Joseph D. Nohavicka

One of the most dramatic examples of parties charting their own procedural course in court took place on June 15, 1995, when F. Lee Bailey goaded prosecutor Christopher Darden into asking O.J. Simpson (who was not testifying) to put on the leather glove that was found at the scene of the crime during the trial. It was, to say the least, extraordinarily unusual, but the attorneys from both sides believed that it would be advantageous to their case and the procedure was approved of by the judge. So who could complain when the stipulated stratagem, which gave birth to Johnny Cochran's iconic phrase, "If it doesn't fit, you must acquit," delivered a savage blow to the prosecution's case?

In New York litigation practice it has been long understood that, unless against public policy, parties to a civil dispute are free to chart their own litigation course, and they may agree on a way which a controversy will be resolved. Parties have been permitted to stipulate away statutory, and even constitutional rights. Mitchell v. New York Hosp., 61 N.Y.2d 208 (1984).

However, the U.S. Court of Appeals for the Second Circuit took umbrage recently with the procedural path chosen by the district court and approved of by litigants in Palin v New York Times Co, No. 17-3801 (Aug. 6, 2019). In Palin, the Second Circuit reversed the dismissal of Sarah Palin's defamation suit against the New York Times over an editorial linking rhetoric used by Palin's political action committee to acts of gun violence. (Sarah Palin, 55, was Republican presidential candidate John McCain's running mate in 2008, and Alaska's governor from 2006 to 2009.).

The Second Circuit's decision initially palliates the constitutional issue presented in Palin by opening with the following: "This case is ultimately about the First Amendment, but the subject matter implicated in this appeal is far less dramatic: rules of procedure and pleading standards."

The lower court's capsulation of the facts and legal issue was presented succinctly:

What we have here is an editorial, written and rewritten rapidly in order to voice an opinion on an immediate event of importance, in which are included a few factual inaccuracies somewhat pertaining to Mrs. Palin that are very rapidly corrected. Negligence this may be; but defamation of a public figure it plainly is not.

Palin, 264 F. Supp. 3d 527, 540 (S.D.N.Y. 2017) (Rakoff, J.). Here is what happened in the court below.

The 'Somewhat Unusual' Plausibility Hearing

Before making a decision on Rule 12(b)(6) motion to dismiss, the district court determined that the Complaint failed to identify any individual at the Times who acted with malice. However, the court noted, the editorial was signed by "The Editorial Board" of the Times.

The court believed it was unable to determine whether the Times could be attributed to a specific individual without any factual background. To resolve that issue for purposes of the motion, the court ordered a brief evidentiary hearing to ascertain the identity of the authors of the offending statements and other basic facts that would provide the context for assessing the plausibility or implausibility of the complaint's allegations:

… because a court must have some knowledge of the context in which the underlying events occurred in order to carry out the function with which the Supreme Court has tasked it. Thus, the Court here convened a hearing pursuant to Rule 43(c) of the Federal Rules of Civil Procedure, which provides that "When a motion relies on facts outside the record [as the instant motion does in effect by arguing that the allegations of the complaint are in context implausible], the court may hear the matter on affidavits or may hear it wholly or partly on oral testimony or on depositions."

Palin, 264 F. Supp. 3d 527, 530 n.1 (S.D.N.Y. 2017) (Rakoff, J.). The district court advised the parties at the hearing that it was not making any credibility determinations. Id.

Significantly for this commentary, the district court acknowledged that "although such a hearing was somewhat unusual, neither party at any point objected to the Court's holding the hearing or to the Court's considering (at least for the limited purpose of deciding this motion) such facts there developed that are not in dispute." Id.

Moreover, during oral argument, Palin's counsel conceded that they did not object to the Plausibility Hearing when it was being conducted and they did not object to it at the time of the argument. [Oral Argument Audio: https://www.courtlistener.com/audio/58351/palin-v-the-new-york-times-co/]. What Palin objected to was how the testimony was "credited" by the district court.

That certainly triggers the semantic question: Is there a difference between a credibility hearing and a plausibility hearing? Yes. A credibility analysis involves weighing the testimony while under a plausibility analysis the testimony is not weighed at all—it just provides a factual backdrop or context. Palin's counsel argued that the Plausibility Hearing, in effect, evolved into a Credibility Hearing and that was not what they agreed to and they were not provided notice that the proceeding was being transformed into a Rule 56 motion. The appellate panel did not buy that argument and noted that even in a Rule 56 contest it is inappropriate to weigh testimony.

In any event, the Second Circuit disagreed with the utilization of the anomalous procedure adopted by the parties and the court, citing to Rule 12(d), which provides: "If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion."

The appellate panel reasoned that Rule 12(d), "presents district courts with only two options: (1) "the court may exclude the additional material and decide the motion on the complaint alone" or (2) "it may convert the motion to one for summary judgment under Fed. R. Civ. P. 56 and afford all parties the opportunity to present supporting material" (emphasis added).

According to the appellate court, because the district court "took neither permissible route under Rule12(d)," it erred in relying on facts outside the pleadings to dismiss the complaint.

Charting the Litigation Course

This commentary does not concern itself with the loftier First Amendment question issue in Palin; rather, it only concerns itself with the procedural issue (as did the lion's share of oral argument): Does the Second Circuit's disapproval of the parties' procedural path chosen encroach on the freedom of litigants to chart the course of their litigation when that course is refied by judicial imprimatur?

The Scope and Purpose of the FRCP

The title of FRCP Rule 1 is, "Scope and Purpose," and admonishes that these rules "should be construed, administered, and employed by the court and the parties to secure the just, speedy, and inexpensive determination of every action and proceeding" (emphasis added).

In Palin, the parties and the district court judge believed that they had a found an efficient way to sharpen the issues and perhaps shorten the case. And it did for the New York Times. Following the hearing, the district court granted the Times' motion to dismiss, finding that Palin failed to plausibly allege actual malice.

The parties and the court believed that authorization for the ad hoc hearing was found in Rule 43(c). The Second Circuit was quick to point out that the "district court's invocation of Rule 43(c), which addresses taking testimony at trial, was misplaced: that rule has nothing to do with the proceedings at the motion-to-dismiss stage."

But neither the district court nor the parties needed Rule 43(c), which mandates as follows: "When a motion relies on facts outside the record, the court may hear the matter on affidavits or may hear it wholly or partly on oral testimony or on depositions." And at oral argument Palin's counsel conceded that the motion did indeed rely on facts outside the record and tried to soften that fact by asserting that the district court required them to provide the additional materials.

The parties could have relied on the common law notion that "Where all parties to a litigation choose to do so, they may to a large extent chart their own procedural course through the courts." Stevenson v. News Syndicate Co. 302 N.Y. 81, 86 (N.Y. 1950). And so they did.

But what was forgotten here was the following caveat: "While parties are accorded considerable latitude in charting their procedural course before the courts, they are bound by the consequences attendant upon the exercise of that prerogative." Sean M. v City of New York, 20 A.D.3d 146 (1st Dep't 2005) (Tom, J.).

Since the parties charted their own course, they should not be able to now change the rules simply because they are unhappy with the outcome.

Freedom of Speech and Freedom of the Press are enormously important matters to society in general. But it is also enormously important to keep in mind that we are in a litigation environment of diminishing resources, and that judges and litigators should be encouraged to be creative and work together to increase efficiency, which appears to be the moral imperative articulated by Rule 1 of the Federal rules of Civil Procedure.

Joseph D. Nohavicka, an attorney at Pardalis & Nohavicka in Astoria, can be reached at [email protected].