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I. Constitutional Limits in Jurisdiction
A. Three parts of the Constitution bear on jurisdiction: 1. Article III—authorizes the establishment of the system of federal courts and in Section 2 sets the limits of federal judicial authority. 2. Article IV, Section 1—requires that “full faith and credit” be given in each state to judicial proceedings of every other state. 3. 14th Amendment §1—no state shall deprive any person of life, livery or property without due process of law. B. Choice of Law 1. Article VI (Supremacy Clause)—state courts are required to enforce any federal law, regardless of whether there is a contrary state statute or state common law rule. 2. In the absence of a controlling federal statute, the federal court system is required to respect both the statutory and common law rules of the several states.
II. Where Can the Suit Be Brought?
A. Personal Jurisdiction 1. 14th Amendment—A court in the US cannot exercise power over a defendant if doing so would “deprive any person of life, liberty, or property, without due process of law. i. A court cannot exercise power over Δ unless the state in which that court sits has some connection with him or with the accident that gave rise to Peters’ claim. B. Subject Matter Jurisdiction 1. Courts of General Jurisdiction—can hear any kind of claim between any persons unless there is legal authority saying that it cannot hear a particular kind of case. i. All states have at least one court of general jurisdiction that would be competent to hear all claim (usually called Circuit Court) 2. Courts of Limited Jurisdiction—can only hear cases that are specifically authorized by the statutes that set up the particular court i. ALL Federal Courts—outer bounds set by Article III, Section 2 of US Constitution + Cases and Controversies between the States + Claims “arising under” the Constitution, laws, or treaties of the US + Diverse citizenship of parties to the suit ii. Probate Courts (wills, trusts, etc.) C. Hawkins v. Masters Farms, Inc. 1
1. FACTS—traffic accident in which a tractor driven by Δ Masters collided with Mr. Creal’s automobile, resulting in the death of Mr. Creal. Δ is a citizen of Kansas, and the accident occurred in Kansas. Π had ties to Missouri and Kansas. 2. PROCEDURE—Π filed this action in federal court alleging diversity jurisdiction under 28 USC §1332. Δs dispute that there is complete diversity among the parties. 3. ISSUE—What state was Π a resident of at time of death? Should Δ’s motion to dismiss for lack of subject matter jurisdiction (diversity) be granted? (Rule 12b1) 4. RULE—(1) Domicile is established by physical presence + intent to remain. (2) Burden of proof is on Π to show that complete diversity exists. 5. HOLDING—At the time of Π’s death, he was domiciled in the state of Kansas. Π failed to carry their burden of showing that complete diversity exists among the parties. 6. JUDGMENT—Court grants Δs motion to dismiss for lack of diversity/subject matter jurisdiction. D. Advantages of Filing in Federal Court 1. Speed—federal courts can have shorter waiting times 2. Picking/avoiding a trier of fact—juries drawn from local county in state courts, which could result in bias. Federal courts draw juries from county of federal court. 3. Federal Judges are appointed for life and don’t have to worry about reelection. E. Venue 1. “Venue” means “place of trial”, and venue rules are an attempt to allocate business among those courts that have subject matter and personal jurisdiction. 2. A suit lies open to a Δ’s challenge unless the court has subject matter jurisdiction, personal jurisdiction, AND venue. 3. Proper: i. In a district where any defendant resides, if all defendants live in the same state ii. In a district where a substantial part of the events or omissions giving rise to the claim occurred iii. In a district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no other district in which it can be brought F. Service of Process 1. Complaint—notifies Δ that action has begun i. Rule 3—copy of complaint must be filed with the court. 2. Rule 4—2 basic means of notice: i. Waiver of Service—informal and inexpensive; involves mailing the Δ the complain and Forms 1A and 1B; if the Δ mails back a signed copy of Form 1B, the suit can proceed. ii. Summons—if Δ refuses to cooperate, draft summons and take it to clerk of court, who will sign and seal it (Rule 4a&b). The summons and complaint must then be “served” (Rule 4c).
III. Personal Jurisdiction
A. Case introducing personal jurisdiction to the Constitution—Pennoyer v. Neff i. Facts: Neff hired Attorney Mitchell to do some legal work, and failed to pay him. Mitchell sued Neff, a non-resident of the state, who was not personally served with process and did not appear (sued in state ct. in Oregon). Default judgment was entered against Neff. After the default was entered, Neff acquired 300 acres of land from the federal govt. Mitchell had the sheriff seize and sell the land to satisfy the judgment, and Pennoyer bought it, receiving a sheriff’s deed as evidence of title. Mitchell received the proceeds. Neff reappeared, got mad, and sued Pennoyer in federal court to recover possession (quiet title/ejectment). a. First lawsuit—Mitchell (lawyer) v. Neff (client) breach of contract suit for legal fees in Oregon State Court, Neff not a citizen of Oregon, failed to address suit, default judgment against Neff. 1. Neff buys a piece of property in the state of Oregon worth ~$15,000. Now that Neff has land in Oregon, Mitchell can satisfy his judgment against Neff by claiming $ from the sale of Neff’s land by the sheriff. b. Second lawsuit—Neff v. Pennoyer (buyer of Neff’s land), quiet title action 1. Neff’s argument that he has better title to the land than Pennoyer— land should’ve never been sold because default judgment in first lawsuit is faulty due to lack of proper service c. Oregon Statute for Resident Notice of Service: 1. Personal Service of Notice and Summons (actual notice, in person or via certified mail with a signature) 2. Seizure of the land by the Court (if it’s a suit over a piece of property) 3. Service by Publication (constructive notice—when actual notice is not possible) 4. Appearance by Δ (counts as notice) 5. Citizen of State (court has jurisdiction) d. What went wrong?—Neff didn’t own the land at the time the default judgment was entered (no seizure as notice), he wasn’t found or served in state (no personal service), didn’t appear, wasn’t a resident of Oregon. *Only constructive notice via publication is left* e. Oregon Statute for Non-Resident Service: 1. If Δ is traveling through state—personal service 2. Constructive notice via publication (this is how Neff was served) f. Consequence of Failure of Proper Service—judgment is null and void ii. Issue: Whether the first lawsuit and sheriff’s sale had extinguished Neff’s title. (Neff argues that the original judgment is void because Oregon state court did not have PJ over him). 1. The important question is whether there is power over the defendant within the state lines of Oregon iii. Holding: No, constructive notice by publication is not enough for personal jurisdiction in this suit—personal service is needed. First judgment is void. No 3
personal jurisdiction exists unless the defendant is served while physically within the state. a. Judge Fields’ Due Process limitation—notice of service must be by: 1. Appearance 2. Personal Service (actual notice) b. How do you constitutionally serve non-residents according to Judge Fields? 1. Seize in-state property owned by the Δ at the outset of the lawsuit (quasi-in-rem) 2. Personal service upon agent 3. Consent 4. CANNOT serve by publication!!—unlikely Δ would get actual notice; violation of Due Process **EXCEPTIONS—divorce action (state where marriage was created also must have the power to undo it) iv. IMPORTANT: CXNal discussion at the end of the case—many CXNal problems: a. Due Process Clause i. He was owed personal service – defendants can’t be bound by judgments unless they received actual notice of the proceedings against him b. Full Faith and Credit Clause i. Courts usually give credit to other courts’ judgments, EXCEPT when the court rendering the judgment doesn’t have personal jurisdiction or subject matter jurisdiction over the defendant (respecting defendant’s due process rights) ii. The problem is that this Missouri court can’t give Full Faith and Credit to Oregon’s judgment because that court didn’t really have PJ over Neff B. Ways to Gain Jurisdiction: 1. In rem: action for property title (power over “the thing”) i. Solution to serving person outside the state: a court located in the same state as the property can enter a judgment disposing of that property – by seizing it at the outset of the lawsuit (in rem jurisdiction) 2. Quasi in rem: power over the person through their land – gain power over nonresidents whom you cannot personally serve, by attaching a piece of the property in the state to the lawsuit in order to give notice. i. In order for the trial court to have jurisdiction over the property, the property needed to be attached before entry of the judgment. Law assumes that property is always in possession of the owner, and therefore the owner knows what happens to his property, so attachment of the property before judicial proceedings are initiated makes constructive notice sufficient.. 3. In personam: power over the person – directed toward a particular person who will be liable for personal judgment. If the suit is to determine title to property, the action must be filed where the property exists and is only enforceable there.
he must raise challenge there or waives the right to do so. and the mover is mailed service in their new state. Also. International Shoe Co. then you waive the right to do so!) i. Jurisdictional Challenge by Int’l Shoe: 5 . Washington (MINIMUM CONTACTS) 1. and collaterally attack that judgment when Π seeks to enforce it (very risky). Raise challenge promptly in your first answer—(but if you answer without raising the 12b2 challenge. Quasi in rem—court seizes land unrelated to lawsuit in order to give owner notice of lawsuit a. **12b2 = SPECIAL APPEARANCE!** D. 3. Property in state iii. Non-resident Δ—how do we conceptualize a presence in a state of non-residents? 3. Themes of International Shoe i. how can courts gain jurisdiction over a Δ?—International Shoe redefines power 2. suffer default judgment. 2. Louis 5. you must have an agent within the state to accept service iii. Pennoyer—3 ways to gain personal jurisdiction: i. So. Resident of the state ii. plus letter sent to St. State has to have the power to declare the status of its own resident.4. Do nothing and don’t show up. Power ii. v. Way to force consent—some states claim that if you’re doing business within the state. ISSUE—Does Washington have personal jurisdiction over Int’l Shoe? i. Hypothetical category: a divorce case. but a “special appearance” allows a Δ to appear in order to challenge. C. 4. If a couple is married within a state and one moves away. Problem—easy for Δ to avoid personal jurisdiction b. personal jurisdiction is established. Jurisdictional Challenges: 1. Consent a. Make a “special appearance”—usually an appearance means waiver of right to challenge jurisdiction. FACTS—Int’l Shoe had travelling salesmen go through Washington and set up temporary showrooms. Louis Int’l Shoe was not paying unemployment taxes in Washington. but it’s a Delaware corporation w/ headquarters in St. Presence a. if Δ makes a pre-answer. How did Washington try to gain power over Int’l Shoe?—personal service of one of the travelling salesmen while in Washington.
he have certain minimum contacts with it such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice. Π wants to sue Int’l Shoe for negligence—no continuous and systematic contacts.” then travelling salesmen can be sued anywhere iii. Quasi in rem—same 6. i. therefore you should expect to be held accountable for your actions within that state (with privilege comes obligation) b. Made a special appearance to challenge PJ ii. MINIMUM CONTACTS TEST—Due Process requires only that in order to subject a Δ to a judgment in personam. 2 Different Types of Contacts: 1. the suit against Appellant within the state does not involve an unreasonable or undue procedure 8. Int’l Shoe says they do not have the presence within Washington to be subject to personal jurisdiction there a. HOLDING—Solicitation within a state by the agents of a foreign corporation (plus some additional activities) renders a foreign corporation open to suit within the forum state to enforce an obligation arising out of its activities within the forum state. If temporary showrooms constitute a “presence. In rem—no real property within Washington v.” a. WHAT DOES SUPREME COUT SAY CONSTITUTES ENOUGH “PRESENCE” IN A STATE TO BE SUBJECT TO PJ? i. Personal Service—argues service on salesman isn’t enough notice iv. can be sued for that act) i. if he be not present within the territory of the forum. Further. General Jurisdiction—Continuous and Systematic Contacts. Appellant’s activities within Washington were systematic and continuous within the years in question.i. Does Δ enjoy advantages of that state’s laws and institutions? 2. Length of time of presence ii. EXAMPLE—Int’l Shoe has salesmen traveling through state and gets into car wreck. Appellant received the benefits and protections of the laws of Washington. As a result. More flexible test than 3 Pennoyer categories ii. These activities resulted in a large volume of business. Policy: To the extent that you conduct activity within a state. you enjoy the protection of that state’s law. Specific Jurisdiction–Nature and quality of Δ’s contacts with the forum that gave rise to the COA. 6 . Washington’s Arugment—service of a salesman (agent) within the state is valid personal service 7. In this case. can be sued for anything i. Has Δ ever initiated lawsuits as a Π in that state? iii.
Hanson v. Key Language: a. The application of that rule will vary with the quality and nature of the Δ’s activity. Co.” (look to quality and nature of contacts with state) b. Applying Minimum Contacts 1.but they can be sued only for claims arising out of this incident E. Issue: Do FL courts have jurisdiction over the DE trustee? iii. breach of contract by Δ. Δ benefitting from their actions in the forum state iii. McGee v. trustee (Δ) was in DE ii. Denckla i. This is SPECIFIC JURISDICTION and is enough for minimum contacts iii. Life Ins. Shaffer v. Insured in CA ii. Holding: There is personal jurisdiction—Δ chose to do business in CA and knew there would be a time when they’d have to pay to CA. Δ’s actions and choices a. Facts: Life Insurance contract. Holding: NO personal jurisdiction. i. Heitner 7 . Where was the contract created? iv. and the insured was a resident of that state when he died. thus invoking the benefits and protections of its laws. trustee in DE didn’t choose to do business in FL and had no contacts there iv. Daughter did not choose for her mother to move to FL b. What’s the Difference? i. Businesses doing business with residents of other states need to get used to being sued in that state ii. person who created the trust moved to FL. the premiums were mailed from there. Key Language: “The unilateral activity of those who claim some relationship with a nonresident Δ cannot satisfy the requirement of contact with the forum state. chose to do business in CA. “CA has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims. Does Quasi-in-Rem (Pennoyer) Still Allow a State to get Jurisdiction Over a Δ? i. Δ in Texas. State of CA has an interest in protecting its resident—FL does not have in interest in proceeds of trust 4. Facts: Trust created in DE.” 3. International Life Insurance Co. These residents would be at a severe disadvantage if they were forced to follow the insurance company to a distant stat in order to hold it legally accountable” 2. “The K was delivered in CA. but it’s essential in each case that there be some act by which the Δ purposefully avails itself of the privilege of conducting activities within the forum state.
Facts: The Robinsons purchased an Audi in NY. its importer. and the litigation) would not support the State’s jurisdiction d. KEY POINT— Under the line of Pennoyer. History: Oklahoma SupCt said there is jurisdiction over the defendants because it was foreseeable that this car would end up in the state. ISSUE—Can a state obtain personal jurisdiction over a party based on that party’s ownership of property in the state? c. Stream of Commerce ii. its regional distributor. Woodson (1980)—PURPOSEFUL AVAILMENT i. Suit is filed in DE. SPECIFIC JURISDICTION 1. Purposeful Availment (+ foreseeability) iii. There is no reason for the artifice of quasi in rem jurisdiction since Int'l Shoe does it much nicer. e. Π attempts to gain jurisdiction by having the 2 officials stocks sequestered in DE (Quasi-in-Rem). The retail dealer (Seaway) and the regional distributor (World-Wide) claim that OK does not have PJ over them. when the only 8 . 28 officials make a special appearance.a. a shareholder of Greyhound (DE) and a nonresident of DE. causing a severe fire which severely burned Mrs. FACTS—Heitner. Any assertion of personal jurisdiction must be considered under Int’l Shoe.e. The Robinsons brought a PL action in OK. This case Put Pennoyer to rest—International Shoe takes over. Three different themes within specific jurisdiction: i. RULE—Whether or not a State can assert jurisdiction over a nonresident must be evaluated according to the minimum-contacts standard of International Shoe Co. claiming defective design and placement of the Audi’s gas tank and fuel system. Minimum Contacts=Umbrella Test for Specific Jurisdiction 2. F. they left NY for a new home in AZ. the presence of the property alone (i. v. the State. they were involved in an accident with another car. iii. as in this case. Issue: Whether an Oklahoma court has in personam jurisdiction over a nonresident auto retailer and its wholesale distributor. the property serving as the basis for jurisdiction is completely unrelated to the plaintiff’s cause of action. b. Where. World-Wide Volkswagen Corp. The Δs do NOT have minimum contacts with the state of DE. Washington. A year later. Π then gives constructive notice by publication and by certified mail. Robinson and the kids. the presence of property in the forum state could be the basis for jurisdiction over claims of any sort. v. absent other ties among the defendant. Fair Play and Substantial Justice 3. As they passed through OK. and its retail dealer. They joined as defendants the manufacturer. ii.. HOLDING—Int’l Shoe minimum contacts rule applies. sues 28 officials of Greyhound (who are not residents of DE) for breach of fiduciary duty to corporation.
Plaintiffs argue that because a car is mobile by its design and purpose. Rule: Minimum contacts must be based on an act of the DEFENDANT. the manufacturer of the tube’s valve assembly. v. 9 . sold. v. and they do not regularly sell cars to OK residents or customers or seek to serve the OK market. establishing channels for providing regular advice to customers in the forum state. tube. vii. Δ HAD NOT PURPOSELY AVAILED ITSELF OF THE OPPORTUNITY TO CONDUCT ACTIVITIES IN OK. A STREAM OF COMMERCE 1. Further. although it could foresee that its buyers might take its cars there. included the tube’s manufacturer Cheng Shin. PART II. etc. they solicit no business there via salespersons or ads. iv. Superior Court (1987)—STREAM OF COMMERCE [PLUS] i. it is foreseeable that the car would cause injury in OK. Dissent [Brennan]: The interest of the forum state and the connection to the litigation is strong. All of Zurcher’s claims were settled. Issue: Whether mere awareness on the part of a foreign defendant (Asahi) that the components it manufactured. iii. The state has a legit interest in enforcing its laws designed to keep its highway system safe. 2. Zurcher named several defendants in his CA suit. Personal jurisdiction cannot be obtained by OK based on one isolated occurrence. a. The court says the foreseeability alone has never been a sufficient benchmark for personal jurisdiction under the DPC. Holding: No.connection is the fact that a car sold in NY to NY residents became involved in an accident in OK. and sealant. designed product for the forum state. Reasoning: a. iv. the goods were purposefully injected by the seller into the stream of commerce and they were predictably used in the forum state. they do not take advantage of the benefits and privileges of OK law. Reasoning: Defendants carry on no activity whatsoever in OK – they close no sales and perform no services there. Holding: No. He filed a PL action alleging that the accident was caused by the defective tire. and delivered outside the US would reach the forum state in the stream of commerce constitutes minimum contacts between the defendant and the forum state. vi. O’Connor goes by “purposeful availment” theory—need more than Δ putting product into stream of commerce. leaving only Cheng Shin’s 3rd party action for indemnity against Asahi. Asahi Metal Industry Co. Asahi claims that it is not subject to PJ because it never contemplated that sales of its product in Taiwan would subject it to suits in CA (no foreseeability). ii. A consumer’s unilateral act of bringing the defendant’s product into the forum state is a not a sufficient constitutional basis for PJ over the defendant. and the trial can proceed at least as efficiently in OK as anywhere else. look to whether Δ marketed in forum state. Facts: Zurcher lost control of his motorcycle and the accident killed his wife. 1. 3.
and the plaintiff is not a CA residentdo it in Taiwan or Japan. “STREAM OF COMMERCE PLUS”—Δ must put the product into the stream of commerce. the interests of the plaintiff and the forum state are slight because all that’s left is an indemnification claim. Do Δs have minimum contacts in Florida?—YES i. They had some trouble getting started. [this test sets a lower bar] v.i. The two tests are meshed together by the court b. Further. Burger King Corp v. In regard to stream of commerce. Π’s interest in obtaining relief iv. Specific Jurisdiction: Some contact with the forum that gave rise to the action 1. Facts: BK’s headquarters are in Florida. In this case. BK negotiated then sued in federal district court in Fla. all the manufacturer needs to do is inject their goods into the stream of commerce. B FAIR PLAY AND SUBSTANTIAL JUSTICE 1. 10 . What we are left with: Broad International Shoe standard a. Rudzewicz and MacShara entered into a joint venture as operators of a BK franchise in Michigan. but it has regional offices that supervise franchisees in their areas. Reasoning: Minimal contracts test + fair play and substantial justice a. iv. Interests of the forum state iii. iii. Burden on the defendant ii. Minimal contacts: 1. Ask about fair play and substantial justice 4. When rent payments fell behind. Issue: Whether the franchisees have minimum contacts with Florida that would establish the state’s PJ over them. Brennan Plurality on Stream of Commerce—injecting products into stream of commerce is sufficient alone if that product ends up in the forum state (Π friendly) b. the burden in Asahi is severe (travel and defending in foreign legal system). The franchisees challenge PJ in Fla. Rudzewicz (1985)—FAIR PLAY AND SUBSTANTIAL JUSTICE** i. PART II. Purposeful availment—Δs negotiated a contract with a FL corporation and voluntarily entered into the contract which subjected them to Florida law. Shared interest of the sever states in furthering fundamental substantive social policies 2. Ask about contacts of ∆ 2. Start with minimal contacts and then look to FP and SJ c. Considerations: i. which they negotiated with the Birmingham district office and the Miami HQ. Holding: Yes. ii. plus an action of the Δ purposely directed towards the forum state 2. Interstate judicial system’s interest in obtaining the most efficient resolution of controversies v.
