Every law student learns that the Federal Rules of Civil Procedure require that a “claim for relief” must contain “a short and plain statement of the claim” showing that a litigant is entitled to relief. This straightforward rule seems simple enough. However, in practice, things can be anything but simple as recent decisions by the federal courts involving hotel industry and franchise disputes demonstrate. Those rulings illustrate the courts’ dissatisfaction with litigants and their lawyers whose court filings are part of a “trend forward prolixity.” And, unfortunately for the litigants involved, the result of such judicial dissatisfaction can mean the dismissal of their cases and the denial of their “day in court.”
A Court Steps in to Simplify a Terminated Franchisee’s Claims, Citing Precedent From a Hotel Industry Dispute.
A dispute in the franchise industry illustrates the courts’ increasing intolerance with litigants whose court filings are obtuse and too lengthy. The dispute started when UPS undertook an investigation into the business practices of one of its franchisees, the Hagans, in order to determine if the Hagans were complying with UPS pricing policies. UPS concluded that they were non-compliant. The Hagans, in turn, hired an investigator to conduct their own investigation into other franchisees’ pricing practices. The investigation purportedly showed that UPS franchisees were overcharging customers through certain practices, which the Hagans had discontinued at their stores. The Hagans reported their findings to UPS. UPS then terminated the Hagans’ franchise and eventually sued them for breach of the franchise agreement and trademark infringement. The Hagans counter-sued and UPS sought to have the counterclaim dismissed.
In considering UPS’s motion to dismiss, the court’s frustration with the voluminous pleadings was obvious. The court noted that “…a growing number of attorneys, from solo practitioners to “big law” partners are ignoring [the] exhortation that “[a] pleading … must contain…a short and plain statement of claim…” The court further observed that
UPS launched its relatively straightforward claims with a sprawling 175-paragraph complaint, larded with more than 1,400 pages of exhibits. That initial pleading,… may have been intended by UPS to overwhelm the defendants. But the Hagans were not deterred. They retaliated with a 210-page, 1,020 paragraph answer …
The Romance of the Law
In ruling upon the Hagans’ counterclaims, the court cited at length a 2015 decision issued by the United States District Court for the Eastern District of New York in Brooklyn Downtown Hotel, LLC v. New York Hotel Trades Council, AFL-CIO and Interstate Hotels & Resorts. Brooklyn Downtown involved antitrust claims relating to the unionization of hotels in New York City. The court found that the plaintiffs’ complaint “…is a stunning violation of Federal Rule of Civil Procedure 8(a)(2)… It is neither short, nor plain, nor are a sizeable number of its 163 paragraphs relevant to a statement of the discrete issues in this case which form the basis of plaintiffs’ claims for relief”. The court, focusing upon Lord Buckmaster’s comments from the 1925 Romance of the Law, then added that
The outsized complaint calls to mind an address by Lord Buckmaster, formerly Lord Chancellor of England, in the course of which he related that
in the reign of the Stuarts there was one counsel who had offended the court by preparing a needlessly long and prolix pleading on parchment. He was ordered to have his pleadings taken, a large hole to be cut in the middle, he was to have his head pushed through it, and he was to attend the first day of the term of every court with his head through the pleadings.
The UPS decision noted that although Lord Buckmaster’s “in terrorem remedy is tempting,” the court decided to fashion a “pragmatic solution.” That “solution” consisted of paring down the Hagans’ numerous counterclaims to a single claim. The court did not dismiss the entirety of the Hagans’ counterclaims because, as the court observed, the Hagans could view such a dismissal as “unfair because UPS was just as culpable in filing its outsized complaint.”
The Implications for Litigants
The UPS case makes clear that voluminous pleading is “self-defeating.” The court described the risks in clear terms – it “chokes” the docket and “obscures” meritorious claims and defenses. When a lawyer overpleads a case it can also “unnecessarily highlight fatal weaknesses in a party’s case.” The court cautioned, “Lawyers should think twice about the burden they impose on judges… [and] they should also think about their clients who presumably come to court to secure the just, speedy, and inexpensive determination “of their claims.”
All too frequently, in the major litigations seen in the franchise and hotel industries, clients’ ability to receive a just, speedy and cost-effective determination is compromised by a “shotgun” approach to asserting claims. It is essential for a client to be satisfied that its lawyer has realistically evaluated the merits of the client’s claims and prioritized the multiple claims that may be asserted. Where technically deficient pleadings were filed, courts have at times issued rulings with the collateral effect of creating unfavorable substantive law that is not helpful to the litigant who filed the dispute or to those in the industry that share its position. Especially troubling is an outcome that erodes years of previously established favorable precedent for other industry participants not involved with the dismissed claims.
The concept that a litigant may have some or all of its claims dismissed at a very early stage because of technical defects in the filings, is not a theoretical issue. The court in UPS made clear that “there is ample authority empowering a court to dismiss pleadings for failure to comply with [the Rules]”. Beware the evaluation of claims that focuses on the advocacy of the future litigation and trial of the case but fails to provide a technically appropriate assessment of how the client gets to trial in the first place. Webster’s dictionary defines “day in court” as “an opportunity to present one’s point of view or argument…” A careful strategic approach to the assertion of claims is essential to ensure this opportunity is preserved.