S.D.N.Y. Notes Intra-Circuit Split Re Whether Unrelated Plaintiffs May Aggregate Claims for Designation of Lead Plaintiff Under PSLRA

Per Bhojwani v. Pistiolis, Slip Copy, 2007 WL 2197836 (S.D.N.Y. Jul 31 , 2007) (NO. 06 CIV 13761 CM KNF):

Although PSLRA permits the appointment of a group of persons as lead plaintiff, courts within the Second Circuit are divided over whether unrelated plaintiffs may join together, aggregate their claims and compete, within the context of the rebuttable presumption, for the designation of lead plaintiff. See Goldberger v. PXRE Group, Ltd., No. 06-CV-3410 et al., 2007 WL 980417, at *3-4 (S.D.N.Y. Mar. 30, 2007). Since the principal purpose of PSLRA is to prevent lawyer-driven litigation, allowing attorneys to assemble otherwise unrelated plaintiffs as a group and to aggregate their holdings in order to manufacture the largest financial interest, would defeat the statute's purpose, and some courts, accordingly, disapprove aggregation. In re Doral Fin. Corp. Sec. Litig., 414 F.Supp.2d 398, 401-02 (S.D.N.Y.2006); see In re Pfizer Inc. Sec. Litig., 233 F.R.D. 334, 337 (S.D.N.Y.2005) (refusing to consider potential lead plaintiffs as a group); In re Veeco Instruments Inc. Sec. Litig., 233 F.R.D. 330, 334 (S.D.N.Y.2005) (disapproving aggregation of unrelated persons who join together in the hope of "becoming the biggest loser for PSLRA purposes"); Goldberger v. PXRE Group, LTD., 2007 WL 980417, at *5 (noting reluctancy to aggregate a group comprised of "disparate and apparently unrelated plaintiffs"); In re Razorfish, Inc. Sec. Litig., 143 F.Supp.2d 304, 308-12 (S.D.N.Y.2001); In re Donnkenny Inc. Sec. Litig., 171 F.R.D. 156, 157-58 (S.D.N.Y.1997).

Other courts allow aggregation of unrelated investors in certain instances, for example, "when it would be most beneficial to the class under the circumstances of a given case." See In re Star Gas Sec. Litig., No. 3:04CV1766, 2005 WL 818617, at *5 (D.Conn. Apr. 8, 2005); Weltz v. Lee, 199 F.R.D. 129, 132-33 (S.D.N.Y.2001) (citing to cases in which the courts approved aggregation). Nevertheless, all courts share a common concern about aggregation: "[the assemblage] of unrelated investors [who have] been cobbled together as a 'group' to displace a single competing institutional investor, or a smaller, closely-related group of investors." See Barnet v. Elan Corp., PLC, 236 F.R.D. 158, 163 (S.D.N.Y.2005). In determining whether aggregation is appropriate courts consider factors, such as: (a) the size of a group; (b) whether the group was formed in bad faith; and (c) the relationship among the parties. See id. at 162.

1st Circuit Notes Split Re Subjecting Ex Post Facto Clause Claims to Plain Error Review

Per U.S. v. Munoz-Franco , 487 F.3d 25 (1st Cir. (P.R.) May 22, 2007) (04-1532 - 04-1535):

The Ex Post Facto Clause " 'forbids the application of any law or rule that increases punishment for pre-existing conduct.' " United States v. Regan, 989 F.2d 44, 48 (1st Cir.1993) (quoting United States v. Havener, 905 F.2d 3, 5 (1st Cir.1990)). For "continuing offenses" such as the bank fraud and conspiracy charges at issue here, however, the critical question is when the conduct ended. FN32 As we have explained, "[w]here a 'continuing offense' straddles the old and new law ... applying the new is recognized as constitutionally sound." Id. In other words, "[a] conviction for a continuing offense straddling enactment of a statute will not run afoul of the Ex Post Facto clause unless it was possible for the jury, following the court's instructions, to convict ' exclusively' on pre-enactment conduct." United States v. Monaco, 194 F.3d 381, 386 (2d Cir.1999) (citation omitted). As suggested, "the question of whether the violation extended beyond the effective date of [the statute is] one that ha[s] to be resolved by the jury." United States v. Tykarsky, 446 F.3d 458, 480 (3d Cir.2006).

