CIVIL PROCEDURE II Holley-Walker Spring 2012
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.
3. If a couple is married within a state and one moves away. International Shoe Co. Make a “special appearance”—usually an appearance means waiver of right to challenge jurisdiction.4. he must raise challenge there or waives the right to do so. and collaterally attack that judgment when Π seeks to enforce it (very risky). Presence a. but a “special appearance” allows a Δ to appear in order to challenge. How did Washington try to gain power over Int’l Shoe?—personal service of one of the travelling salesmen while in Washington.
C. Washington (MINIMUM CONTACTS) 1. State has to have the power to declare the status of its own resident. Jurisdictional Challenges: 1. Louis Int’l Shoe was not paying unemployment taxes in Washington. 4. FACTS—Int’l Shoe had travelling salesmen go through Washington and set up temporary showrooms. Quasi in rem—court seizes land unrelated to lawsuit in order to give owner notice of lawsuit a. and the mover is mailed service in their new state. Resident of the state ii. Non-resident Δ—how do we conceptualize a presence in a state of non-residents? 3. suffer default judgment. personal jurisdiction is established. Louis 5. Do nothing and don’t show up. if Δ makes a pre-answer. Jurisdictional Challenge by Int’l Shoe: 5
. **12b2 = SPECIAL APPEARANCE!** D. Power ii. how can courts gain jurisdiction over a Δ?—International Shoe redefines power 2. v. Raise challenge promptly in your first answer—(but if you answer without raising the 12b2 challenge. Consent a. but it’s a Delaware corporation w/ headquarters in St. Problem—easy for Δ to avoid personal jurisdiction b. Property in state iii. you must have an agent within the state to accept service iii. Hypothetical category: a divorce case. Also. Themes of International Shoe i. then you waive the right to do so!) i. plus letter sent to St. Pennoyer—3 ways to gain personal jurisdiction: i. Way to force consent—some states claim that if you’re doing business within the state. So. ISSUE—Does Washington have personal jurisdiction over Int’l Shoe? i. 2.
WHAT DOES SUPREME COUT SAY CONSTITUTES ENOUGH “PRESENCE” IN A STATE TO BE SUBJECT TO PJ? i.” a. you enjoy the protection of that state’s law. Int’l Shoe says they do not have the presence within Washington to be subject to personal jurisdiction there a. Specific Jurisdiction–Nature and quality of Δ’s contacts with the forum that gave rise to the COA. As a result. 6
. Further.i. More flexible test than 3 Pennoyer categories ii. Appellant received the benefits and protections of the laws of Washington. Personal Service—argues service on salesman isn’t enough notice iv. Policy: To the extent that you conduct activity within a state. Quasi in rem—same 6. In rem—no real property within Washington v. Has Δ ever initiated lawsuits as a Π in that state? iii. MINIMUM CONTACTS TEST—Due Process requires only that in order to subject a Δ to a judgment in personam. can be sued for anything i. If temporary showrooms constitute a “presence. Washington’s Arugment—service of a salesman (agent) within the state is valid personal service 7. Does Δ enjoy advantages of that state’s laws and institutions? 2. In this case. These activities resulted in a large volume of business. 2 Different Types of Contacts: 1. 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. EXAMPLE—Int’l Shoe has salesmen traveling through state and gets into car wreck. Π wants to sue Int’l Shoe for negligence—no continuous and systematic contacts. if he be not present within the territory of the forum. 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. General Jurisdiction—Continuous and Systematic Contacts. Made a special appearance to challenge PJ ii. Appellant’s activities within Washington were systematic and continuous within the years in question. i. therefore you should expect to be held accountable for your actions within that state (with privilege comes obligation) b.” then travelling salesmen can be sued anywhere iii. can be sued for that act) i. the suit against Appellant within the state does not involve an unreasonable or undue procedure 8. Length of time of presence ii.
Δ benefitting from their actions in the forum state iii. Facts: Trust created in DE. 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. Hanson v. i. State of CA has an interest in protecting its resident—FL does not have in interest in proceeds of trust 4. Facts: Life Insurance contract. Holding: NO personal jurisdiction.but they can be sued only for claims arising out of this incident E. Daughter did not choose for her mother to move to FL b. chose to do business in CA. Δ’s actions and choices a. Where was the contract created? iv. 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. Key Language: a.” 3. Life Ins. and the insured was a resident of that state when he died. Heitner 7
. Denckla i. “CA has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims. Co. Issue: Do FL courts have jurisdiction over the DE trustee? iii. thus invoking the benefits and protections of its laws. This is SPECIFIC JURISDICTION and is enough for minimum contacts iii. What’s the Difference? i. person who created the trust moved to FL. the premiums were mailed from there. Δ in Texas. McGee v. Businesses doing business with residents of other states need to get used to being sued in that state ii. trustee (Δ) was in DE ii. Shaffer v. trustee in DE didn’t choose to do business in FL and had no contacts there iv. International Life Insurance Co. The application of that rule will vary with the quality and nature of the Δ’s activity. Applying Minimum Contacts 1. 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. breach of contract by Δ. Insured in CA ii.” (look to quality and nature of contacts with state) b. 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. Does Quasi-in-Rem (Pennoyer) Still Allow a State to get Jurisdiction Over a Δ? i. “The K was delivered in CA.
