The Substantive Elements in the New Special Pleading Laws

• Jurisdiction: United States,Federal
• Citation: Vol. 78
• Publication year: 2021

78 Nebraska L. Rev. 412. The Substantive Elements in the New Special Pleading Laws

412

Jeffrey A. Parness*
Amy M. Leonetti**
Austin W. Bartlett***

The Substantive Elements in the New Special Pleading Laws

TABLE OF CONTENTS

I. Introduction .......................................... 413
II. Illustrative Laws...................................... 414
A. Federal Securities Claims ......................... 414
B. New Jersey and Georgia Professional Malpractice
Claims ............................................ 416
C. Medical Malpractice Claims ....................... 417
D. Requests for Punitive Damages .................... 420
E. Childhood Sexual Abuse Claims ................... 421
F. Federal Civil Rights Claims ....................... 422
III. Determining and Applying the Substantive Elements of
the New Special Pleading Laws ....................... 424
A. Separation of Powers: Who Makes the Law? ....... 425
1. Legislature or Judiciary?....................... 425
2. Lower Court or High Court? ................... 427
B. Choice of Law: Which Law Applies?................ 428
1. Federal or State Law? ......................... 428
a. Erie Analysis .............................. 428
i. Professional Malpractice Claims ........ 428
ii. Medical Malpractice Claims ............ 431
iii. Punitive Damages Requests ............ 433
b. Reverse-Erie Analysis ...................... 435
2. Whose State Law? ............................. 437
IV. Guidelines for Assessing the Substance Based New
Special Pleading Laws ................................ 438
V. Conclusion ............................................ 443

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I. INTRODUCTION

In recent years, both federal and state lawmakers have initiated new special pleading standards applicable to discrete substantive law claims or to certain remedial requests. Relevant claims include allegations of securities fraud, professional malpractice, childhood sexual abuse, and civil rights violations, while relevant remedial requests include punitive damages demands. Generally, these standards require, at the least, the pleading of significant additional facts not demanded by the otherwise applicable general pleading standards; in some instances, they also require that pleadings at the outset, or later in litigation, be accompanied by evidence, often involving experts 1 or special certificates of merits.2

While often characterized as procedural law reforms, many of these standards seem better described as substantive law revisions. Recognition and resolution of troubling procedure/substance dichotomies in these settings is important not only for semanticists, but also for the legislators, judges, and lawyers developing or utilizing the new standards. Differentiations are key in at least two contexts - separation of powers and choice of law. Thus, when dealing with these new pleading norms, many must resolve who should determine the new standards and which standards should apply when two interested governments have divergent norms. These two contexts will be examined in this paper.3

This paper initially reviews some of these new pleading standards. It examines the application of such standards in the separation of powers and choice of law contexts. Finally, general guidelines will be

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suggested for all involved in determining and applying the new special pleading norms.

II. ILLUSTRATIVE LAWS

Special civil claim pleading standards governing particular claims or remedial requests have been established recently for both federal and state trial courts. These standards were formulated by a variety of lawmakers, and apply in several different settings. They are exemplified by the following laws.4

A. Federal Securities Claims

The special pleading standards of the Private Securities Litigation Reform Act of 1995 (PSLR) apply to plaintiff class actions arising under 15 U.S.C. §78a.5 Every plaintiff seeking class representative status must file a "sworn certification" with the complaint stating: the plaintiff reviewed the complaint and authorized its filing; the plaintiff did not purchase the relevant security at the direction of a lawyer or in order to participate in any private civil action; the plaintiff is willing to serve as a representative and to provide testimony; the identity of any other civil action under the same chapter within the last three years where the plaintiff has sought class representative status; and an assurance that the plaintiff will not receive any payment for service as a class representative beyond a pro rata share of recovery, unless it is approved by the court.6

The Act also sets out additional pleading requirements for certain securities actions where the plaintiff alleges the defendant made untrue statements of material fact or omitted to state a necessary mate