FN32. We have held that conspiracy is "often a continuing offense," United States v. Welch, 15 F.3d 1202, 1207 (1st Cir.1993), and, in the context of determining venue, we have acknowledged that "[b]ank fraud is also a continuing offense," United States v. Scott, 270 F.3d 30, 36 (1st Cir.2001). The other circuits that have considered the issue generally have agreed that both conspiracy and bank fraud are continuing offenses. See, e.g., United States v. Lennon, 372 F.3d 535, 541 n. 8 (3d Cir.2004)(conspiracy); United States v. Nash, 115 F.3d 1431, 1440-41 (9th Cir.1997)(bank fraud); United States v. Duncan, 42 F.3d 97, 104 (2d Cir.1994)(bank fraud and conspiracy). Under the circumstances present here, there is no question that the conspiracy and bank fraud charges reflect continuing offenses.

. . .

An unpreserved ex post facto claim is subject to plain error review. See, e.g., Tykarsky, 446 F.3d at 479; United States v. Julian, 427 F.3d 471, 481 (7th Cir.2005). Under such review, an appellant must show: "(1) that an error occurred (2) which was clear or obvious and which not only (3) affected the defendant's substantial rights, but also (4) seriously impaired the fairness, integrity, or public reputation of judicial proceedings." United States v. Duarte, 246 F.3d 56, 60 (1st Cir.2001).

In its brief, the government agrees that the district court should have issued an instruction that the jury must find that the conduct continued past the enactment date of the bank fraud statute. Its position is consistent with recent circuit court decisions holding that the failure to issue such an instruction satisfies the first two prongs of the plain error analysis by establishing that an error occurred that was obvious. See Tykarsky, 446 F.3d at 479-80 ("[B]ecause the communications spanned two different versions of the statute with different minimum penalties, the question of whether the violation extended beyond the effective date of the amended version was one that had to be resolved by the jury.... We also conclude that the error in not requiring a special jury finding was 'plain' in that it was an obvious mistake in retrospect."); Julian, 427 F.3d at 482 ("This was a plain error in the sense of being an obvious mistake in retrospect."). Thus, our task is to determine whether this error affected appellants' substantial rights, and, if so, whether the fairness, integrity or public reputation of the judicial proceedings was impaired.

The other circuits have taken varying approaches to applying these prongs of the plain error test in assessing a claimed ex post facto violation. In United States v. Calabrese, 825 F.2d 1342, 1346 (9th Cir.1987), the Ninth Circuit held that the "jury's verdict represents a finding that a crime was committed as alleged in the indictment." Because the indictment alleged an offense that continued past the date of enactment, the court concluded that there was no plain error in the court's failure to issue an instruction. Id.

The Fifth Circuit has examined the record to see whether the bulk of the evidence occurred after the enactment of the statute. In United States v. Todd, 735 F.2d 146 (5th Cir.1984), that court held that where "[m]ost of the evidence focused on events that occurred within the effective date of the amendments," and "the record ... clearly establishes violations of the amended act by the appellants during the relevant time period," the failure to give the jury instruction did not "result in the likelihood of a grave miscarriage of justice or circumstances that seriously affect the fairness, integrity, or public reputation of judicial proceedings." Id. at 150.

The Second and Third Circuits have adopted an approach in which prejudice is established if there was a reasonable possibility that the jury convicted appellant on the basis of pre-enactment conduct. In Tykarsky, for example, the Third Circuit explained that a district court's failure to issue an instruction means that a defendant "has been prejudiced if there is a reasonable possibility that a jury, properly instructed on this point, might have found [the defendant] guilty based exclusively on acts that occurred before the increased penalty took effect." 446 F.3d at 480. The court noted that "[t]he most that can be said here is that it is improbable, rather than impossible, as a factual matter, that the jury convicted Tykarsky exclusively on the basis of" pre-enactment conduct, which was "insufficient to persuade us that [the defendant's] substantial rights were not affected." Id. at 482. FN34 The court concluded that this prejudice "tainted the integrity and reputation of the judicial process" and consequently vacated the defendant's sentence and remanded to the district court. Id. at 483.