The retail dealer (Seaway) and the regional distributor (World-Wide) claim that OK does not have PJ over them. Π attempts to gain jurisdiction by having the 2 officials stocks sequestered in DE (Quasi-in-Rem). the presence of property in the forum state could be the basis for jurisdiction over claims of any sort. ii. This case Put Pennoyer to rest—International Shoe takes over. iii. absent other ties among the defendant. the State. its regional distributor. 28 officials make a special appearance. Robinson and the kids.e. Π then gives constructive notice by publication and by certified mail. Minimum Contacts=Umbrella Test for Specific Jurisdiction 2. World-Wide Volkswagen Corp. The Δs do NOT have minimum contacts with the state of DE. Three different themes within specific jurisdiction: i. the property serving as the basis for jurisdiction is completely unrelated to the plaintiff’s cause of action. F. Suit is filed in DE. they were involved in an accident with another car. v.a. e. v. They joined as defendants the manufacturer. sues 28 officials of Greyhound (who are not residents of DE) for breach of fiduciary duty to corporation. A year later. its importer. FACTS—Heitner. claiming defective design and placement of the Audi’s gas tank and fuel system. Purposeful Availment (+ foreseeability) iii. As they passed through OK. the presence of the property alone (i. and the litigation) would not support the State’s jurisdiction d. Woodson (1980)—PURPOSEFUL AVAILMENT i.. Facts: The Robinsons purchased an Audi in NY. Fair Play and Substantial Justice 3. and its retail dealer. a shareholder of Greyhound (DE) and a nonresident of DE. when the only
. There is no reason for the artifice of quasi in rem jurisdiction since Int'l Shoe does it much nicer. ISSUE—Can a state obtain personal jurisdiction over a party based on that party’s ownership of property in the state? c. Where. 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. as in this case. b. 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. Washington. Stream of Commerce ii. they left NY for a new home in AZ. Any assertion of personal jurisdiction must be considered under Int’l Shoe. causing a severe fire which severely burned Mrs. Issue: Whether an Oklahoma court has in personam jurisdiction over a nonresident auto retailer and its wholesale distributor. HOLDING—Int’l Shoe minimum contacts rule applies. SPECIFIC JURISDICTION 1. The Robinsons brought a PL action in OK.
v. Δ HAD NOT PURPOSELY AVAILED ITSELF OF THE OPPORTUNITY TO CONDUCT ACTIVITIES IN OK. designed product for the forum state. and sealant. and the trial can proceed at least as efficiently in OK as anywhere else. Reasoning: a. leaving only Cheng Shin’s 3rd party action for indemnity against Asahi. 2. etc.connection is the fact that a car sold in NY to NY residents became involved in an accident in OK. Holding: No. look to whether Δ marketed in forum state. Dissent [Brennan]: The interest of the forum state and the connection to the litigation is strong. 1. All of Zurcher’s claims were settled. Reasoning: Defendants carry on no activity whatsoever in OK – they close no sales and perform no services there. the manufacturer of the tube’s valve assembly. v. A STREAM OF COMMERCE 1. He filed a PL action alleging that the accident was caused by the defective tire. 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). included the tube’s manufacturer Cheng Shin. The state has a legit interest in enforcing its laws designed to keep its highway system safe. Asahi Metal Industry Co. 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. 9
. although it could foresee that its buyers might take its cars there. Plaintiffs argue that because a car is mobile by its design and purpose. a. O’Connor goes by “purposeful availment” theory—need more than Δ putting product into stream of commerce. iv. Rule: Minimum contacts must be based on an act of the DEFENDANT. sold. 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. ii. they do not take advantage of the benefits and privileges of OK law. they solicit no business there via salespersons or ads. it is foreseeable that the car would cause injury in OK. vii. and they do not regularly sell cars to OK residents or customers or seek to serve the OK market. Superior Court (1987)—STREAM OF COMMERCE [PLUS] i. iv. establishing channels for providing regular advice to customers in the forum state. Zurcher named several defendants in his CA suit. tube. Issue: Whether mere awareness on the part of a foreign defendant (Asahi) that the components it manufactured. Holding: No. The court says the foreseeability alone has never been a sufficient benchmark for personal jurisdiction under the DPC. Further. PART II. Facts: Zurcher lost control of his motorcycle and the accident killed his wife. 3. Personal jurisdiction cannot be obtained by OK based on one isolated occurrence. the goods were purposefully injected by the seller into the stream of commerce and they were predictably used in the forum state. iii. vi.
