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NO. 12-35886

United States Court of Appeals for the Ninth Circuit

HERBERT BURKART, individually; TANJA M BURKART, individually and the marital community thereof and SCOTT E. STAFNE, Plaintiffs-Appellants, v. GLOBAL ADVISORY GROUP, INC., a Washington corporation, Defendant, and MORTGAGE ELECTRONIC REGISTRATION SYSTEMS, INC., a Delaware corporation; BAC HOME LOANS SERVICING, LP, a foreign corporation; BANK OF AMERICA NA, a national bank; BANK OF AMERICA CORPORATION, a Delaware corporation; COUNTRYWIDE FINANCIAL CORPORATION, a Delaware corporation; COUNTRYWIDE HOME LOANS, INC., a New York corporation; LINDA GREEN DOES 1-10, Defendants-Appellees. _____________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON, SEATTLE, NO. CV-01921-RAJ HONORABLE RICHARD A. JONES

REPLY BRIEF FOR PLAINTIFFS-APPELLANTS

STAFNE LAW FIRM Attorneys for Plaintiffs-Appellants 17207 155th Avenue NE Arlington, Washington 98223 (360) 403-8700

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TABLE OF CONTENTS Page TABLE OF AUTHORITIES .................................................................................... ii I. II. INTRODUCTION ...........................................................................................1 ARGUMENT IN REPLY ................................................................................3 A. B. MERS GROUP MISCHARACTERIZES THE DISTRICT COURTS ORDER AS MERE GUIDANCE ................................ 3 MERS GROUP IGNORES ARGUMENTS REGARDING FEDERAL COURTS OBLIGATIONS TO LITIGANTS AND STATES UNDER PRINCIPLES OF JUDICIAL FEDERALISM ......................................................................................6 1. 2. 3. Federal Court Authority to Create Rules is Not Without Limits; It Must be Constitutional ................................................ 6 Absent a Conflict Between a Federal Rule of Procedure of Federal Statute State Substantive Law Controls .................... 8 Federal Procedure Must be Constitutional and Within Authority of Federal Governments Enumerated Powers .......................................................................................11

C. D.

MERS GROUP WRONGLY ARGUES DISTRICT COURTS CITATION TO PETERSON WAS PROPER .................. 11 FEDERAL COURTS DEFEAT THE CHECKS AND BALANCES OF JUDICAL FEDERALISM BY USING UNPUBLISHED DECISIONS TO INTERPRET STATE STATUTES .........................................................................................15 THE MERS GROUP MISINTERPRETS THE COLLATERAL ORDER DOCTRINE ..............................................17 THE BURKARTS DO NOT RELY ON WMX TECHNOLOGIES AS A BASIS FOR THEIR APPEAL ................... 22 THIS COURT SHOULD CERTIFY ANY UNCLEAR ISSUES OF STATE LAW TO THE WASHINGTON SUPREME COURT ............................................................................22

E. F. G.

CONCLUSION ........................................................................................................24 i

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TABLE OF AUTHORITIES Page(s) Cases: Bain v. Metro. Mortg. Grp., Inc., 175 Wash. 2d 83, 285 P.3d 34 (2012) ....................................................passim Bavand v. OneWest Bank FSB, 2013 U.S. Dist. LEXIS 41745 (W.D. Wash. Mar. 25, 2013) ........................17 Bond v. United States, __ U.S. __, 131 S. Ct. 2355, 180 L. Ed. 2d 269 (2011) ................................23 Cobbledick v. United States, 309 U.S. 323, 84 L. Ed. 783, 60 S. Ct. 540 ...................................................18 DC Comics v. Pac. Pictures Corp., 706 F.3d 1009 (9th Cir. Cal. 2013) ...............................................................21 Digital Equip. Corp. v. Desktop Direct, 511 U.S. 863, 114 S. Ct. 1992, 128 L. Ed. 2d 842 (1994) ......................18, 19 Does I through XXIII v. Advanced Textile Corp., 214 F.3d 1058 (2000) ................................................................................6, 22 Erie R.R. Co. v. Tompkins, 304 U.S. 64, 58 S. Ct. 817 (1938) ............................................... 6-7, 8, 15, 16 Gravquick A/S v. Trimble Navigation Intern. Ltd., 323 F.3d 1219 (9th Cir. 2003) ......................................................................... 5 Greensprings Baptist Christian Fellowship Trust v. Cilley, 629 F.3d 1064 (9th Cir. Cal. 2010) .........................................................20, 21 Guam v. Yang, 800 F.2d 945 (1986), revd on other grounds, 850 F.2d 507 (1987) .................................................................................................10, 11, 15 Hanna v. Plumer, 380 U.S. 460, 85 S. Ct. 1136, 14 L. Ed. 2d 8 (1965) ..................................7, 8 Hart v. Massanari, 266 F.3d 1155 (9th Cir. 2001) .................................................................15, 22 Huddleston v. Dwyer, 322 U.S. 232, 64 S. Ct. 1015, 88 L. Ed. 1246 (1944) ..................................... 5 ii