FN34. The Third Circuit's holding is similar to that of the Second Circuit. See United States v. Harris, 79 F.3d 223, 229 (2d Cir.1996) "Because the [ ] statute is a continuing crime statute, we must determine whether it was possible for the jury, following the district court's instructions, to convict [the defendant] exclusively on pre-[ ]enactment conduct. After examining the jury instructions, we think that such a scenario was impossible."). Appellants also refer to United States v. Torres, 901 F.2d 205 (2d Cir.1990). However, that case is distinguishable because appellants did raise a general ex post facto challenge before the district court. Id. at 228. On appeal, the Second Circuit discussed plain error review but did not explicitly apply such review. Id. It concluded only that "it is inappropriate to impose a mandatory life sentence upon [the defendants] where there was an ex post facto violation in the instruction actually given, and the defendants brought the general ex post facto question to the attention of the district court." Id. at 229.

Finally, in Julian, the Seventh Circuit considered an alleged conspiracy and found, on the third prong of the plain error analysis, that a court's failure to issue an ex post facto instruction "affected [the defendant's] substantial rights in the sense that it exposed him to a longer sentence." 427 F.3d at 482. It then focused on the fourth prong, explaining that "[i]f a jury, properly instructed on this point, might have found that the conspiracy had come to an end before the increased penalty took effect or that [defendant] had withdrawn from the conspiracy before that date, then the error is one that implicates the fairness, integrity, or public reputation of the judicial process." Id. It concluded that a reasonable jury could not have found that the conspiracy at issue ended prior to the enactment date of the statute. Id. at 483.

Ultimately, we need not settle on a rule here. The plain error analysis used by the Second and Third Circuits is most favorable to defendants because it requires a finding of prejudice if there was a "reasonable possibility" that the jury convicted appellants solely on the basis of pre-enactment conduct. Here, even under that test, appellants cannot demonstrate an ex post facto violation because no reasonable jury would have convicted appellants based exclusively on conduct that occurred prior to the enactment date. Moreover, even if we were to apply the "miscarriage of justice" approach of the Seventh Circuit, we would conclude there was no miscarriage of justice here because the government presented so much evidence of the involvement of the defendants in the ongoing conspiracy and bank fraud following the enactment of the bank fraud statute in 1984.

N.D. California Notes Split Re Whether PMA Approval Process Creates Specific FDA Requirements for Purposes of MDA Preemption

Per Notmeyer v. Stryker Corp., --- F.Supp.2d ----, 2007 WL 2257113 (N.D.Cal . Aug 06, 2007) (NO. C 06-04096SI):

Subsequent to Lohr, circuit courts have split on the issue as to whether the PMA approval process creates specific FDA requirements for purposes of MDA preemption. Five out of six circuit courts that have faced this issue have ruled that the PMA process creates FDA requirements. See Riegel v. Medtronic, Inc., 451 F.3d 104, 118 (2d Cir.2006); Gomez v. St. Jude Medical Daig Div., Inc., 442 F.3d 919, 930 (5th Cir.2006); Horn v. Thoratec Corp., 376 F.3d 163, 169-70 (3d Cir.2004); Brooks, 273 F.3d at 799; Kemp v. Medtronic, Inc., 231 F.3d 216, 226-28 (6th Cir.2000), reh'g denied, 2001 WL 91119 (6th Cir. Jan. 26, 2001), cert. denied, 122 S.Ct. 48 (2001) ; Mitchell v. Collagen Corp., 126 F.3d 902, 911 (7th Cir.1997), cert. denied, 523 U.S. 1020 (1998) . In Mitchell, the Seventh Circuit held: "We agree that the PMA process, as opposed to the 'substantially equivalent' process at issue in [ Lohr ], can constitute the sort of specific federal regulation of a product that can have preemptive effect." Mitchell, 126 F.3d at 911.