the interests of the plaintiff and the forum state are slight because all that’s left is an indemnification claim. Start with minimal contacts and then look to FP and SJ c. “STREAM OF COMMERCE PLUS”—Δ must put the product into the stream of commerce. Rudzewicz and MacShara entered into a joint venture as operators of a BK franchise in Michigan. Further. B FAIR PLAY AND SUBSTANTIAL JUSTICE 1. 10
. 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. plus an action of the Δ purposely directed towards the forum state 2. What we are left with: Broad International Shoe standard a.i. The two tests are meshed together by the court b. and the plaintiff is not a CA residentdo it in Taiwan or Japan. all the manufacturer needs to do is inject their goods into the stream of commerce. iv. Specific Jurisdiction: Some contact with the forum that gave rise to the action 1. PART II. Issue: Whether the franchisees have minimum contacts with Florida that would establish the state’s PJ over them. Rudzewicz (1985)—FAIR PLAY AND SUBSTANTIAL JUSTICE** i. Minimal contacts: 1. The franchisees challenge PJ in Fla. iii. Ask about fair play and substantial justice 4. Interstate judicial system’s interest in obtaining the most efficient resolution of controversies v. In regard to stream of commerce. Π’s interest in obtaining relief iv. which they negotiated with the Birmingham district office and the Miami HQ. Facts: BK’s headquarters are in Florida. Reasoning: Minimal contracts test + fair play and substantial justice a. Purposeful availment—Δs negotiated a contract with a FL corporation and voluntarily entered into the contract which subjected them to Florida law. Burger King Corp v. Shared interest of the sever states in furthering fundamental substantive social policies 2. Burden on the defendant ii. Ask about contacts of ∆ 2. ii. They had some trouble getting started. When rent payments fell behind. Considerations: i. but it has regional offices that supervise franchisees in their areas. BK negotiated then sued in federal district court in Fla. Do Δs have minimum contacts in Florida?—YES i. In this case. the burden in Asahi is severe (travel and defending in foreign legal system). Holding: Yes. [this test sets a lower bar] v. Interests of the forum state iii.
Middle: exchange b. Court looks to: 1.Calder case (effects test) and internet cases i. DVD CCA sues him for misappropriation of trade secrets for posing the program on his site. on its website that allows users to essentially override CSS technology. the act was not purposefully directed toward CA. studied comp engineering at Purdue. b.d. Dissent: Defendant’s intentional act was expressly aimed at CA – he should reasonably anticipate being haled into court here. Internet spectrum (solely internet use) a. Case law. Choice of law clause (FL) in contract iv. Reasoning: a. which had a website that provided only information. iv.minimal contacts 3. Knowledge that his conduct may injure certain industries in CA is insufficient to establish express aiming at CA. No jurisdiction: posting only b. so it posted DeCSS. a source code of a program. Here. (2) minimum contacts. a resident of Texas. Dissent (Justice Stevens)—Florida should not have jurisdiction a. ii. Δs could have reasonably anticipated being hauled into court in FL. had no interactive features. Notes:
. Unequal bargaining power in contract formation. and there is no evidence that residents of CA even visited the site. vi. Thus. Jurisdiction: Business 1. boilerplate language so they didn’t really contract for it. Holding: No. The project sought to defeat new technology and enable the decryption and copying of DVDs. Issue: Does California have personal jurisdiction over a defendant based on a posting on his website? iii. 2. Facts: Pavlovich. The Court uses the 3-part test for specific jurisdiction: (1) purposeful availment of defendant of forum benefits. Statute. Constitution. Δs didn’t think their burgers and fries would be traveling down to Florida—no reasonable anticipation of being sued there. the website did not target CA.” v. “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.long arm statute (coextensive-legislature says if Constitution allows it.) California is coextensive 2. Pavlovich v. it can and enumerated-there jurisdiction is less than what is allowed in Constitution. which is owned by DVD CCA. where he was the founder and project leader of the LiVid video project. and (3) fair play and substantial justice. 5. Superior Court (2002)—SPECIFIC JURISDICTION & THE INTERENET i. Fair play and substantial justice: 1.
