Opinion
ADM04-8001
03-13-2018
ORDER PROMULGATING AMENDMENTS TO THE RULES OF CIVIL PROCEDURE
Two petitions to amend the Rules of Civil Procedure were filed in 2016: by the Minnesota State Bar Association, to substantially conform certain rules to the Federal Rules of Civil Procedure and to amend Rule 23 to require that at least 50 percent of unclaimed, undistributed, funds in state class action lawsuits be donated to the Minnesota Legal Aid Foundation Fund; and by the Board on Judicial Standards, to amend Rule 63 to clarify and update the judicial-disqualification standard. We referred both petitions to the Advisory Committee on the Rules of Civil Procedure, which considered the amendments proposed in those petitions and other updates to the Rules of Civil Procedure over the course of several meetings in 2017.
The committee filed its report and recommendations on August 1, 2017. We opened a public-comment period and on December 19, 2017, held a public hearing. The court has carefully considered the petitions, the recommended amendments, and the oral and written comments regarding those recommendations. Based on that review, we have decided that the petition of the Minnesota State Bar Association should be granted in part, the petition of the Board on Judicial Standards should be granted, and the recommendations of the Advisory Committee on the Rules of Civil Procedure should be adopted in part.
Based on all of the files, records, and proceedings herein,
IT IS HEREBY ORDERED THAT:
1. The Committee's recommendation to amend the Rules of Civil Procedure to adopt timing deadlines based generally on a 7-, 14-, 21-, and 28-day system, as shown in Attachment 1 to the Committee's report, is referred to the Supreme Court Advisory Committee on the General Rules of Practice, the Supreme Court Advisory Committee on the Rules of Criminal Procedure, and the Supreme Court Advisory Committee on the Rules of Civil Appellate Procedure. Those committees are directed to consider the recommended amendments to the Rules of Civil Procedure that are identified in Attachment 1 to the Committee's August 1 report, and determine whether similar or other changes to the time deadlines in the rules monitored by those committees should be recommended for amendment. The reports and recommendations of those committees shall be filed on or before October 1, 2018.
2. The petition of the Minnesota State Bar Association is granted in part with respect to the request to amend Rules 3-4, 23, 30, 34, 37, and 56 of the Rules of Civil Procedure.
3. The petition of the Board on Judicial Standards, to amend Rule 63 of the Rules of Civil Procedure, is granted.
4. The attached amendments to the Rules of Civil Procedure and to Rule 115.01 of the General Rules of Practice for the District Courts, are prescribed and promulgated to be effective as of July 1, 2018. The rules as amended shall apply to all cases pending on, or filed on or after, the effective date, with the exception of the amendments to Rules 26, 34, 37, and 63, which apply only to actions commenced on or after the effective date. A district court may, however, direct the parties in any case pending on the effective date of these rules to follow Rules 26, 34, and 37.
5. The Advisory Committee comments are included for convenience and do not reflect court approval of the comments.
Dated: March 13, 2018
BY THE COURT:
/s/
Lorie S. Gildea
Chief Justice MEMORANDUM PER CURIAM.
Two petitions to amend the Rules of Civil Procedure were filed in 2016. First, the Minnesota State Bar Association (MSBA) filed a petition that asks the court to adopt the system used in the Federal Rules of Civil Procedure to calculate rule-imposed deadlines, to otherwise amend certain rules to conform Minnesota's rules to changes made to the Federal Rules of Civil Procedure over the last several years, and to amend Minn. R. Civ. P. 23 to require that at least SO percent of unclaimed undistributed funds in state class action lawsuits ("cy pres funds") be donated to the Minnesota Legal Aid Foundation Fund. Second, the Board on Judicial Standards petitioned to amend Rule 63 to clarify and update the judicial-disqualification standard. We referred the petitions to the Advisory Committee on the Rules of Civil Procedure, which considered both petitions and other proposed rule amendments over a series of meetings in 2017.
The committee filed its report and recommendations on August 1, 2017. We opened a public-comment period and held a public hearing on December 19, 2017. Ten comments were filed, and representatives of the MSBA, Committee chair Judge Eric Hylden, and Committee reporter David Herr spoke at the public hearing. After careful consideration of the petitions, the Committee's recommendations, the written comments, and the remarks at the public hearing, we have decided to grant in part and deny in part the MSBA's petition, grant the petition of the Board on Judicial Standards, and adopt the recommendations of the Advisory Committee with respect to most other recommended rule amendments, for the reasons explained below.
I.
