case differs slightly from Health One because, although Curaden AG did not hire a fax broadcaster to advertise its products, it did enter into a distribution agreement with Curaden USA to “use its best endeavours to promote the sale of the Products throughout the Territory.” The determinative question, therefore, is whether entering into such a distribution agreement “caused” the sending of the fax advertisements.

 

(…) The distribution agreement in this case mirrors the agreement in Garner Properties. Further, the undisputed evidence shows that Curaden AG did not even know that Curaden USA planned to use faxes as a method of advertisement, much less that Curaden USA had hired a fax broadcaster or created the fax advertisements at issue. Curaden USA, not Curaden AG, paid AdMax’s invoices and communicated with AdMax. Cf. Garner Properties, 2018 WL 6788013, at *3 (“Marblecast did not discuss the Fax with anyone at American Woodmark before it was sent . . . . American Woodmark had no independent knowledge that Marblecast was sending the Fax.”). Indeed, all of the contact and social media information listed on the faxes directed consumers to Curaden USA and not to Curaden AG.

 

(…) Because Curaden AG clearly lacked knowledge of and involvement in the fax advertisements, we agree with the district court’s conclusion that Curaden AG was not a “sender” and thus not liable under the TCPA.

 

(…) But, the FCC stated, the statute’s prohibition “does not extend to facsimile messages sent as email over the Internet.”

 

(…) The Bureau also clarified its earlier email caveat: “By contrast, a fax sent as an email over the Internet—e.g., a fax attached to an email message or a fax whose content has been pasted into an email message—is not subject to the TCPA.” 30 F.C.C. Rcd. 8623–24 ¶ 10 (emphasis in original). In other words, with an efax “there is an end-to-end communication that starts when the faxed document is sent over a telephone line and ends when the converted document is received on a computer,” whereas emails originate not as a fax over a telephone line, but “over the Internet.” Id.

 

 

Secondary sources: William B. Rubenstein, Newberg on Class Actions § 12:15 (5th ed. 2017)

 

 

(U.S. Court of Appeals for the Sixth Circuit, March 24, 2021, LYNGAAS v. CURADEN AG, Docket Nos. 20-1199/1200/1243, recommended for publication)

 

 

Williams v. Super. Ct., S227228

Discovery & objections: Class action: Standing: Affirmative defense: Summary judgment: Fishing expeditions:

In the absence of privilege, the right to discovery in this state is a broad one, to be construed liberally so that parties may ascertain the strength of their case and at trial the truth may be determined. Our prior decisions and those of the Courts of Appeal firmly establish that in non-PAGA (Labor Code Private Attorneys General Act of 2004) class actions, the contact information of those a plaintiff purports to represent is routinely discoverable as an essential prerequisite to effectively seeking group relief, without any requirement that the plaintiff first show good cause.

(PAGA authorizes an employee who has been the subject of particular Labor Code violations to file a representative action on behalf of himself or herself and other aggrieved employees. (Lab. Code, § 2699)).

(…) Early in discovery, Williams issued two special interrogatories (…)

(…) Williams moved to compel responses (…)

A trial court must be mindful of the Legislature‘s preference for discovery over trial by surprise, must construe the facts before it liberally in favor of discovery, may not use its discretion to extend the limits on discovery beyond those authorized by the Legislature, and should prefer partial to outright denials of discovery. (Greyhound Corp. v. Superior Court, 56 Cal.2d at p. 383.) A reviewing court may not use the abuse of discretion standard to shield discovery orders that fall short: Any record which indicates a failure to give adequate consideration to these concepts is subject to the attack of abuse of discretion, regardless of the fact that the order shows no such abuse on its face. (Id. at p. 384; see Pacific Tel. & Tel. Co. v. Superior Court (1970) 2 Cal.3d 161, 171.)