2. Jurisdiction: Business 1. Reasoning: a. and (3) fair play and substantial justice. the act was not purposefully directed toward CA.” v. on its website that allows users to essentially override CSS technology.Calder case (effects test) and internet cases i. “A passive website that does little more than make information available to those who are interested in it is not grounds for the exercise of PJ. No jurisdiction: posting only b. Choice of law clause (FL) in contract iv.long arm statute (coextensive-legislature says if Constitution allows it. Superior Court (2002)—SPECIFIC JURISDICTION & THE INTERENET i. a resident of Texas. Unequal bargaining power in contract formation. Holding: No. 5. Thus. vi. The project sought to defeat new technology and enable the decryption and copying of DVDs. b. Δs could have reasonably anticipated being hauled into court in FL. Notes: 11 . Statute. Dissent: Defendant’s intentional act was expressly aimed at CA – he should reasonably anticipate being haled into court here. Middle: exchange b. where he was the founder and project leader of the LiVid video project. The Court uses the 3-part test for specific jurisdiction: (1) purposeful availment of defendant of forum benefits. Fair play and substantial justice: 1. Dissent (Justice Stevens)—Florida should not have jurisdiction a. iv. boilerplate language so they didn’t really contract for it.d. which had a website that provided only information.minimal contacts 3. Here. which is owned by DVD CCA. the website did not target CA. it can and enumerated-there jurisdiction is less than what is allowed in Constitution. Case law. a source code of a program. so it posted DeCSS. Δs didn’t think their burgers and fries would be traveling down to Florida—no reasonable anticipation of being sued there. ii. studied comp engineering at Purdue. and there is no evidence that residents of CA even visited the site. Pavlovich v. Facts: Pavlovich. had no interactive features. Issue: Does California have personal jurisdiction over a defendant based on a posting on his website? iii.) California is coextensive 2. Internet spectrum (solely internet use) a. Constitution. DVD CCA sues him for misappropriation of trade secrets for posing the program on his site. Court looks to: 1. Knowledge that his conduct may injure certain industries in CA is insufficient to establish express aiming at CA. (2) minimum contacts.
firing a bullet over a state line). The state had jurisdiction over tabloid based on the effects of its FL conduct in CA – wrote an article that they knew would damage Jones. he carried on in Ohio a continuous and systematic supervision of the necessarily limited activities of his company. b. alleging that it owes her money as a result of its failure to issue stock certificates and dividends to her. and knew that it would be felt by her in the state in which she lives and works and where the tabloid has its largest circulation. had correspondence there. Calder: tabloid writer slammed an actress who lived in CA. iv. v. Under what circumstances will Δ be subject to jurisdiction for all claims—even those without any connection to the forum state? (General Jurisdiction) i. Facts: Helicopteros (Helicol) is a Colombian corporation with its principal place of business in that country. Usually. drew and distributed salary checks there. Facts that can determine internet jurisdiction: 1. (in the Phillippine Islands). where the cause of action arose from activities entirely different from its activities in Ohio (breach of K claim). GENERAL JURISDICTION 1. Jones v. v. and four US citizens lost their lives. ii. Usage info – regarding residents 2. Location of server G. purchased copters and parts from there. The Consorcio contract for the job provided that controversies arising out of the contact would be submitted to the jurisdiction of Peruvian courts. Reasoning: Because the President of the corp returned to Ohio during a hiatus and kept his files there. Individuals—state of domicile 2. if someone has systematic and continuous contacts with a state. Helicopteros Nacionales de Colombia. Hall (1983) i. Perkins v. Notes: a.A. Corporations—state of incorporation and principal place of business ii.a. Holding: Yes. Plaintiffs are the survivors and executors of the decedents. filed two suits in Ohio against the mining co. Benguet Consolidated Mining Co. who were employed by Consorcio. d. The premise is that a state has jurisdiction over a defendant who acts in a way that he knows will cause harm in another state (ex. (1952) i. 3. This is the first state. iii. and maintained bank accounts there. Interactivity of website 3. Facts: Perkins. Commercial use? 4. a nonresident of Ohio. 12 . send employees for training there. rather than federal. they are a resident and there is no general jurisdiction problem. Issue: Whether the business done in Ohio by the company was sufficient to permit Ohio to entertain a cause of action against a foreign corp. court case we’ve looked at for PJ c. Ohio can take or decline jurisdiction. a Peruvian joint venture formed by Texans to enable them to enter into a deal to construct a Peruvian oil pipeline. S. Helico had contacts with Texas – held negotiation sessions there. A helicopter owned by them crashed in Peru.
iv. Reasoning: Mere purchases. Opposite of traditional—“tag jurisdiction” (personal service while passing through state) 1. After Int’l Shoe. husband has minimum contacts because he used the laws. they moved to NJ. even if occurring at regular intervals. iv. Systematic and continuous contacts is a VERY high bar to meet. In 1987. [CA courts refuse to dismiss for PJ]. ii. Holding: No. Facts: Husband and wife married in 1976 in WV. but did not attempt to serve his wife. where two children were born. ii. Holding: No. It’s very rare to find a court that says that they have general jurisdiction over a non-resident defendant. they decided to separate. Concurrence [Brennan plurality]: We must apply the minimum contacts test/Shoe in all cases.) (personal availment of state benefits). For exam i. 6. business. The DPC does not prevent jurisdiction. no need for tag jurisdiction—just argue minimum contacts c. husband visited CA on business. The form iv. Wife brought suit for divorce in 1988. then visited his children and took them to San Fran for the weekend. 4. Superior Court (1990) i. a. who was personally served with process while temporarily in that state. Husband filed on grounds of desertion. Notes: i. Traditional Basis Exam: can use traditional basis to get jurisdiction under Pennoyer. No there was not general jurisdiction. consent. roads. That year. in a suit unrelated to activities in this state. He then returned to NJ. etc.here is why… 5. and protection of the state (fire. medical. The 3 traditional ways to gain jurisdiction: residence. Notes: 13 . economy.ii. Using this test in this case. he was served with a CA court summons. are not sufficient to establish general jurisdiction where the COA is not related to the purchase transactions. vi. When he returned to wife’s house. Wife moved to CA and they agreed to file for divorce on grounds of irreconcilable differences. How contacts do not fit into cause of action iii. Burnham v. personal service v. Issue: Whether the contacts of Helicopteros were sufficient to allow Texas to assert jurisdiction over the corporation. iii. Issue: Whether the DPC denies CA courts jurisdiction over a nonresident.’” This is the time-honored approach. Cause of action ii. Shoe only applies where the defendant is not in the state—can give personal service to anyone in the state. Reasoning *Scalia plurality+: “The short of the matter is that jurisdiction based on physical presence alone constitutes due process because it is one of the continuing traditions of our legal system that define the due process standard of ‘traditional notions of fair play and substantial justice. b. iii. In 1977.
This is a VOLUNTARY presence case—distinction. etc. Π sued in NY. The face of each ticket contained the language “SUBJECT TO CONDITIONS OF CONTRACT ON LAST PAGES IMPORTANT! PLEASE READ CONTRACT.” The contract contained a forum-selection clause indicating that any disputes would be settled in FLORIDA. ii. the clause was not the result of negotiation. Shute. treating the quotes clause as consent to PJ and that the clause did not violate due process. Szukhent—Szukhents.) occurred in NJ. REASONING—Three Points: a. contrary to The Bremen case. A defendant may. b. 14 . HOLDING—Because of forum-selection clause (and therefore consent by Shute to bring all suits in FL). leased farm equipment from a NY concern. On the back of the lease form was a clause saying that the Szukhents “designate Florence Weinberg (NY) as agent for the purpose for accepting service of process. CONSENT AS A SUBSTITUTE FOR POWER 1. Pennoyer—Either power or consent can establish jurisdiction 2. MI farmers. The Supreme Court upheld this procedure. The cruise line has interest in limiting jurisdiction because it carries passengers from everywhere and has contacts everywhere. When the Szukhents defaulted on the lease. What constitutes consent? i. 3. consent to jurisdiction in a forum. Shute i. b. then forum-selection clauses do not violate fundamental fairness and are valid. which is a Florida Corporation. and the clause thus limits the confusion regarding where suits must be brought—and passengers also benefit from reduced prices allowed by limiting jurisdiction. and enforcement effectively would deprive respondents of their day in court. The clause was reasonable. There isn’t general jurisdiction in this case because the husband did not have continuous and systematic contacts with CA. bought cruise tickets from Carnival. iii. National Equipment Rental v. Ms. d. As long as there was no fraud or bad faith in obtaining consent. from Washington. Unequal bargaining power was fundamentally fair. Limits of this case: it was a plurality opinion H. FACTS—Mrs. 4. Int’l Shoe recharacterized implied consent to include consent by minimum contacts. There isn’t specific jurisdiction in this case because all of the facts that led to the divorce (marriage. She filed a negligence suit in Washington.a. Common sense dictates that the clause will not be negotiated because it was purely routine. Shute was injured when she slipped on a deck mat during a guided ship tour while over international waters. Carnival Cruise Lines v. Respondents argue that the forumselection clause should not be enforced because. c. either at the outset of the lawsuit itself or before it. WA has no PJ over Carnival. basing jurisdiction on service of Weinberg.
form contracts offered on a take-orleave basis by a party with stronger bargaining power to a party with weaker power. to apprise interested parties of the action and give them an opportunity to object. Choice-of-Law Clauses – decide what forum’s (state’s) law will apply. as his agent for service of process” (Nat’l Equipment Rental) iii. FL” b. Individuals being sued in personam must receive some form of notice. Because it is perfectly permissible for a state to assume that people keep an eye on their property. FL. The traditional rule is that contractual provisions which seek to limit the place or court in which an action may be brought are invalid as contrary to public policy. Consentual Ways to Adjust Procedure Law i. 2. do not require suit brought there a. DISSENT—Justice Stevens: a. b. “The parties agree that any litigation arising out of this agreement shall be brought out of Miami. Consent-to-Jurisdiction Clauses – parties consent to suit in particular place (waives challenges to PJ). Notice is another requirement for personal jurisdiction. No bad faith motive. i. “John Rudsewics appoints X. “The parties agree that any litigation arising out of this agreement shall be governed by the law of Florida” (Burger King) ii. Party against PJ will argue forum-selection clause not apply because plaintiff could not negotiate clause + unequal bargaining power iv. Carnival Test: Was clause reasonable and fundamentally fair? c. Mullane v. only permit suit to be brought in consentedto place. The cruise line’s principal place of business was in FL and many cruises depart and return from FL. Courts traditionally have reviewed with heightened scrutiny the terms of contracts of adhesion. BUT—Pennoyer establishes a distinction between in personam and in rem jurisdiction a. Forum-Selection Clauses – Limit forum to specific location a. Arbitration Clauses – remove courts and require arbitration I. Standard—Notice must be “reasonably calculated under all the circumstances.” (Mullane) 4. however. Central Hanover Bank & Trust Co. iv. 3. 5. but not where the suit will be brought a. a state could presume that the seizure of property (prerequisite to in rem jurisdiction) would also accomplish notice.c. FACTS—Central Hanover Bank & Trust (Appellee) set up common fund pursuant to a New York statute allowing people to combine their small trusts 15 . residing in Miami. THE CONSTITUTIONAL REQUIREMENT OF NOTICE 1. i.
ii. which is all that was required by the NY statute for judicial settlement of the common trust fund. State or Local Government authorizes it to do so ii. iii. “Notice” was by publication for four weeks in a local newspaper. There were 113 participating trusts. After Int’l Shoe expanded the doctrine of PJ. FRCP Rule 4—NOTICE i. It would not be a burden to serve by mail those whose addresses are already known. Relationship between long-arm statutes and the DPC? a. to apprise interested parties of the action and give them an opportunity to object. however. Some of the beneficiaries were not residents of New York. If yes. A court may exercise jurisdiction over a Δ only when: a. HOLDING—(1) Yes. The Constitution allows it (Due Process/Full Faith and Credit) b.” (2) Resort to notice by publication is approved as a customary substitute where it is not reasonably possible or practicable to give more adequate warning. but nothing requires that a state assert the entire jurisdiction permitted by the CXN. ISSUES—(1) Is notice by publication of a judicial settlement to unknown beneficiaries of a common trust reasonable notice under the due process requirements of the Fourteenth Amendment? (2) Is notice by publication to all of the beneficiaries of a common trust whose residences are known reasonable notice under the due process requirements of the Fourteenth Amendment? iii. a. then do Constitutional analysis to see if there is PJ. RULES—(1) Notice must be “reasonably calculated under all the circumstances. Appellee Bank petitioned for settlement of its first account as common trustee. 5. states began to authorize service (often by mail) on Δ beyond their borders. a search is not required to find the addresses of the unknown. First do the state Long-Arm Statute analysis to see if claim would be heard in state. 149 examples J. The CXN sets the outer boundaries of PJ. iv. Long-Arm Statutes as a Restraint on Jurisdiction i. Brown (1998): 16 .into one fund for investment purposes. Gibbons v. iv. notice by publication of a judicial settlement to unknown beneficiaries of a common trust is reasonable notice. Statutes authorizing state courts to reach beyond their own borders came to be known as “Long-Arm” Statutes a. AND DISCRETIONARY REFUSAL OF JURISDICTION 1. iv. SELF-IMPOSED RESTRAINTS ON JURISDICTIONAL POWER: LONG-ARM STATUTES. notice by publication to all the beneficiaries of a common trust whose residences are known is not reasonable notice. (2) No. Textbook pg. VENUE.
Brown were driving together in Canada. Brown sued Gibbons in FL to recover for her own injuries. alleging his negligent driving caused the accident. Venue as a Further Localizing Principle 17 . Given the length of time between the 2 actions and the fact that the prior suit did not name Mrs. FL’s long-arm statutes are of a class that requires more activities or contacts to allow service of process than are currently required by the decisions of the US SupCt. Gibbons says the complaint doesn’t satisfy the long-arm requirements in FL of “engaged in substantial and not isolated activity. Why would FL impose a stricter long-arm statute requiring more contacts or activities? They already have the resources of their state courts taxed enough with the cases they feel already belong there. Issue: Whether FL can assert PJ over Gibbons. Relationship between long-arm statutes and the DPC? i. who turned the wrong way onto a one-way street and caused a head-on collision. Gibbons was giving directions to Mr. Gibbons “is engaged” in any activity in FL whatsoever other than defending the present suit.” b. Two years later. the FL long-arm statute requiring a person to be “engaged in substantial and not isolated activity” is not satisfied by the former suit filed two years ago. sued Mr. e. and Mrs. 3. Brown says that Gibbons is subject to the PJ of FL because she brought the prior suit. A current Δ’s prior decision to bring suit in FL should not act indefinitely as a sword of Damocles hanging perilously over the head of that Δ if she later challenges jurisdiction in a separate suit (albeit arising from the same incident). Brown in FL. a TX resident. The CXN sets the outer boundaries of PJ. Facts: Gibbons and Mr. i. Brown as a party. Some states have enacted long-arm statutes that reach for as much jurisdiction as the CXN allows. Brown has not shown that Ms. alleging that Gibbons gave bad directions that caused the crash. Brown. d. 2. 1. Thus. Reasoning: Even if the court was to assume that bringing an action in a FL court can constitute “substantial and not isolated activity” in some instances. Gibbons. Brown has not alleged a satisfactory ground for personal jurisdiction under the FL statute.” 2. c. Mrs. the Court held that Mrs. Notes: 1. 2. but nothing requires that a state assert the entire jurisdiction permitted by the CXN. the court nevertheless notes that Mrs. Ex: California: “A court of this state may exercise jurisdiction on any basis not inconsistent with the CXN of this state or of the US. Mrs. 4. Holding: No.a.
a. Rubfil. §1391 b. Defendants challenge jurisdiction and venue. Indonesia (Bakrie and Perkebunan) and in Thailand. c. b. a. Facts: Two American purchasers of extruded rubber thread. Usually. Venue. stems from statutory rather than constitutional sources. corps in Malaysia (Heveafil. Once you figure out that a particular state has PJ. Δ Corporations—deemed to reside in any district in which it is subject to PJ i. The American defendants can only be sued where they can be “found. 2. Holding: Yes to both. Where ANY Δ resides 2. Whether there is PJ over an Indonesian manufacturer (Bakrie) that consummates its sales of thread in Indonesia. and Rubberflex). Where substantial amount of events occur 3. Where any Δ may be found (if it can be brought no other district) c.S. State venue provisions trump §1391 18 . Jurisdiction founded ONLY on Diversity of Citizenship—§1391(a) 1. Where substantial amount of events occur 3. §1391 a. Issues: 1. More than one district in a state—look to Corporation’s most significant contacts within a particular district iii. Dee-K Enterprises. The foreign defendants can be sued in any district. Heveafil Sdn. the next question is “what is the proper district court which has jurisdiction over the Δ?” ii. §1391(c) 1.i.” d. Federal Statute—28 U. where litigation takes place. Venue locates litigation not just in a state but in a particular federal judicial district within that state. among other things. Where any Δ resides 2. Bhd. v. c. Jurisdiction NOT founded solely on Diversity of Citizenship—§1391(b) 1.S. Sue in federal court in the Eastern District of VA. 28 U. Plaintiffs allege a broad conspiracy among defendants to fix prices and restrain competition in rubber thread. Whether venue is proper in the EDVA.C.C. Dee-K (from VA) and Asheboro (from NC) bought the rubber thread from defendants to make bungee cords. Reasoning: 1. Plaintiffs sued in an anti-trust claim many corps producing the thread. Inc. Venue Statute used Section 12 of Clayton Act i. Where any Δ is subject to PJ (if it can be brought in no other district) b.
5. in this circumstance. any challenge to PJ is governed by the cxnal test of “fair play and substantial justice. Thus. which provides that aliens may be sued in any district. Does an alternative forum exist? 19 . BUT—Clayton Act applies to the American Δs. even though jurisdiction satisfies venue and due process. Section 12 finds venue (1) where Δ is found or (2) where Δ conducts business 2. then you have service of process in any district. Under either Rule 4 or the Clayton Act. 2. overrides any special venue statute (such as the Clayton Act here). Court applies 1391(b) to American defendants e. 4. should not do so c. the SupCt has held that 1391. a court has the power to hear a case but.if not subject to PJ in any state. Declining Jurisdiction: Transfer and Forum Non Conveniens a. Test under the trial court’s discretion: 1. Federal Statute §1391(d)—An alien may be sued in any district i.ii. Don’t want to hold up suits against foreign ∆s and 1391d removes venue impediments. Court says: prereqs for obtaining PJ: i. for reasons of justice or efficiency. ii. Statute (usually long-arm) or rule must authorize service of process over defendant. Because the Clayton Act doesn’t govern foreign Δs and §1391 does that. HOWEVER. Many times. Forum Non Conveniens (“Inconvenient Forum”): plaintiff can ask the court to dismiss the case from the district for inconvenience. iv. Forum non conveniens (common law)—affects both state and fed courts 2. b. Transfer among federal judicial districts under §1404— applies only to fed courts allowing them to move cases around the country “for the convenience of parties and witnesses. in the interests of justice.” (Shoe) – so. may be sued in any federal district court. §1391 trumps the Clayton Act ii.” d. plaintiff must show that he didn’t offend the CXN with service. Service of process pursuant to the statute or rule must comport with due process. Notes: 1. Federal long-arm statute FRCP 4(k)(2). Two rationales for declining to exercise jurisdiction: 1. as aliens. 3. **JUST BECAUSE A VENUE STATUTE TELLS US WE CAN SUE A Δ IN A PARTICULAR DISTRICT DOES NOT MEAN THERE WILL BE PERSONAL JURISDICTION!!!** v. 1391(d) eliminates any venue impediment to suit in this district with respect to the foreign defendants because they.
