The Lawletter Vol 41 No 11

Paul Ferrer, Senior Attorney, National Legal Research Group

      All states have a statute of frauds, based on the original Statute of Frauds enacted in England in 1677, barring actions upon some types of promises unless evidenced by a writing signed by the party to be charged with the promise. The promises typically covered by a state’s statute of frauds include "any promise to answer for the debt, default, or misdoing of another," and "any agreement that is not to be performed within one year from the making thereof." Ky. Rev. Stat. Ann. § 371.010(4), (7). In Chin v. Chin, 494 S.W.3d 517 (Ky. Ct. App. 2016), the Kentucky Court of Appeals held that neither of these provisions barred a claim by parents ("the Chins") against their son ("Raymond") for breach of an oral contract to repay a college loan that the parents had taken out for his benefit.

     In that case, Raymond attended college at the Rose-Hulman Institute of Technology, a top-ranked engineering college that carried a price tag of about $54,000 per year in 1999. At the time, Raymond’s father was making $55,000 per year as a teacher, while his mother was making $18,000 per year as an aide. The Chins obtained a Parent PLUS loan to pay for Raymond’s college expenses, which ultimately totaled more than $58,000 (Raymond received a partial scholarship). Although the Chins signed for the loan, Raymond orally agreed that he would be responsible for paying the loan, and would repay any amounts the Chins had already paid, as soon as he had a job.

The Lawletter Vol 41 No 7

Paul Ferrer, Senior Attorney, National Legal Research Group

      For many years, trial attorneys were familiar with the broad scope of discovery under Rule 26(b)(1) of the Federal Rules of Civil Procedure, which provided that unless otherwise limited by court order, parties could "obtain discovery regarding any nonprivileged matter that is relevant to any party's claim or defense." As indicated in Rule 26(b)(1), the scope of discovery could be limited by the entry of a protective order if the court determined, among other things, that "the burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues." Fed. R. Civ. P. 26(b)(2)(C)(iii) (amended), quoted in EEOC v. Thompson Contracting, Grading, Paving, & Utils., Inc., 499 F. App'x 275, 281 n.5 (4th Cir. 2012). As part of the "Duke Rules" package of amendments to the Federal Rules of Civil Procedure, which took effect on December 1, 2015, that language was moved out of Rule 26(b)(2)(C)(iii) and into Rule 26(b)(1), which now provides that

The Lawletter Vol 41, No 3

Paul Ferrer, Senior Attorney, National Legal Research Group

      In order to keep cases from ping-ponging between state and federal court, the federal removal statutes prohibit appellate review of remand orders. See In re La Providencia Dev. Corp., 406 F.2d 251, 252 (1st Cir. 1969) ("The action must not ricochet back and forth depending upon the most recent determination of a federal court."). In particular, 28 U.S.C. § 1447(d) provides that, with the exception of certain cases involving federal officers or civil rights, "[a]n order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise." 28 U.S.C. § 1447(d) (emphasis added). Does the "or otherwise" language prevent review by a district court of its own remand order under Rule 60(b)(3)? That was the question addressed by the U.S. Court of Appeals for the Fourth Circuit, sitting en banc, in Barlow v. Colgate Palmolive Co., 772 F.3d 1001 (4th Cir. 2014) (en banc).

     In Barlow, two individuals separately sued Colgate-Palmolive Company and other companies in Maryland state court, alleging that each of the defendants' products had exposed them to asbestos. Even though the plaintiffs joined in-state defendants, Colgate removed the two cases to federal court on the basis of diversity of citizenship. Colgate asserted that the in-state defendants had been fraudulently joined, pointing to discovery responses indicating that the plaintiffs did not intend to pursue a claim against any defendant other than Colgate. The plaintiffs then moved to remand the cases to state court. In their motions, the plaintiffs' counsel represented that there was some circumstantial evidence to suggest exposure to asbestos at the hands of the nondiverse defendants. Based on counsel's representations, the district court judges (Judges Nickerson and Quarles) remanded the cases to state court.

The Lawletter Vol 40 No 11

Paul Ferrer—Senior Attorney, National Legal Research Group

     Courts often give voice to the black-letter principle that a so-called "agreement to agree, where [material] terms are left to future negotiations, is unenforceable." In re Estate of Wyman, 8 N.Y.S.3d 493, 494 (App. Div. 2015). Some courts have concluded that an agreement to negotiate at a later date is an unenforceable agreement to agree. See, e.g., 77 Constr. Co. v. UXB Int'l, Inc., No. 7:13-CV-340, 2015 WL 926036, at *4 (W.D. Va. Mar. 4, 2015). But other courts have distinguished unenforceable agreements to agree from valid agreements to negotiate in good faith. See, e.g., Copeland v. Baskin Robbins, U.S.A., 117 Cal. Rptr. 2d 875 (Ct. App. 2002).

     In that case, Copeland negotiated with Baskin Robbins to buy an ice cream manufacturing plant. The purchase transaction was contingent on Baskin Robbins's agreeing to a "copacking" arrangement, by which Baskin Robbins would agree to buy the ice cream that Copeland manufactured at the plant. After several months of negotiations, Baskin Robbins sent Copeland a letter indicating that it would (1) sell Copeland the plant for $1.3 million, and (2) buy the ice cream manufactured at the plant for three years, "subject to a separate co-packing agreement and negotiated pricing." Id. at 878. Copeland indicated his agreement, after which the parties continued negotiating over the terms of the copacking agreement. Two months later, Baskin Robbins broke off the negotiations because due to recent business decisions, the copacking arrangement was no longer in alignment with its strategy. Copeland sued for breach of contract, but the trial court granted summary judgment in favor of Baskin Robbins because the essential terms of the copacking deal were never agreed to.

The Lawletter Vol 40 No 7

Paul Ferrer, Senior Attorney, National Legal Research Group

     Federal law permits "civil actions involving one or more common questions of fact" that are pending in different districts to be transferred to any district for coordinated or consolidated pretrial proceedings by the judicial panel on multidistrict litigation ("MDL"). 28 U.S.C. § 1407(a). Another federal statute grants an unsuccessful litigant in a federal district court the right to take an appeal, as a matter of right, from a "final decision" of the district court. Id. § 1291. In Gelboim v. Bank of America Corp., 135 S. Ct. 897 (2015), the Supreme Court decided the question of whether the right to appeal secured by § 1291 is affected when a case is consolidated for MDL pretrial proceedings under § 1407.

The Lawletter Vol 40 No 3

Paul Ferrer, Senior Attorney, National Legal Research Group

     The U.S. Supreme Court continues to refine the state-action immunity doctrine first formulated in Parker v. Brown, 317 U.S. 341 (1943). In Parker, relying on principles of federalism and state sovereignty, the Court refused to construe the Sherman Act, which prohibits contracts, combinations, or conspiracies in restraint of trade, see 15 U.S.C. § 1, as applying to the anticompetitive conduct of a state acting through its legislature. Rather, the Supreme Court ruled that the Sherman Act was intended to prohibit private restraints on trade, and it refused to infer an intent to "nullify a state's control over its officers and agents" in activities directed by the legislature. Parker, 317 U.S. at 351.