In the absence of contrary court order, a civil litigant‘s right to discovery is broad. Any party may obtain discovery regarding any matter, not privileged, that is relevant to the subject matter involved in the pending action . . . if the matter either is itself admissible in evidence or appears reasonably calculated to lead to the discovery of admissible evidence. (Code Civ. Proc., § 2017.010; see Davies v. Superior Court (1984) 36 Cal.3d 291, 301 [discovery is not limited to admissible evidence].)

This right includes an entitlement to learn the identity and location of persons having knowledge of any discoverable matter.

Of course, the discovery may also fail to reveal any, or many, other violations or unlawful policies, but that is an equally worthy end result. The discovery statutes were intended to curtail surprises, enable each side to learn as much as possible about the strengths and weaknesses of its case, and thereby facilitate realistic settlements and efficient trials. (See Fairmont Ins. Co. v. Superior Court (2000) 22 Cal.4th 245, 253, fn. 2; Greyhound Corp. v. Superior Court, supra, 56 Cal.2d at p. 376.)  (fn. 3).

(…) Code of Civil Procedure section 2019.020. That provision sets out the general rule that the various tools of discovery may be used by each party in any order, and one party‘s discovery shall not operate to delay the discovery of any other party. (Id., subd. (a).) However, if a party shows good cause, the trial court may establish the sequence and timing of discovery for the convenience of parties and witnesses and in the interests of justice. (Id., subd. (b).)

California law has long made clear that to require a party to supply proof of any claims or defenses as a condition of discovery in support of those claims or defenses is to place the cart before the horse. The Legislature was aware that establishing a broad right to discovery might permit parties lacking any valid cause of action to engage in fishing expeditions, to a defendant‘s inevitable annoyance. (Greyhound Corp. v. Superior Court, supra, 56 Cal.2d at p. 385.) It granted such a right anyway, comfortable in the conclusion that mutual knowledge of all the relevant facts gathered by both parties is essential to proper litigation. (Id. at p. 386.)

Doubts as to whether particular matters will aid in a party‘s preparation for trial should generally be resolved in favor of permitting discovery; this is especially true when the precise issues of the litigation or the governing legal standards are not clearly established. (see Colonial Life & Accident Ins. Co. v. Superior Court (1982) 31 Cal.3d 785, 791, fn. 8.) In pursuing such discovery, the strength or weakness of the plaintiff‘s individual claim is immaterial: It is well established that relevancy of the subject matter does not depend upon a legally sufficient pleading, nor is it restricted to the issues formally raised in the pleadings. (Union Mut. Life Ins. Co., infra, at p. 10.)

(…) The way to raise lack of standing is to plead it as an affirmative defense, and thereafter to bring a motion for summary adjudication or summary judgment, not to resist discovery until a plaintiff proves he or she has standing. (Cf. Union Mut. Life Ins. Co. v. Superior Court, 80 Cal.App.3d at p. 12 [a discovery motion is not the right vehicle to litigate the appropriate scope of an action].)

(Possible objections: overbreadth, relevance, undue burden, expense, intrusiveness, privacy interests).

(Cal. S.C., July 13, 2017, Williams v. Super. Ct., S227228).

Le droit d'exercer la procédure de discovery est large, il vise à permettre aux parties d'apprécier le mérite de leurs prétentions, ainsi qu'à favoriser des accords amiables. Par exemple, dans les actions de classe, l'obtention de l'identité de toutes les parties potentielles peut faire l'objet de la procédure de discovery, sans que le demandeur ne doive préalablement démontrer les mérites de sa démarche de classe. Le caractère relevant ou non de la preuve recherchée ne dépend pas de ce que contiennent les mémoires. Le risque d'une "fishing expedition" a été reconnu par le législateur : il a considéré qu'il s'agissait d'un inconvénient inévitable lié au système précité.

La cour de première instance doit préférer une procédure de discovery partielle plutôt qu'un rejet complet.

Les réquisitions doivent toutefois porter sur des moyens de preuve admissibles au procès, ou porter sur des éléments susceptibles de découvrir de tels moyens. Par exemple, les noms et adresses des personnes susceptibles de divulguer des moyens de preuve peuvent être requis.