The MSBA's petition asks us to amend the Rules of Civil Procedure to conform "to the time-period structure" in the Federal Rules of Civil Procedure. The Committee also recommends amendments to several rules to adopt deadlines based "on a 7-, 14-, 21-, and 28-day system," in place of the existing 5-, 10-, and 20-day deadlines. These proposed rule changes embrace similar changes made in the Federal Rules of Civil Procedure. In 2009, deadlines in the federal rules were amended to require the counting of all days—"including intermediate Saturdays, Sundays, and legal holidays" when calculating a rule-imposed deadline. See Fed. R. Civ. P. 6, advisory comm. note—2009 Amendments. With this change to the federal rules, all days are treated the same (except when the last day of the event falls on Saturday, Sunday, or legal holiday, in which case counting continues forward to the next day that is not a Saturday, Sunday, or legal holiday), and complicated or counterintuitive counting outcomes are eliminated. See id. (explaining that under the former counting rules, a 10-day period "not infrequently ended later than [a] 14-day period" that started at the same time).
The MSBA and the Advisory Committee agree that the change adopted by the federal courts to calculate rule-imposed deadlines is sound. But with respect to this particular change, the Committee recommends that input from the Advisory Committees for the General Rules of Practice, the Rules of Criminal Procedure, and the Rules of Civil Appellate Procedure be obtained before a final decision is made on the recommended amendments to the timing provisions in the Rules of Civil Procedure.
We agree. Uniformity in procedures, between state and federal court actions, is beneficial in some instances, but must be feasible and practical in Minnesota state courts. Determining whether uniform time-calculation rules should apply in all case types, or if not in which instances a different time-calculation rule should be used, requires input from the Advisory Committees for the General Rules of Practice, the Rules of Criminal Procedure, and the Rules of Civil Appellate Procedure.
II.
The MSBA's petition asks us to amend the Rules of Civil Procedure by adopting other changes that have been made in recent years to the Federal Rules of Civil Procedure that are unrelated to the calculation of deadlines, and the Advisory Committee, agreeing with many of those changes, recommends similar amendments to the Rules of Civil Procedure. We agree that many of the amendments made over the last several years in the Federal Rules of Civil Procedure have worked well in federal practice and are likely to be useful to civil parties, practitioners, and our district courts. We therefore grant the MSBA's petition in part, and adopt the committee's recommended amendments to Rules 3-4, 14, 34, and 37 of the Rules of Civil Procedure.
We do not grant the MSBA's petition with respect to the proposed amendments to Rules 16.01-.02, which govern scheduling conferences. The MSBA proposes mandatory, as opposed to optional, scheduling conferences and mandatory attendance at those conferences. Mandatory requirements may, as the MSBA contends, enhance the utility of these pretrial proceedings, but not every civil case in our state district courts requires this level of pretrial rigor. The considerable discretion exercised by the district court judge in tailoring scheduling conferences accommodates, necessarily, the variety of case management, case types, and court schedules that exist across the state. The current flexibility in Rule 16 is a better model for our state district courts.
For similar reasons, we do not grant the MSBA's petition to amend Rule 26, and we accept the Committee's recommendations regarding amendments to Rules 26.02-.04 and 26.06. The Committee did not support the MSBA's proposed amendments to Rule 26, which governs initial disclosures and discovery, in part because the current practice, which was adopted in 2013 following extensive study of civil justice reform initiatives, is reported to work well in Minnesota's district courts. The Committee's proposed amendments to Rules 26.02-.04 and 26.06 are also consistent with our existing case management processes and include an appropriate emphasis on proportionality in discovery. Thus, for Rule 26, we conclude that it is unnecessary to adopt procedures simply because they have been used in federal courts, particularly when doing so may constrain the flexibility and discretion of our district court judges without achieving an obvious benefit to the administration of justice.
Finally, although we promulgate amendments to Rule 56, which governs summary-judgment motions and practice in the district courts, we do so using our current standard, which is slightly different from that proposed by the MSBA and recommended by the Committee. Consistent with the current rule and our case law, summary judgment is appropriate only when there is no "genuine issue of material fact," as opposed to "no genuine dispute as to any material fact." See Senogles v. Carlson, 902 N.W.2d 38, 42 (Minn. 2017) (stating that "[s]ummary judgment is appropriate when there is no genuine issue of material fact and a party is entitled to judgment as a matter of law." (emphasis added)); Minn. R. Civ. P. 56.03 (stating that summary judgment can be granted if "there is no genuine issue as to any material fact"); but see Fed. R. Civ. P. 56(a) (stating that summary judgment is granted "if the movant shows that there is no genuine dispute as to any material fact"). We have therefore promulgated amendments to Rule 56, and specifically Rules 56.01, 56.03, and 56.07 using the "genuine issue" rather than the "genuine dispute" standard.
III.