Crash in Scotland. Decedent’s survivors knew the Scottish law would not be favorable to them. The propellers were manufactured in Ohio by Hartzell. Is the forum inappropriate because of the court’s administrative and legal problems? e. all decedents are Scottish ii. the US was starting to become a popular place to file suits because it was favorable in many ways for plaintiffs): 1. Holding: A change in forum to a less favorable court is permissible. so he appointed her). The plane was owned and maintained by Air Navigation. 2. 3. The decedents were all Scottish subjects and residents. Piper Aircraft v. Reyno i.2. lawyer appoints his secretary as administratix of the decedent’s estates 20 . and that US has strict liability in torts b. A CA probate court appointed Reyno as administratrix over the estates (she is the legal secretary to the attorney who filed the suit in Scotland – attorney wanted to chase these cases. a Scottish taxi service also organized in the UK. as are their heirs and kin. which was organized in the UK. then transferred to the MD of Pennsylvania and finally tried to get a forum non conveniens dismissal. but the Third Circuit reversed on the ground that forum non conveniens shouldn’t be applied if it will cause the plaintiff to go to a forum with less favorable law for the plaintiff. Piper Aircraft v. 5. Appeal to SupCt. Issue: Is it permissible for the trial court to issue a forum non conveniens dismissal? 4. The plane was manufactured in Penn by Piper. Does the difference in the law give a remedy “so clearly inadequate or unsatisfactory that it is no remedy at all?” 4. Reyno initiated suits against Piper and Hartzell for wrongful death. and was operated my McDonald Aviation. Facts: A small commercial aircraft crashed in the Scottish highlands on a charter fight. Procedure: The defendants had the case removed to federal court in California. Find lawyer in CA. A British Dept. The federal district court granted the motion. Would trial in this forum cause oppression and vexation to the defendant that is out of proportion to the plaintiff’s convenience? 3. Overturned Court of Appeals’ decision and reinstated District Court’s decision. Why file in US (California)? a. of Trade report found no evidence of defective equipment and indicated that pilot error may have contributed to the accident. Reyno (1981) (history: at this time.
if view would be appropriate to the action. Δs move case to federal court. possibility of view of premises. 166 footnote #6) i. Public—administrative difficulties flowing from court congestion. and (2) lack of PJ v. vi. All Scottish parties are closer to PA than CA iv. Π’s convenience 3) Court’s interest 4) Private and public interests (p. the “local interest in having localized controversies decided at home” the interest in having the trial of a diversity case in a forum that is at home with the law that must govern the action. §1404 Transfer—for the convenience of parties and witnesses. Δs also move to dismiss based on (1) forum non conveniens. and the cost of obtaining attendance of willing witnesses.iii. Piper is located in PA b. or 21 . and all other practical problems that make trial of a case easy. Forum Non Conveniens—TEST for whether to dismiss on the basis of Forum Non Conveniens: a. Private—relative ease of access to sources of proof. Gilbert & Koster Considerations: 1) Is there an alternative forum 2) Oppressiveness to Δ v. and then use §1404 to transfer to PA a. availability of compulsory process for attendance f unwilling. the avoidance of unnecessary problems in conflict of laws. expeditious and inexpensive ii. in the interest of justice. a district court may transfer any civil action to any other district or division where it might have been brought.
Gonzales v. less deference is given to the Π’s choice 1. HOLDING—Case is allowed in US. which may be overcome only when the private and public interest factors clearly point toward trial in the alternative forum. However. and the unfairness of burdening citizens in an unrelated forum with jury duty. Oppressiveness to Δ v. not dismissed by Forum Non Conveniens 4. Scottish) would confuse jury (public interest concern) c. Π is Mexican citizen. it is reasonable to assume that the choice is convenient. f. Shootings overseas in Egypt hotel—most evidence from overseas (like Piper) 3. when the plaintiff is foreign. Π is US Citizen 2. it would open the floodgates for foreign litigation in the US b. Π’s convenience— generally tend to respect Π’s choice of forum. 1. Guidi v. HOLDING—Court dismissed on the basis of Forum Non Conveniens a. this assumption is much less reasonable (assume all forums in US are inconvenient to foreigners) – therefore. car accident in Mexico. 1. When a home forum is chosen. a foreign plaintiff’s choice deserves less deference. There is ordinarily a strong presumption in favor of the plaintiff’s choice of forum. Inter-Continental Hotels Corp. Chrysler Corp.in the application of foreign law. but no lawyer would take it because it’s not a good case in Scotland (no strict products liability) 6. ii. Yes—more deference is given to US Citizens’ choice of US forum g. vii. IMPACT OF US’S DISMISSAL OF Π’S CASE—can refile in Scotland. but when Π is foreign. Notes: i. his son dies 22 . Clearly Π is not choosing CA based on convenience because Π is foreign vii. Choice of law (US v. If Court did not dismiss on the basis of Forum Non Conveniens. Is the difference the fact that the Π is a US Citizen here? (unlike Piper) i.
Just because it’s not economically viable doesn’t make it not an alternative 5. laws of US. State Courts could hear cases 2. 3. Statutory Source—Federal Jurisdictional Statutes i. Limits the establishment of lower federal courts—doesn’t require them to be in existence. Federal Subject Matter Jurisdiction 1. How would cases be heard without lower federal courts? 1. Π files in Texas. Maritime (Special Court) a. §1333—Admiralty. IV. Wrongful death suit in Mexico would cap wrongful death damages at $2. §1332—Diversity of Citizenship. treaties (FEDERAL QUESTION) ii. State Courts (CONCURRENT JURISDICTION) *Can bring cases of federal question (ie.2. Why would Congress choose to allow only 1 Federal Supreme Court? 1. Article III. HOLDING—There is an alternative forum (Mexico) i. but allows Congress to establish them (ORDAIN AND ESTABLISH CLAUSE) a. Subject Matter Jurisdiction A. B. Controversies between the States v. Arising under the constitution. Exclusive jurisdiction—states do NOT have concurrent jurisdiction 23 . federal statute) in either federal or state forums 2. Court is not going to get into judging alternative forums based on how reasonable their outcome would be. Constitutional Source—Article III. Amount in Controversy iii. Framers were fearful of power of federal government 2. Federal Courts 2. Admiralty and Maritime Jurisdiction iv. Cases to which the US would be a party c. §1331—Federal Question ii. §1 i.500. Who can hear cases of Federal Question Jurisdiction? 1. Congress can strip jurisdiction from the Federal Courts b. Between Citizens of Different States iii. claiming no alternative forum 4. litigants/lawyers/judges need to know which kinds of cases belong in which courts—this is referred to as SUBJECT MATTER JURISDICTION. Because both state and federal governments have court systems. §2 gives a list of types cases that the Supreme Court could hear: i.
Exclusive jurisdiction—states do NOT have concurrent jurisdiction 3. § 1331 1. §2? 2. Exclusive jurisdiction—states do NOT have concurrent jurisdiction v. Has Congress further authorized the lower federal courts to assume that jurisdiction? D. §1334—Bankruptcy Cases (Special Court) a. No clear test has yet developed to determine which cases “arise under” the CXN ii. Federal Courts are courts of limited jurisdiction—so 2 questions arise: 1. i. and they do not have the power to hear cases that are not enumerated. RULE— Well-Pleaded Complaint Rule—Federal question arising under the Constitution must be evident on the face of the Π’s complaint Here. Π’s COA—breach of contract a. File in Federal Court because the claim arises under §1331. Effect—Limits power of federal courts to certain kinds of cases (those involving federal claims. etc. Louisville & Nashville Railroad v. Mottley i. The COURT raises the Federal Question Challenge sua sponte Supreme Court says they have a duty to raise this issue because Federal Courts are courts of limited jurisdiction. or treaties of the US. laws. FACTS—Π’s got free lifetime railway passes for being injured on railway. Does the case fall within one of the enumerated categories of Article III. C.” 2) American Well Works “Creation Test” and 3) Modern Smith line of cases (with 3 factors to consider in Grable) 2. it is stepping on Congress’s toes and the judgment wouldn’t be binding. Case Law Tests—1) Mottley “Well-Pleaded Complaint Rule.S. §1338—Patents. Congress subsequently banned lifetime railway passes and railroad refuses honor them.iv. Copyrights (Special Court) a. The district courts shall have original jurisdiction of all civil actions “arising under” the Constitution. FEDERAL QUESTION JURISDICTION 28 U. it is a violation of Due Process (arising under Constitution) iii. Rule 12 allows the Court to do this Subject matter jurisdiction 12(b)(1) is NOT waivable iv.C. ISSUE— Whether Federal Question jurisdiction is established where the only reference to federal law in the complaint is the plaintiff’s allegation of what he anticipates will be the defense to his cause of action. ii. diverse parties. the Π’s Due Process issue and §1331 issue that they claim “arises under the Constitution” granting federal question are 24 . If the Court hears a different kind of case. If it is deemed that RR need not honor the passes in the breach of contract action.
Statutes interpret “arising under” much narrower.B. state contracts law created the COA c. Eliscu files suit in NY STATE Court against Harms 1. Creation Test—Justice Holmes suggests that for determining when Mottley’s Well-Pleaded Complaint rule is met—“a suit arises under the law that creates the COA” a. 3.only answers in anticipation of the Δ’s defense.B. American Well Works i. Cause of action by state law—no federal question 1. NOT the complaint’s COA The federal question must be in the Π’s statement of his own COA v. The fact that Δ’s defense is based on a federal law does not make it a part of Π’s case in chief. Π’s complaint embodies no federal question. Kansas City Title & Trust Co. No. It’s not really about interpreting the federal law. (MODERN LINE OF CASES) 25 . Harms files suit against Eliscu in NY FEDERAL Court 1. Smith v. Osborn interprets “arising under” very broadly to hold that any claim that has any federal ingredient is seen as meeting the “arising under” language 2. Harms v. HOLDING—Π’s breach of contract complaint is a state claim that does not require any proposition of federal law. HOLDING—Copyright is an issue. COA—declaratory judgment as to who owns the copyrights 2. Δs move to dismiss claim—Federal Court grants dismissal for lack of federal jurisdiction c. and therefore. Here. to include §1338 e. but the real question is who have these copyrights been assigned to? This issue is not enough to meet the “arising under” jurisdiction because this is actually a state contract issue. Cause of action by federal law—federal question b. Osborn—Article III case about “arising under” 1. The Creation test—narrower than Well-Pleaded Complaint Rule ii. d. this case can be decided without consulting the Federal Copyright Statute §1338 5. Believes this case belongs in federal court (federal question) because of the Federal Copyright Act §1338 3. T. COA—interpretation of whether Eliscu owns the copyright of the songs under the agreement b. Eliscu a. T. Eliscu Test—COA infused with national interest? 1.
Π’s claimed that investing in the bonds would exceed the company’s corporate powers. and the bonds at issue in the case were invalid because the federal state authorizing them was unconstitutional. Despite Justice Holmes’ suggested test. if the Π prevailed. it arises under the Constitution and is a Federal Question. Interpreting the federal law is relevant to employer’s liability b. The general rule is that where the right to relief depends on the construction or application of the federal law/Constitution. SUBSTANTIAL FEDERAL ISSUE APPROACH ii. HOWEVER—the Πs here could not prove this state law claim without establishing a proposition of federal law—can’t prove a breach of fiduciary duty unless Π can show that the federal statute under which the bonds were issued was unconstitutional iii. i. rather. the Federal law would be deemed unconstitutional—this obviously belongs in federal court 26 . b. but the Π. so we can claim CN. the right to relief will depend on a constitutional question or on the construction of other federal law a. Federal law used to determine whether employer can use Contributory Negligence (DEFENSE) iii. COA—KY Employers Liability Act ii. FACTS—Πs sued to enjoin Δ from investing in certain bonds issued by federal banks under the authority of a federal statute. the employer is just pointing to the Federal statute saying “we abided by the rule. ISSUE—Is there FEDERAL QUESTION JURISDICTION? (Does it arise under the Constitution?) a. Does NOT satisfy the Creation Test for Federal Question Jurisdiction. Π’s COA—Breach of Fiduciary Duty claim (STATE LAW) a. since there was no federal question jurisdiction under his “Creation Test” 6. iii. Court says YES b. In Smith. Federal law is not central to the right to relief like it is in the Smith case. a. ISSUE—Did employer violate federal law? a. must PROVE a proposition of federal law. Moore v. federal courts have occasionally upheld arising-under jurisdiction where federal law does not create the COA.i. SMITH TEST—the Π files what looks like a state law COA. iv. in order to establish her state law claim. HOLDING—NOT a Federal Question a. since it was only authorized to invest in valid securities.” b. since the COA was created under state corporation law. EXCEPTION TO MOTTLEY TEST v. Chesapeake & Ohio Railway Co. DISSENT—Holmes dissented. but to decide the state claim.
COA—Products Liability. Congress did NOT establish a private right of action for misbranding drugs under the FDCA 1. However. District Court follows Smith line of cases—right to relief depends upon the application of federal law (FDCA) a. because the warnings did not meet the labeling requirements of the FDCA b. DISSENT (Brennan) a. COA—State law quiet title action 27 . This is like Mottley—using federal law as a defense is not enough 7. But here in Moore. Merrel Dow Pharmaceuticals v. Can’t follow Smith line of cases b. Grable & Sons v. there should be a federal COA here 1. under the Creation Test. there’s a twist that led the Supreme Court to distinguish Smith—all parties agreed that Congress did not intend to authorize parties who claimed injury from the failure to comply with the FDCA to sue for damages iii. Speculation as to whether the Court was overruling Smith’s Federal-IssueEmbodied-in-a-State-Claim exception to the Creation Test a. but this is an application of Smith b. Smith is still alive. Federal Courts should uniformly interpret the FDCA statute. Thompson i. Negligence theory—Merrell Dow gave inadequate warnings of the risks of Bendectin. To allow Πs to turn negligence claim into one “arising under” federal law simply by alleging that the Δ was negligent for failure to provide adequate warnings under the federal statute would fly in the face of Congress’s decision NOT to create a federal right to sue for damages for FDCA violations. Negligence per se claim depends on interpretation of the FDCA statute 2. Negligence Per Se a. HOLDING—NOT Federal Question Jurisdiction (reversed district court) a.1. So. the COA is not CREATED under federal law since there is no private right of action under the FDCA statute iv. 2. THUS—the complaint alleged a state COA (negligence) but asserted that the Πs could PROVE this state COA by showing a violation of the standard governing warnings in the federal statute ii. all the court has to do is figure out whether the employer followed federal law. Brennan feels that under Smith. Darue i. rather than have states interpret it differently v. but it is not a CHALLENGE to federal law iv. Court’s decision in Grable & Sons put that speculation to rest 8.
a. Π claims he was not properly notified by IRS that he owed in taxes, and he has superior title to the house than Darue, who bought the house at the IRS sale b. Darue removed case to federal court, arguing that the case arose under federal law because the nature of the notice required under the federal statute is a question of federal law. ii. Federal Law—Notice Statute a. Title depends on whether the IRS sale was valid—Did the IRS give Π proper notice of service? iii. HOLDING—There IS Federal Question Jurisdiction a. Supreme Court recognized that the Π’s action arose under a state law (quiet title), but it also recognized that Πs could only establish its right o reclaim the property by proving a proposition of federal law. 1. “A federal court ought to be able to hear claims recognized under state law that nonetheless turn on substantial questions of federal law.” b. Smith line of cases—state law COA, but Π’s right to relief depends on construction of federal law [SUBSTANTIAL FEDERAL ISSUE APPROACH] c. Is there a definitive Smith rule to be applied to cases? 1. No clear test—but Justice Sutter attempts to do this d. FACTORS TO CONSIDER IN SMITH LINE OF CASES: 1) Does the Π’s state law COA necessarily raise an issue of federal law? 2) Is federal issue actually disputed AND substantial? 3) Does it disturb the balance of power between federal and state judicial responsibilities? 9. Empire Health Choice i. COA—Insurance Contract Claim (State COA) ii. Federal Presence—Whether under FEHBA, McVeigh’s estate should’ve paid back the Federal Employee Benefits iii. HOLDING—NO Federal Question Jurisdiction a. Use Grable 3 Factors: 1) This is not a necessary issue of federal law. Federal statute is in the background of this case 2) Points of dispute are factual—the federal law is not actually in dispute 3) These are the kinds of cases that belong in state court—if federal court hears all cases where there’s a dispute between employer and federal employee who is covered under the Federal Health Benefits law, this would federalize a LOT of cases.
iv. Brennan’s Dissent in Merrill Dow—the federal employee benefits law needs to be applied uniformly, so all of these cases should be federalized rather than having state courts apply the federal statute un-uniformly. 10. Challenging Federal Subject Matter Jurisdiction i. What if Δ thinks there is no basis for federal subject matter jurisdiction? **Obvious answer—move for dismissal under Rule 12(b)(1). a. Diversity Cases—the obvious 12(b)(1) answer is the only method. b. Federal Question Cases—2 options: 1. Move for 12(b)(6) dismissal i. Because “arising under” jurisdiction depends on the substance of the Π’s claim, a party could argue that a complaint does not state a claim arising under federal law 2. Move for 12(b)(1) dismissal i. Based on lack of jurisdiction ii. When a Δ challenges federal question jurisdiction in district court, one of 3 questions commonly arise: a. Is there a federal issue at all? 1. If the Π’s claim is based on some federal statute or regulation, the problem consists in interpreting legislation. If the Π claims the right to relief under federal common law, the question is whether such federal common law exists. b. Assuming there is a federal issue, doe it “give rise to” Π’s claim? (This the question in Mottley) c. If there is a federal issue that is not the basis for Π’s claim, is it sufficiently important to “federalize” the case? 11. Group of Cases to Look Out For: i. Situations that appear to be a federal claim, but really at its essence is a state law claim ii. State law COA in which the federal court WILL find that there is “arising under” federal question jurisdiction E. DIVERSITY JURISDICTION 1. Article III, §2 of the Constitution—permits but does not mandate Federal Court jurisdiction based on “controversies between citizens of different States” and “between a State, or the citizens thereof, and foreign States, citizens, or subjects.” i. Original jurisdiction over diversity cases ii. Includes jurisdiction in civil actions between citizens of different States 2. Federal Statute—28 U.S.C §1332 i. Amount in controversy in diversity cases must exceed $75,000
a. St. Paul Mercury Indemnity Co. v. Red Cab Co.—If, from the face of the pleadings, it is apparent to a legal certainty that the Π cannot recover the amount claimed ($75,000+), the case will be dismissed. a. Otherwise, the claim in the pleading is all but controlling to consider the amount in controversy b. $75,000 must be in ACTUAL damages, not punitive c. If Π is asking for injunction rather than $ damages, consider: 1. the value of the injunction to the Π 2. the cost to the Δ of complying 3. cost or value to the party invoking federal jurisdiction 4. allow jurisdiction if any of the tests above yield a figure of the statutory amount ($75,000+) d. Aggregation 1. A single Π with 2 or more unrelated claims against a single Δ may aggregate claims to satisfy the statutory amount. 2. If 2 Πs each have claims against a single Δ, they may not aggregate if their claims are regarded as “separate and distinct” i. Can aggregate if they are NOT separate and distinct claims 3. If one Π has a claim in excess of the statutory amount and another Π has the same claim against same Δ for less than statutory amount, both can sue in federal court 4. If Π has claims against 2 Δs, Π may NOT aggregate them unless one claim is in excess of $75,000, and then you can supplement the other claim against the other Δ ii. Citizens of Different States: a. Π(SC) v. Δ(NC) 1. Strawbridge Case—must have COMPLETE diversity i. Π(SC) v. Δ(NC) & Δ(SC)—NO DIVERSITY b. Π(SC) v. Δ(England) c. Π(SC) & Π(Mexico) v. Δ(NC) & Δ(England) 1. Alien v. Alien jurisdiction is PROHIBITED as diversity jurisdiction i. Π(SC) & Π(Mexico) v. Δ(England)—NO d. Π(England) v. Δ(SC) e. Partnerships—look at citizenship of each of the partners 1. Grupo Dataflux (Mexican Corp.) v. Atlas Global Group (TX, Mexico) i. At the time of filing, some Atlas partners (Π) were from Texas, some were from Mexico; Grupo from Mexico
ii. Grupo should’ve filed 12(b)(1) motion to dismiss for lack of jurisdiction since there is no diversity jurisdiction—both parties from Mexico (alien v. alien) iii. ONE foreign partner in an American corporation can ruin diversity citizenship when a foreign Π sues them (becomes alien v. alien) f. Corporation—look to: 1. State of Incorporation 2. Principle Place of Business i. Nerve Center Theory—where is the headquarters/CEO/board meetings ii. Muscle Center Theory—majority of everyday activities iii. DEPENDS ON JURISDICTION WHICH TO USE g. Territories—Citizens of DC, Puerto Rico, Guam, and other territories are considered citizens of a “state” for diversity purposes—§1332(d) h. Ex-Patriots—US Citizens residing aboard (and domiciled there) are not citizens of a state—no diversity jurisdiction!! 1. Would have to file in state court i. §1332(d)—CAFA (Class Action Fairness Act) 1. Provides for federal diversity jurisdiction in class actions over amounts in excess of $5 million in which “any member” of the class possesses the requisite diversity based on state or foreign citizenship. i. Minimal diversity ii. Does not apply when parties are state officials 2. Congress was concerned that state courts were hearing and deciding class actions in which many or most members of the class came from other states—it reached for diversity jurisdiction as a way to address this problem. iii. Redner v. Sanders (2000): a. For purposes of determining whether diversity jurisdiction exists, a person is a “citizen” of the state in which he or she is “domiciled.” For adults, domicile is established by physical presence in a place in connection with a certain state of mind concerning one’s intent to remain there. b. Facts: Plaintiff alleges in his complaint that he is a citizen of the US residing in France, and that the two defendants are residents of NY, and the corporate defendant has its principal place of business in NY. Plaintiff says diversity jurisdiction exists because he is a resident of a foreign state. c. Issue: Whether diversity jurisdiction exists under 1332(a)(2) 31
Reasoning: Plaintiff’s complaint speaks of residence. Plaintiff sued for breach of K in federal court. etc. but whose citizenship is in Jordan. Facts: The plaintiff (Saadeh) is a Greek citizen and the defendant is a permanent resident of the US residing in Maryland.need to know citizenship of each partner. Dismissed. at least one claimant diverse in citizenship from another. 1. πs must be from different states than ∆s 5. would allow him to invoke diversity jurisdiction against NY citizens.limits the scope of 1332). his factual submissions are insufficient to demonstrate a CA domicile. that is. 2. 3. Complete diversity requirement: interpretation attached by the courts. Intent to remain indefinitely. 32 . requires only minimal diversity. The two are not synonymous. Saadeh v. Different than corporation. f.d. and for jurisdiction to exist plaintiff would need to be a citizen of France. and ii. 6. Plaintiff says that he has a CA DL. Moreover. Notes: 1. Present domicile. Domicile = presence + intent to remain 3. and considers CA his domicile. if proven. 1332: an alien admitted to the US for permanent resident shall be deemed a citizen of the state in which he is domiciled. For partnership. Plaintiff also shifts the ground to a discussion of his connection with California which. iv. has a CA law license. citing diversity jurisdiction. (Strawbridge. (this is true even if the plaintiff has moved to another state for the sole purpose of establishing diversity) 4. 2. Test for state citizenship: i. Each plaintiff MUST be diverse from each defendant. e. his brief does not actually assert the claim that there is jurisdiction on the basis of a CA domicile or make a request to amend the complaint to assert such a claim. KEY POINT—Diversity is determined at the time the suit is filed for diversity jurisdiction purposes (doesn’t matter if it changes during litigation). Farouki (1997): a. Allapattah: the CXN. is searching for jobs there. as opposed to 1332. b. Holding: No. while the statute speaks of citizenship. However. The time for measuring citizenship for diversity purposes is as of the date on which the complaint is filed in federal court.