Le Code de procédure civile, à sa Section 2019.020, prévoit que de manière générale les différents outils de la procédure de discovery peuvent être utilisés par toutes les parties dans n'importe quel ordre. La discovery d'une partie ne saurait empêcher la discovery d'une autre. Cependant, pour justes motifs, la cour peut établir l'ordre et le moment des diverses opérations de discovery, de manière à ce que ces opérations ne chargent pas inutilement les parties ni les témoins, le tout à la lumière de l'intérêt de l'administration de la justice.

A titre d'exemple, si une partie entend se prévaloir d'une absence de "standing" de l'autre partie, elle doit le faire en soulevant une défense affirmative, puis en sollicitant une décision sommaire. Elle ne peut pas valablement résister à la procédure de discovery jusqu'à ce que l'adverse partie démontre satisfaire aux conditions de "standing".

California Public Employees' Retirement System v. ANZ Securities, Inc., Docket 16-373

Repose: Statute of repose: Statute of limitations: Tolling: Equitable tolling: Common law: Dismissal: Class action:

The Securities Act of 1933 “protects investors by ensur­ing that companies issuing securities . . . make a ‘full and fair disclosure of information’ relevant to a public offer­ing.” Omnicare, Inc. v. Laborers Dist. Council Constr. Industry Pension Fund, 575 U. S. ___, ___ (2015) (slip op., at 1) (quoting Pinter v. Dahl, 486 U. S. 622, 646 (1988)); see 48 Stat. 74, as amended, 15 U. S. C. §77a et seq. Com­panies may offer securities to the public only after filing a registration statement, which must contain information about the company and the security for sale. Omnicare, 575 U. S., at ___–___ (slip op., at 1–2). Section 11 of the Securities Act “promotes compliance with these disclosure provisions by giving purchasers a right of action against an issuer or designated individuals,” including securities underwriters, for any material misstatements or omis­sions in a registration statement. Id., at ___ (slip op., at 2); see 15 U. S. C. §77k(a).

The Act provides time limits for §11 suits. These time limits are set forth in a two-sentence section of the Act, §13. It provides as follows:

“No action shall be maintained to enforce any liability created under [§11] unless brought within one year af­ter the discovery of the untrue statement or the omis­sion, or after such discovery should have been made by the exercise of reasonable diligence . . . . In no event shall any such action be brought to enforce a li­ability created under [§11] more than three years after the security was bona fide offered to the public . . . .” 15 U. S. C. §77m.

So there are two time bars in the quoted provision; and the second one, the 3-year bar, is central to this case.

The question then is whether §13 permits the filing of an individual complaint more than three years after the relevant securities offering, when a class-action complaint was timely filed, and the plaintiff filing the individual complaint would have been a member of the class but for opting out of it. The answer turns on the nature and purpose of the 3-year bar and of the tolling rule that peti­tioner seeks to invoke.

As the Court explained in CTS Corp. v. Waldburger, 573 U. S. ___ (2014), statutory time bars can be divided into two categories: statutes of limitations and statutes of repose. Both “are mechanisms used to limit the temporal extent or duration of liability for tortious acts,” but “each has a distinct purpose.” Id., at ___–___ (slip op., at 5–6).

Statutes of limitations are designed to encourage plain­tiffs “to pursue diligent prosecution of known claims.” Id., at ___ (slip op., at 6). In accord with that objective, limitations periods begin to run “when the cause of action accrues”—that is, “when the plaintiff can file suit and obtain relief.” Id., at ___ (slip op., at 5). In a personal-injury or property-damage action, for example, more often than not this will be “‘when the injury occurred or was discovered.’” Ibid.

In contrast, statutes of repose are enacted to give more explicit and certain protection to defendants. These stat­utes “effect a legislative judgment that a defendant should be free from liability after the legislatively determined period of time.” Id., at ___–___ (slip op., at 6–7). For this reason, statutes of repose begin to run on “the date of the last culpable act or omission of the defendant.” Id., at ___ (slip op., at 6).