The MSBA's petition asks us to amend Rule 23 to require that "at least 50 percent of unclaimed, undistributed residual funds in class actions (i.e., cy pres funds) be donated to the Minnesota Legal Aid Foundation Fund." Such funds would be used to support qualified legal services programs. The MSBA explains that civil legal services providers "have reaped substantial benefits" in states that have adopted court rules or enacted statutes governing the dedicated distribution of cy pres funds from a class-action settlement or compromise.
The cy pres doctrine, as used in a class-action context, has its roots in trust law. "In its original trust law habitat, the cy pres doctrine allows courts to take trust money previously designated for a defunct purpose and reallocate that money to some other purpose consonant with the purpose for which the trust was originally created." In re Citigroup Inc. Sec. Litig., 199 F.3d 845, 848 (S.D.N.Y. 2016).
The Committee considered the MSBA's petition and sought input from class-action practitioners. The Committee recommends that we decline to amend Rule 23 for two reasons. First, the Committee noted that there is no similar federal rule and thus, a rule of procedure governing Minnesota state court actions could be "inconsistent with numerous federal class-action decisions." Further, given the relatively few class actions in Minnesota state courts, the Committee concluded that adequate guidance on cy pres distributions, when the occasion arises, can be found in federal court decisions. Guidance could also be sought, the Committee noted, from analogous Minnesota law, e.g., Minn. Stat. § 501B.31 (2016), which incorporates common law cy pres principles by allowing the "redirection" of trust funds when doing so will "as nearly as possible, accomplish the general purposes of the instrument and the intention of the grantor." Id., subd. 4(c). Second, the Committee questioned whether a requirement, mandatory or permissive, for distribution of class-action cy pres funds to a specific category of recipients would present separation-of-powers concerns.
The MSBA, in response to the Committee's recommendation, explained that using the cy pres doctrine in a class action to distribute otherwise undistributed class action funds is a "pragmatic" and "justice-oriented" solution that can increase the capacity of civil legal services programs to provide access to the courts. Eight of the ten comments filed during the public comment period supported the MSBA's petition and proposed amendment to Rule 23. The MSBA's petition is also supported by the American Bar Association.
Currently, Rule 23.05 requires a district court to consider whether a proposed class-action settlement or compromise is "fair, reasonable, and adequate," Minn. R. Civ. P. 23.05(a)(3), which can "require[] an amalgam of delicate balancing, gross approximations and rough justice." SST, Inc. v. City of Minneapolis, 288 N.W.2d 225, 231 (Minn. 1979) (citations omitted) (explaining the "standard applied to judicial approval of settlements in class actions"). Nothing in the plain language of this rule requires or prohibits the parties from providing in a settlement or compromise agreement for a cy pres distribution of remaining funds, see Buchholz Mortuaries, Inc. v. Dir. of Revenue, 113 S.W.3d 192, 196 n.1 (Mo. 2003) (Wolff, J., concurring) (noting that the parties can agree in a settlement, "subject to court approval," that undistributed funds will be distributed "for the indirect benefit of the class"); and nothing in the rule requires or prohibits the district court, in an exercise of its discretion, from directing the distribution of cy pres funds to a particular recipient, including a legal services provider. See, e.g., In re Peterson's Estate, 277 N.W. 529, 533 (Minn. 1938) (explaining that under the "historical doctrine of judicial cy pres," a court can "approximate the intention of the donor when his exact intention cannot be carried out for some reason"); Heller v. Schwan's Sales Enter., Inc., 548 N.W.2d 287, 289 (Minn. App. 1996) (explaining that approval of a class-action settlement is reviewed under an abuse of discretion standard), rev. denied (Minn. Aug. 6, 1996).
We acknowledge the basic premise that underlies the MSBA's petition: providers of civil legal aid services require funding in order to provide meaningful access to civil justice. We can also acknowledge that class-action cy pres distributions may be preferable as compared to other options for distributing funds that remain after class members have been compensated. See, e.g., In re Baby Prods. Antitrust Litig., 708 F.3d 163, 172 (3d Cir. 2013) (noting that "cy pres distributions have benefits over the alternative choices" for undistributed class-action funds). But, courts and commentators have observed that untethered from some nexus to the class action, the fairness of a cy pres distribution in a particular class-action case may be open to question. See Nachshin v. AOL, LLC, 663 F.3d 1034, 1038 (9th Cir. 2011) (acknowledging that "the cy pres doctrine—unbridled by a driving nexus between the plaintiff class and the cy pres beneficiaries—poses many nascent dangers to the fairness of the distribution process.").