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Jackson v. Vasquez, 1 F.3d 885 (9th Cir. Cal. 1993)......................................................................21 Jones-Hamilton v. Beazer Materials & Services, 973 F.2d 688 (9th Cir. 1992) .........................................................................13 Klem v. Wash. Mut. Bank, 176 Wash. 2d 771, 295 P.3d 1179 (2013) ................................................... 4-5 Knecht v. Fid. Natl Title Ins. Co., 2013 U.S. Dist. LEXIS 38814 (W.D. Wash. Mar. 11, 2013) ........................17 Krienke v. Chase Home Fin., LLC, 2007 Wash. App. LEXIS 2668 ......................................................................12 Lauro Lines s.r.l. v. Chasser, 490 U.S. 495, 109 S. Ct. 1976, 104 L. Ed. 548 (1989) .................................19 Peterson v. Citibank, No. 67177-4-I, 2012 WL 4055809 (Wash. Ct. App. Sept. 17, 2012) ...4, 6, 11 Powell v. Lambert, 357 F.3d 871 (9th Cir. 2004) ...................................................................13, 14 Rattlesnake Coal v. U.A. E.P.A., 509 F.3d 1095 (9th Cir. 2007) ......................................................................... 2 Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 130 S. Ct. 1431, 176 L. Ed. 311 (2010)........................................................... 8 State Farm Fire and Casualty Co. v. Smith, 907 F.2d 900 (9th Cir. 1990) ........................................................................... 5 Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 108 S. Ct. 2239, 101 L. Ed. 22 (1988) ....................................... 8 United States v. Higuera-Guerrero, 518 F.3d 1022 (9th Cir. Cal. 2008) ...............................................................18 Valerio v. Crawford, 206 F.3d 742 (9th Cir. 2002) .........................................................................14 Van Cauwenberghe v. Baird, 486 U.S. 517, 108 S. Ct. 1945, 100 L. Ed. 2d 517 (1988) ...........................19 Vandenbark v. Owens Illinois Class Co., 311 U.S. 538, 61 S. Ct. 347, 85 L. Ed. 327 (1941) ..................................... 5-6 iii

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Walker v. Armco Steel Corp., 446 U.S. 740, 100 S. Ct. 1978, 64 L. Ed. 2d 659 (1980) ............................7, 8 Westlands Water Dist. v. Amoco Chemical Co., 953 P.2d 1109 (9th Cir. 1991) ................................................................. 12-13 Will v. Hallock, 546 U.S. 345, 126 S. Ct. 952, 163 L. Ed. 2d 836 (2006) ........................18, 19 Wolfson v. Watts (In re Watts), 298 F.3d 1077 (9th Cir. 2002) .......................................................................13

Statutes & Other Authorities: 28 U.S.C. 1652 ....................................................................................................5, 7 28 U.S.C. 2072(a) ...................................................................................................7 28 U.S.C. 2072(b) ...............................................................................................7, 8 28 U.S.C. 2702(b) ...................................................................................................7 Fed. R. Civ. P. 11 ...............................................................................................20, 22 Wash. Const. Art. 4 30 ..........................................................................................22 Wash. Const. Art. 4 30(1) .......................................................................................9 Wash. Const. Art. 4 30(2) .......................................................................................9 Wash. Const. Art. 4 30(5) .......................................................................................9 Wash. Rev. Code 2.06.040................................................................................9, 22 Wash. Rev. Code Ch. 19.86 .......................................................................................4 GR 14.1 ....................................................................................................................22 RCW 61.24...............................................................................................................16 RCW 61.24.005(2) ...................................................................................................17 RCW 61.24.030(7)(a) ..............................................................................................17 RCW 61.24.030(8)(l) ...............................................................................................17 Wash. RAP 12 ..........................................................................................................22 Wash. RAP 12(d) .....................................................................................................23 iv

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Wash. RAP 12(e) .....................................................................................................23 Wash. RAP 12.3(d) ..............................................................................................9, 10 Adam N. Steinman, What Is the Erie Doctrine? (And What Does It Mean for the Contemporary Politics of Judicial Federalism?), 84 NOTRE DAME L. REV. 245 (2008).............................................................16

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I. INTRODUCTION This is an appeal brought solely pursuant to the Collateral Order Doctrine. The notice of appeal filed after the second U.S. District Court (district court) dismissal was to ensure no one assumed the Burkarts and their counsel intended to abandon their appeal. The MERS Group of affiliated companies (hereafter MERS Group) 1 seem not to understand the nature of the appellate system. The Burkarts filed the appeal