The 3-year time bar in §13 reflects the legislative objec­tive to give a defendant a complete defense to any suit after a certain period. From the structure of §13, and the language of its second sentence, it is evident that the 3 ­year bar is a statute of repose. In fact, this Court has already described the provision as establishing “a period of repose,” which “‘imposes an outside limit’” on temporal liability. Lampf, Pleva, Lipkind, Prupis & Petigrow v. Gilbertson, 501 U. S. 350, 363 (1991).

(…) Confirmed by the two-sentence structure of §13. In addition to the 3-year time bar, §13 contains a 1­ year statute of limitations. The limitations statute runs from the time when the plaintiff discovers (or should have discovered) the securities-law violation. The pairing of a shorter statute of limitations and a longer statute of re­pose is a common feature of statutory time limits. See, e.g., Gabelli v. SEC, 568 U. S. 442, 453 (2013) (“Statutes applying a discovery rule . . . often couple that rule with an absolute provision for repose”). The two periods work together: The discovery rule gives leeway to a plaintiff who has not yet learned of a violation, while the rule of repose protects the defendant from an interminable threat of liability. Cf. Merck & Co. v. Reynolds, 559 U. S. 633, 650 (2010) (reasoning that 2-year discovery rule would not “subject defendants to liability for acts taken long ago,” because the statute also included an “unqualified bar on actions instituted ‘5 years after such violation’”).

The determination that the 3-year period is a statute of repose is critical in this case, for the question whether a tolling rule applies to a given statutory time bar is one “of statutory intent.” Lozano v. Montoya Alvarez, 572 U. S. 1, ___ (2014) (slip op., at 8). The purpose of a statute of repose is to create “an absolute bar on a defendant’s tem­poral liability,” CTS, 573 U. S., at ___ (slip op., at 6); and that purpose informs the assessment of whether, and when, tolling rules may apply.

In light of the purpose of a statute of repose, the provi­sion is in general not subject to tolling. Tolling is permis­sible only where there is a particular indication that the legislature did not intend the statute to provide complete repose but instead anticipated the extension of the statu­tory period under certain circumstances.

For example, if the statute of repose itself contains an express exception, this demonstrates the requisite intent to alter the operation of the statutory period. See 1 C. Corman, Limitation of Actions §1.1, pp. 4–5 (1991) (Corman); see, e.g., 29 U. S. C. §1113 (establishing a 6-year statute of repose, but stipulating that, in case of fraud, the 6-year period runs from the plaintiff ’s discovery of the violation). In contrast, where the legislature enacts a general tolling rule in a different part of the code—e.g., a rule that suspends time limits until the plaintiff reaches the age of majority—courts must analyze the nature and relation of the legislative purpose of each provision to determine which controls. See 2 Corman §10.2.1, at 108.

Of course, not all tolling rules derive from legislative enactments. Some derive from the traditional power of the courts to “‘apply the principles . . . of equity jurispru­dence.’” Young v. United States, 535 U. S. 43, 50 (2002). The classic example is the doctrine of equitable tolling, which permits a court to pause a statutory time limit “when a litigant has pursued his rights diligently but some extraordinary circumstance prevents him from bringing a timely action.” Lozano, 572 U. S., at ___ (slip op., at 7). Tolling rules of that kind often apply to statutes of limitations based on the presumption that Congress “‘legislates against a background of common-law adjudicatory principles.’” Id., at ___ (slip op., at 8).

The purpose and effect of a statute of repose, by con­trast, is to override customary tolling rules arising from the equitable powers of courts. By establishing a fixed limit, a statute of repose implements a “‘legislative deci­sion that as a matter of policy there should be a specific time beyond which a defendant should no longer be sub­jected to protracted liability.’” CTS, 573 U. S., at ___ (slip op., at 7). The unqualified nature of that determination supersedes the courts’ residual authority and forecloses the extension of the statutory period based on equitable principles. For this reason, the Court repeatedly has stated in broad terms that statutes of repose are not sub­ject to equitable tolling. See, e.g., id., at ___–___ (slip op., at 7–8); Lampf, Pleva, 501 U. S., at 363.