Holding: Yes. purchased copters and parts from there. and maintained bank accounts there. he carried on in Ohio a continuous and systematic supervision of the necessarily limited activities of his company. filed two suits in Ohio against the mining co. firing a bullet over a state line). Jones v. who were employed by Consorcio. Calder: tabloid writer slammed an actress who lived in CA. Facts: Helicopteros (Helicol) is a Colombian corporation with its principal place of business in that country. a nonresident of Ohio. Commercial use? 4. 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. if someone has systematic and continuous contacts with a state. Facts that can determine internet jurisdiction: 1. b. Helicopteros Nacionales de Colombia. ii. Benguet Consolidated Mining Co. 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. v. Facts: Perkins. A helicopter owned by them crashed in Peru. Hall (1983) i. Individuals—state of domicile 2. Helico had contacts with Texas – held negotiation sessions there. a Peruvian joint venture formed by Texans to enable them to enter into a deal to construct a Peruvian oil pipeline. court case we’ve looked at for PJ c. This is the first state.A. alleging that it owes her money as a result of its failure to issue stock certificates and dividends to her. send employees for training there. S. Reasoning: Because the President of the corp returned to Ohio during a hiatus and kept his files there. (1952) i. 12
. had correspondence there. 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. and four US citizens lost their lives. Ohio can take or decline jurisdiction. GENERAL JURISDICTION 1. rather than federal.a. iii. Location of server G. 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. Interactivity of website 3. Notes: a. they are a resident and there is no general jurisdiction problem. Plaintiffs are the survivors and executors of the decedents. 3. The Consorcio contract for the job provided that controversies arising out of the contact would be submitted to the jurisdiction of Peruvian courts. Usually. drew and distributed salary checks there. iv. Corporations—state of incorporation and principal place of business ii. Usage info – regarding residents 2. where the cause of action arose from activities entirely different from its activities in Ohio (breach of K claim). (in the Phillippine Islands). Perkins v. v. d. Under what circumstances will Δ be subject to jurisdiction for all claims—even those without any connection to the forum state? (General Jurisdiction) i.
but did not attempt to serve his wife. consent. ii. 6. b. Notes: i. The DPC does not prevent jurisdiction. business. Holding: No. [CA courts refuse to dismiss for PJ]. etc. Shoe only applies where the defendant is not in the state—can give personal service to anyone in the state. in a suit unrelated to activities in this state.here is why… 5. husband has minimum contacts because he used the laws. they decided to separate. personal service v. Issue: Whether the DPC denies CA courts jurisdiction over a nonresident. Wife moved to CA and they agreed to file for divorce on grounds of irreconcilable differences. 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. husband visited CA on business. and protection of the state (fire. The form iv. No there was not general jurisdiction. medical. are not sufficient to establish general jurisdiction where the COA is not related to the purchase transactions. Notes:
. economy. a. vi. For exam i. Cause of action ii. He then returned to NJ. It’s very rare to find a court that says that they have general jurisdiction over a non-resident defendant. After Int’l Shoe. iii. they moved to NJ. ii. Concurrence [Brennan plurality]: We must apply the minimum contacts test/Shoe in all cases. Burnham v. he was served with a CA court summons. Superior Court (1990) i. no need for tag jurisdiction—just argue minimum contacts c. who was personally served with process while temporarily in that state. When he returned to wife’s house. The 3 traditional ways to gain jurisdiction: residence. where two children were born. 4. Holding: No. then visited his children and took them to San Fran for the weekend. iv. That year. Issue: Whether the contacts of Helicopteros were sufficient to allow Texas to assert jurisdiction over the corporation. iv.ii.’” This is the time-honored approach. Facts: Husband and wife married in 1976 in WV. Systematic and continuous contacts is a VERY high bar to meet. In 1987. even if occurring at regular intervals.) (personal availment of state benefits). Husband filed on grounds of desertion. Opposite of traditional—“tag jurisdiction” (personal service while passing through state) 1. In 1977. roads. How contacts do not fit into cause of action iii. Wife brought suit for divorce in 1988. Using this test in this case. iii. Traditional Basis Exam: can use traditional basis to get jurisdiction under Pennoyer. Reasoning: Mere purchases.
Unequal bargaining power was fundamentally fair. Respondents argue that the forumselection clause should not be enforced because. What constitutes consent? i. The cruise line has interest in limiting jurisdiction because it carries passengers from everywhere and has contacts everywhere. 3. Ms. The Supreme Court upheld this procedure. Shute. Common sense dictates that the clause will not be negotiated because it was purely routine. Carnival Cruise Lines v. bought cruise tickets from Carnival. FACTS—Mrs. Π sued in NY. and the clause thus limits the confusion regarding where suits must be brought—and passengers also benefit from reduced prices allowed by limiting jurisdiction. REASONING—Three Points: a. Limits of this case: it was a plurality opinion H. and enforcement effectively would deprive respondents of their day in court. b. etc. ii. She filed a negligence suit in Washington. 14
. leased farm equipment from a NY concern. iii. contrary to The Bremen case. d. treating the quotes clause as consent to PJ and that the clause did not violate due process. National Equipment Rental v. HOLDING—Because of forum-selection clause (and therefore consent by Shute to bring all suits in FL). There isn’t specific jurisdiction in this case because all of the facts that led to the divorce (marriage. 4.a. This is a VOLUNTARY presence case—distinction. which is a Florida Corporation.) occurred in NJ. Int’l Shoe recharacterized implied consent to include consent by minimum contacts. Shute i. b. Szukhent—Szukhents. As long as there was no fraud or bad faith in obtaining consent. WA has no PJ over Carnival. Pennoyer—Either power or consent can establish jurisdiction 2. then forum-selection clauses do not violate fundamental fairness and are valid. either at the outset of the lawsuit itself or before it. c. The face of each ticket contained the language “SUBJECT TO CONDITIONS OF CONTRACT ON LAST PAGES IMPORTANT! PLEASE READ CONTRACT. Shute was injured when she slipped on a deck mat during a guided ship tour while over international waters. MI farmers. from Washington. consent to jurisdiction in a forum. A defendant may. basing jurisdiction on service of Weinberg.” The contract contained a forum-selection clause indicating that any disputes would be settled in FLORIDA. the clause was not the result of negotiation. 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. There isn’t general jurisdiction in this case because the husband did not have continuous and systematic contacts with CA. The clause was reasonable. CONSENT AS A SUBSTITUTE FOR POWER 1. When the Szukhents defaulted on the lease.