The alienage amendment “clearly appears to have been intended only to eliminate subject matter jurisdiction of cases between a citizen and an alien living in the same state. ii. or 24 1. would not have fit within the district courts’ subject matter jurisdiction. 1367(b) does not allow jurisdiction over any claims Π then has against X. APPLIES TO ALL FEDERAL CASES THAT ARE NOT DIVERSITY JURISDICTION ONLY (b) When original jurisdiction in federal court is based on diversity only. FRCP 14—if Δ is liable to Π.it’s all set at time of complaint f.S. parties from the same state have nothing to worry about 2. Supplemental Jurisdiction broadens federal jurisdiction i. if brought independently. Δ is able to pass on liability to X. Parties actions cannot cure subject matter jurisdiction. Holley-Walker: the opposite side of the argument is that these two parties may still experience prejudice in state court based upon their home countries F. So.S. 28 U. Reasoning: The Court examines the legislative history behind the 1988 amendment in order to determine congressional intent. SUPPLEMENTAL JURISDICTION 1. logically. it has supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the Constitution. The Court discovers an intent to reduce diversity jurisdiction through the alienage provisions. Main justification for diversity jurisdiction in the first place is to eliminate prejudice in home state courts. dismissed for lack of subject matter jurisdiction. §1367 (a) If federal district court has original jurisdiction. 20.c. Issue: Does Farouki (defendant) qualify as a “citizen of a state” under the 1988 amendment to 1332? d. 19.C. e. §1367 2. 1. It originated in case law that stretched federal jurisdiction to cover parts of cases that. This includes claims involving joinder or intervention of additional parties 2. Notes 1. Holding: No. the court does NOT have supplemental jurisdiction over claims by Π against persons made parties under FRCP 14.C.” 1. Congress then codified the case law results—28 U. (c) District Courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if: 33 . i. if we’re worried about prejudice.
20. or 4. In exceptional circumstances. so long as those facts are both common and operative. Gibbs 5. Holding: Yes.1. Questions to ask in Supplemental Jurisdiction cases: i. a. the courts should compare the facts necessary to prove the elements of the federal claim with those necessary to the success of the state claim. §1367(a)—original jurisdiction not based solely on diversity jurisdiction 1. as well as a state fraud claim against all defendants (Counts II and III). §1367(b)—diversity jurisdiction alone b. there are other compelling reasons for declining jurisdiction. Reasoning: The court states that “a loose factual connection” may be sufficient to confer supplemental jurisdiction. Article III. Does §1367 allow claim to be filed? a. §2—Federal Courts hear both the initial claim and the additional claims because the Federal Court is hearing the entire “case” a. The court holds that the state claim and the federal claim have common operative facts because both are based on intentional inflation 34 . The court may also ask whether the state claims can be resolved or dismissed without affecting the federal claims. 3. United Mine Workers v. Efficiency ii. or 24? 4. Trevino (defendant) appraised the house at much higher than it was actually worth in order to increase the loan amount she could qualify for (and take out from them) and thereby increase Ameriquest’s profit. Π claim against person made party under FRCP 14. Same claim or controversy? iii. Issue: Whether the court has supplemental jurisdiction over the defendants for the state fraud claims (part of same “case & controversy”?) iii. In re Ameriquest Mortgage Co. The claim raises a novel or complex issue of State law 2. Which joinder rule does this case involve? ii. Skanes alleges that Homestead’s agent. The claim substantially predominates over the claim or claims over which the district court has original jurisdiction 3. Facts: Skanes (plaintiff) consummated a mortgage transaction with Ameriquest. The district court has dismissed all claims over which it has original jurisdiction. Skanes alleges a claim against Ameriquest under the Federal Truth in Lending Act (Count I). Constitutional Basis for Supplemental Jurisdiction i. 19. iv. (District Court. To determine whether the claims are connected by common and operative facts. Ameriquest ordered an appraisal of Skanes’ future home from codefendant Homestead. ii. 2007): i.
The court finds that: a. v. b. and she sued. (PR has not adopted the MRPC). This is an issue of PR law that must be addressed by PR courts. The PR law claims raise complex or novel issues. She received information that bank officials may have been committing ethical or legal violations. The PR law claims “substantially predominate” over the federal claims. “Because we cannot conclude that the resolution of one of her state claims will have no effect on the resolution of her federal claims. Holding: No. Rule: The federal court may decline to exercise supplemental jurisdiction for the presence of complex or novel issues of state law. First Bancorp. but their scope also exceeds that of the federal claims 35 . violations of the PR CXN. alleging violations of federal employment law (Title VII) and a number of claims under the laws of Puerto Rico (wrongful discharge. which enumerates the court’s discretionary reasons to refuse supplemental jurisdiction. defamation. Canon 21 of the PR legal ethics rules addresses the matter of lawyers’ conduct. The Title VII discrimination and retaliation claims survive. and both require the court to find fraud (basically. Issue: Whether supplemental jurisdiction exists for the Puerto Rican law claims. 1. we cannot deny our supplemental jurisdiction here. Facts: Plaintiff Szendrey worked for the defendant bank in Puerto Rico as general counsel. She reported her findings to outside counsel. iii. §1367(c)(2)—state law claims do NOT substantially dominate over the federal claim 6. The PR claims require a much fuller look into the performance of plaintiff as general counsel. 2.of value.” c. (2007): i. Not only do the PR claims far outnumber the federal claims. Canon 21 does not say whether a lawyer can divulge client information in order to pursue a legal claim against the client. b. §1367(c)—DISCRETIONARY EXERCISE OF SUPPLEMENTAL JURISDICTION i. 1. and conducted an investigation in which she concluded that violations occurred. ii. bank officials. The court also finds that the discretionary factors set out in 1367(c) do not weigh in favor of a decision to decline to exercise supplemental jurisdiction. and the Board of Directors. iv. those claims are dismissed. 1. this is one story). Szendrey-Ramos v. She was then fired. Reasoning: The court looks to 1367(c). and tortuous interference with contracts).
The PR claims are all distinct and have their own elements of proof. Permissive—Δ may join any unrelated claim that he has against the Π b. but permissive claims probably aren’t. because compulsory counterclaims are automatically within a court’s supplemental jurisdiction. permissive counterclaim i.2. HOLDING— Counterclaim: Court uses logical relationship test (flexible) – the debt counterclaim was compulsory because the subject of the case is the loan. 1. “Same transaction/occurrence” Test—Logical relationship between claim and counterclaim. Π wants to argue that unpaid balance claim is a compulsory counterclaim. CLAIMS BY THE DEFENDANT: COUNTERCLAIMS i. 36 . Notes: 1367(d) addresses the problem of plaintiffs being wrong about courts granting supplemental jurisdiction. Basis of the original jurisdiction over the case b. Blazer a. The identify of the party–plaintiff or defendant–seeking to invoke supplemental jurisdiction c. The Rule authorizing the joinder of the party or claim over whom supplemental jurisdiction is sought. c. FRCP Rule 13—permits Δs to assert counterclaims against Πs. while it is generally accepted that a compulsory counterclaim falls within the ancillary jurisdiction of the federal courts even if it would ordinarily be a matter for state court consideration. Rule 13—compulsory v. Do the joinder rules allow Blazer to bring this counterclaim against Plant? 1. 1367–grants supplemental jurisdiction based on three variables: a. 7. Compulsory—arises from same transaction/occurrence. 2. iii. Plant v. Rule 13(a): A counterclaim is compulsory if it arises out of the transaction or occurrence that is the subject matter of plaintiff’s claim. and the SOL running out on their state claims after their federal claims are dismissed. Section(d) opens a 30-day “window” that tolls the SOL after the claim is dismissed. ii. which satisfies the “same transaction” test under 13(a). which is not necessary to establish Title VII claims. vi. must bring this counterclaim if you ever want to bring it at all a. arising from the same set of operative facts ii. Rule: a permissive counterclaim must have an independent jurisdictional basis.
g. Omaha Public Power District a. Permissive Counterclaim—meets “same case/controversy” test but do not meet the “same transaction/occurrence” test for compulsory counterclaims. probably broader i. This tells us that if you meet the standard of 13a. e. JOINDER i. Yes. Great Lakes Rubber Corp. You can use compulsory counterclaim as a way of getting claims into federal court that wouldn’t normally be heard there Lack of original jurisdiction doesn’t stop a federal court from hearing a claim based on Rule 13a 8. Federal Court dismisses all of Great Lakes claims for lack of federal question jurisdiction. “same transaction/occurrence” 1. then it will automatically meet the requirements of 1367 – “same case or controversy. Same case/controversy is at least as broad as same transaction/occurrence. Reasoning: Purpose of compulsory counterclaim rule is to provide complete relief to the defendant who has been brought involuntarily into federal court. Owen shares in that liability”) 2. Great Lakes then files all of its initial claims as counterclaims—Court holds these are compulsory counter-claims and will hear them (13a same transaction/occurrence) 1.. “Same case/controversy” v. Do the supplemental jurisdiction rules allow federal court to hear this counterclaim? 1. Kroger v. Notes: If the claim “arises out of the same transaction or occurrence” (13a). Herbert Cooper Co. This case was before §1367 was written 37 . v. but will hear Herbert’s anti-trust counter claim b. diversity jurisdiction allows Kroger to sue OPPD in federal court. a. Kroger then files its own claim against Owen b. which falls within the supplemental jurisdiction test of “same case/controversy” iii. Kroger sues OPPD—employer Paxton is insulted by workers’ comp.” f. but if we are found liable. most likely to recover against OPPD (deepest pockets) 1.d. court says this is a compulsory counterclaim. OPPD interpleads Owen Equipment under Rule 14 (“we are not liable. you also meet the supplemental jurisdiction standard of same case/controversy ii.
HOLDING—No. §1332(a)(1) allows federal jurisdiction over civil actions where the matter in controversy exceeds $75. OPPD is the Δ dragged into court—once they’re there. Πs are restricted from bringing claims against parties brought in under 14. a Nebraska citizen. Kroger a. even where the nondiverse defendant is impleaded through ancillary jurisdiction. Start with §1332—no diversity jurisdiction 2.S. 28 U. Owen Equipment & Erection Co. and §1367 now still allows for it a. 20 & 24 e. How would this work under §1367? 1. in federal district court. b. an Iowa corporation. Respondent amended the complaint naming the PetitionerDefendant. (Defendant). Owen’s argument—strictly construe §1332. §1367(b) does NOT allow supplemental jurisdiction over this claim 2. don’t let in cases to federal court that could not be heard under traditional diversity statute. FACTS—The Respondent-Plaintiff. §1367(b) only restricts supplemental jurisdiction over claims made by Π ii. Π’S CLAIM WON’T BE HEARD 1. as an additional defendant. Owen Equipment & Erection Co.000 and is between citizens of different states.c. How do we explain the fact that OPPD is allowed to interplead Owen into the federal case even though it violates diversity jurisdiction? i. Kroger (Plaintiff). we should at least allow them to bring any parties in that they believe actually share in liability ii. c. 19. III—same case/controversy. but where the newly named third-party defendant is a citizen of the same state that the plaintiff is (no diversity). This statute and its predecessors 38 . RULE—Diversity jurisdiction does not exist unless each defendant is a citizen of a different state from each plaintiff. Rule 14 allows for it. ISSUE—Whether a federal court has jurisdiction over a third-party defendant named in an amended complaint in a suit in which complete diversity exists between the plaintiff and the original defendant. a citizen of Iowa. d. ISSUE—Does the federal court have jurisdiction over the claim by the Π against the 3rd party Δ? 1.C. Π’s claim against 3rd party Δ should be heard by Federal Court because the Federal Court is hearing the entire case 3. The basis of federal court jurisdiction was diversity. Kroger’s argument—ancillary jurisdiction under Art. don’t let in cases to federal court that could not be heard under traditional diversity statute d. v. HOLDING—strictly construe §1332. filed suit against Omaha Public Power district.
B(NC)—ADA claim and negligence state claim $75. 3. Jurisdictional statutes give Πs the initial choice of state or federal courts for cases in which federal and state court jurisdiction overlap. REMOVAL 1. Congress has also given Δs the power to second-guess Πs who choose a state court in cases that could’ve been brought in federal court. G. the entire case may be removed and the federal court may determine all issues. A(SC) v. i. If filed in SC state court. or it may discretionarily remand all matters in which State law predominates.000 a. DISSENT—Justice White and Justice Brennan dissented. Π can file in state or federal court b. B(NC)—Negligence. A(SC) v. i. This case is removable by Δ. Any other such action (diversity only cases) shall be removable only if none of the parties properly joined and served as Δs are a citizen of the state in which such action is brought. When the Plaintiff amended her complaint to assert a claim against the Defendant. e. Their dissent viewed § 1332 as only requiring complete diversity between the plaintiff and the parties he initially brings into the suit. since there is a Federal Question joined with an otherwise non-removable state negligence claim (due to Hometown Rule) brought in NC state court 39 .000+ brought in NC state court 1. §1441 (a) Any civil action brought in State Court over which Federal Court would have original jurisdiction may be removed by the Δ to the Federal District Court (b) Any civil action of which the federal court has FEDERAL QUESTION JURISDICTION shall be removable without regard to the citizenship or residence of the parties. [HOMETOWN RULE] 1. B(NC)—if A brought suit in NC state court. i. A(SC) v.C. Δ may not remove to federal court (c) If a federal question is joined in state court with one or more otherwise nonremovable claims. Δ can remove to federal district court in SC 2.have consistently been held to require complete diversity of citizenship.S. diversity jurisdiction does not exist unless each defendant is a citizen of a different state from each plaintiff. REMOVAL—28 U. That is. $80. complete diversity was destroyed just as surely as if she had sued Defendant initially. Thus they held that in a diversity case a federal court has power to entertain all claims among the parties arising from the same nucleus of operative facts as the plaintiff’s original claim against the defendant.
C. even if the original action to be removed couldn’t have been brought in federal court as an original matter 4. THE PROCEDURE FOR REMOVAL—28 U. and orders served upon such Δ. 5. If only basis for removal is diversity. or within 30 days after the service of summons upon Δ if such initial pleading has then been filed in court and is not required to be served upon Δ.(d) Any civil action brought in a State Court against a foreign state may be removed by the foreign state to the Federal Court. Δ has 30 days after becoming aware of grounds for removal to file iii. If there’s a lack of subject matter jurisdiction. you are signing it under Rule 11 (reasonable investigation as to whether there is a legitimate basis for removal. which shall effect removal and the State court shall proceed no further unless and until the case is remanded. whichever period is shorter. i. Example—Δ removes when suit was filed in Δ’s homestate— Π has 30 days to file a motion for remand based on the Hometown Rule 40 . Δ has 30 days to file for removal ii.S. FRCP 11—when you file a notice of removal as Δ’s attorney.S. pleadings. there is a 1 year restriction on removal (c) Promptly after the filing of such notice of removal of a civil action the Δ shall give written notice thereof to all adverse parties and shall file a copy of the notice with the clerk of the state court. if not. If basis for removal is NOT in existence at time of Π’s initial complaint (ie. 2. attorney may be sanctioned) (b) The notice of removal shall be filed within 30 days after the receipt by the Δ of a copy of the initial pleading setting forth the claim for relief. §1447 “Motion to Remand to State Court” i. i. 1. CHALLENGING REMOVAL—28 U. or (B) The Δ is a party to an action which is or could have been brought under §1369 in a federal court and arises from the same accident as the action in State court. together with a copy of all process. (e) (1) Notwithstanding section (b). A motion to remand “on the basis of any defect other than lack of subject matter jurisdiction” has a 30-day time limit. the Π may at any time ask for case to be remanded to state court. §1447(c) contains a pair of provisions concerning remand to the state courts: a.C.. a Δ in State Court may remove the action to Federal Court if: (A) The action could’ve been brought in federal court under §1369. If basis for removal exists when Π initially files complaint. §1446 (a) Δ desiring to remove an action from a State Court shall file in the Federal District Court a notice of removal signed pursuant to FRCP 11 and containing a short and plain statement of the grounds for removal. federal question complaint is filed in amended complaint).