Petitioner makes an alternative argument that does not depend on tolling. Petitioner submits its individual suit was timely in any event. Section 13 provides that an “action” must be “brought” within three years of the rele­vant securities offering. See 15 U. S. C. §77m. Petitioner argues that requirement is met here because the filing of the class-action complaint “brought” petitioner’s individual “action” within the statutory time period. This argument rests on the premise that an “action” is “brought” when substantive claims are presented to any court, rather than when a particular complaint is filed in a particular court. The term “action,” however, refers to a judicial “proceeding,” or perhaps to a “suit”—not to the general content of claims. See Black’s Law Dictionary 41 (3d ed. 1933) (defining “action” as, inter alia, “an ordinary proceeding in a court of justice”); see also id., at 43 (“The terms ‘action’ and ‘suit’ are . . . nearly, if not entirely, synonymous”). Whether or not petitioner’s individual complaint alleged the same securities law violations as the class-action complaint, it defies ordinary understanding to suggest that its filing—in a separate forum, on a separate date, by a separate named party—was the same “action,” “proceeding,” or “suit.”

The limitless nature of petitioner’s argument, further­more, reveals its implausibility. It appears that, in peti­tioner’s view, the bringing of the class action would make any subsequent action raising the same claims timely. Taken to its logical limit, an individual action would be timely even if it were filed decades after the original secu­rities offering—provided a class-action complaint had been filed at some point within the initial 3-year period. Con­gress would not have intended this result.

Secondary authorities: C. Corman, Limitation of Actions §1.1, pp. 4–5 (1991); Black’s Law Dictionary 41 (3d ed. 1933).

(U.S.S.C., June 26, 2017, California Public Employees' Retirement System v. ANZ Securities, Inc., Docket 16-373, J. Kennedy).

Péremption et prescription, suspension d'un délai :

L'émetteur de papiers-valeurs engage sa responsabilité pour ses déclarations inexactes ou pour ses omissions, au sens de la Section 11 du Securities Act de 1933.

Les délais sont régis par la Section 13 : un délai d'une année pour ouvrir action, à partir de la connaissance de la déclaration inexacte ou de l'omission, ou à partir du jour où dite connaissance aurait dû raisonnablement survenir. En aucun cas l'action ne peut-elle être déposée plus de trois ans après la mise à disposition publique, de bonne foi, des papiers-valeurs.

La question est de savoir si le second de ces deux délais est de péremption, et s'il peut être judiciairement suspendu en équité.

Dans la présente affaire, un demandeur était partie à une action de classe déposée dans le délai d'un an. Par la suite, dit demandeur s'est retiré de la procédure et a ouvert action individuellement, mais hors du délai de trois ans précité.

Les délais de prescription visent à encourager les demandeurs à agir de manière diligente dans un certain délai. De la sorte, le dies a quo par exemple en matière de dommage corporel ou matériel est le plus souvent le jour de la survenance du préjudice, ou le jour de la connaissance par la victime de son préjudice.

Par contraste, les délais de péremption visent la protection des défendeurs. Ils sont le résultat de la réflexion du législateur portant sur la période de temps après laquelle un défendeur échappe à toute responsabilité. De la sorte, le dies a quo de ces délais est le jour du dernier acte ou omission illicite du défendeur.

Le délai de trois ans de la Section 13, de par la structure et le texte de dite loi (cf. sa seconde phrase ci-dessus), reflète l'intention du législateur d'immuniser le défendeur de toute responsabilité après complet écoulement. Il s'agit ici d'un délai de péremption.

La structure de la loi – un délai de prescription plus court suivi d'un délai de péremption plus long – est typique s'agissant de l'ordonnancement des deux types de délai.

Seuls les délais de prescription peuvent être suspendus, notamment par le Juge statuant en équité (cependant, l'intention du législateur est décisive à cet égard, de sorte que le législateur peut prévoir un délai de péremption susceptible d'être suspendu, à des conditions bien définies).