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rial fact so as to prevent statements from being misleading.7 Here, a complaint must "specify" each statement alleged to be misleading, the reason or reasons why the statement was misleading, and, if the allegation is made on information and belief, the particular facts on which the belief is formed.8 And in those securities actions in which a plaintiff must prove "a defendant acted with a particular state of mind" before recovering money, the plaintiff must state with particularity the "facts giving rise to a strong inference that defendant acted with the required state of mind."9 Dismissal follows for any complaint failing to meet the heightened pleading requirements of the Act.10

The passage of the Securities Litigation Uniform Standards Act of 1998 generally precluded plaintiffs from filing certain securities actions in state courts in order to avoid the strict pleading requirements of the PSLR.11 Specifically, for example, Congress found that since 1995 there had been a shift of securities class action lawsuits from federal to state courts, preventing full achievement of the objectives of the 1995 Act and thus requiring "national standards for securities class action lawsuits involving nationally traded securities."12

The substantive elements in the PSLR have not gone unnoticed. They are viewed as undermining the goal of a "truly neutral" proce

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dural system.13 And they have been read to portend even further blurring of "the hazy line between substance and procedure" through congressional "tinkering with procedure" for certain claims in order to vindicate "substantive purposes."14

B. New Jersey and Georgia Professional Malpractice Claims

A New Jersey statute requires that an affidavit of "an appropriate licensed person" be filed by a plaintiff in any action for damages resulting from an alleged act of malpractice or negligence by a "licensed person in his profession or occupation" within sixty days following the date on which the answer is filed.15 The affiant must state that there is a "reasonable probability" that the conduct alleged in the complaint "fell outside acceptable professional or occupational standards or treatment practices."16 A plaintiff can escape the affidavit requirement by providing a "sworn statement" that the defendant failed to provide "information having a substantial bearing on preparation of the affidavit."17 Failure to comply with the requirements is deemed a failure to state a cause of action.18

This New Jersey law can be read to impose delayed, special plead-ing requirements, often involving evidence, for certain professional malpractice claims. The New Jersey statute appears under the title "Administration of Civil and Criminal Justice," a subtitle on "Specific Civil Actions," and a chapter on "Negligence and Other Torts."19 Here, the broader categories imply the requirements involve procedural law, but the narrowest category suggests they are substantive. The requirements were enacted as part of a larger tort reform package.20

In Georgia, a similar affidavit requirement exists for professional malpractice actions. It was part of an enactment entitled "Medical Malpractice Reform Act of 1987" and was "located between provisions on medical malpractice and health care providers."21 Its particulars

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are found in a title on "Civil Practice," a chapter called the "Civil Practice Act," under an article involving "Pleadings and Motions."22 Here, the affidavit requirement was not enacted as part of a larger tort re-form initiative, but as an effort to reduce frivolous malpractice lawsuits. 23 There are other significant differences between the New Jersey and Georgia expert affidavit laws. The affidavit in Georgia must be completed by an expert who is "competent to testify," be filed "with the complaint," set forth "at least one alleged negligent act or omission," and present "the factual basis" for each claim of professional malpractice.24

C. Medical Malpractice Claims

Outside of New Jersey and Georgia, several states have special pleading norms applicable only to medical malpractice claims. A Michigan statute on pleading medical malpractice claims differs from both the New Jersey and Georgia schemes in that it requires a plaintiff, in an action against a health professional or health facility, to give the prospective defendant written notice of the medical malpractice claim 182 days before filing.25 The notice must be mailed to the defendant's last known professional business address or residential address. 26 The notice must contain allegations as to the "factual basis for the claim," the "applicable standard of practice or care," the manner of the breach, the conduct that should have been taken by the defendant, and the manner in which proximate cause arises, as well as the names of all other health professionals and health facilities who have been notified.27 If at any time within the notice period a potential defendant informs the claimant that it does not intend to settle, the claimant may then...