DISSENT—Justice Stevens: a. as his agent for service of process” (Nat’l Equipment Rental) iii. form contracts offered on a take-orleave basis by a party with stronger bargaining power to a party with weaker power. THE CONSTITUTIONAL REQUIREMENT OF NOTICE 1. Individuals being sued in personam must receive some form of notice. FL. 3. 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. i. Mullane v. iv. Forum-Selection Clauses – Limit forum to specific location a. “The parties agree that any litigation arising out of this agreement shall be brought out of Miami. “John Rudsewics appoints X.c. BUT—Pennoyer establishes a distinction between in personam and in rem jurisdiction a. 2. The cruise line’s principal place of business was in FL and many cruises depart and return from FL. but not where the suit will be brought a.” (Mullane) 4. do not require suit brought there a. Arbitration Clauses – remove courts and require arbitration I. residing in Miami. FACTS—Central Hanover Bank & Trust (Appellee) set up common fund pursuant to a New York statute allowing people to combine their small trusts 15
. i. only permit suit to be brought in consentedto place. Because it is perfectly permissible for a state to assume that people keep an eye on their property. a state could presume that the seizure of property (prerequisite to in rem jurisdiction) would also accomplish notice. Central Hanover Bank & Trust Co. FL” b. Courts traditionally have reviewed with heightened scrutiny the terms of contracts of adhesion. Standard—Notice must be “reasonably calculated under all the circumstances. Party against PJ will argue forum-selection clause not apply because plaintiff could not negotiate clause + unequal bargaining power iv. Notice is another requirement for personal jurisdiction. Choice-of-Law Clauses – decide what forum’s (state’s) law will apply. “The parties agree that any litigation arising out of this agreement shall be governed by the law of Florida” (Burger King) ii. Consentual Ways to Adjust Procedure Law i. Consent-to-Jurisdiction Clauses – parties consent to suit in particular place (waives challenges to PJ). 5. b. however. to apprise interested parties of the action and give them an opportunity to object. Carnival Test: Was clause reasonable and fundamentally fair? c. No bad faith motive.
Long-Arm Statutes as a Restraint on Jurisdiction i. which is all that was required by the NY statute for judicial settlement of the common trust fund. notice by publication of a judicial settlement to unknown beneficiaries of a common trust is reasonable notice. Appellee Bank petitioned for settlement of its first account as common trustee. Relationship between long-arm statutes and the DPC? a. SELF-IMPOSED RESTRAINTS ON JURISDICTIONAL POWER: LONG-ARM STATUTES. but nothing requires that a state assert the entire jurisdiction permitted by the CXN. 149 examples J. Some of the beneficiaries were not residents of New York. then do Constitutional analysis to see if there is PJ. iv. RULES—(1) Notice must be “reasonably calculated under all the circumstances. There were 113 participating trusts. The Constitution allows it (Due Process/Full Faith and Credit) b. (2) No. If yes. FRCP Rule 4—NOTICE i. ii. A court may exercise jurisdiction over a Δ only when: a. First do the state Long-Arm Statute analysis to see if claim would be heard in state. Gibbons v. After Int’l Shoe expanded the doctrine of PJ. The CXN sets the outer boundaries of PJ. HOLDING—(1) Yes. a search is not required to find the addresses of the unknown. It would not be a burden to serve by mail those whose addresses are already known.” (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. states began to authorize service (often by mail) on Δ beyond their borders. iii. Textbook pg. Statutes authorizing state courts to reach beyond their own borders came to be known as “Long-Arm” Statutes a. iv. however. 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. Brown (1998):
. 5. to apprise interested parties of the action and give them an opportunity to object. a. AND DISCRETIONARY REFUSAL OF JURISDICTION 1. VENUE.into one fund for investment purposes. “Notice” was by publication for four weeks in a local newspaper. State or Local Government authorizes it to do so ii. iv. notice by publication to all the beneficiaries of a common trust whose residences are known is not reasonable notice.