Post- Lohr, only the Eleventh Circuit court has explicitly found that the PMA review process does not create specific federal requirements. See Goodlin v. Medtronic, Inc., 167 F.3d 1367, 1375-80 (11th Cir.1999). In Goodlin, the plaintiff sued the manufacturer of a PMA-approved pacemaker lead. The Eleventh Circuit held that "neither the FDA's actual review of a device and its supporting information nor the agency's eventual approval of the device imposes any ascertainable requirement on the device." Id. at 1375. In reaching this holding, the court engaged in a thorough review of Congressional intent, and noted that "several highly publicized incidents involving defective medical devices ... gave rise to Congress's legislation in this area. It would have been inconsistent for the same Congress that enacted these sweeping reforms ... then to preempt product liability suits when those devices caused injury." Id. at 1378. The court continued: "We ... are reluctant to conclude that Congress sought to remove all remedies available to the very class of persons that it sought to protect when it enacted the MDA." Id. at 1379.

Though the Ninth Circuit has not directly addressed this issue post-Lohr, it did address the issue pre- Lohr, in Kennedy v. Collagen Corporation, 67 F.3d 1453 (9th Cir.1995). In Kennedy, the plaintiff brought suit against the manufacturer of a PMA-approved prescription medical device used to treat soft tissue defects. In addressing defendant's preemption argument, the Ninth Circuit stated: "We must address two threshold questions: (1) what constitutes a 'State ... requirement' and (2) what constitutes a 'requirement' under the MDA." Id. at 1457 (quoting case). With respect to the first inquiry, the Ninth Circuit held that state common-law causes of action do not constitute state requirements for the purposes of MDA preemption. See id. at 1459. As discussed above, the Supreme Court in Lohr overruled this first holding of Kennedy. The Ninth Circuit recognized this much in Papike v. Tambrands, Inc., 107 F.3d 737, 741 (9th Cir.1997), stating: "To the extent we concluded in Kennedy that the MDA cannot preempt any state common-law causes of action, the conclusion cannot survive in light of the concurring and dissenting opinions in [ Lohr ]."

1st Circuit Notes Split Re Application of Federal DNA Act in Fourth Amendment Search and Seizure Issues

Per U.S. v. Weikert, --- F.3d ----, 2007 WL 2265660 (1st Cir.(Mass.) Aug 09, 2007) (NO. 06-1861):

This case presents a question of first impression in this circuit: is it a violation of the Fourth Amendment's prohibition on unreasonable searches and seizures to require an individual on supervised release to provide a blood sample for purposes of creating a DNA profile and entering it into a centralized database? Agreeing with the eleven other circuits that have held similarly, we hold that it is not. In doing so, we interpret the Supreme Court's decision in Samson v. California, --- U.S. ----, 126 S.Ct. 2193, 165 L.Ed.2d 250 (2006), to require that we join the majority of the circuits in applying a "totality of the circumstances" approach to the issues in this case, rather than the "special needs" analysis used by the minority of circuits.

. . .

The other circuits have split in the analysis they apply to the federal DNA Act or its state law analogs. A majority-the Third, Fourth, Fifth, Eighth, Ninth, Eleventh, and D.C. Circuits-use the totality of the circumstances analysis described in Knights and Samson. See United States v. Kraklio, 451 F.3d 922, 924 (8th Cir.2006)(federal DNA Act); Johnson v. Quander, 440 F.3d 489, 496 (D.C.Cir.2006)(federal DNA Act); United States v. Sczubelek, 402 F.3d 175, 184 (3d Cir.2005)(federal DNA Act); Padgett v. Donald, 401 F.3d 1273, 1280 (11th Cir.2005)(Georgia analog); United States v. Kincade, 379 F.3d 813, 832 (9th Cir.2004)(en banc)(federal DNA Act); Groceman v. U.S. Dep't of Justice, 354 F.3d 411, 413-14 (5th Cir.2004)(per curiam)(federal DNA Act); Jones v. Murray, 962 F.2d 302, 306-07 (4th Cir.1992)(Virginia analog). A minority-the Second, Seventh, and Tenth Circuits-apply the special needs analysis. See Amerson, 483 F.3d 73, 79 n. 6 (2d Cir.2007)(federal DNA Act); United States v. Hook, 471 F.3d 766, 773 (7th Cir.2006)(federal DNA Act); United States v. Kimler, 335 F.3d 1132, 1146 (10th Cir.2003)(federal DNA Act). Finally, the Sixth Circuit, in United States v. Conley, 453 F.3d 674, 679-81 (6th Cir.2006), declined to choose a mode of analysis, holding that the DNA Act was constitutional under either a totality of the circumstances or a special needs analysis. FN6