However. v. intervened in the lawsuit as a plaintiff. Lewis settled with Whayne. by the time the trial came around. Reasoning: Supreme Court believes that problem pointed to by plaintiffs is not too large because the problem requires that the defendant make two gambles: (1) that the case will become diverse. or was okay because diversity was proper by the time of trial. rather than at the time the case is removed from state to federal court. Why did the Court get it wrong? a. 1. and (2) that the federal district court will miss the original diversity problem. and filed in KY state court against Caterpillar (incorporated in Delaware. iv. At the time of removal. (KY corp). Remand is required if the district court lacks subject matter jurisdiction. If case had been remanded to state court. Lewis (1996): i. Holding: No. Liberty Mutual Insurance Group (Mass. Caterpillar is an outlier. Lewis files for remand to state court. iii. Lewis sustained injuries while operating a bulldozer. remand rules under 1447 are required where the case was founded only on diversity because the federal courts have no power to hear the case. If Caterpillar had lost jury verdict. is the appropriate time at which to examine whether complete diversity exists permitting federal court jurisdiction. ii. vii. Facts: Plaintiff Lewis is from Kentucky. b. Corp with principal place of business in Mass). Diversity at the time judgment is entered. the insurance carrier for Lewis’ employer. v. and asserted state law claims against defendants Caterpillar and Whayne Supply Co. and principal place of business in Illinois). Notes: a. diversity was settled. it then could’ve claimed they made a mistake and there was no federal jurisdiction c. Π could’ve possibly won 41 . Inc. then Caterpillar filed a notice of removal in district court. vi.b. Courts will almost always remand cases that improperly use diversity jurisdiction. The question becomes whether the district court’s original jurisdiction is invalid because of removal. removal was improper because Liberty still had a claim against Whayne. Issue: Whether the absence of complete diversity at the time of removal is fatal to federal court adjudication. This includes absence of diversity or a federal question 6. Caterpillar. SupCt decided that it would not remand even though no diversity existed when removal was sought because it wanted to protect the efficiency of court resources (new trial would cost a lot for parties and court). Upholding jury verdict of bad actor—Caterpillar should’ve never removed this case to federal court b. Unlike supplemental jurisdiction under 1367.
28 U. Spot an Erie problem 2. With promissory notes.” a. except where the Constitution or Acts of Congress otherwise require or provide. The federal law that is the source of the federal question is the law that applies. with checks those defenses are much more limited ii. be sure that the case involves a federal court sitting in diversity jurisdiction 2. a halfway step between a promissory note and a modern check. The Erie Problem A. Possible laws to derive the answer from—state statutes. NY cases were not binding on federal court. ruling that bills were subject to a number of defenses. Does it apply the state law? Or Federal Law? ii.V. When a federal court sits in diversity jurisdiction.C. it is clear that federal law applies.S. Courts struggle with this language 3. OBJECTIVES 1. Swift v. THE ISSUE—CHOICE OF LAW 1. When federal courts have jurisdiction by virtue of a federal question. When is it an issue of substance. or a different issue of law that would require the application of state law or federal law? B. the Court should apply NY state law because that is where the facts occurred. regulations. precedent. What are the more difficult questions about applying the Erie Doctrine? i. §1652—Rules of Decision Act i. federal statutes (none exist on the issue here). Involved a bill of exchange. Example—Federal Court has Diversity Jurisdiction over a state negligence claim a. in cases where they apply. Constitutions iii. Were these NY cases part of “the laws” of that state and thus binding on the federal district court? c. Tyson i. What does Erie Doctrine do? 3. shall be regarded as rules of decision in civil actions in the courts of the US. which law does it apply? i. b. there are numerous defenses assertable by anyone sued for breach. a. Tyson’s argument—even though the case is in Federal Court. 42 . a. a. ISSUE—Which law applied to the substantive question of how many defenses may be asserted. b. Diversity case filed in a federal court in NY. NY Courts had spoken on the substantive issue. HOLDING—No. When determining whether to apply Erie and its progeny. “The laws of the several states. It is more difficult when actions are brought on the basis of diversity jurisdiction iii.
a. Swift went on to reach a conclusion different from that reached by the NY courts on the issue iv. The accident occurred in Pennsylvania. CONSTITUTIONALIZING THE ISSUE 1. instead. an open door struck him. Erie Railroad v. and he severed his arm underneath the train. He kept several feet between him and the tracks. What does “law” mean? 1. Tompkins (1938) i. Facts: Tompkins was walking home alongside the railroad tracks of the Erie Railroad. they need not follow state case law. STILL MUST FOLLOW THAT STATE STATUTE!! vi. State case law just becomes one of the reference sources Federal Courts can look to in deciding what the Federal Law should be b. knocked him down. iv. Pennsylvania law required that the railroad have committed “wanton negligence” since Tompkins was a trespasser (higher standard of negligence. Erie requires that federal courts apply state common law when they are sitting in diversity. Therefore. Tompkins is a citizen of NY and the Railroad is a citizen of PA. Where would the court find the standard for negligence in PA? Case law ii. It does not include state courts’ interpretations of laws. regulations. he did not apply Pennsylvania law based on Swift v. Holding: The law to be applied in any case is the law of the state. As a train passed. There is no federal general common law. Federal Courts were basically free to ignore state case law. federal courts sitting in diversity did not have to apply precedent set forth by State courts. However. IF THERE IS A STATE STATUTE. The “laws of the several states” only included statutes and other forms of positive law. the federal court instructed the jury on ordinary negligence. federal law allowed ordinary negligence). the Rules of Decision Act only requires that federal courts apply state statutes. Tompkins brought suit against Erie Railroad in federal district court in New York based on diversity. what law should apply in terms of the substance of the case? iii. Federal Court says it can look to “general law” and can declare what the best law is 2. RULE—The Court held that the Rules of Decision Act did not include state common law precedent. case law (Evidence of what the law means) v. Reasoning: 43 . a. KEY POINT—When a Federal Court is sitting in Diversity.1. (obviously Swift encourages forum shopping). After Swift. Issue: When a federal court is sitting in diversity. CXN (US and state). Statutes. Tyson. but can look to federal common law/general law to declare what the best law is C.
Swift could be in violation of the CXN. equal protection concerns there may be 44 . However. takes away power that is given to the several states (federalism argument). 4. which allows exclusivity agreements 2. 3. b. There is no Constitutional basis for holding a federal common law.III. This changes the analysis from simply a statutory construction case to a case with cxnal implications.a. Diversity jurisdiction was intended to provide a neutral forum for litigation between citizens of a state and non-citizens. Lack of uniformity. Policy concerns with Swift: 1. The Court also argues that the Swift decision created federalism concerns. 2. a. One of the companies decides to reincorporate in Tennessee. The Court also points out that Congress does not even have the power to legislate in the areas of “general common law” that is reserved to the states. RR and taxi companies want to execute exclusivity agreement b. The argument is rooted in Art. the Court also determined that there was no such thing as federal common law. Black & White Taxicab Co. so that any controversies can be settled by Diversity in Federal Court to take advantage of general law. First. 5. v. This denies state citizens the “equal protection of the laws” because non-citizens could bring the action in federal court to apply a different interpretation of state law c. 3. i. Swift encourages non-citizens to forum shop within the state to find favorable law. but also the common law of the states. Brown & Yellow Taxicab Co. The purpose of the Act was to include not just written statutes. which gave Congress the power to create lower federal courts of limited jurisdiction. Constitutional basis: 1. the result of Swift meant that the laws of a state were applied differently depending on whether the action was brought in federal or state court. the Court finds that the Swift court misinterpreted the Rules of Decision Act. Kentucky (where both were from) does not allow these agreements c. Swift introduced a way for non-citizens to discriminate against citizens.
Therefore. substance (state law) iv. Conflicts question: which state law applies? D. Procedure rule 45 . Tyson. Traditional Substance v. NY substantive law governed. 6. Courts in equity did not traditionally consider themselves bound by SOLs. separation of powers concerns if you allow federal common law almost becomes like a legislature because it makes common law dealing with everything it hears. (no federal doctrine of laches) v. v. Facts: Plaintiff sued a bond trustee in a federal diversity action alleging misrepresentation and breach of trust. Guaranty Trust Co.a discrimination against a particular state by those outside the state seems to favor those outside the state because they can remove it to federal court and receive lighter treatment. a federal court in equity can take cognizance of the suit because there is diversity of citizenship between the parties.” viii. KEY POINT: When a Federal Court is sitting in diversity. Law) vs. That Erie requires deference to State Courts as lawmaking bodies ii. no matter how it might be labeled. In the years since Erie. vii. 2. A state rule that was outcome-determinative was to be followed. Notes: 1. York (1945): i. That Federal Courts are an independent judicial system 2. Issue: Whether. QUESTION REMAINING—When may Federal Courts use Federal Law instead of State law? 3. iii. RULE: Outcome Determinative Rule—courts should insure that a case that could be filed in state would have the same outcome if it was filed in federal court. Holding: No. the statutes of the state and the common law of the state in which they’re sitting should be followed—THERE IS NO GENERAL FEDERAL LAW!! e. Reasoning: Courts need to cut down on “forum shopping. the Court holds that there is no federal common law. d. instead. This case overrules Swift v. Action is barred. a. Plaintiff argued that the SOL did not bar the suit because it was on the “equity side” of federal court. ii. THE LIMITS OF STATE POWER IN FEDERAL COURT 1. the leading pre-Erie case. the federal court sitting in diversity is bound to follow the law of that state. Defendant invoked NY SOL. even if it is judge-made common law. Manner /means (fed. Would the law effect the outcome of the case—substance vi. the Supreme Court has addressed questions in an effort to mediate between opposing principles: i. when no recovery is possible in state court because the action is barred by the SOL.
i. Polygraphic Co. The way in which the Π goes about vindicating his rights b. was a “statutory” employee whose exclusive remedy was under the SC Workmen’s Comp Act. as recognized by the State. Interstate Realty Co. The issue of 46 . Rule 23. HOLDING—State law followed (Court didn’t consider possible effect of Rule 17(b): look to state of incorporation) 8. therefore. TEST—MANNER & MEANS a. HOLDING—State law followed 7. If applying state law and applying federal law would give rise to different outcomes b. ISSUE—VT barred arbitration of employment practices. federal statute arguably required arbitration ii. Court says—don’t give too much weight to this substance v. The question is whether such a statute concerns merely the manner and the means by which a right to recover. Byrd v. i. Beneficial Indus. Procedure Question—apply federal law ix.a. ISSUE—MS statute barred out-of-state corporations not paying MS taxes from suing in state courts. is enforced. HOLDING—State law followed 5. Bernhardt v. does it significantly affect the result of a litigation for a federal court to disregard a law of a State that would be controlling in an action upon the same claim by the same parties in a state court? x. HOLDING—State law followed 6. ISSUE—When does a lawsuit begin. procedure rule a. Woods v. Facts: Plaintiff was injured while on a construction job for defendant. Although he was employed by an independent contractor.1 did not so require ii. Loan Corp. Cohen v. TEST—OUTCOME DETERMINATIVE TEST a. sued in tort. If the law to be applied significantly affects the result of a litigation— APPLY STATE LAW 4. Substance Question—apply state law b. should federal diversity court do so? ii. Ragan v. ISSUE—NJ statute required small shareholder suing corporation to post bond for expenses. i. or whether such statutory limitation is a matter of substance in the aspect that alone is relevant to our problem. Blue Ridge Rural Electric Cooperative (SC. Merchants Transfer & Warehouse Co. of America i. If the law to be applied relates to the manner & means—APPLY FEDERAL LAW xi. namely. for statute of limitations purposes—when filed (Rule 3) or when served (KS practice)? ii.1958): a. defendant contended plaintiff was doing the same work as defendant’s regular employees and.
In this case. Reasoning: 1. which is a matter for the judge under SC law. but a matter for a jury under federal law. This is an issue of FORM & MODE a. RULE: The federal practice will be used when it is not certain that using the federal rule will be outcome-determinative. Is this outcome determinative? 1. Here. Whether the issue is bound up with state-created rights and obligations in such a way that its application in the federal court is required – OR. d. Justice Brennan find that it is NOT b. c. If no—apply federal law b. 7th Amendment—APPLY FEDERAL LAW DECISION TREE: (1) “Bound up with rights and obligations”? o If “yes”. First look at SC Workmen’s Compensation Act—Erie requires that Federal Court sitting in diversity examine the substance of the state law i. Brennan finds that we don’t know if it’s outcome determinative 1. Questions Brennan asks: i.b. Is choice of judge/jury “bound up with state-created rights and obligations”? a. [If found that it was—he would apply state law] iii. immunity came up. then state law should apply) iii. Is there an “affirmative countervailing consideration?” 2. Issue: Should the state policy of having the judge decide a particular issue of fact trump the federal rule of having a jury decide in the interest of uniformity of outcome? Holding: Federal law applies and the jury should decide in this case. apply state law. Looking to see what kind of importance the state places on whether a judge or jury hears these cases in the statute ii. 47 . e. ii. looking to affirmative countervailing considerations 2. Reversed. If yes—apply state law 2. Is it an issue of form and mode + Outcome Determinative (if outcome determinative.
Plumer (1965): i. Is this a rule of civil procedure? b.C. but Rule 4. State RCP conflict i. a. whether federal courts should follow the state practice is a constitutional question. FRCP governs in Federal Court 4. Plaintiff says: FRPC are a special case when referring to Erie because they’ve been around for a long time and we shouldn’t just throw them out because of this concern iv. Issue: Whether. Erie questions are constitutional matters. law required personal service of process on a defendant served as executor of an estate. it is a “Form & Mode” issue. Mass. Holding: The Rule under the FRCP is the standard against which the district court should have measured the adequacy of the service. (This is outcome-determinative because the legitimacy of service depends on which one we use). 2. i. While purporting to overrule none of the cases in the Erie line. Rules Enabling Act. writs. allowed for the complaint to be left with a competent adult at the residence of any defendant. Would applying FRCP disturb purposes of Erie? ii. which rejected the invitation to reach its decision as an interpretation of the Rule of Decision rather than the Constitution. this case reframes the issue as one of statutory rather than constitutional interpretation. pleadings. Plaintiff left the complaint with the defendant’s wife at his house.S. and 48 . service of process shall be made in the manner proscribed by state law or that set forth in Rule 4(e)(2)(B) of the FRCP. Article III. Defendant argues: Guaranty Trust (York) says that if the rule is outcomedeterminative. (2) “Form & Mode” o Is this OUTCOME DETERMINATIVE? If yes—apply state law If no—apply federal law If unsure—look to affirmative countervailing considerations E. Plumer i. §1 power to create federal court also gives Congress power to write rules of Civil Procedure that govern federal courts ii. by general rules. Reversed. That framing of the issue is consistent with Erie itself. ii. De-Constitutionalizing Erie 1. 3. Hanna v. Facts: This case arose out of a diversity suit for personal injuries where the defendant was the estate of one of the drivers involved. the forms of process. FRCP v. which plaintiff followed. Under both Guaranty Trust and Byrd. v. o If “no”. Questions to ask: a. the state rule must be applied iii. 28 U. Hanna v. § 2072: The SupCt has the power to prescribe. in a civil action where the jurisdiction of the US district court is based upon diversity of citizenship between the parties.
2. denying the federal rule would remove any power whatsoever that the fed courts have over their procedures. RULE: If there is a conflict between a state law and federal rule of procedure. and the SupCt gives the power to the rules committee) b. c.” 1. Congress gives the SupCt the power to make the federal rules. Such rules shall not abridge. Notes: a. enlarge of modify any substantive right and shall preserve the right of trial by jury.motions. is to stay close to basic principles by inquiring if the choice of rule would substantially affect those “primary decisions respecting human conduct” which our cxnal system leaves to state regulation. Concur [Harlan]: The proper line of approach in determining whether to apply fed or state law. We’re not worried about forum shopping because no one is going to choose fed or state court based on service of process rules. The court says this rule is not a “talisman. follow federal law if the rule is made pursuant to the REA and does not abridge. a. Reasoning: It is difficult to argue that permitting service of defendant’s wife to take the place of personal service on him alters the mode of enforcement of state-created rights in a fashion sufficiently substantial to raise the sort of equal protection problems to which Erie alluded. If yes. We’re not worried about inequitable administration of laws because once this case is settled. procedure or Congress’ attempt to exercise that power in the Enabling Act. “The test must be whether a rule really regulates procedure—the judicial process for enforcing rights and duties recognized by substantive law and for justly administering remedy and redress for disregard of infraction of them. whether substantive or procedural. If so. go through this analysis: 1. or modify a substantive right. The Erie rule has never been invoked to void a federal rule. Erie and the CXN require that the state rule prevail. and the practice and procedure of the district courts of the US in civil action. 1. (Through this Act. Public uncertainty over which laws govern would be debilitating. the court must follow the dictates of that statute. b. no one will argue about this again.“To hold that a FRCP must cease to function wherever it alters the mode of enforcing state-created rights would be to disembowel either the CXN’s grant of power over fed. Summary: Outcome determinative judgments are important for deciding if a state or federal rule applies. viii. a. even in the face of a conflicting fed rule. Is the Rules Enabling Act constitutional? 49 . enlarge. then use fed rule. Is the statute/rule constitutional? If yes. but in this case. Hanna analysis (fed practice flowing from fed rule/statute): Do the rules conflict? If no. The outcome-determination test (from Guaranty Trust) cannot be read without reference to the twin aims of the Erie rule: discouragement of forum shopping and avoidance of inequitable administration of the laws.” vi. vii. ix.
even if it differs from the state practice in a significant way. §1404 iv. Does the rule promulgated under the authority of the Rules Enabling Act in fact fit its description: “rules of practice and procedure?” (HW: this is kind of a false question.C. F. Gasperini v. Stewart Org. State Practice—Yes: NY Statute requiring such review by state appellate courts iii. Federal Practice—FRAP 38 (discretionary award of extra costs for frivolous appeal) iv. IF the rule passes these tests. State Practice—No: AL case law iii. Federal Practice—Reexamination clause of 7th Amendment iv. Holding—Modify federal practice—by allowing district courts to examine verdicts for effectiveness v. Practice at Issue—Is forum selection clause enforceable? ii. DETERMINING THE SCOPE OF FEDERAL LAW: AVOIDING AND ACCOMMODATING ERIE 1. ii. Federal Practice—28 U. So long as the statute is constitutional and one knows what the statute requires. then it must be applied. Explanation—The Rule’s discretionary mode of operation unmistakably conflicts with the mandatory provisions of Alabama’s affirmance penalty statute 3. Center for Humanities. Inc i. the choice of law problem is solved. Holding—Federal Practice: NO PENALTY v. v.3. Burlington North R. Practice at Issue—Is Δ who stays damage judgment but loses appeal liable for 10 percent penalty? ii. Under Hanna’s reading of Erie. where “the court faced a one-or-the-other choice: trial by judge as in state court. They’re never ruled against a FRCP) i. Explanation—Unlike Byrd. Woods i. many Erie questions will not require resort to the Constitution because Congress by statute will have told federal courts what to do in the situation. Holding—Federal Practice: ignore state case law. Explanation—Section 1404 is intended to place discretion in the district court to adjudicate motions for transfer according to an individualized. or trial by jury according to the federal practice. Practice at Issue—Must federal circuit court decide if damages exceed “reasonable compensation”? ii. give substantial weight to clause v. 50 . But not always—the Federal Courts have encountered a few cases in which the federal interests overcame state practices 2. case-by-case consideration of convenience and fairness and trumps state’s blanket rule 4. State Practice—Yes: AL statute iii. i. v. Ricoh i.S.