alleging that Gibbons gave bad directions that caused the crash. Venue as a Further Localizing Principle
. Notes: 1. Holding: No. Issue: Whether FL can assert PJ over Gibbons. e. Brown were driving together in Canada. Gibbons was giving directions to Mr. Brown as a party. c. Facts: Gibbons and Mr. but nothing requires that a state assert the entire jurisdiction permitted by the CXN.” 2. 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. 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. Brown sued Gibbons in FL to recover for her own injuries. 3. Two years later. Gibbons says the complaint doesn’t satisfy the long-arm requirements in FL of “engaged in substantial and not isolated activity. 4. a TX resident.a. Brown in FL. the Court held that Mrs. The CXN sets the outer boundaries of PJ. Given the length of time between the 2 actions and the fact that the prior suit did not name Mrs. Gibbons. Some states have enacted long-arm statutes that reach for as much jurisdiction as the CXN allows. 1. Mrs. Brown. Brown has not alleged a satisfactory ground for personal jurisdiction under the FL statute. Brown has not shown that Ms. 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. 2. 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. and Mrs.” b. d. 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. 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). 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. sued Mr. i. alleging his negligent driving caused the accident. 2. Thus. Gibbons “is engaged” in any activity in FL whatsoever other than defending the present suit. the court nevertheless notes that Mrs. Brown says that Gibbons is subject to the PJ of FL because she brought the prior suit.
c. v. Reasoning: 1. Where ANY Δ resides 2. Δ Corporations—deemed to reside in any district in which it is subject to PJ i.i. The American defendants can only be sued where they can be “found. Indonesia (Bakrie and Perkebunan) and in Thailand. §1391(c) 1. More than one district in a state—look to Corporation’s most significant contacts within a particular district iii. The foreign defendants can be sued in any district. Sue in federal court in the Eastern District of VA. a. Whether venue is proper in the EDVA.C. Plaintiffs allege a broad conspiracy among defendants to fix prices and restrain competition in rubber thread.C. §1391 b. Facts: Two American purchasers of extruded rubber thread. State venue provisions trump §1391 18
. Holding: Yes to both.S. b. Jurisdiction founded ONLY on Diversity of Citizenship—§1391(a) 1. Rubfil. Defendants challenge jurisdiction and venue. 2. Where substantial amount of events occur 3. Whether there is PJ over an Indonesian manufacturer (Bakrie) that consummates its sales of thread in Indonesia. c. Where substantial amount of events occur 3. Bhd. the next question is “what is the proper district court which has jurisdiction over the Δ?” ii. Dee-K (from VA) and Asheboro (from NC) bought the rubber thread from defendants to make bungee cords. Once you figure out that a particular state has PJ. stems from statutory rather than constitutional sources. Heveafil Sdn. Federal Statute—28 U. Issues: 1. and Rubberflex). §1391 a. Dee-K Enterprises. Venue Statute used Section 12 of Clayton Act i. Where any Δ resides 2. a. Where any Δ may be found (if it can be brought no other district) c. Plaintiffs sued in an anti-trust claim many corps producing the thread. Venue locates litigation not just in a state but in a particular federal judicial district within that state. 28 U. Where any Δ is subject to PJ (if it can be brought in no other district) b.” d. Venue. where litigation takes place. Jurisdiction NOT founded solely on Diversity of Citizenship—§1391(b) 1. Usually.S. among other things. corps in Malaysia (Heveafil. Inc.
in this circumstance. a court has the power to hear a case but. Section 12 finds venue (1) where Δ is found or (2) where Δ conducts business 2. Service of process pursuant to the statute or rule must comport with due process. Don’t want to hold up suits against foreign ∆s and 1391d removes venue impediments. Federal long-arm statute FRCP 4(k)(2). then you have service of process in any district. Many times. for reasons of justice or efficiency. in the interests of justice. Test under the trial court’s discretion: 1. the SupCt has held that 1391. Forum non conveniens (common law)—affects both state and fed courts 2. Court says: prereqs for obtaining PJ: i. 2. BUT—Clayton Act applies to the American Δs. overrides any special venue statute (such as the Clayton Act here). 5. may be sued in any federal district court. Does an alternative forum exist? 19
. HOWEVER.” (Shoe) – so. 3. iv.” d. Statute (usually long-arm) or rule must authorize service of process over defendant. Two rationales for declining to exercise jurisdiction: 1. 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. Because the Clayton Act doesn’t govern foreign Δs and §1391 does that. as aliens. ii. Declining Jurisdiction: Transfer and Forum Non Conveniens a. plaintiff must show that he didn’t offend the CXN with service. any challenge to PJ is governed by the cxnal test of “fair play and substantial justice. 4. which provides that aliens may be sued in any district. even though jurisdiction satisfies venue and due process. b. 1391(d) eliminates any venue impediment to suit in this district with respect to the foreign defendants because they.if not subject to PJ in any state. **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. Thus. §1391 trumps the Clayton Act ii. Notes: 1. should not do so c. Under either Rule 4 or the Clayton Act. Court applies 1391(b) to American defendants e. Federal Statute §1391(d)—An alien may be sued in any district i. Forum Non Conveniens (“Inconvenient Forum”): plaintiff can ask the court to dismiss the case from the district for inconvenience.ii.