The considerations relevant to judicial approval of a class-action settlement or compromise can vary considerably from case to case, based on the nature of the particular class action and the terms of any settlement or compromise agreement, including terms that address a possible cy pres distribution. See Lane v. Facebook, Inc., 696 F.3d 811, 819 (9th Cir. 2012) (explaining that a "class-action settlement that calls for a cy pres remedy" should not be approved as "fair, adequate, and reasonable" unless that remedy "account[s] for the nature of the plaintiffs' lawsuit, the objectives of the underlying statutes and the interests of the silent class members" (alteration in original) (citation omitted)). Given these considerations and the district court's broad discretion in this area of law, we conclude that mandating the distribution of a specific minimum percentage of cy pres funds to a single recipient may unnecessarily constrain the district court's evaluation of what is fair, adequate, and reasonable in a given case. On the other hand, the district court's evaluation of those considerations, when it comes to cy pres funds, may be better informed if it has input from potential cy pres recipients, including civil legal services providers.
Thus, we believe the appropriate balance between class-action principles and the cy pres remedy is to require notice to legal services providers when the district court is considering the possible distribution of cy pres funds. See also Sister Elizabeth Kenny Found., Inc. v. Nat'l Found., 126 N.W.2d 640, 646 (Minn. 1964) (addressing, in the context of a trust distribution, when a possible beneficiary of cy pres funds should be permitted to intervene). As promulgated here, the rule will require the district court to provide notice to qualified legal services programs, see Minn. Stat. § 480.24, subd. 3 (2016) (defining such programs), about a cy pres distribution from a class-action settlement or compromise. The district court can also decide to provide notice to other potential cy pres recipients, if appropriate based on the factors relevant to the individual case. Those who receive notice can then decide whether or not to request distribution of some or all of the cy pres funds, and the district court can decide, based on the nexus between the nature, purpose, and objectives of the class action and the interests of the class, and the interests of the potential cy pres recipients, how to distribute the cy pres funds. With these features, we believe the appropriate balance is struck among multiple interests, including the discretion of the district court, the objectives of a particular class action, the terms of a settlement or compromise, and our commitment to adequate funding for civil legal services providers.
IV.
Fourth, the Board on Judicial Standards proposed amendments to Rule 63 to update the judicial-disqualification standard for consistency with the standard in other rules and in appellate decisions.
Currently, Rule 63 requires a trial judge to recuse if the judge "might be excluded for bias from acting therein as a juror." Minn. R. Civ. P. 63.02. The Code of Judicial Conduct provides a different disqualification standard, one that does not necessarily depend on potential juror bias. See Minn. Code of Jud. Conduct 2.11(A) (stating that a judge is disqualified from presiding over "any proceeding in which the judge's impartiality might reasonably be questioned"). We have said that judicial disqualification is based on a bias, or an appearance of bias, standard. See Troxel v. State, 875 N.W.2d 302, 314 (Minn. 2016) (stating that "impartiality," as used in Rule 2.11(A) of the Code "means the absence of bias or prejudice in favor of or against, particular parties or classes of parties, as well as maintenance of an open mind in considering the issues" (citation omitted)); Powell v. Anderson, 660 N.W.2d 107, 114-15 (Minn. 2003) (stating the disqualification standard for an appellate judge). The standard applied in our cases is consistent with the Code of Judicial Conduct, and is reflected in the Rules of Criminal Procedure. See Minn. R. Crim. P. 26.03, subd. 14(3) (prohibiting a judge from presiding "if disqualified under the Code of Judicial Conduct"). Consistency in the rules regarding the standard for judicial disqualification is preferred, and the Advisory Committee agrees that the rules should be updated.
We note that with these amendments to Rule 63.03, we do not adopt the 14-day deadline that may, in the future, be adopted in other rules. Rule 63.03 requires a party to serve notice to remove a judge "within ten days after the party receives notice" of which judge will preside at the proceeding (or not later than "the commencement of the trial or hearing.") Minn. R. Civ. P. 63.03. We recognize that a 10-day deadline is inconsistent with the committee's recommendation to use 7, 14, 21, or 28 days for rule-imposed deadlines. But in this instance, resolution of judicial-assignment decisions sooner rather than later will be beneficial to the parties and promote efficient case management.
V.
Last, the Committee recommends amendments to Rules 10, 12, 31, and 67 to clarify procedures for parties, address recent legislative changes, and make minor corrections. None of the comments addressed these recommended amendments, and all of the recommended amendments will improve procedures in civil cases. We therefore adopt these amendments.
We appreciate the work of the Minnesota State Bar Association, whose efforts brought before us the proposed federal conformity amendments and the cy pres discussion; and, the attention of the Board on Judicial Standards to consistency among the rules and the Code of Judicial Conduct. We also acknowledge the thorough and thoughtful work of the Committee in addressing these petitions, and the helpful comments offered during the public comment period.
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