Court rejects this FRCP 41 argument 1. So. judgments in CA fed courts would not be preclusive because CA state court practice states that SOL dismissals are without prejudice. 5. and successfully moved to dismiss plaintiff’s claims as barred by CA’s 2 year SOL. ISSUE—Is the claim preclusion an Erie Problem? a. Semtek Intl. Plaintiff says that the case is controlled by Dupasseur v. alleging breach of K and other business torts. v. decision on the merits b. 1. Court says proper law for Maryland Courts to apply is CA state laws of claim preclusion (the law of the state where the federal court was sitting in diversity) to see what the effect of the first judgment is i. Court decides not to apply this rule because it was based off of law created before the FRCP (predates REA) b. a. ii. CONFLICT—FRCP 41 and 3 year SOL in Maryland a. This matters because plaintiff filed suit again in MD. The federal rule is that SOL dismissals operate on the merits with prejudice. fully litigated. Example of when a state court would have to respect a Federal law—Federal Civil Procedure 41b dismissal with prejudice iii. Lockheed Martin Corp. same claim or claims that were available at the time. but CA state practice says that a SOL dismissal is not with prejudice. Since the case is now in Maryland State Court. Inc. Defendant removed to fed district court in CA on diversity. FACTS—Plaintiff filed a complaint in CA state court. just advises to look at the CA law to determine this. Why do we look to CA law? 51 . Question is—WHAT LAW SHOULD A STATE COURT APPLY? c. This leads to claim preclusion—same parties. alleging the same COA. MD state court looks to federal law (FRCP 41(b)).—decides that a state practice overcomes both a Rule and what Byrd called “affirmative countervailing considerations” of the federal judicial system. under Dupasseur. this is not a traditional Erie problem (not in federal court sitting in diversity) b. Why is this in the Erie line of cases? 1.here the principal state and federal interests can be accommodated” by district court review. FRCP 41b—a dismissal under this subsection operates as an adjudication on the merits 1. under a longer SOL. Other rule: Involuntary Dismissal rule (41(b)) ii. Court doesn’t say whether claim would be precluded. i. Rochereau – which held that the res judicata effect of federal diversity jurisdiction is such as would belong to the judgments of the state courts and may not be accorded any higher effect.
not here (majority) 52 . Steps in a circumstance with conflicting laws b. b. Does the Federal rule answer the question? (rule 23) c.don’t go through Erie vii. Allstate i. Interpreting FRCP 41 to have a claim preclusive effect would conflict with the Rules Enabling Act because it would remove parties’ state substantive right to refile the suit. RULE: When a federal court decides a case in diversity. assigned rights to insurance to her doctor ii. Allstate paid the claim late but there was unpaid interest iii. NY: class action. b. Is rule 23 substantive or procedural? a. II-B—plurality a. a subsequent state court should adopt the rule of the original state in which the district court sits. vi. unless. HW: not critical to our understanding of Erie 6. Shady Grove v. Fed and State statutes seems to address two different issues but there is a conflict because there is language in the NY statute that’s not in the Fed. Procedure regulates judicial process by enforcing rights and duties viii. it’s just the manner in which they are suing (class action) Not the substance of the suit. EXCEPTION: Don’t follow state rule if it is incompatible with federal interests.a. II A—Majority a. Allstate then sued to get the unpaid interest and then it became a class action b/c Allstate had refused to pay those fees iv. Issue of SOL is outcome determinative (look to state law) b. Class action dismissed under NY law v. Erie purposes: apply substantive state law to avoid forum shopping and make sure there is an equitable administration of justice. procedure b. Lady hurt in car wreck. v. Diversity with conflict of federal and state law b. Dichotomy of substances vs. Does the rule exceed Congress’ rulemaking authority (not a rule or procedure)? 1. Procedural: all litigants have a right to sue ∆. substance is an expanding of rights. The language of FRCP 41 says it wouldn’t apply c. iv. If no.non statutory penalty. How do we know this is an Erie case? a. Notes: a. – limitation on ability to file class action c. HW: why is this not an Erie case? 1. It’s not a strict application of the Erie doctrine because this court isn’t sitting strictly in diversity c. a. fed court should not follow state rule because fed courts need to protect the integrity of their judicial process. Example: if state law does not preclude subsequent claim after dismissal for discovery abuse.
Common substantive law claim—products liability.b. ix. Doctrinal i. Substantive: (dissent) changing it from a $500 case to a $5 million dollar case—huge shift in the rights. Rule 23—A class action permits one of more parties to “sue or be sued as representative parties on behalf” of all those similarly situated. Policy justifications—Efficiency/use of judicial resources/client v. Purpose ii. attorney interests 2. Typically about 100 Πs ii. the person seeking to represent the class must show that each of these requirements are satisfied: i. 53 . Categories of class actions B. Class Actions A. Benefit to clients (Π & Δ) iii. D. Commonality a. PROBLEM: The ability to aggregate large numbers of litigants tends to shift the focus from the client to the lawyer. C. 1. Federalism concerns of Shady Grove 1. from damages to attorney’s fees. CERTIFICATION 1. but the attorney’s fees comes from the entire amount received. States could override Congress’ authority VII. Numerosity a. Outlines of rule 23 ii. securities and exchange act violations. Theoretical i. FRCP 23(a)—to establish a case as a class action. etc. Working understanding of prerequisites iii. and from litigation to settlement. Class action allows claimant representatives to get relief for all members of the class. Objectives 1. When to use? When several parties are similarly situated and it is not physically possible to join them all 1.compared to Symtec a. Class should consist of persons who share characteristics that matter in terms of the substantive law involved. What do lawyers get from it (ethics) iv. Erie Issues. Before a class is certified it is called a “Putative Class Action” E. whereas joinder would require participation of all people who want relief. Established if the class representative can show that enough persons are in the class to make joining them as individuals impractical b. (technically a joinder device) 1. because the class members may have less interest in the suit (able to receive less money per person).
2. Should not be an employee or a relative of the lawyer 2. 3. Common question of fact/injury—Exxon spilled oil and all fisherman suffered injury b. 54 . Individual actions dispositive of others’ rights 2. in the same shoes as the average class member. Representative’s relation to the lawyer should be straightforward. b. After meeting the 23(a) prerequisites. In order to protect the interests of the absent class members. 1. Lawyer must be sufficiently skillful and equipped with sufficient support and resources to handle the case. the lawyer seeking class certification still has to show that the litigation fits within one of the three categories of Rule 23(b): a. making the decisions that a client would be making in a one-client suit. Much litigated question—whether the members of the class have enough in common to justify certification. Example—Should environmental agencies allow permits for filling of wetlands for certain purposes? i. Class representative herself must have some stake in the litigation. Common remedy 3. Requirement that class representatives stand. c. Limited to cases in which the Πs are primarily seeking injunctive or declaratory relief. iv. Named representative must be typical of the class b. 2. FRCP 23(b) i. 1. Prevents “varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class” i. iii. Rule 23(b)(1)— Similarly situated parties should be treated alike 1. one would want the representative client to have the same incentives and motivations as the average class member. Typicality a. Adequacy of Representation a. in significant respects. Inconsistent verdicts ii. Lawyer should have no conflicts that would cloud the representation. Class—all property owners in a particular area who may be affected by the granting or denial of this particular permit b. Class representative will be controlling the litigation. Rule 23(b)(2)—Where the party opposing the class has acted or refused to act “on grounds that apply generally to the class” 1.
a fire. Rule 23(b)(3) requires the certifying judge to engage in a complicated weighing of advantages and disadvantages—as a result of which he may rule against certification. EXAMPLE—Class representatives say “give us each $1 million and we’ll voluntarily dismiss the class claim for $50 million” 6. i. Rule 23(b)(3)—comprises all the class actions not captured in 23(b)(1)&(2) 1. NO MEMBERS CAN OPT OUT! ii. 55 . and on the fee she proposes to seek if successful. Common claims of class predominate over the individual questions 3. Prevents Δ from making side-deals with the named Πs and leaving others with nothing b. ii. Communities for Equity c. Class action is superior to allowing individual lawsuits 4. i. 5. Once a decision is made in terms of granting or denying class action certification. FRCP 23(f) i. Places substantial weight on the entrepreneurial activity of counsel in unearthing and investigating the claim. All claims in which the Πs are seeking primarily money damages. Takes class action certification into the realm of interlocutory appeal ii. Notice IS required in 23(b)(3) because 23(b)(3) has an opt-out procedure 3. In 23(b)(1&2)—once a class is certified. on the resources the lawyer can bring to bear on the case. Establishes both guidelines and a procedure for appointing class counsel. school integration—by a Δ. FRCP 23(g) i. EXAMPLE—civil rights cases where relief sought is an injunction requiring some action—voter registration. MUST DIRECT NOTICE TO THE CLASS!—[23(c)(2)(B)] i. Flow: i.2. “Small Claims Lawsuits”—actions in which many persons allege small amounts of damage ii “Mass Tort”—an airplane crash. asbestos exposure 2. FRCP 23(e)—SETTLEMENTS i. on experience in handling class actions. First. Class action claims may be settled or voluntarily dismissed only with COURT APPROVAL a. you can apply for an appeal immediately after decision 4. on knowledge of the applicable law. Notice is optional in 23(b)(1&2) classes—[23(c)(2)(A)] a.
Plaintiffs wish to define the class as all present and future female students in enrolled in schools who participate in interscholastic athletics or who are deterred from participating in such because of defendants’ discriminatory conduct and who are adversely affected by that conduct. inability to bear these costs may en the suit. Communities for Equity v. Falcon case: Mexican-American brought a discrimination in employment class action suit. Rule 23(c)(2)(B) requires individual notice to class members in all 23(b)(3) classes a. b. 2. Because the Supreme Court has held that the representative Π must initially pay for such notice. Facts: Plaintiffs bring suit against the athletic association. alleging that they were excluded from opportunities to participate in interscholastic athletic programs and have received unequal treatment and benefits in these programs due to gender discrimination. differences in damages sustained by class members will usually not defeat certification. Commonality satisfied because the common question is whether the defendant in fact acted through the illegal policy or procedure. Second. iv. c. $5 million plus ii. 1. Does not require complete diversity—just need one member of the class to be diverse from any ∆ 8. (SupCt requires a rigorous analysis on this issue) i. Reasoning: a. 1332(d)(2) statutory requirements for federal jurisdiction for class actions i. “appropriate notice” to the class in 23(b)(1) and (b)(2) cases. b. Falcon does not bar because: 56 . Numerosity exists because thousands of female high school athletes and would-be athletes are subject to the discrimination. Class included all MexicanAmerican employees and applicants for employment. (most difficult hurdle here) 1. ii. SupCt denied class certification. Issue: Whether plaintiffs can be properly class certified. class actions are disproved due to lack of commonality. Where the nature of the legal claims are such that individuals would have to submit separate proofs to establish liability. 7.ii. 23(c)(2)(A) allows. Holding: Yes. iii. By contrast. Mich. Once it is determined that there are common questions of law and fact as to a legal claim. stating that one allegation of specific discriminatory treatment is not enough to support an acrossthe-board attack. Typicality is satisfied and not precluded by the Falcon case. but does not require. High School Athletic Assn (1999): i.
The SupCt has held that the cost of individual notice must be borne by the plaintiff (probably his lawyer). Adequacy is satisfied.a. 9. d. c. the interests of some individual class members in controlling their own case would be compromised – their exposure as counterclaim defendants could exceed the amount they might recover for statutory penalties as class members. and the trial court abused its discretion. Heaven v. individual lessee counterclaim defendants would be compelled to come forward with individual defenses – which would require the court to engage in multiple separate factual determinations. She sought to certify a class action. Facts: Plaintiff Heaven leased a car from Sun Trust. Sun Trust counterclaimed. Reasoning: The district court correctly concluded that Sun Trust’s counterclaims were compulsory under 13(a). The decision to certify or refuse to certify a class action is often critical for the outcome – gives class representive immense bargaining power if granted. Issue: Whether Heaven met the requirements of 23(b)(3) to certify a class action. thus increasing the expense of the suit. Trust Company Bank (1997): i. Thus. b. in this case. An action seeking monetary damages cannot fall under (b)(2) unless the final injunctive relief or corresponding declaratory relief is the primary relief sought. Presence of compulsory counterclaims can be a basis for denying class certification. (deferential standard of review b/c of efficiency and b/c it’s a fact intensive inquiry) iii. v. Holding: No. ii. Standard of review owes deference to lower court’s denial of certification iv. There is proof of an underlying policy of discrimination here. the class would have to broken into subclasses to avoid these difficulties. v. Quality of class counsel is good and the interests of those class members who do not consider themselves adversely affected will be adequately represented by defendants. stating that the individual class members had defaulted on the terms of their lease agreements and/or made false statements in their lease applications. b. Notes: a. b. Thus. Notes: 57 . then brought an action alleging that it failed to comply with the disclosure requirements of the Consumer Leasing Act. Moreover. An association is the class representative. a.
Commonality requires class to show that they suffered the same injury—this does not mean merely that they have all suffered a violation of the same provision of law 1. Must be same contention (ex. anecdotal evidence b. c. Blazer determined that defaults on loans were compulsory counterclaims. No commonality of Π—no common questions of law or fact 1. defendant needs to prove specific compulsory counterclaims. plaintiffs needed to prove individual instances. statistical evidence of pay discrepancies. move down and file regional or statewide class action suit—common managers or decision makers so you can run statistics related to those specific people c. Π introduced lots of evidence on commonality—sociologist testimony on culture of Walmart. eventually was fired (failure to promote) **Various claims of named Πs was clearly a way for Πs to address Falcon opinion v. 2nd—was told to doll up and dress better (harassment) c. demoted to greeter. Theory of Π’s case—Walmart gives individual store managers the discretion over pay and promotion of employees. Dukes—series of disciplinary actions. Distinguish from Michigan: in Michigan. the Court here suggests that Appellate Courts should also do a rigorous analysis of class certification ii. Ms. 1. What is the impact of this case on class actions? a. Dukes i. Named Πs—3 women a. One supervisor that was failing to promote) as well as common resolution across the class 58 . Instead.a. An adequately represented class is bound by a judgment or settlement 10. male greeters were paid more than her (retaliation and disparate pay) b. Pattern of discrimination arising from discretion requires much more proof b. whereas here.5 million females—largest class ever certified in US iii. b. and this discretion is being exercised in a disproportionate way in favor of men and against women. MAJORITY OPINION (Scalia) a. Without overtly changing the abuse of discretion standard of review. 3rd—brushed off when asked about applying for managerial position. This may be the end of the nationwide class action certification 1. Walmart v. Plant v. Walmart is aware of this discrimination and hasn’t done anything about it iv. CLASS—current and former female employees of Walmart a.
5 million women are suffering from gender discrimination?—probably not 1. HOLDING—an individual’s claim of discrimination cannot be extrapolated into a class action 2. Πs are saying that the question of law is the discretion given to managers and that there is a pattern of managers using that discretion in a discriminatory way 1.c. Not good enough here—Scalia says that Πs weren’t able to prove that all 1. District Court did not abuse its discretion—should’ve been left undisturbed F. Appellate Court’s Standard of Review for Class Certification—abuse of discretion 1. Falcon 1. Two ways around this: i. but instead asks whether there are questions of law or fact that predominate over individual questions of law/fact—this is improper b. may nevertheless bind the entire represented class. Disparate Impact Theory—discretion given to manager results in disparate impact towards women 1. having different managers.5 million women. have a common question of law or fact related—every manager uses discretion in a different way and not all will cause disparate impact f. One test used for all employees used to hire/promote that is discriminatory and is used systematically ii. conducted by a representative on behalf of a number of persons who are not formal parties. Fundamental to the class action is the idea that a suit. The majority doesn’t ask the question of whether there is ANY question of law or fact. THE CLASS ACTION AND THE CONSTITUTION 1. When measuring commonality in this case. Official company policy is discriminatory e. DISSENT—the rule does not require that ALL questions of law or fact in the litigation be common. Representative Adequacy i. Is this gender discrimination so common that it’s a pattern such that there’s a common question of law/fact that 1. 59 . Not an appropriate 23(b)(2) classification—23(b)(2) is for injunctive relief and Πs here are asking for back-pay vi. even a single question of law or fact in common will satisfy the commonality requirement a. MUST BE A PATTERN TO HAVE A COMMON QUESTION OF LAW/FACT d.
v. iv. and defendants only purported to represent themselves (thus no class action that could bind people later). Departure from the ordinary proposition that one may be bound only by litigation to which one is a party b. whose substantial interests are not necessarily or even probably the same as those whom they are deemed to represent. bought a house in an area of Chicago allegedly covered by a racially restrictive covenant. does not afford that protection to absent parties which due process requires. Denial of the Hansberrys’ right to litigate is a denial of due process. 60 . The court upheld the covenant in Burke. a. In that case. A selection of representatives for the purposes of litigation. Neither the plaintiffs or defendants in the earlier action represented the Hansberrys – plaintiff wanted an opposite effect. naming as defendants the Hansberrys and the people from whom they bought the property. vi. Issue: Whether the Supreme Court of Illinois deprived plaintiffs of due process under 14A by binding them to a judgment rendered in earlier litigation to which they were not parties. even though those findings were factually erroneous. Reasoning: Those who sought to secure the covenant’s benefits in Burke cannot be said to be in the same class with or represent those whose interest was in resisting performance. Hansberry rule: a judgment in a class action binds absentee members of a class only if they have been adequately represented. ii. a property owner in a class action sued those in violation of the covenant – and the court upheld the covenant because the parties had stipulated (falsely) that the requisite 95% had signed. an earlier suit to enforce the same covenant. Holding: Yes.a. Hansberry v. Lee brought an action to enjoin breach of the covenant. Facts: The Hansberrys. vii. iii. a black family. The covenant did not take effect unless signed by owners of 95% of the frontage – but the signers represented only 54%. Lee (1940): i. RULE: Members of a class not present as parties to the litigation may be bound by the judgment when they are in fact adequately represented by parties who are present. The Hansberrys said that the covenant was unenforceable because not enough owners signed it but – but Lee refers to Burke v. DUE PROCESS CONCERN 2. Kleiman. Procedure: The SupCt of Illinois determined that Burke was a class action and that the Hansberrys and their vendors were members of the class of plaintiffs in Burke and were therefore bound by the findings in the previous action. Notes: a.
4. c. Problem with this case: The US SupCt doesn’t have jurisdiction to correct confusion within states courts unless the confusion falls within its jurisdiction – so it had to reach the IL judgment by finding a constitutional error. 61 .b. such as Shutts. even though that plaintiff may not possess the minimum contacts with the forum which would support PJ over a defendant. Some of this gas came from land leased from others. Shutts sues in Kansas state court and provides the best possible notice.100 members. some of whom are present as parties. HW: what makes this a real due process case is that it’s in the same line of cases as Pennoyer and the like e. Shutts wants to recover interest on the money that was withheld.00 people in Shutts’ position who get together to sue for the interest – but none of these people have much interest. Holding: Yes. is joint. What is needed for adequate representation? 1. Reasoning: A forum state may exercise jurisdiction over the claim of an absent class-action plaintiff. Must be PRESENT to be bound for litigation – exception is class actions f. Phillips Petroleum v. OR where the interest of the members of the class. Facts: Phillips produces and sells natural gas. There are 33. KEY POINT—Res Judicata may not bind a subsequent plaintiff who had no opportunity to be represented in the earlier civil action. 2. while a negligible part of the oil and gas leases are in Kansas. Phillips makes a personal jurisdiction argument that only the KS plaintiffs can sue. OR where for any other reason the relationship between the parties present and those who are absent is such as legally to entitle the former to stand in judgment for the latter G. A person asserted to be bound by a former class litigation has the right collaterally to challenge the adequacy of representation in the class suit.000 of these are Kansas residents. Members of a class not present may be bound where they are adequately represented by the PARTIES present in the litigation (not limited to just Πs). OR where they actually participate in the conduct of the litigation in which members of the class are present as parties. Phillips was selling gas at a higher price and then only paying royalties on a lower price. JURISDICTION 1. iii. Issue: Whether Ks may exercise jurisdiction over absent plaintiffs in this class action suit. 3. and less than 1. The final class contains 28. d. Shutts (1985): i. only a small amount. ii. iv.