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. lawyer appoints his secretary as administratix of the decedent’s estates 20
. of Trade report found no evidence of defective equipment and indicated that pilot error may have contributed to the accident. Would trial in this forum cause oppression and vexation to the defendant that is out of proportion to the plaintiff’s convenience? 3. the US was starting to become a popular place to file suits because it was favorable in many ways for plaintiffs): 1. 5. as are their heirs and kin. Reyno i. Crash in Scotland. Holding: A change in forum to a less favorable court is permissible. The federal district court granted the motion. The propellers were manufactured in Ohio by Hartzell.2. The plane was owned and maintained by Air Navigation. Does the difference in the law give a remedy “so clearly inadequate or unsatisfactory that it is no remedy at all?” 4. 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. Decedent’s survivors knew the Scottish law would not be favorable to them. The decedents were all Scottish subjects and residents. Reyno (1981) (history: at this time. so he appointed her). 2. then transferred to the MD of Pennsylvania and finally tried to get a forum non conveniens dismissal. which was organized in the UK. Find lawyer in CA. Overturned Court of Appeals’ decision and reinstated District Court’s decision. Reyno initiated suits against Piper and Hartzell for wrongful death. The plane was manufactured in Penn by Piper. Procedure: The defendants had the case removed to federal court in California. 3. Issue: Is it permissible for the trial court to issue a forum non conveniens dismissal? 4. Piper Aircraft v. all decedents are Scottish ii. Why file in US (California)? a. a Scottish taxi service also organized in the UK. Facts: A small commercial aircraft crashed in the Scottish highlands on a charter fight. A British Dept. Piper Aircraft v. Appeal to SupCt. and that US has strict liability in torts b. and was operated my McDonald Aviation. Is the forum inappropriate because of the court’s administrative and legal problems? e.
a district court may transfer any civil action to any other district or division where it might have been brought. the avoidance of unnecessary problems in conflict of laws. availability of compulsory process for attendance f unwilling. and the cost of obtaining attendance of willing witnesses. or 21
. Forum Non Conveniens—TEST for whether to dismiss on the basis of Forum Non Conveniens: a. 166 footnote #6) i. if view would be appropriate to the action. and then use §1404 to transfer to PA a. Gilbert & Koster Considerations: 1) Is there an alternative forum 2) Oppressiveness to Δ v. possibility of view of premises. vi. Piper is located in PA b. Public—administrative difficulties flowing from court congestion. Δs move case to federal court. §1404 Transfer—for the convenience of parties and witnesses. Π’s convenience 3) Court’s interest 4) Private and public interests (p.iii. Private—relative ease of access to sources of proof. Δs also move to dismiss based on (1) forum non conveniens. 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. in the interest of justice. expeditious and inexpensive ii. and (2) lack of PJ v. and all other practical problems that make trial of a case easy. All Scottish parties are closer to PA than CA iv.
ii. HOLDING—Case is allowed in US. Notes: i. Gonzales v. his son dies 22
. IMPACT OF US’S DISMISSAL OF Π’S CASE—can refile in Scotland. this assumption is much less reasonable (assume all forums in US are inconvenient to foreigners) – therefore. Guidi v. less deference is given to the Π’s choice 1.in the application of foreign law. When a home forum is chosen. when the plaintiff is foreign. a foreign plaintiff’s choice deserves less deference. If Court did not dismiss on the basis of Forum Non Conveniens. Chrysler Corp. Scottish) would confuse jury (public interest concern) c. and the unfairness of burdening citizens in an unrelated forum with jury duty. not dismissed by Forum Non Conveniens 4. Inter-Continental Hotels Corp. Choice of law (US v. There is ordinarily a strong presumption in favor of the plaintiff’s choice of forum. f. but when Π is foreign. Shootings overseas in Egypt hotel—most evidence from overseas (like Piper) 3. 1. car accident in Mexico. Clearly Π is not choosing CA based on convenience because Π is foreign vii. However. Yes—more deference is given to US Citizens’ choice of US forum g. but no lawyer would take it because it’s not a good case in Scotland (no strict products liability) 6. Oppressiveness to Δ v. it is reasonable to assume that the choice is convenient. HOLDING—Court dismissed on the basis of Forum Non Conveniens a. which may be overcome only when the private and public interest factors clearly point toward trial in the alternative forum. Is the difference the fact that the Π is a US Citizen here? (unlike Piper) i. it would open the floodgates for foreign litigation in the US b. vii. 1. Π is US Citizen 2. Π’s convenience— generally tend to respect Π’s choice of forum. Π is Mexican citizen.