Par exemple, si le délai de péremption tel que stipulé prévoit lui-même une exception expresse, l'intention du législateur est claire.

Toutes les règles régissant la suspension d'un délai ne dérivent pas d'une décision du législateur. Certaines de ces règles proviennent de la compétence traditionnelle des Tribunaux d'appliquer les principes jurisprudentiels de l'"equity". L'exemple classique est la doctrine de la suspension équitable, qui permet à un Tribunal de suspendre un délai quand une partie a procédé avec diligence, mais qu'une circonstance extraordinaire l'a empêchée d'agir judiciairement dans le délai. Ce type de règle est basé sur la présomption que le Congrès légifère en conformité avec la jurisprudence découlant de la Common law.

Par contraste, le but et l'effet d'un délai de péremption est de se substituer aux règles habituelles de suspension des délais établies par la jurisprudence statuant en équité. En établissant un tel délai de péremption, le législateur estime d'intérêt public de fixer une limite au-delà de laquelle la responsabilité du défendeur ne peut plus être engagée.

De manière alternative, le recourant soutient que dans la mesure où sa participation à l'action de classe est intervenue pendant le délai de 3 ans, son action individuelle, déposée après l'échéance de ce délai, ne serait pas tardive. C'est à tort. Les deux actions, déposées auprès de Tribunaux différents, à des dates différentes, par des parties nommées différemment, doivent être considérées comme deux actions différentes. Considérer ces deux actions comme équivalentes reviendrait à juger recevable le dépôt d'une action individuelle des dizaines d'années après le dépôt de l'action de classe, dans l'hypothèse où cette dernière aurait été déposée dans le délai de trois ans. Le Congrès n'a jamais prévu un tel résultat.

Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., Docket 16-466

Jurisdiction (personal): Standing: Class action: Res judicata:

The Court held that the defendant had standing to argue that the Kansas court had improperly exercised personal jurisdiction over the claims of the out-of-state class members because that holding materially affected the defendant’s own interests, specifically, the res judicata effect of an adverse judgment. Phillips Petroleum Co. v. Shutts, 472 U. S. 797, 803-806 (1985).

(U.S.S.C., June 19, 2017, Bristol-Myers Squibb Co. v. Superior Court of Cal., San Francisco Cty., Docket 16-466, J. Alito (only J. Sotomayor filed a dissenting opinion)).

Un défendeur qui fait face à plusieurs demandeurs, certains hors de l'état du for, est recevable à contester ("standing" – injury in fact, causation, redressability) la compétence de la cour pour connaître des prétentions des demandeurs hors de l'état du for. En effet, reconnaître la compétence pour connaître de ces prétentions est susceptible d'affecter les intérêts du défendeur, découlant en particulier de l'effet de chose jugée d'un jugement qui lui serait défavorable.

Microsoft Corp. v. Baker, Docket 15-457

Class action: Class certification: Dismissal: Appeal: Art. III: (this is the concur. opinion).

The plaintiffs in this case, respondents here, sued Mi­crosoft, petitioner here, to recover damages after they purchased allegedly faulty video game consoles that Mi­crosoft manufactured. The plaintiffs brought claims for themselves (individual claims) and on behalf of a putative class of similarly situated consumers (class allegations). Early in the litigation, the District Court granted Mi­crosoft’s motion to strike the class allegations, effectively declining to certify the class. The Court of Appeals denied permission to appeal that decision under Federal Rule of Civil Procedure 23(f), which requires a party to obtain permission from the court of appeals before appealing a decision regarding class certification.

The plaintiffs decided not to pursue their individual claims, instead stipulating to a voluntary dismissal of those claims with prejudice. They then filed a notice of appeal from the voluntary dismissal order. On appeal, they did not ask the Court of Appeals to reverse the Dis­trict Court’s dismissal of their individual claims. They instead asked the Court of Appeals to reverse the order striking their class allegations. The question presented in this case is whether the Court of Appeals had jurisdiction to hear the appeal under both §1291, which grants appel­late jurisdiction to the courts of appeals over “final deci­sions” by district courts, and under Article III of the Con­stitution, which limits the jurisdiction of federal courts to “cases” and “controversies.”