This holding rests on the idea that the burdens are different on defendants than on class action plaintiffs – defendants are hailed into court with certain burdens on them to defend a lawsuit. Due Process—Π must receive notice plus an opportunity to be heard and participate in the litigation. including the right to receive notice b. a. The choice of law governing a class action must not violate the full faith and credit clause or the due process clause of the Constitution. The notice must be the best practicable. use the principles from the state where the case is filed. then use law based on where plaintiffs are from. This concept that notice is a constitutional concept for plaintiffs in the class action realm – plaintiffs do receive minimal due process protections. whether in person or through counsel. However. is adequately represented and does not opt out.The plaintiff must receive notice plus an opportunity to be heard and participate and the ability to opt out (this later gets built into Rule 23). Notes: a. The state (not the parties) must have a connection to the litigation so as not to make applying its law unfair or arbitrary. 1. H. REASONING—Personal jurisdiction over absent class members in a class action is not evaluated under the “minimum contacts” test governing personal jurisdiction over absent class members. the decision is binding if the plaintiff is given adequate notice. Any state class action statute will need a NOTICE PROVISION: 1. But what about diversity cases? a. Cauble—held that for purposes of diversity. When a class suit is based on a federal statute. i. Supreme Tribe of Ben-Hur v. and to that extent lowered jurisdictional barriers to the multistate diversity-based class action.” v. Absent class members in cases involving money judgment must be given notice. courts should look to the citizenship only of the class representatives and ignore the class members. jurisdiction will arise under federal law and §1331. CLASS ACTION FAIRNESS ACT OF 2005 1. 62 . Supreme Tribe thus created an exception to the complete diversity rule for class actions. c. this is different from plaintiffs. “reasonably calculated under all the circumstances to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. a. When you have nationwide class actions and state law applies.
vi. The connection of the forum to the class members. Ability to aggregate claims of all class members to reach the $5 million amount in controversy requirement. Grants original jurisdiction to the federal courts in class actions in which “any member of the class of Πs” possesses the requisite diversity with respect to any Δ. Inc. 63 .b. Makes broad use of the principle that Article III requires only minimal diversity ii. and the Δ. whether or not a citizen of the state in which the action arose [GETS RID OF HOMETOWN RULE FOR CLASS ACTIONS!] v. Exxon Mobil Corp. Supreme Court held that both the named Π and each member of the class had to satisfy the amount in controversy requirement. the injuries giving right to the claim occurred in state. Grants original jurisdiction to the federal courts in class actions in which “any member of the class of plaintiffs” possesses the requisite diversity with respect to any defendant. Class Action Fairness Act of 2005 i. at least one significant defendant is in state. or under the provisions of §1453. if more than 2/3 of the class members are in state. The Act allows federal courts to remand actions in which state interests seem to predominate a. Relative size of the in-state and out-state class membership 2. §1332(d)(3) defines the factors relevant to the discretionary power to decline federal jurisdiction 1. b. Makes broad use of the principle that Article III requires only minimal diversity. Such suits may be brought under original jurisdiction. the harm.” b. a. Allapattah Services. iii. so long as the named party satisfied the amount in controversy requirement. Also allows aggregation of claims of all class members to reach the $5 million amount in controversy requirement. iv. “Whether the claims asserted involve matters of national or interstate interest 3. 1966 Rules Revisions 1. v. 1. Court interpreted the supplemental jurisdiction statute (28 USC §1367) to allow such smaller-claims actions under the basic diversity statute. 2. may be removed by any Δ. and 3. c. What state’s law will apply to the claims 4. 28 USC § 1332(d)(4)—circumstances in which a federal court MUST decline jurisdiction 1. 2.
using the analogy of contingent fee arrangements. radio spots. Class Action Fairness Act of 2005 a. CAFA both allows and commands federal courts to remand actions in which state interests seem to predominate. If the settlement involves a 23(b)(3) class—must offer a second chance for individual members to opt out of the class and settlement. 64 . 2. courts apply the “common fund” doctrine: i. and the lawyer may not settle without the client’s agreement i. etc. In ordinary litigation. d. A simple percentage is appropriate. Idea is that a regulator could appear at a settlement hearing and offer an opinion about the appropriateness of the settlement B. the judge must first “direct notice in a reasonable manner to all class members who would be bound by the proposal. Does NOT require individual notice: 1. Such notices include information about the terms of settlement and that those objecting to the terms of the settlement may do so. c. Notice must occur without regard to what sort of class action is involved b. Requires that if the Δ is subject to state or federal regulation.” a.c. 2. In class actions that create funds for distribution to class members—courts regularly award the class lawyer a fee taken directly from the fund created by the litigation a. Rule 23(e)—Requires court approval of any settlement of a class action i. SETTLEMENTS OF CLASS ACTIONS A. I. online postings. novelty of the issues. A Π whose efforts create a fund is entitled to have those who benefit contribute to his lawyer’s fee ii. objections may not be withdrawn without court approval ii. FEES 1. Can be newspaper ads. the client pays the lawyer’s fee because she agreed to do so. Neither holds true for class actions 2. Rule 23(e)(1)—To order such approval. After NOTICE—the court conducts a hearing at which it hears argument from the settling parties about why the settlement is fair to the class members iii. 23(e)(5)—to prevent objectors being “bought off” by the settling parties. In class actions that recover money damages. How should the court calculate such a fee? 1. “The Lodestar” Method—start with the appropriate hourly rate of the lawyer taking into account factors such as special risk. etc. that the regulatory authorities be notified of the suit and a pending settlement (28 USC §1715) a.
Rule 23(h) creates a process the court must use to approve any fees—including those embodied in a settlement: 1. Holding: Yes. the class failed to demonstrate that common issues predominated over other questions (23(b)(3)). 65 . Issue: May settlement play a role. or that the named plaintiffs would fairly and adequately protect the interests of the class. the representatives of the Π and Δ. the court held that while a class may be certified for the sole purpose of settlement. but a limited role only. In this instance. in determining the propriety of class certification? iv. Settlement and Dismissal 1. and opportunity to object to fees C. are unlikely to raise questions casting doubt on the agreed amount or on the vigorousness of the litigation leading the settlement ii. through the doctrines of former adjudication.” b. v. Such a settlement would. Amchem Products. under Rule 23. Rule 23(e) i. 2. Facts: The volume and complexity of asbestos litigation led the Judicial Panel on Multi-District Litigation to transfer all asbestos claims filed in federal courts. The proposed settlement provided for set compensation for certain asbestos-related diseases. Fee award is made in the context of a settlement approval hearing a. Inc. reasonable. Windsor i. counsel for the plaintiffs and defendant manufacturers reached a partial settlement: a class consisting of all individuals with potential asbestos claims who had not yet filed suit would be certified under 23(b)(3) for purposes of settlement only. Requires notice. The 3rd Cir vacated the order and found that the requirements of class certification had not been met – specifically. i. who will have agreed on an appropriate amount of fees. and adequate. hearing. findings. but not yet on trial. At that hearing.3. Rule 23(e) requires notice to the absent class members and a hearing and judicial finding that the proposed settlement is “fair. Just because it’s a settlement class DOES NOT MEAN you can over look 23(a)&(b) certification requirements!! ii. iii. Suppose a class with great potential liability could be certified—and the claims then settled for far less than they were worth. to the Eastern District of Pennsylvania. The district court approved the plan and certified the class. After the cases were consolidated. bar its members from individual suits. the certification requirements of Rule 23 must still be met as though the case were going to trial. To prevent the Π’s lawyer from being “bought off” *higher fees for lower relief settlement]: a.
b. Furthermore. If Δ’s summary judgment is denied. c. This case demonstrates the importance of subclasses – can’t have nine named plaintiffs representing everyone in a single class. These groups have very different interests. Adversity (ruling must be something other than what was requested) a. NO—goes to trial on the issue and there will be a finding 66 . If you have multiple COAs and you only win on one COA. doesn’t mean it’s the role of the courts to step in. What circumstances could Π appeal? i. Common issues did not predominate given that some of the class members had not yet manifested physical disease. VIII. Aetna: Π prevailed on contract theory but did not prevail on fraud theory. 1. the requirements were not fulfilled. B. Notes: a. vi. a. HOLDING—Ruling for breach of contract but not fraud is adverse because relief would be different among the two COAs d. Appeals A. we have to ask whether you received the type of remedy requested. b. All lawyers represented different issues – some plaintiffs have already filed claims and some haven’t filed. you need: i. can Δ appeal this immediately? 1. Reasoning: A court considering a class for settlement need not consider whether certification would present intractable management problems at the trial stage. ie. This applies to a winning Π appealing for further relief—must have adverse ruling to you b.v. The US litigation system operates with a heavy presumption that the trial court decision is correct (80-90% affirmance rate). Just because these cases are unmanageable and Congress hasn’t dealt with the problem. To appeal. Here.) 2. Must show that Π lost in some way—there was something to gain on the fraud theory that they lost out on (punitive damages. but the remaining requirements of Rule 23 must be met. the named parties would not adequately represent the class because those currently injured had different interests from those who had been exposed to asbestos but had not yet developed any symptoms. and those that had injuries were not all the same (23(b)(3)). Who can appeal? 1.
or dissolving is immediately appealable 2. EXCEPTION—May be appealed without a final judgment—§1292: INTERLOCUTORY APPEAL 1. Appointing Receivers (bankruptcy). District Court must make all 3 of these findings to certify the interlocutory appeal ii. Δ must actually object at trial i. Federal Appellate Court has jurisdiction over all “final decisions” of federal district courts [§1291] 1. 1292(a)(1)—Injunctions. Final Judgment Rule—may not appeal unless there is a final judgment [§1291] b. United States) c. 1292(b)—controlling question of law as to which there is substantial ground for difference of opinion. Grants jurisdictions for the appellate courts to hear that appeal. and 2. or Collateral Order Doctrine) Ripeness. What happens when interlocutory appeal is granted? i. refusing. Admiralty i. modifying. i. Plain Error Exception—if Δ forgets to object during trial. Request in Jury Instructions 3. Finality (Must satisfy 1291. a.2. Defines the moment at which appeal is proper. party seeking appeal must appeal to Appellate Court within 10 days iii. Take other questions to trial if they can be separated 67 . Appellate Court can then either hear or refuse interlocutory appeal 3.” (Catlin v. or (b). If so. Granting. and that will materially affect the case. District Court can STAY the case ii. Δ can still argue that the error has seriously affected the fairness. Don’t want to punish the party for lawyer’s mistake (DUE PROCESS) ii. granting continuing. d. To preserve the issue for appeal later. 1292(a). A final decision “is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment. §1291 has two functions: 1. integrity or public reputation of the judiciary proceedings i. Can move for Rule 50 Motion for New Trial iii. Pre-trial motion for SJ is not enough to preserve the issue ii.
and the other go to trial. Here. a. Appellate court agrees. and petitioner appealed to the 3rd Circuit. granting continuing. The district court’s decision was not final because it did not grant any relief asked for by plaintiffs. Not certified as an interlocutory appeal—now certification under 1292(b) and not a 1292(a) b/c there was no injunction. 2. Note: If issue not raised through JMOL/JNOV – plain error review on appeal C. District court believes there is a controlling question of law with a substantial ground for difference of opinion. and a. Issue: Whether the district court’s judgment was final. The district court ruled in favor of respondents on the issue of petitioner’s liability under the Act. Not a proper interlocutory appeal iv. which affirmed on the merits. or dissolving injunctions (immediate appeal) 3) 1292(a)(2): District court interlocutory appointments (immediate appeal) 4) 1292(b): (immediate appeal) Order where: i. the plaintiffs only assert a single claim or legal theory. iii. “Were we to sustain the procedure followed here. Wetzel (1976): i. District court must believe immediate appeal may materially advance the end of litigation. Liberty Mutual Insurance Co. 54(b) does not apply and the decision was not final. 54(b)—if multiple causes of action. Liability ruling but no relief. Federal appellate courts shall have jurisdiction over: 1) 1291: all final decisions of federal district courts 2) 1292(a)(1): District court interlocutory orders modifying. even though they brought multiple requests for relief – thus. Same for claim and counter—can get a ruling on counter and claim go to trial. Novel issue or significant circuit split ii. 1. Appellate Court raised the issue of Final Judgment Sua Sponte ii. Holding: The district court’s order was not appealable to the Court of Appeals. v.e. a. a court may give partial final judgment where there are multiple claims for relief. Reasoning: Under 54(b). a. and thus appealable. we would condone a practice whereby a district court in virtually any case before it might 68 . FRCP Rule 8 D. even though the order said the policies violated Title VII. Facts: Wetzel filed a complaint in district court asserting that Liberty’s employee insurance benefits and maternity leave regulations discriminated against women in violation of Title VII of the Civil Rights Act of 1964. b. Citing 54(b) and using the words “final judgment” in an order does not make an order a final judgment. however. can get final judgment on one cause. and iii.
1292 b. Collateral Order Doctrine 2. 54(b) applies to single-claim actions.r. Lauro moved to dismiss the actions. which purported to obligate the passenger to institute any suit in connection with the contract in Italy. holding that ticket did not give reasonable notice of waiver.render an interlocutory decision on the question of liability of the defendant. g. citing the forum-selection clause printed on each passenger ticket.l. we must find a final judgment (possibly under 54(b)). Statutory exception? a. The use 1291. ii. Notes: a. Lauro sought to appeal to the 2nd Circuit. Petitioner owns the ship. not multiple claim actions b. Exceptions to the Final Judgment Rule 1. Procedure: a. Chasser (1989): i. 23F iii. Facts: Respondents are or represent the estates of persons who were passengers aboard the cruise ship Achille Lauro when it was hijacked by terrorists on the ocean. District court denied motion to dismiss. Partial summary judgment: doesn’t dispose of every issue in the case d. HW Appeals Check List i. Collateral order doctrine E. Use of 54(b) will create a 1291 and 1292 issue. and the defendant would thereupon be permitted to appeal to the court of appeals without satisfying any of the requirements that Congress carefully set forth. If not a final judgment. Without moving for certification for immediate appeal under 1292(b). we must use 1292. 54(b) final judgment does not have to be case specific (finality for one claim or party is sufficient). Respondents filed suits against Lauro Lines in the district court to recover damages for injuries sustained as the result of the hijacking and for the wrongful death of a passenger. The basic argument for the final judgment rule involves a cost-benefit calculation f.” v. Lauro Lines s. b. Common law exception? a. Final judgment? a. v. 69 . Final decision is jurisdictional 2. ii. Appellate courts have the power and duty under 1291 to consider appealability even if neither party raises the issue c. 1291 can be brought by the court sua sponte e.
Is this a 1292 interlocutory appeal exception? 1. and iii. the legal and practical value of which would be destroyed if it were not vindicated before trial. then you’ll lose your right forever.” 1. Must conclusively determine the disputed question. Beneficial Industrial Loan Corp): i.” 2. rights asserted in the action. 1292(a)—doesn’t fit these categories 2. Resolve an important issue completely separate from the merits of the action. a. v. a. Reasoning: An order denying a motion to dismiss a civil action on the ground that a contractual forum-selection clause requires that such suit be brought in another jurisdiction is not a decision on the merits that ends the litigation. ii. a. and collateral to. iii. Although Lauro argues that they will lose their contractual right not to stand trial in America. b. the case is not effectively 70 . On the contrary. Issue: Whether an interlocutory order of a district court denying a defendant’s motion to dismiss a damages action on the basis of a contractual forum-selection clause is immediately appealable under 1291 as a collateral final order. An order is effectively unreviewable only where the order at issue involves “an asserted right. and that are too important to be denied review and too independent of the cause itself to require that appellate consideration be deferred until the whole case is adjudicated. Collateral Order Doctrine: an exception for a “small class” of prejudgment orders that “finally determine claims of right separable from. such an order ensures the litigation will continue in the district court. 2nd Circuit dismissed appeal on the ground that the district court’s orders denying the motions to dismiss were interlocutory and not appealable under 1291. 1292(b)—no evidence that there is substantial ground for difference of opinion iv. 1.c. doesn’t end the litigation on the merits. Holding: No. The Court holds that the district court’s order is not effectively unreviewable. Three Conditions of Doctrine (from Cohen v. If you don’t have the opportunity to raise this issue now. Is this a final judgment?—No. litigation will continue even after the interlocutory decision b. – the orders did not fall within the exception to the rule of nonappealability carved out for collateral final orders. Be effectively unreviewable on appeal from a final judgment.
Bessemer City (1985): i.unreviewable because Lauro could still argue not to enforce in Italy. She was the only woman who applied out of 5 other men. b. alleges that she was denied a position with the city due to her gender. Critique of how test is applied b. No review (most deferential) 2. 1292(b)—300 a year certified by district courts and only 100 a year accepted by courts of appeals (rare) 1. refusing to fulfill its judicial obligations i. Scope of Review 1. Anderson v.forum selection clause is not a protection from suit it just restricts where the suit can be filed.” c. Abuse of discretion iii. Facts: Anderson brings a gender discrimination in hiring case under Title VII. Spectrum of Review (Holley-Walker): i. This is a rare and drastic issuance b. obtained in an original proceeding in the court that issues the writ. Important exclusion to the final judgment rule: 1. orders a public official to perform an act required by law. A writ of mandamus. the right is not sufficiently important to overcome the policies militating against interlocutory appeals. Concur [Scalia]: In this case. vi. d. De novo (least deferential) ii. a. High bar—show that the lower court is abdicated its judicial role. Writ of Mandamus: i. The district court made several findings supporting its holding that Anderson had been denied 71 . or refusing to dissolve or modify injunctions. 1292(a): allows appeals from interlocutory orders of the district courts “Granting. Real question the case turned on—How important is the issue? 1. modifying. (may be a judge of a lower court) (§ 1651) a. Case will be ordered to be dismissed if this is proven F. This should be element #4 of the Collateral Order Doctrine vii. HW: there are many reasons why this court would want this case to be heard in the states. What do you have to argue to establish you’re entitled to Writ of Mandamus? 1. Immunity cases. Collateral Order Doctrine should not be applied in many cases 3.protection from being sued anywhere. continuing. refusing or dissolving injunctions. Notes: a.
the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. Closer to the action 2. b.) iv. Notes: a. the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. v. Better at determining credibility 3. US Gypsum Co. ii. whether based on oral or documentary evidence. The 4th Cir reversed. c. v. Clearly erroneous means that although there is evidence to support a finding. Why is the standard of review clearly erroneous when reviewing the trial court’s findings of fact? 1.” (US v. class action certification and discovery are all reviewed under abuse of discretion standard 72 . Rule 52: findings of fact and findings of law have different standards of review on appeal. “A finding is clearly erroneous when although there is evidence to support it. 3.employment because of her sex. 56(a)(6): Findings of fact. a. The Court of Appeals misapplied the clearly erroneous standard. 1. Issue: Whether the district court’s finding was actually clearly erroneous. Efficiency b. look anew to questions of law and don’t have to defer at all to the district court’s findings 2. 4. the conduct of her interview. must not be set aside unless clearly erroneous. Holding: No. and held that three of the findings were clearly erroneous. De novo review on the appellate level would also be very expensive and time consuming. With experience comes expertise 4. Legal finding: de novo standard. Rule: FRCP 52(a)—findings of fact shall not be set aside unless clearly erroneous. Trial court judges become experts at making factual findings – an expertise that he court of appeals doesn’t have. Reasoning: The findings of the district court regarding Anderson’s qualifications. The Court of Appeals failed to give due regard to the ability of the district court to interpret and discern the credibility of oral testimony. Decisions about admissibility of evidence. iii. least deferential. and due deference should be given to trial court a. and the bias of the male committee members were not clearly erroneous – therefore the court’s finding that Anderson was discriminated against on account of her sex was also not clearly erroneous.
d. in Michigan state court. Inc. the dealer who sold the vehicle. Issue: Whether the district court erred in admitting the Zonker report into evidence. and Bridges. but the court did not take him up on it. 1. Harnden v. In the area of punitive damage awards. RULE: trial court conclusions of law are not entitled to any deference. At trial. as required by Rule 56. Note: Harmless Error. Erie: a court of appeals should review de novo a district court’s determination of state law. The 6th Cir notes that sending this case back to the trial court will just result in the report being submitted in admissible form. relying in part on an expert report prepared by Zonker. which made the chassis and motor. Jayco moved for summary judgment on all claims against it. Respect For Judgments A. Zonker’s report was allowed by the court as admissible evidence. which made the body. Jayco. which will grant the same outcome. he sued Ford. Harnden appeals the court’s order granting summary judgment on this basis. Admission of the report was a harmless error. Jayco’s counsel offered to submit the report in an admissible form. When the repairs did not fix the vehicle. Notes: a. admissible or not. e. Harnden knew of the report. Facts: Harnden purchased a vehicle and returned it several times for repairs. Federal courts are forbidden to reverse for “errors or defects that do not affect the substantial rights of the parties. Jayco. Holding: No. ii. their employee. iii. This strips both jury and trial judge of the deference granted to such fact-finding and law-application. Some states have a rule that the failure of a judge to give a jury instruction that is a correct statement of law and relevant to the case is reversible error IX. and had ample time to procure his own expert report. 1. CLAIM PRECLUSION (RES JUDICATA) 73 . f. well in advance. the Court has not only permitted but required searching appellate review of facts and their application to law. All claims against Ford and Bridges were either dropped or dismissed.” (courts typically do so by speculating about the likely outcome of the case in the absence of the error). 3. v. Reasoning: An error is harmless if it does not affect any party’s substantial rights. 2007): i. (6th Cir. iv. even though it was not in the proper form of an affidavit or sworn statement.