For convenience, Defendant-Appellees are referred to collectively as the MERS Group. In Bain v. Metro. Mortg. Grp., Inc., 175 Wash. 2d 83, 285 P.3d 34 (2012), the late Justice Tom Chambers described MERS and its allied corporations as maintaining: [A] private electronic registration system for tracking ownership of mortgage-related debt. This system allows its users to avoid the cost and inconvenience of the traditional public recording system and has facilitated a robust secondary market in mortgage backed debt and securities. Its customers include lenders, debt servicers, and financial institutes that trade in mortgage debt and mortgage backed securities, among others. MERS does not merely track ownership; in many states, including our own, MERS is frequently listed as the beneficiary of the deeds of trust that secure its customers' interests in the homes securing the debts. The Burkarts complaint challenged the legality of some of the practices of the MERS Group of defendants in this case with regard to private sales of real property. However, because those practices by the MERS Group do not relate to the collateral constitutional issues being appealed here (see generally Opening Brief (OB), the only relevance of this label is the extent to which it should remind this Court of the national attempts by MERS Groups to develop a federal common law for the states, which in Washington has not been based on an analysis of state statutes, but reductive short cuts. The MERS affiliated banks frequent and false suggestion that the Burkarts are freeloaders, who only want a free house, is irrelevant here. See e.g., Response Brief (RB), pp. 1, 5). The sole issue before this Court is whether a federal court can require state litigants and their attorney to
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and set forth the issues for review. In this case, it appears the MERS Group wants to re-write the appeal and then respond to it. Although this makes their job easier, the Burkarts prefer this Court consider their arguments; not the arguments the MERS Group has made for them. The MERS Group Response Brief concedes several important points by not arguing them. Rattlesnake Coal v U.A. E.P.A., 509 F. 3d 1095, 1000 (9th Cir. 2007). This also concedes standing. The MERS Group admits, inter alia, the portion of the order being appealed is collateral to the rest of the Order. That Order held the Burkarts could not be dismissed because the Washington Supreme Courts ruling in Bain v. Metro. Mortg. Grp., 175 Wash.2d 83, 285 P.3d 34 (2012), made the complaint plausible as it changed the reductive memes most federal district courts had previously relied upon to provide quick victories to banks, servicers, and government sponsored enterprises. Response Brief (RB) pp. 22-23. The Response Brief is dismissive of the role a state supreme court plays under our constitutional system. I.e., by not addressing its role in establishing substantive state law in diversity actions. RB p. 22. This failure causes the MERS Group to miss that part of the Collateral Order Rule, which is premised on the need

treat unpublished case law for purposes of filing a complaint in federal court pursuant to an order dismissing their complaint.
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for a healthy legal system.

Id.

Rather than discussing how a federal

procedure, displaces state substantive law, the MERS Group contends, without citation to any authority, that federal procedure works to preempt state substantive law. RB p. 26, note 26. But, they fail to provide authority to explain how displacement of state substantive law occurs. Finally, the MERS Group argues that the directive to write a complaint based on bad law can be remedied after the trial. RB pp. 23-27. But the MERS Group never explains how it can in fact be remedied. Once the Burkarts have been ordered by a federal court to write a state cause of action, based on state law, which does not exist, there is no cure. The Burkarts will be the only persons in Washington who have been ordered by a federal court to write a complaint based on law, which is not the law of the State of Washington. Under our judicial system, this Court should review this appeal, as the Burkarts have properly presented and briefed it to this Court, not as the MERS Group misconstrues and mischaracterizes it. II. ARGUMENT IN REPLY A. MERS GROUP MISCHARACTERIZES THE DISTRICT COURTS ORDER AS MERE GUIDANCE The MERS Group mischaracterizes the district courts Order as mere guidance. See e.g., Response Brief (RB), pp. 2, 14, 22, 33. That guidance

was an Order, which stated the Burkarts must consider in their amended
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complaint the unpublished Washington Court of Appeals decision, Peterson v Citibank, No. 67177-4-I, 2012 WL 4055809 (Wash. Ct. App. Sept. 17, 2012). ER 10 (Emphasis Supplied); see also Opening Brief (OB) pp. 2, 3. Peterson

concludes that where the cause of a foreclosure is a result of the borrowers default, the borrower has no claim under the Consumer Protection Act (CPA), Wash. Rev. Code, Ch. 19.86. Therein: It is undisputed that the Petersons defaulted on their loan and that it was this default that led to the foreclosure proceedings. The Petersons do not contend that any action by MERS caused or induced the Petersons to default on the loan. Nor do the Petersons assert that there was no party entitled to foreclose on the property. Accordingly, the Petersons have failed to plead facts demonstrating that their alleged injuries would not have occurred but for MERS's actions; regardless of MERS's conduct as the beneficiary under the deed of trust, the Petersons' property would still have been foreclosed upon based on their failure to make payments on the loan. Peterson v Citibank, N.A., No. 67177-4-I, 2012 WL 4055809, at *10. No decision of any court, except for this Order being appealed, has followed Petersons substantive interpretation of the CPA or suggested it is consistent with Bain v. Metro. Mortg. Grp., 175 Wash.2d 83, 285 P.3d 34 (2012).2 On the other hand, the Washington Supreme Court has found CPA violations even where borrowers were in default. See Klem v. Wash. Mut.

Petersons holding, which is not the law of Washington, is nonsensical. Basically, it proposes the notion that a person who fails to pay a bill, he or she forfeits all rights to a remedy for any wrong, which may have been independently caused him or her.
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Bank, 176 Wash.2d 771, 784-92, 295 P.3d 1179 (2013)(failure to perform a neutral trustee sale violated CPA even though borrower was in default). Accordingly, the Burkarts contend neither the district court nor this Court has authority under the principles of Federalism, Dual Sovereignty, and the Constitutions guarantee of a States Republican form of government, to order them to write a complaint, which does not accurately reflect substantive state law. See Gravquick A/S v. Trimble Navigation Intern. Ltd., 323 F.3d 1219, 1222 (9th Cir. 2003); State Farm Fire and Casualty Co. v. Smith, 907 F.2d 900, 901 (9th Cir. 1990) (a federal court is bound to apply substantive state law to state claims); see also, Huddleston v. Dwyer, 322 U.S. 232, 236, 64 S. Ct. 1015; 88 L. Ed. 1246 (1944)("Until such time as a case is no longer sub judice, the duty rests upon federal courts to apply state law under the Rules of Decision statute 3 in accordance with the then controlling decision of the highest state court.")(citing Vandenbark v. Owens Illinois Class Co., 311 U.S. 538, 543, 61 S. Ct. 347; 85 L. Ed. 327

State laws as rules of decision The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.