The Court today holds that the Court of Appeals lacked jurisdiction under §1291 because the voluntary dismissal with prejudice did not result in a “final decision.” I disagree with that holding. A decision is “final” for purposes of §1291 if it “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Catlin v. United States, 324 U. S. 229, 233 (1945). The order here dismissed all of the plaintiffs’ claims with prejudice and left nothing for the District Court to do but execute the judgment. See App. to Pet. for Cert. 39a (“directing the Clerk to enter Judgment . . . and close the case”).

I agree that the plaintiffs could not appeal in these circum­stances. In my view, they could not appeal because the Court of Appeals lacked jurisdiction under Article III of the Constitution. The “judicial Power” of the United States extends only to “Cases” and “Controversies.” Art. III, §2. This requirement limits the jurisdiction of the federal courts to issues presented “in an adversary con­text,” Flast v. Cohen, 392 U. S. 83, 95 (1968), in which the parties maintain an “actual” and “concrete” interest, Campbell-Ewald Co. v. Gomez, 577 U. S. ___, ___ (2016) (slip op., at 6). Put another way, “Article III denies federal courts the power to decide questions that cannot affect the rights of litigants in the case before them, and confines them to resolving real and substantial controversies admitting of specific relief through a decree of a conclusive character.” Lewis v. Continental Bank Corp., 494 U. S. 472, 477 (1990).

The plaintiffs’ appeal from their voluntary dismissal did not satisfy this jurisdictional requirement. When the plaintiffs asked the District Court to dismiss their claims, they consented to the judgment against them and disavowed any right to relief from Microsoft. The parties thus were no longer adverse to each other on any claims, and the Court of Appeals could not “affect their rights” in any legally cognizable manner. Indeed, it has long been the rule that a party may not appeal from the voluntary dismissal of a claim, since the party consented to the judgment against it. See, e.g., Evans v. Phillips, 4 Wheat. 73 (1819); Lord v. Veazie, 8 How. 251, 255–256 (1850); United States v. Babbitt, 104 U. S. 767 (1882); Deakins v. Monaghan, 484 U. S. 193, 199–200 (1988).

The plaintiffs contend that their interest in reversing the order striking their class allegations is sufficient to satisfy Article III’s case-or-controversy requirement, but they misunderstand the status of putative class actions. Class allegations, without an underlying individual claim, do not give rise to a “case” or “controversy.” Those allega­tions are simply the means of invoking a procedural mechanism that enables a plaintiff to litigate his individ­ual claims on behalf of a class. See Shady Grove Orthope­dic Associates, P. A. v. Allstate Ins. Co., 559 U. S. 393, 408 (2010) (plurality opinion). Thus, because the Court of Appeals lacked Article III jurisdiction to adjudicate the individual claims, it could not hear the plaintiffs’ appeal of the order striking their class allegations.

Plaintiffs’ representation that they hope to “revive their individual claims should they prevail” on the appeal of the order striking their class allegations does not under­mine this conclusion. This Court has interpreted Article III “to demand that an ac­tual controversy be extant at all stages of review, not merely at the time the complaint is filed.” Campbell Ewald Co., supra, at ___ (slip op., at 6). And in any event, a favorable ruling on class certification would not “revive” their individual claims: A court’s decision about class allegations “in no way touches the merits” of those claims. Gardner v. Westinghouse Broadcasting Co., 437 U. S. 478, 482 (1978).

(U.S.S.C., June 12, 2017, Microsoft Corp. v. Baker, Docket 15-457, J. Thomas, with whom the C.J. and J. Alito join, concurring in the judgment).