FN6. The circuits also disagree over which test is more rigorous. Compare Sczubelek, 402 F.3d at 184 (explaining that it would apply the "more rigorous Knights totality of the circumstances test rather than the Griffin special needs exception) and Kraklio, 451 F.3d at 924 (same) with Amerson, 483 F.3d at 79 n. 6 (2d Cir.2001)(indicating that the special needs test is more "stringent").

1st Circuit Notes Split Re Whether Standing is Required to Invervene if Original Parties are Maintaining a Case or Controversy

Per Maine v. Johnson, --- F.3d ----, 2007 WL 2258265 (1st Cir. Aug 08, 2007) (NO. 04-1363, 04-1375):

Since we have sustained state jurisdiction as to all of the sites, this statutory argument does not affect the ultimate outcome. Further, the EPA argues that the intervenors have no standing to make an argument that has been made neither by the EPA (in defense as to the nineteen sites) nor by Maine (as to the other two sites). The standing argument is, as is often the case, more complicated than the merits of the claim--partly because of conflict in the case law and partly because more than one standing concept is involved. FN12

FN12. E.g., Mangual v. Rotger-Sabat, 317 F.3d 45, 61 & n. 5 (1st Cir.2003) ("[T]he circuits are split on the question of whether standing is required to intervene if the original parties are still pursuing the case and thus maintaining a case or controversy....").

E.D. Pennsylvania Notes Split Re Whether an Unauthorized Driver of a Rental Car has Standing to Challenge Fourth Amendment Vehicle Search

Per U.S. v. Dennis, Slip Copy, 2007 WL 2173394 ( E.D.Pa. Jul 27, 2007) (NO. CRIM.06-650-01):

The Third Circuit has not yet addressed the question whether an unauthorized driver of a rental car has standing to challenge a vehicle search under the Fourth Amendment. However, several other Circuit Courts have addressed the issue directly. See United States v. Thomas, 447 F.3d 1191 (9th Cir.2006) (collecting cases and analyzing the Circuit split).

Of the Circuits to address the issue, the Fourth, Fifth and Tenth Circuits have adopted a bright line approach, under which an unauthorized driver of a rental car lacks standing to object to its search. See United States v. Wellons, 32 F.3d 117, 119 (4th Cir.1994); United States v. Boruff, 909 F.2d 111, 117 (5th Cir.1990); United States v. Roper, 918 F.2d 885, 887-88 (10th Cir.1990). The Eighth and Ninth Circuits have adopted a modified bright-line approach, under which an unauthorized driver may have standing to challenge a vehicle search if he received permission from the authorized driver to use the car. United States v. Thomas, 447 F.3d 1191, 1199 (9th Cir.2006); United States v. Best, 135 F.3d 1223, 1225 (8th Cir.1998). Finally, the Sixth Circuit has adopted a totality of the circumstances approach, in which courts consider factors including, (1) whether the defendant has a driver's license; (2) the relationship between the unauthorized driver and the lessee; (3) the driver's ability to present rental documents; (4) whether the driver had the lessee's permission to use the car; and (5) the driver's relationship with the rental company. United States v. Smith, 263 F.3d 571, 586 (6th Cir.2000).