28 U.S.C. 1652 (Emphasis Supplied).

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(1941)). This is a final Order. It directs what state substantive law the federal district court requires to be included as part of any amended complaint, filed in federal court, pursuant to an order granting a motion to dismiss. See Does I through XXIII v. Advanced Textile Corp., 214 F. 3d 1058 (2000).4 B. MERS GROUP IGNORES ARGUMENTS REGARDING FEDERAL COURTS OBLIGATIONS TO LITIGANTS AND STATES UNDER PRINCIPLES OF JUDICIAL FEDERALISM The MERS Group fails to address the constitutional issues before this Court, namely: whether a federal court can require state litigants to file a complaint based on consideration of an unpublished state court of appeals decision when state law provides such decisions are not a part of Washington substantive law? See OB pp. 1, 2, 15-21 (Issue B). 1. Federal Court Authority to Create Rules is Not Without Limits; It Must be Constitutional. The MERS group argues the federal courts written order to consider Peterson, as a part of Washingtons substantive law, is a matter of federal procedure, which controls the application of state law in federal courts. See RB, 26. This unsubstantiated assertion is contrary to Erie R.R. Co. v. Tompkins, 304
4

Does, supra, like this case, involved a trial court sustaining a motion to dismiss, but allowing the filing of amended complaint, which identified each of the Doe plaintiffs. Here, as in Does the problem lies in the district courts order about what must be included in the amended complaint.
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U.S. 64, 58 S. Ct. 817 (1938); the Rules Enabling Act, 28 U.S.C. 2702 (b); 5 and 28 U.S.C. 1652. 6 The broad command of Erie is that "federal courts must apply state substantive law and federal procedural law" when sitting pursuant to their diversity jurisdiction. Hanna v Plumer, 380 U.S. 460, 465, 85 S. Ct. 1136, 14 L. Ed. 2d 8 (1965); Walker v. Armco Steel Corp., 446 U.S. 740, 100 S. Ct. 1978, 64 L. Ed. 2d 659 (1980). The Supreme Court has evolved a two-prong procedure to determine whether state substantive or federal procedural law applies. Id. First, the court must determine whether a federal rule of procedure or statute conflicts with state substantive law. Id. If there is no conflict, the state substantive law must be applied. Id. If there is a conflict between a federal rule of procedure or federal

The Rules Enabling Act states, in pertinent part: Rules of procedure and evidence; power to prescribe (a) The Supreme Court shall have the power to prescribe general rules of practice and procedure and rules of evidence for cases in the United States district courts (including proceedings before magistrates thereof) and courts of appeals. (b) Such rules shall not abridge, enlarge or modify any substantive right. All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect.

28 U.S.C. 2072(a) and (b)(Emphasis supplied).

6

See text cited at note 3.

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statute and substantive state law the federal law controls, so long as it is constitutional and within the authority of the federal government. Id. 2. Absent a Conflict Between a Federal Rule of Procedure of Federal Statute State Substantive Law Controls. The first test is whether there is a Federal Rule or statute, the "scope" of which is "sufficiently broad to control the issue before the Court." Walker, 446 U.S. at 749-750; see also Shady Grove Orthopedic Assocs. v. Allstate Ins. Co., 130 S. Ct. 1431, 1437, 176 L. Ed. 311 (2010). If there is, the Federal Rule or statute governs, state law notwithstanding, "unless it exceeds statutory authorization or Congress's rulemaking power." Shady Grove, 130 S. Ct. at 1437 (citing Hanna, 380 U.S. at 463-64); see also 28 U.S.C. 2702 (b). Significantly, the MERS Group cites no court rule or federal statute to support their position that as a matter of federal procedure federal courts can order state litigants to treat unpublished decisions as substantive precedent construing the meaning of a state statute. Failing to do so, the MERS group cannot prevail under Erie because state law controls absent a countervailing federal civil rule of procedure or statute. See Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 27 n.6, 108 S. Ct. 2239, 101 L. Ed. 22 (1988); Walker, supra; Hanna, at 465; see also Shady Grove, 130 S. Ct. at 1437 (plurality, concurring, and dissenting opinions).

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Rather than citing authority permitting federal courts to order state litigants to consider unpublished decisions as substantive precedent, the MERS Group instead submitted two pages of argument for the proposition that federal courts can consider unpublished decisions when trying to divine the meaning of state substantive law where a State Supreme Court has not ruled on the issue. RB 31, 32. But this argument, and the precedent supporting it, does not reach the true issue before this Court as to whether a federal court can direct state litigants and their attorney to consider as substantive law a case that has been determined by state court judges to have no precedential authority under Wash. Const. Art. 4 30(1), (2), and (5)7 as implemented by Rev. Code Wash. 2.06.040; 8 and Wash. RAP 12.3(d). 9 See also Wash GR 14.

These Constitutional provisions state: COURT OF APPEALS. (1) Authorization. In addition to the courts authorized in section 1 of this article, judicial power is vested in a court of appeals, which shall be established by statute. (2) Jurisdiction. The jurisdiction of the court of appeals shall be as provided by statute or by rules authorized by statute. * * * (5) Administration and Procedure. The administration and procedures of the court of appeals shall be as provided by rules issued by the supreme court.