Judgment on the Merits 1. Dismissal for Failure to Prosecute [without good cause— determined case by case] 5. Express Agreement to be Bound by a Decision to which One is not a Party iii. Why it’s not a final judgment on the merits—if it is a drafting mistake. Dismissal after a Rule 12(b)(6) Motion for Failure to State a Claim—GOES EITHER WAY i. stated in Frier concurrence and Restatement) c. Full Jury Trial 2. Finality 1. Preserve scarce resources 3. there are no grounds for relief (this is on the merits) ii. Claim preclusion forbids a party from litigating a claim that was. in former litigation. Between Same Parties 1. i. Goals: a. or could and should have been raised. Instances of “Procedural Representation” b. After Final Judgment d. Dismissal after Rule 12(b)(2) motion for want of personal jurisdiction 6. Π should get at least 1 leave to amend ii. Defendant doesn’t have to worry that plaintiff will come back and sue 10 years from now c. NOT: i. Why it should be a final judgment on the merits—if all claims in complaint are taken to be true. Exception—parties in privity (consecutive ownership or contractual relationship) 2. Efficiency 1.1. Substantive Legal Relationships ii. not drag out a resolution. Court wants people to put the judgment behind them and move on. City of Vandalia b. Elements: a. Avoidance of Inconsistent Judgments 74 . Three Situations Resulting in Binding a Nonparty: i. Frier v. Argue all claims arising out of one occurrence between the same parties at one time 2. Same Claim—claims arising out of the same transaction or occurrence (leading test. Summary Judgment [if it is granted] 4. Judgment as a Matter of Law 3.
(NOT Erie doctrine because it’s not founded in diversity). Frier v. The city filed a motion to dismiss based on res judicata. and he wants them returned to him (replevin COA). 1985): a. He then filed a federal civil rights claim based on the Due Process clause in federal court. Plaintiff files a suit against defendant and seeks separate damages for the car. and the same defendant not liable in another proceeding arising from the same occurrence—doesn’t make sense and lowers confidences in the courts 2. The state court found for the city. (IL law) 1. He stated that he was denied due process because the city did not give him a hearing before taking his cars (they waited a month). HOW TO RAISE PRECLUSION: i. Reasoning: Court states that causes of action are identical where the evidence necessary to sustain a second verdict would sustain the first. Facts: Several of Frier’s cars have been towed by the city. and the claim will be precluded—same parties out of same transaction or occurrence. City of Vandalia (7th Cir.. Plaintiff sues defendant for personal injury and jury finds defendant not liable for the accident. 2. Full Faith & Credit 4. Respect for Rule of Law 3. Holding: Yes. Defendant raises claim preclusion as a defense. where the causes of action are based upon a common core of operative facts. The Court uses Illinois law to decide even though the case is in federal court on the basis of a federal question. One suit precludes a second suit where the parties and the COAs are identical. i. the IL state court). iv. d. FRCP 8(c)—Δ must affirmatively raise defense in the answer ii. 1. iii. 12(b)(6)—“failure to state a claim upon which relief can be granted” motion to dismiss on the basis of res judicata c.e. Inc. because § 1738 Full Faith and Credit Act tells the court they it should give the same respect for the judgment that the lower court did (in this case. 1. McDonald’s System. remedy sought is different b. Martino v. we get the SAME EVIDENCE STANDARD (minority standard): i. COAs are identical where evidence necessary to sustain a second verdict would 75 . stating that the city had a right to take his cars for parking them in the street. COA is different. Under IL law.1. Issue: Whether Frier’s claim was precluded under the doctrine of res judicata. Hypo—Car accident. Defendant can be liable in one proceeding.
Affirmed. Martino’s son purchased a Burger Chef franchise. all possible issues related to that claim are considered settled even if they weren’t brought up in the first suit. The district court held that res judicata and the compulsory counterclaim rule of FRCP 13(a) barred Martino from suing. Holding: Yes. RULE: Once a judgment has been rendered on a claim. 1. Reasoning: The court says that Martino is correct – Rule 13(a) has no effect because Martino never filed a pleading. Frier’s law (generally accepted): in trying to decide the preclusive effect of a judgment. McDonalds brought a suit to enforce the no-relative clause. Issue: Whether a consent judgment against Martino precludes the cause of action set forth in the complaint. A broader standardall claims arising from a single transaction – broadly defined to include matters related in time. d. (1979): a. Theory as to why 2nd lawsuit should be precluded: i. one should look to the jurisdiction rendering the judgment. f. Two suits my entail the same COA even though they present different legal theories and the first suit operates as an absolute bar to a subsequent action. he had to “use it or lose it” at that point and he can’t bring it up now. e.. Martino v. Facts: Martino agreed with McDonalds that he would lease a local franchise – the agreement provided that neither he nor anyone in his immediate family would acquire a financial interest in a competing restaurant without the consent of McDonalds. e. Res judicata claim preclusion—same COA b. If Martino wanted to bring up antitrust as a defense in the first suit. origin. where the COAs are based upon a common core of operative fact).e. v. and motivation— must be litigated in a single initial lawsuit or be barred from being raised in subsequent litigation. and the suit ended with a consent judgment agreeing that Martino would sell his franchise. space. Notes: 1. It is possible for someone not formally 76 . Parties can be in privity – meaning that both parties are bound to one judgment. Martino’s anti-trust claim was a compulsory counterclaim in the first action (same transaction or occurrence) ii. Majority of courts uses the SAME TRANSACTION STANDARD (adopted by the Restatement): i. Martino then brought a claim against McDonalds. c. Inc. 3.sustain the first (i. Notes: 1. the court says that McDonald’s is correct to say that Martino’s new claim is precluded by res judicata. claiming that it violated Section 1 of the Sherman Antitrust Act. However. Six years later. McDonald’s System.
Courts will bind nonparties to judgments if: a. d. the sons were not in privity with their parents – their interest was neither mutual nor successive. Holding: No. b. Merrill Lynch (6th Cir. Issue: Should the Searle Brothers be bound by the final judgment of the divorce case as a matter of either issue preclusion or claim preclusion? (Were the sons in privity with the father?) c. like other final judgments. Just because they could’ve been a party to the prior action but failed to get involved doesn’t bar them from litigating their own claim. Notes: 1. General rule—Agents and principals do not have any mutual or successive relationship to rights of property and are not. The usual rule is that a judgment is final even when an appeal is pending. Searle (Utah 1978): a. Substantive legal relationships b. The court awarded the entire property to Edlean to even out the distribution of marital property. in privity with each other. The partnership interest was not legally represented in the prior divorce suit because Woodey was acting as the husband of the plaintiff and was not acting in a representative capacity for the partnership. Express agreement to be bound by a decision to which one is not a party c. Rule from this case: A strong legal relationship is required to bind someone to a judgment in a case to which he was not a party. The final judgment requirement for claim preclusion doesn’t always receive a completely literal interpretation. 3. However.named as a party to be so closely connected to a suit that it is appropriate to treat him as if he were named (because he essentially represents the same legal right). i. Woodey argued that he only had a half interest in the property and that the other half was owned by a partnership with his sons as partners. Gargallo v. Facts: Edlean Searle sued Woodey Searle for a divorce. The trial court held that claim and issue preclusion barred this action. The sons brought suit against Edlean for their half interest because they said Slaugh House had been paid for with partnership funds. 1. The term merely expresses the conclusion that the person whose name was not on the caption of the first case should nevertheless be bound. is conclusive as to parties and their privies and operates as a bar to any subsequent action. Searle Brothers v. 2. vi. 1990): 77 . e. vi. as a consequence thereof. a divorce decree. Reasoning: The court states that in general. The court determined that a piece of property recorded in Woodey’s name (Slaugh House) was part of the marital property. Instances of “procedural representation” 2.
Gargallo counterclaimed. Ohio claim preclusion law would bar the claim in an Ohio court. Facts: Gargallo opened a brokerage account with Merrill Lynch and losses occurred.1. Note: Rule 8(c): former adjudication is an affirmative defense. Thus. event as to claims within the exclusive jurisdiction of the federal courts ii. The federal district court dismissed the suit against ML on res judicata grounds. The federal courts are required under 28 USC §1738 to determine the preclusive effect of prior state court judgments. Would Ohio treat this as claim preclusion? i. Gargallo then filed a complaint in federal court. ii. OH would have said that a judgment rendered by a court lacing SMJ ought not to be given preclusive effect. the plaintiff brought his claim in a federal tribunal. However. Ohio Claim Preclusion Law—a judgment rendered by a court lacking subject matter jurisdiction ought not to be given preclusive effect 3. the requirements for application of claim preclusion are the same as those applicable in a federal court. pursuant to the law of the state in which the judgment was entered. ISSUE PRECLUSION (COLLATERAL ESTOPPEL) 78 . for the same claims asserted. 4. alleging the ML lost his funds and that the firm had violated federal securities laws. under Ohio law. 2. ML filed suit for collection in Ohio. 6. Ohio claim preclusion law ultimately determines the outcome of this case. Holding: No. (2) How the jurisdictional defect in the first proceeding ought to affect claim preclusion a. Reasoning: i. the dismissal with prejudice in the first suit was a final judgment rendered on the merits. 5. The Ohio court judgment may not be given claim preclusive effect in a subsequent federal court action asserting those same claims because Ohio courts would not give claim preclusive effect to a prior final judgment upon a cause of action over which the OH court had no subject matter jurisdiction. BUT—Court says it is a judgment on the merits b. with the same charges against ML. When he did not pay his debts. Thus. absent any regard for subject matter jurisdiction. Rule: A federal court must determine whether to give claim preclusive effect to a state court judgment upon a COA over which the state court had no SMJ by determining whether the state court would give preclusive effect to such a judgment. Gargallo’s strongest argument—dismissal under FRCP 37 is not a judgment on the merits i. In Ohio. B. The Full Faith and Credit Clause required the federal court to follow the preclusive effect that the state court would apply – in this case. The state court dismissed with prejudice because Gargallo failed to comply with discovery orders. Issue: (1) Whether the original dismissal was “on the merits” for purposes of claim preclusion.
Since there’s no way of knowing why the jury came to the conclusion they did. Reasoning: The Court holds that claim preclusion doesn’t apply because the railroad admits that the new suit is based on a different COA than the first suit (apply same evidence standard). But they will be barred from relitigation in all subsequent claims between the parties – and in some claims that do not involve both parties. the court finds that the jury could have either found for the railroad based on a finding of contributory negligence or Jessie’s failure to meet the burden of proof. issue preclusion applies if the COAs are not the same but some of the issues raised in the second suit were “actually litigated and determined” in the first suit. Notes: a. Claim preclusion bars all contentions of plaintiff (even those she did not advance). iv. The railroad moved for summary judgment. Facts: Jessie and Bertha Parks were injured when their car collided with an Illinois Central train. An issue of fact or law is ii. Case law adds a final requirement—that the party burdened with issue preclusion have had an “adequate opportunity and incentive” to litigate the issue in the earlier proceeding. The opacity of the general verdict made it difficult to determine what the first judgment had decided. The determination is essential to the judgment. its okay to try the issue over again because the court thinks its wasn’t really litigated and determined with finality. 2. but Jessie got nothing because judgment was rendered for the railroad on his claim. Purpose of issue preclusion: application of the doctrine of IP represents a decision that the needs of judicial finality and efficiency outweigh the possible gains of fairness or accuracy from continued 79 . Black letter law of issue preclusion [RESTATEMENT]: i. However. The party raising the claim has the BOP of demonstrating that issue preclusion applies vi. a. whether on the same or a different claim v. A valid and final judgment iv. The court says that issue preclusion may apply to the matter of Jessie’s contributory negligence. b. 3. 1979): i. Illinois Central Gulf Railroad v. Jessie then sued separately for his own injuries. Rule: Claim preclusion precludes the re-litigation of a COA for which there has been a final judgment. Holding: No. The doctrine of issue preclusion allows the judgment in the prior action to operate as an estoppel as to those facts or questions actually litigated and determined in the prior action. App. However. Parks (Ind. v. the determination is conclusive in a subsequent action between the parties. The Parks sued the railroad for personal injuries to Bertha and loss of consortium to Jessie. Issue preclusion bars from relitigation only those issues actually litigated and determined.1. Actually litigated and determined by iii. but the trial court held that his claim was not barred by claim preclusion or issue preclusion on the issue of contributory negligence. iii. ii. Bertha recovered a judgment. Issue: Whether Jessie’s claim is actually precluded.
1. issue preclusion is not a concern if the party doesn’t answer the complaint – doesn’t make issues “actually litigated. who had determined (1) that Illinois Central had not been negligent and (2) that Jessie Parks had been contributorily negligent. b. Shore then moved for partial summary judgment against Parklane. it continues to be a requirement for claim preclusion. NOW. Under these circumstances should the court in a subsequent claim between the same parties hold Jessie precluded from relitigating both those issues? Or neither one? 1. vii. BOTH should be precluded in subsequent litigation. District court denied the motion. 2. Imagine that the trial in Parks had taken place before a judge.litigation of an issue that previously has been considered by a competent tribunal. Facts: a. Exception: a party who deliberately precludes resolution of factual issues through normal adjudicative procedures may be bound by a prior judicial determination reached without completion of the usual process of adjudication. but recently many courts have abandoned the requirement for issue preclusion. Shore (1979): i. v. In a trial to the bench. The First Restatement of Judgments took the position that when alternative grounds for decision existed. The Second Restatement on Judgments §27 Comment I opines that NEITHER determination should be binding in subsequent litigation. District Court found that the statement was false and misleading and entered a declaratory judgment. which the 2nd Cir affirmed. Shore then brought this stockholders’ class action against Parklane in federal district court. citing alternative grounds for its decision – lack of federal SMJ and lack of PJ. e. Mutuality: former and present lawsuits involve same parties. mutuality was a requirement for both claim and issue preclusion. d. 4. Default judgments: usually. Parklane Hosiery Co. asserting that they were collaterally estopped (issue preclusion) from litigating the issues that had been resolved against them in the first action. a. 80 . c. The complaint alleged that Parklane had issued a materially false and misleading proxy statement which had violated regulations promulgated by the SEC. At common law. alleging that the proxy statement issued by Parklane was materially false and misleading. The Securities and Exchange Commission (SEC) filed suit against Parklane.” 1. Ruhrgas case: defendant makes a pretrial motion seeking to dismiss a case. and 2nd Cir reversed. Rule 52(a) requires the judge to set forth findings of fact and conclusions of law. Issue that is essential to the judgment 1.
Notes: a. Shore could not have joined the previous SEC suit. iv. 3. Mutuality requirement was abandoned in Blonder-Tongue Laboratories v. v. there are no inconsistent rulings in this case. Blonder-Tongue involved a defensive use of CE. b. The Court also holds that the use of offensive CE would not violate Parklane’s 7A right to a jury trial (7A not a bar to successful assertion of issue preclusion). A party may not have litigated the issue aggressively in the first suit if the stakes were small or the forum inconvenient. none of the risks exist. a trial judge should not allow the use of offensive collateral estoppel. Instead held that lower courts should exercise discretion in deciding whether to allow such offensive assertions of estoppel. 81 . d. Court notes risks posed by offensive use of estoppel: 1. Issue: Whether a party who has had issues of fact adjudicated adversely to it in an equitable action may be collaterally estopped from relitigating the same issues before a jury in a subsequent legal action brought against it by a NEW party. Plaintiffs may adopt a “wait and see” approach and hold back from joining the first suit (which would increase volume of lawsuits – and could reward a new plaintiff for not even taking a risk) 2. and there would be no different procedural opportunities available to Parklane in the second suit. Goals of issue preclusion: judicial efficiency. 1. One or more prior inconsistent judgments on the issue may suggest that it would be unfair to give conclusive effect to any of them. University of Illinois Foundation. It may not have been possible for the losing party to litigate effectively in the first action if the procedural rules of the court that decided the first case were more restrictive than those of the court hearing the second.a plaintiff was estopped from asserting a claim that the plaintiff had previously litigated and lost against another defendant. c. iii. 4. In this case. Parklane had a full and fair hearing previously. but trial courts should be granted broad discretion to determine when it should be applied. It states that the general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where the application of offensive estoppel would be unfair to a defendant.ii. b. Holding: Yes. however. protects litigants from burden of relitigating an identical issue with the same party or his privy. Reasoning: The Court calls this offensive nonmutual collateral estoppel. the Court does not categorically endorse or reject nonmutual collateral estoppel. (Whether a litigant may use a judgment “offensively” to prevent a defendant from relitigating an issue). a. In this case.
Century Home Components i. Neese—Verdict for Π In the current case. “Wait and see” mentality—doesn’t encourage judicial economy 2. d. Gives plaintiff a strong incentive to join all potential defendants in the first action if possible. Rule—Currieabsent mutuality. 1. IF A sues the US and prevails. B may not in a later suit use against the US those issues determined in A’s favor 5.—Jury verdict for Δ. Special Verdict Form—can indicate that issue preclusion is fair because you can see whether a jury actually based its decision on a particular issue 2.) 6. some in favor of Π and some in favor of Δ. Kovach v. Note: the principles of Parklane do not apply to the United States – US cannot be subjected to nonmutual-issue preclusion. No blanket rule. State Farm Fire & Casualty Co. Sylvester—Judgment for Δ c. can you use issue preclusion against the Δ? iii. Did Π have ability to join previous lawsuit? ii. collateral estoppel should not be applied where a defendant potentially faces more than two successive actions. Holding—Court agrees to the extent at least that. it is a strong indication that the application of collateral estoppel would work an injustice. Looking to be able to say there are not inconsistent findings on a particular issue (blame it on bad lawyering rather than merits. 1. where there are extant determinations that are inconsistent on the matter in issue. ie. v. look to whether it would be unfair 1. the Π wants to conform pleadings to those in the first and third case and then argue that there is issue preclusion on Δ’s negligence. Apply General Rule from Parklane i.c. judgment for Π b. (More easily justified) 1. ii. Pacific N. Facts—50 lawsuits surrounding a fire.W. Issue Preclusion 7. Offensive use of estoppel: occurs when a new plaintiff seeks to borrow a finding from a prior action to impose liability on a party who was a defendant in a prior action. Three in particular: a. Issue—When you have multiple cases decided. Π filed summary judgment. District of Columbia 82 . overturned +new trial for procedural error. Defensive use of estoppel: occurs when a defendant seeks to prevent a plaintiff from asserting a claim the plaintiff has previously litigated and lost again another defendant. Unfair to Δ? *opportunity to fully litigate. There seems to be something fundamentally offensive about depriving a party of the opportunity to litigate the issue again when he has shown beyond a reasonable doubt that on another day he prevailed a. Claim Preclusion ii. iv. Boundaries of Preclusion i. etc+ e.
District Court in Missouri found the land was in Missouri. Oh well.i. Issue of whether Kovach actually ran the red light can be precluded 1. EXAMPLE—Federal Question Jurisdiction—on the face of the complaint (Mottley) a. even though it didn’t have subject matter jurisdiction. claim preclusion doesn’t apply. By paying the fine without contesting the ticket. that this rule is subject to doctrines of federal pre-emption. he admitted that he actually ran the red light [CONSIDERED ACTUALLY LITIGATED] 8. EXAM ISSUES: 1. If it’s a removal question. All issues were fully litigated. Make sure to follow issue through it’s full analysis i. Nebraska State Court had jurisdiction over the subject matter controversy ONLY if the land in question was in Nebraska [found that it was]. iii. but issue preclusion DOES apply a. RULE—The court is stating the perplexing rule that even if it is later determined that a state court lacked subject matter jurisdiction or personal jurisdiction. so long as those jurisdictional issues were contested and ruled upon by the state court. the state court’s judgment will stand. Res judicata applies not only to judicial adjudications. state removal rules—don’t just jump to subject matter jurisdiction 2. follow through with Smith and Grable with federalizing state law COA 83 . but also to determinations made by agencies other than courts. when such agencies are acting in a judicial capacity ii. Full Faith and Credit as a bar to collateral attack ii. HOLDING—Here. Duke refiled in Missouri Federal District Court. The court noted however. not Nebraska. Durfee v. RULE—Res judicata can be applied when you have an admission of liability made by an administrative agency a. If not on face of the complaint. FACTS—Durfee brought quiet title action in Nebraska over land situated on Nebraska/Missouri border. or sovereign immunity. a. But subject matter jurisdiction can’t be waived—a court must have subject matter jurisdiction to render a binding judgment. but the Federal Court still owes Full Faith and Credit to the Nebraska State Court’s decision. Duke i. Don’t mix together personal jurisdiction concepts with subject matter jurisdiction 3.
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