February 04, 2020 Practice Points

Rooker-Feldman’s Narrow Fraud Exception

Litigants should be vigilant whenever this doctrine rears its head.

By Samuel D. Harrison

When a client wants to file a new action that involves legal issues that were long ago litigated in state court, challenging the basis of that state court ruling in a federal action may seem like a good strategy at first blush. This is especially true if the appeal period in state court has lapsed. After all, if the legal claims can be reframed in the new federal action to avoid res judicata concerns, filing the case in a federal district court may provide friendlier legal standards than those that previously doomed the case. Rebooting the case in federal court might also present an opportunity to focus the case on new or different facts, or permit the federal judge a chance to review the legal reasoning that the state court used to dismiss the case and reach a better result for your client.

But something about this strategy probably seems too good to be true. For those hoping for this second chance in federal court, the Supreme Court’s Rooker-Feldman doctrine typically prevents the strategy from finding much traction. Litigants should be aware, however, that in certain circumstances Rooker-Feldman permits an exception for allegations of fraud.

After a somewhat rocky beginning for Rooker-Feldman, the Supreme Court clarified the standard for applying the doctrine in Exxon Mobil Corp. v. Saudi Basic Indus. Corp., 544 U.S. 280 (2005). The Court explained that it “is confined to cases of the kind from which the doctrine acquired its name: cases brought by state-court losers complaining of injuries caused by state-court judgments rendered before the district court proceedings commenced and inviting district court review and rejection of those judgments.” Id. at 284.

Despite this clarification, which makes no mention of any exceptions, courts in the Sixth and Ninth Circuits (as well as other district courts), have additionally held that Rooker-Feldman is inapplicable if the federal plaintiff alleges extrinsic fraud on the court. “Extrinsic fraud is conduct which prevents a party from presenting his claim in court.” Kougasian v. TMSL, Inc., 359 F.3d 1136, 1140 (9th Cir. 2004) (quoting Wood v. McEwen, 644 F.2d 797, 801 (9th Cir. 1981)). No such exception applies, however, in the case of intrinsic fraud (such as perjury), which “goes to the very heart of the issues litigated in the state court action.” Lewis v. L.A. Metro. Transit Auth., No. CV 19-1456 PSG (JPRx), 2019 U.S. Dist. LEXIS 208440, at *7 (C.D. Cal. Sep. 10, 2019) (quoting Green v. Ancora-Citronelle Corp., 577 F.2d 1380,1384 (9th Cir. 1978)).

Before relying upon the fraud exception to Rooker-Feldman, however, litigants should be mindful of its limited application. While fully adopted in the Sixth and Ninth Circuits (and several district courts), the exception has been rejected elsewhere. As recently noted in the Eastern District of Pennsylvania, “the Second, Fifth, Seventh, Eighth, Tenth, and Eleventh Circuits have rejected the exception, as have district courts in the Fourth Circuit.” Campbell v. Tabas, Civ. A. No. 16-6513, 2017 U.S. Dist. LEXIS 115722, at *7 (E.D. Pa. July 25, 2016). Accordingly, the first step in the fraud-exception analysis should be ascertaining whether it is even available.

Given the doctrine’s inconsistent application throughout its life and the partially unsettled nature of its fraud exception, litigants should be vigilant whenever the doctrine rears its head.

Samuel D. Harrison is an associate with Pepper Hamilton in Philadelphia, Pennsylvania.

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