Rev. Code Wash 2.06.040 states in pertinent part:

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Moreover, the MERS Groups argument is dubious even for the proposition it urges: namely that federal courts can cite to unpublished opinions, which are not a part of a states common law, as authority for what the substantive common law is where the state has publicly declared the law of that state republic forbids that result. This Court long ago disapproved of such a result. Guam v. Yang, 800 F.2d 945 (1986) (Emphasis Supplied) revd on other grounds Guam v. Yang, 850 F.2d 507 (1987). Finally, we note that just as we must defer to the Guams courts

The court shall sit in panels of three judges and decisions shall be rendered by not less than a majority of the panel. In the determination of causes all decisions of the court shall be given in writing and the grounds of the decisions shall be stated. All decisions of the court having precedential value shall be published as opinions of the court. Each panel shall determine whether a decision of the court has sufficient precedential value to be published as an opinion of the court. Decisions determined not to have precedential value shall not be published.
9

RAP 12.3(d) states: Publication of Opinions--Court of Appeals. A majority of the panel issuing an opinion will determine if it will be printed in the Washington Appellate Reports pursuant to RCW 2.06.040 or be filed for public record only. In determining whether the opinion will be published in the Washington Appellate Reports, the panel will use at least the following criteria: (1) Whether the decision determines an unsettled or new question of law or constitutional principle; (2) Whether the decision modifies, clarifies or reverses an established principle of law; (3) Whether a decision is of general public interest or importance; or (4) Whether a case is in conflict with a prior opinion of the Court of Appeals.

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interpretation of their substantive law, so must we defer to their understandings of what constitutes their decisional law. Id. 3. Federal Procedure Must be Constitutional and Within Authority of Federal Governments Enumerated Powers. Even assuming arguendo, MERS Groups two pages of argument suggesting federal procedure allowed the federal district court to adjudicate cases based on unpublished decisions, this line of cases does not support the result the MERS Group seeks here. This is because the MERS Group would still have to show the exercise of this discretionary federal procedural authority is within an enumerated grant of constitutional authority. See OB pp. 21, 22. This is not possible to do. To do so would thwart the very purpose of dual sovereignty, federalism, and the promise to the states of a Republican form of government. C. MERS GROUP WRONGLY ARGUES DISTRICT COURTS CITATION TO PETERSON WAS PROPER The MERS Group argues, [t]he District Courts Court Citation to the unpublished Peterson Decision Was Proper. RB p. 31. However, the problem with this argument is that it ignores the fact that the district court did not simply cite an unpublished decision. The court improperly ordered litigants and their counsel to consider this unpublished decision as part of Washingtons substantive common law for purposes of their federal court complaint. See e.g., OB pp. 6-7 (listing federal district court cases following the unpublished Washington Court of
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Appeals decision, Krienke v. Chase Home Fin., LLC, 2007 Wash. App. LEXIS 2668, as if it represented binding Washington precedent). There is no indication from the district courts, which followed Krienke, that it is not binding precedent, although everyone involved should know that under Washington law, Krienke is not a part of the common law of Washington at all. As pointed out in Burkarts Opening Brief, the Washington Supreme Court is the final arbiter of the meaning of Washington statutes. OB at pp. 12 and 22. In sidestepping the issue actually before this court, the MERS Groups implicit contention is that Washington federal district courts and/or this Court can carelessly cite to unpublished decisions of the State of Washington; and thereby require litigants to follow such cases in federal courts, as if they were precedential. It is the Burkarts position that federal courts, including this Court and the U.S. Supreme Court, are bound to follow state statutes as interpreted by the State Supreme Courts unless there is a constitutional basis for doing otherwise. See OB pp. 15-32. The MERS Group is simply wrong that district courts must consider unpublished state court of appeals decisions when construing state law. RB pp. 3132. In this regard, the MERS Group states [t]he decisions of the states intermediate appellate courts are data that a federal court must consider in undertaking this [ a state] law analysis. RB p. 32 (quoting Westlands Water Dist.
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v Amoco Chemical Co., 953 P.2d 1109, 1111 (9th Cir. 1991)). But the language of Westlands is not so all-encompassing. It does not read, unpublished decisions ; only decisions. Westlands, 953 P.2d at 1111. Ninth Circuit precedent establishes that this Circuit distinguishes between published precedential decisions and un-published, non-precedential decisions when determining how a State Supreme Court will rule with regard to deciding an undecided issue of substantive state law. For example, this Circuit requires its panels to reevaluate prior circuit law interpreting state law only when a state court of appeals has made a subsequent precedential ruling that changes state law. See Wolfson v. Watts (In re Watts), 298 F.3d 1077, 1082-1087 (9th Cir. 2002); JonesHamilton v. Beazer Materials & Services, 973 F.2d 688, 696 n. 4 (9th Cir. 1992). The MERS groups citation to Powell, for the proposition that federal courts can use unpublished decisions for whatever purposes they choose is spurious. RB p. 31 (Powell v. Lambert, 357 F.3d 871, 879 (9th Cir. 2004)). In Powell, this Circuit reviewed unpublished Washington decisions, not to determine precedent or the meaning of substantive state law, but as evidence of how state criminal court procedure actually worked in Washington for purposes of federal Habeas Corpus relief. Id. The Powell Court explained: The State contends that we should not consider unpublished decisions of the Washington courts. It argues that because unpublished decisions have no precedential value and cannot be cited to the Washington state courts, we should ignore them in this case. We are
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sympathetic to a court's decision to employ unpublished decisions for routine cases and to forbid the citation of such decisions as precedent. But we are also bound by Supreme Court case [habeas corpus] law, as well as considerations of fairness, to determine the actual practice of state courts in enforcing their procedural bars. The Supreme Court has stated that only a "firmly established and regularly followed state practice may be interposed by a State to prevent subsequent review by [a federal court] of a federal constitutional claim." Ford, 498 U.S. at 423-24 (emphasis added; internal quotation and citation omitted). In other words, it is the actual practice of the state courts, not merely the precedents contained in their published opinions that determine the adequacy of procedural bars preventing the assertion of federal rights. See also Valerio c Crawford, 206 F.3d 742, 776 (9th Cir. 2002)(en banc)(examining "both published opinions and unpublished orders" in determining the adequacy of a state procedural rule). Unpublished decisions are not irrelevant to a determination of a court's actual practice. Indeed, to the extent that decisions of the state courts are unpublished because they involve only routine application of state court rules, unpublished decisions are a particularly useful means of determining actual practice. Powell, at 879 (Empasis Supplied). Here, the district court was not following any Supreme Court holding with regard to determining judicial procedure when it erroneously ordered Washington litigants and their counsel to write a complaint treating an unpublished case construing the CPA as if it were actual precedent. The cases cited by the MERS group (at RB 32), which state in unreasoned footnotes that federal courts can consider unpublished decisions,10 do not