L'opinion concurrente rendue par le Juge Thomas est d'intérêt :

Les demandeurs ont agi pour eux-mêmes et pour la classe formée des consommateurs dans la même situation qu'eux. En début de procédure, la cour de district fédérale, saisie d'une motion de la défenderesse, a refusé de certifier la classe. Saisie à son tour, la cour d'appel fédérale n'a pas autorisé le dépôt d'un appel, en application de la Règle 23(f) des Règles fédérales de procédure civile.

Les demandeurs ont alors décidé de ne pas poursuivre la procédure portant sur leurs prétentions individuelles, en notifiant une annulation volontaire de ces prétentions, "avec préjudice". Ils ont ensuite déposé un appel contre l'ordonnance d'annulation de la procédure. Ils n'ont pas demandé à la cour d'appel de renverser dite annulation de la procédure : ils ont demandé à dite cour de renverser l'ordonnance par laquelle la certification de classe était refusée. La question posée en l'espèce est dès lors celle de savoir si la cour d'appel fédérale est compétente pour connaître d'un appel sous l'angle de la Section 1291 (qui lui confère compétence dans les procédures contre les décisions finales rendues par les cours de district fédérales) et sous l'angle de l'Art. III de la Constitution fédérale, qui limite la compétence du système fédéral aux affaires litigieuses, le litige devant être actuel et susceptible d'être réglé par une décision judiciaire.

La Cour Suprême juge en l'espèce que la cour d'appel n'est pas compétente au sens de la Section 1291 parce que l'ordonnance d'annulation "avec préjudice" ne s'analyse pas en une décision finale. Le Juge Thomas conteste ce raisonnement. Selon lui, une décision est finale au sens de la Section 1291 si elle met fin à la procédure au fond, ne laissant à la cour aucune tâche, si ce n'est l'exécution de dite décision de clôture de procédure. Et en l'espèce, c'est justement ce qui est advenu.

Le Juge Thomas convient que les demandeurs ne pouvaient valablement appeler dans les circonstances de l'espèce. Mais, selon lui, ils ne le pouvaient parce que la cour d'appel n'était pas compétente au sens de l'Art. III de la Constitution fédérale. La compétence des cours fédérales ne s'étend qu'aux affaires litigieuses, présentant des intérêts actuels et concrets, susceptibles de résolution judiciaire, affectant les droits des parties.

L'appel des demandeurs contre la décision d'annulation qu'ils ont eux-mêmes sollicitée ne satisfait pas aux conditions posées par l'Art. III de la Constitution fédérale. En demandant à la cour de district fédérale d'annuler leurs prétentions contre M., ils ont de ce fait accepté la décision rendue contre eux et ont ainsi renoncé à l'ensemble de leurs prétentions contre M. Les parties n'étaient ainsi plus parties adverses, et la cour d'appel ne pouvait pas modifier le contenu de leurs droits. La jurisprudence a par ailleurs établi à cet égard qu'une partie ne saurait recourir contre l'annulation judiciaire volontaire d'une prétention.

C'est à tort que les demandeurs soutiennent que leur intérêt à l'annulation de l'ordonnance qui refusait de certifier la classe est un intérêt suffisant au sens de l'Art. III de la Constitution. En effet, les allégués dans la procédure de classe, sans une prétention individuelle sous-jacente, n'entrainent nullement l'existence d'une controverse au sens de l'Art. III. Ces allégués "de classe" ne sont que le moyen de recourir à un mécanisme procédural qui permet à un demandeur de porter en justice sa propre prétention au nom d'une classe. Comme la cour d'appel n'était pas compétente pour se saisir de prétentions individuelles, elle n'était pas compétente non plus pour connaître de l'appel contre l'ordonnance refusant de certifier la classe.

Les demandeurs se trompent en soutenant que leurs prétentions individuelles pourraient renaître en cas de succès de leur appel contre l'ordonnance précitée. L'art. III de la Constitution impose l'existence d'un litige à tous les stades de la procédure, et non seulement au moment du dépôt de la demande. Par surabondance, une décision certifiant la classe ne provoquerait aucune renaissance des prétentions individuelles : une décision judiciaire certifiant une classe est sans effet sur la question du mérite de prétentions individuelles.