One court in this Circuit recently considered this standing issue in light of the Third Circuit's opinion in Baker. In United States v. Kennedy, 2007 WL 1740747, *3-4 (E.D.Pa. Jun.15, 2007), the court observed that in Baker, the Third Circuit adopted a "fact-bound" inquiry into a driver's standing. Id. at *4. Accordingly, the Kennedy court held that Baker "may be read as an implicit endorsement of either the modified bright-line rule or the totality of the circumstances test." Id. As to the bright-line approach, the court observed: "Despite the laudable qualities of this standard-including ease of applicability-it is a blunt instrument, particularly in an area of law that usually calls for a fact-specific analysis." Id. at *3.

This Court agrees with the analysis of the Kennedy court. In Kennedy, citing Baker, the Court predicted that "the Third Circuit would utilize either the modified bright-line rule, under which unauthorized drivers of rental cars have standing to contest a search if they have the permission of an authorized driver, or the totality of the circumstances test." Id. at *4.

S.D.N.Y. Notes Split Re Whether Defendant Classes are Permissible in Class Actions under Rule 23(b)(2)

Per Brown v. Kelly, Slip Copy, 2007 WL 2156400 (S.D.N.Y. Jul 24 , 2007) (NO. 05 CIV 5442 SAS):

There is currently a split in the circuits as to whether defendant classes are permissible in class actions governed by Rule 23(b)(2). FN138 Courts ascribing to a literal reading of the Rule have held that it only permits plaintiff classes to seek injunctive and declaratory relief from individual defendants, as opposed to defendant classes. FN139 However, the Second Circuit-the only appellate court that binds this Court-has expressly rejected such a narrow interpretation of the Rule. In Marcera v. Chinlund, the court affirmed certification of a defendant class of county sheriffs and stated "it is now settled that 23(b)(2) is an appropriate vehicle for injunctive relief against a class of local public officials." FN140 Although it is employed rarely for this purpose, both before and after Marcera, Rule 23(b)(2) has been the cornerstone of bilateral civil rights class actions.

FN138. The Supreme Court has not spoken on this issue. In Zablocki v. Redhail, 434 U.S. 374, 380 n. 6 (1978), the Court noted that the appellant had not appealed the district court's certification of a(b)(2) defendant class, but did not otherwise address this point.

FN139. See Paxman v. Campbell, 612 F.2d 848, 854 (4th Cir.1980) ( "As is clear from the language of the Rule, it is applicable to situations in which a class of plaintiffs seeks injunctive relief against a single defendant .... To proceed under 23(b)(2) against a class of defendants would constitute the plaintiffs as 'the party opposing the class,' and would create the anomalous situation in which the plaintiffs' own actions or inactions could make injunctive relief against the defendants appropriate."). Accord Tilley v. TJX Cos., Inc., 345 F.3d 34, 40 (1st Cir.2003); Henson, 814 F.2d at 415-17; Thompson, 709 F.2d at 1204.

FN140. 595 F.2d at 1238. Accord Southern Ute Indian Tribe v. Amoco Prod. Co., 2 F.3d 1023 (10th Cir.1993) (affirming certification of a(b)(2) defendant class); Baker v. Wade, 743 F .2d 236, 244 (5th Cir.1984) (certification of a(b)(2) defendant class was proper where the named defendants would adequately represent the class and "the true interest at stake" was "that of the State of Texas in the constitutionality of its duly enacted legislation"). See also Luyando, 124 F.R.D. at 58 (certifying a(b)(2) defendant class); Follette v. Vitanza, 658 F.Supp. 492, 506 (N.D.N.Y.1987) (same); DeAllume, 110 F.R.D. at 304 (same). The Second Circuit's decision in Marcera was vacated on grounds completely distinct from the court's holding with respect to certification of the (b)(2) defendant class. See Marcera, 442 U.S. at 915 (remanding the case for further consideration in light of recent precedent regarding inmate confinement facilities). Indeed, on remand, the district court, in applying the new substantive law, again certified a(b)(2) defendant class, which was not disturbed on appeal. Accordingly, Marcera remains good law in this Circuit and is binding on this Court.