10

The MERS groups argument that federal courts can cite all unpublished state cases is logically flawed. See RB, 31-32. Just because a district court can cite
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withstand the Burkarts constitutional challenge to an order requiring them to prepare a complaint taking into account state case law, which does not exist. Where Washington courts have made a determination that a decision should not be precedential, federal courts must respect that aspect of judicial power relating to determining the meaning of state substantive law unless the federal courts can identify enumerated constitutional authority for doing otherwise. See Hart v.

Massanari, 266 F.3d 1155, 1180 (9th Cir. 2001) ( one important aspect of judicial function is separating the cases that should be precedent from those which should not.); see also Guam v Yang, supra. (Federal courts must defer to state courts understandings of what constitutes their decisional law.). D. FEDERAL COURTS DEFEAT THE CHECKS AND BALANCES OF JUDICAL FEDERALISM BY USING UNPUBLISHED DECISIONS TO INTERPRET STATE STATUTES. One commentator observed that the times which spawned the Erie decision are much like those we live in now; where federal courts are preferred by powerful corporations because of the procedural advantages afforded them. Our septuagenarian Erie finds itself in a political and judicial environment that is eerily similar to the one prevailing at its birth. Then, as now, corporate and business interests tend to favor federal unpublished California cases, does not mean it can cite a Washington unpublished case where state law prohibits citation. However, even if it could, it requires a much greater leap to conclude a federal court can order individual litigants to file a complaint in federal court based on a decision the judges of the state court of appeals have determined should not be precedent.
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court, while their political and litigation adversaries tend to favor state court. Justice Brandeis' ruling in Erie restrained a pro-corporate federal judiciary by eliminating its power to create substantive rules of federal common law, which had operated to displace state rules that were often less favorable to corporate litigants. While Erie put state and federal courts on equal footing when it came to the substantive elements of the litigants' claims and defenses, the conventional wisdom is that it did not eliminate disparities with respect to many aspects of civil procedure. These procedural disparities are at the core of the contemporary politics of judicial federalism. As compared to their state brethren, federal courts are widely perceived to be more likely to grant summary judgment against plaintiffs, less likely to certify class actions, and (if the Supreme Court's recent decision in Bell Atlantic Corp. v. Twombly is any indication) more likely to dismiss cases on the pleadings. When it comes to high-stakes civil litigation, these trends generally make federal courts more desirable for defendants, who tend to be corporate and business interests, and state courts more desirable for plaintiffs (and plaintiffs' attorneys). Adam N. Steinman, What Is the Erie Doctrine? (And What Does It Mean for the Contemporary Politics of Judicial Federalism?), 84 NOTRE DAME L. REV. 245, 248-9 (2008). The common perception is that state courts and federal courts administer very different brands of justice when it comes to civil litigation. Id., at 251. This is particularly true with regard to private sales under the Washington Deed of Trust Act. (Ch. 61.24 RCW) Indeed, the Washington Supreme Court in Bain did not find even one of the numerous federal court decisions helpful because none had meaningfully considered the Washington legislatures language defining beneficiary. Bain, 175 Wash. 2d at 109 (Unfortunately, we could find no case,

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and none have been drawn to our attention, that meaningfully discusses a statutory definition like that found in RCW 61.24.005(2).). Up until Bain, MERS affiliated companies simply told the federal judiciary that borrowers are not entitled to see the note. All borrowers need to know is who to pay. See Bain, 175 Wash. 2d at 98 and note 7. Of course, this federal mantra (which still goes on, even in Washington) is directly contrary to the language of RCW 61.24.030 (7)(a) and (8)(l), which clearly requires the note owners to be identified. Still some federal judges ignore the Supreme Courts explicit

instruction that a court read Washingtons DTA, as written by the Washington legislature and interpreted by the Washington Supreme Court. Compare Bavand v. OneWest Bank FSB, 2013 U.S. Dist. LEXIS 41745 (W.D. Wash. Mar. 25, 2013) (Continuing to dismiss cases because borrower seeks to determine who owns the note), with, Knecht v. Fid. Nat'l Title Ins. Co., 2013 U.S. Dist. LEXIS 38814 at **10-11 (W.D. Wash. Mar. 11, 2013) (In the wake of Bain, this court suggests that it is time to retire the reductive show-me-the-note meme, at least in cases arising under Washington law.). E. THE MERS GROUP MISINTERPRETS THE COLLATERAL ORDER DOCTRINE The MERS group argues the collateral order rule does not create finality for purposes of this appeal. See RB 19-21. But its argument is premised on the misconception that no interests related to a healthy legal system arise when a
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federal court insists state litigants file an amended complaint in federal court based on the erroneous assumption that an unpublished case is binding authority. The Supreme Court stated: The collateral order doctrine is best understood not as an exception to the "final decision" rule laid down by Congress in 1291, but as a "practical construction" of it, [citation omitted] We have repeatedly held that the statute entitles a party to appeal not only from a district court decision that "ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment," [citation omitted], but also from a narrow class of decisions that do not terminate the litigation, but must, in the interest of "achieving a healthy legal system," cf. Cobbledick v. United States, 309 U.S. 323, 326, 84 L. Ed. 783, 60 S. Ct. 540, nonetheless be treated as "final." Digital Equip. Corp. v. Desktop Direct, 511 U.S. 863, 867, 114 S. Ct. 1992, 128 L. Ed. 2d 842 (1994). In order to satisfy this exacting standard, an order must (1) conclusively determine the disputed question, (2) resolve an important issue completely separate from the merits of the action, and (3) be effectively unreviewable on appeal from a final judgment. United States v. HigueraGuerrero, 518 F.3d 1022, 1025 (9th Cir. Cal. 2008). Although these criteria must each be met, it is ultimately the significance of the issues to maintaining a healthy legal system, which is most important with regard to determining whether a decision should be treated as final. As stated in Will: Since only some orders denying an asserted right to avoid the burdens of trial qualify, then, as orders that cannot be reviewed "effectively" after a conventional final judgment, the cases have to be combed for some further characteristic that merits appealability under Cohen; and as Digital Equipment explained, that something further boils down to
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"a judgment about the value of the interests that would be lost through rigorous application of a final judgment requirement." 511 U.S. at 878-879, 114 S. Ct. 1992, 128 L. Ed. 842 (citing Van Cauwenberghe v. Baird, (citing 486 U.S. 517, 524, 108 S. Ct. 1945, 108 S. Ct 1945, 100 L. Ed. 2d 517 (1988)). See also Lauro Lines s.r.l. v Chasser, 490 U.S. 495, 502, 109 S. Ct. 1976, 104 L. Ed. 548 (1989) (SCALIA, J., concurring) ("The importance of the right asserted has always been a significant part of our collateral order doctrine"). Will v. Hallock, 546 U.S. 345, 351-52, 126 S. Ct. 952, 163 L. Ed. 2d 836 (2006). Just as the nature of the immunity at issue being contractual, rather than constitutional, was a deciding factor in Digital Equipment, such juxtaposition is also the deciding factor here. Id. If forced to amend his complaint to state a cause of action based on an unpublished decision, (while no other litigant is under a compulsion to do so), the Burkarts equal protection rights under the federal constitution will be compromised. Their standing based on the freedoms

guaranteed to them by the checks and balances inherent in our constitution will be frustrated and forever lost. Since the MERS group fails to appreciate any distinction between federal courts citing an unpublished opinion when adjudicating a case and ordering a litigant to apply an unpublished case when writing a complaint for consideration in the federal court, they fail to properly apply the three criteria to this case. An order requiring only these state litigants to write a complaint treating an unpublished decision of the court of appeals, as substantive precedent distinguishing Bain, for these federal proceedings: (1) conclusively requires this be done at the risk of
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defying a federal court order; (2) resolves an important issue with regard to whether a federal court can order litigants to treat unpublished decisions of the state court of appeals as if it were precedent for purposes of writing a complaint which must be signed pursuant to Fed. R. Civ. Pro. 11; and (3) effectively is unreviewable on appeal because the litigants have been forced by the federal court into undertaking a trial based on a complaint that does not adequately reflect state law. This bell cannot later be unrung. The cases cited by the MERS group do not support any contention that the principles of federalism and dual sovereignty, coupled with the Constitutions guarantee of a republican form of government are not essential to a healthy legal system. For example, in Greensprings Baptist Christian Fellowship Trust v. Cilley, 629 F.3d 1064 (9th Cir. Cal. 2010), the plaintiff church sued defendants attorneys (who had represented others in a prior action) for malicious prosecution. The U.S. District Court granted the attorneys motion to strike the complaint pursuant to Californias Anti-SLAPP statute, but granted leave to amend. Id. The attorneys (who prevailed below) appealed claiming the church should have no right to amend their complaint. Id. A panel of this Court observed: The Attorney defendants point to no precedent in which the only disputed question for purposes of collateral order appeal was the propriety of granting leave to amend. We have been unable to locate any such precedent from our own case law or that of our sister circuits, and we decline to embrace an interpretation of the first prong
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of the collateral order test so at odds with the Supreme Court's strong emphasis on the "stringent" nature of the test. Greensprings Baptist, at 1069-70. This case is inapposite to the facts here. The Burkarts are not appealing that part of the order dismissing their claims without prejudice. They are appealing only that part of the federal courts order that unconstitutionally denies them access to the same substantive Washington law to which all others in Washington are entitled. The Burkarts claims are much closer to DC Comics v. Pac. Pictures Corp., 706 F.3d 1009, 1014 (9th Cir. Cal. 2013). In that case, after considering the importance of the constitutional rights involved, this Court invoked the collateral order doctrine and determined to hear the appeal. Id. Similarly, Jackson v. Vasquez, 1 F.3d 885 (9th Cir. Cal. 1993) supports the Burkarts claim to collateral order jurisdiction because of the importance of the issues involved. In Jackson a federal judge ordered a warden to transport an inmate to a medical facility related to his prisoners confinement. Id. This Court found the requirements of the collateral order rule satisfied. Id. The order required the warden to transport the prisoner and there was nothing therein which suggested the court did not expect the order to be followed. Id. Like the situation here, the second criterion is met because this appeal challenges the district court's determination that it possessed the legal authority to issue an order requiring the Burkarts to write a complaint based on an unpublished opinion.
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Finally, the issue as to whether the Court can require state litigants and their counsel to write a complaint based on an unpublished decision will involve them in a legal action based on unsound legal principles in violation of their duties to both sovereigns. See Fed. Civ. Pro. 11; Gr 14.1. F. THE BURKARTS DO NOT RELY ON WMX TECHNOLOGIES AS A BASIS FOR THEIR APPEAL The WMX Technologies rule does not apply to the appeal of collateral orders, which are necessary to maintaining a healthy legal system. Does I thru XXIII, 214 F. 3rd 1058. G. THIS COURT SHOULD CERTIFY ANY UNCLEAR ISSUES OF STATE LAW TO THE WASHINGTON SUPREME COURT Burkarts challenge an order requiring them to prepare a complaint alleging a state CPA cause of action based on an adverse unpublished opinion. This violates the Washington Constitution (Art. IV 30); a Washington statute (Rev. C. Wash. 2.06.040); Washington Court Rules (GR 14.1 and RAP 12); and the inherent power of a court to determine which cases shall constitute precedent. Hart, 266 F. 3d at 1180. The MERS group wants to argue another point, which may or may not be helpful to them here. MERS Group contends federal courts can cite unpublished state decisions as precedent and as a corollary, thereof, require diversity plaintiffs to treat unpublished opinions as if they are part Washingtons common law.
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Although, Washingtons normative rules favor the Burkarts, a strong case can be made the Washington court of appeals routinely ignore the RAP 12 criteria for determining when a case should be considered as precedent. See OB pp. 23-4. As the Burkarts stated in their Opening Brief the problem of federal court directing homeowners to follow unpublished decisions, as if they were law, is exacerbated by Washington courts of appeal routinely ignoring RAP 12 (d) and (e). See OB pp. 34-5. As a result the federal judiciary is claiming power it does not have and the state judiciary is abdicating its judicial responsibility to construe state statutes. As was noted, supra, Washington homeowners are caught in the middle of the contemporary politics of judicial federalism. They have standing to seek

redress for any harms that befall them as a result of both the federal and state governments failure to respect the checks and balances our forefathers imbued in the Constitution. Bond v United States, __ U.S. __, 131 S. Ct. 2355, 2364, 180 L. Ed. 2d 269 (2011); see also OB pp. 19-20. Accordingly, if any part of the resolution of this appeal turns on an interpretation of state law, which is unclear to this Court, the Burkarts would ask that such issues be certified to the Supreme Court of Washington for resolution.

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CONCLUSION For the forgoing reasons, this Court should reverse the district courts order that the Burkarts must consider unpublished case when preparing their amended complaint under the collateral order doctrine. This Court should remand the case back for further proceedings consistent therewith.

Dated: June 3, 2013 STAFNE LAW FIRM Scott E. Stafne

By: s/Scott E. Stafne Scott E. Stafne Attorneys for Appellants, Herbert & Tanja Burkart

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CERTIFICATE OF COMPLIANCE Pursuant to Rule 32(a)(7)(C) of the Federal Rules of Appellate Procedure, the foregoing brief is in 14-Point Times Roman proportional font and contains 6,130 words and thus is in compliance with the type-volume limitation set forth in Rule 32(a)(7)(B) of the Federal Rules of Appellate Procedure.

Dated: June 3, 2013 STAFNE LAW FIRM Scott E. Stafne

By: s/Scott E. Stafne Scott E. Stafne Attorneys for Appellants, Herbert & Tanja Burkart

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CERTIFICATE OF SERVICE I hereby certify that on June 3, 2013, I electronically filed the foregoing with the Clerk of the Court for the United States Court of Appeals for the Ninth Circuit by using the appellate CM/ECF system. I certify that all participants in the case are registered CM/ECF users and that service will be accomplished by the appellate CM/ECF system.

s/

Simone Cintron