3. Between Citizens of Different States iii. Maritime (Special Court) a. Admiralty and Maritime Jurisdiction iv. Court is not going to get into judging alternative forums based on how reasonable their outcome would be. §1332—Diversity of Citizenship. Congress can strip jurisdiction from the Federal Courts b. Because both state and federal governments have court systems. State Courts (CONCURRENT JURISDICTION) *Can bring cases of federal question (ie. Arising under the constitution. federal statute) in either federal or state forums 2. Federal Subject Matter Jurisdiction 1. Who can hear cases of Federal Question Jurisdiction? 1. Statutory Source—Federal Jurisdictional Statutes i. HOLDING—There is an alternative forum (Mexico) i. but allows Congress to establish them (ORDAIN AND ESTABLISH CLAUSE) a. claiming no alternative forum 4. Cases to which the US would be a party c. Just because it’s not economically viable doesn’t make it not an alternative 5. Federal Courts 2. Article III. laws of US. §1333—Admiralty. Π files in Texas. B. Framers were fearful of power of federal government 2.500. Amount in Controversy iii. How would cases be heard without lower federal courts? 1. §1331—Federal Question ii. Exclusive jurisdiction—states do NOT have concurrent jurisdiction 23
. §2 gives a list of types cases that the Supreme Court could hear: i. Constitutional Source—Article III.2. Controversies between the States v. Wrongful death suit in Mexico would cap wrongful death damages at $2. treaties (FEDERAL QUESTION) ii. Subject Matter Jurisdiction
A. State Courts could hear cases 2.
IV. litigants/lawyers/judges need to know which kinds of cases belong in which courts—this is referred to as SUBJECT MATTER JURISDICTION. §1 i. Limits the establishment of lower federal courts—doesn’t require them to be in existence. Why would Congress choose to allow only 1 Federal Supreme Court? 1.
If the Court hears a different kind of case. File in Federal Court because the claim arises under §1331. 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. Does the case fall within one of the enumerated categories of Article III. If it is deemed that RR need not honor the passes in the breach of contract action. Louisville & Nashville Railroad v. Has Congress further authorized the lower federal courts to assume that jurisdiction? D. C.C. Exclusive jurisdiction—states do NOT have concurrent jurisdiction 3. it is stepping on Congress’s toes and the judgment wouldn’t be binding. §2? 2. Copyrights (Special Court) a. Rule 12 allows the Court to do this Subject matter jurisdiction 12(b)(1) is NOT waivable iv. FEDERAL QUESTION JURISDICTION 28 U. Π’s COA—breach of contract a. it is a violation of Due Process (arising under Constitution) iii. Effect—Limits power of federal courts to certain kinds of cases (those involving federal claims. Case Law Tests—1) Mottley “Well-Pleaded Complaint Rule. etc. 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. diverse parties. i. and they do not have the power to hear cases that are not enumerated. No clear test has yet developed to determine which cases “arise under” the CXN ii.S. ii. or treaties of the US. Congress subsequently banned lifetime railway passes and railroad refuses honor them. FACTS—Π’s got free lifetime railway passes for being injured on railway. §1338—Patents. RULE— Well-Pleaded Complaint Rule—Federal question arising under the Constitution must be evident on the face of the Π’s complaint Here.iv. Exclusive jurisdiction—states do NOT have concurrent jurisdiction v.” 2) American Well Works “Creation Test” and 3) Modern Smith line of cases (with 3 factors to consider in Grable) 2. §1334—Bankruptcy Cases (Special Court) a. Mottley i. § 1331 1. the Π’s Due Process issue and §1331 issue that they claim “arises under the Constitution” granting federal question are
. Federal Courts are courts of limited jurisdiction—so 2 questions arise: 1. The district courts shall have original jurisdiction of all civil actions “arising under” the Constitution. laws.
American Well Works i. 3. Cause of action by federal law—federal question b. HOLDING—Copyright is an issue. Harms v. state contracts law created the COA c. 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. COA—declaratory judgment as to who owns the copyrights 2. NOT the complaint’s COA The federal question must be in the Π’s statement of his own COA v. Cause of action by state law—no federal question 1.B. Smith v. Here. Π’s complaint embodies no federal question. Believes this case belongs in federal court (federal question) because of the Federal Copyright Act §1338 3. Harms files suit against Eliscu in NY FEDERAL Court 1. The fact that Δ’s defense is based on a federal law does not make it a part of Π’s case in chief. The Creation test—narrower than Well-Pleaded Complaint Rule ii. Eliscu a. to include §1338 e. T. and therefore. It’s not really about interpreting the federal law. d. No. Kansas City Title & Trust Co. (MODERN LINE OF CASES)
. Δs move to dismiss claim—Federal Court grants dismissal for lack of federal jurisdiction c. COA—interpretation of whether Eliscu owns the copyright of the songs under the agreement b.B. Eliscu Test—COA infused with national interest? 1. Eliscu files suit in NY STATE Court against Harms 1. HOLDING—Π’s breach of contract complaint is a state claim that does not require any proposition of federal law. 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. T. Osborn—Article III case about “arising under” 1. 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. Statutes interpret “arising under” much narrower.only answers in anticipation of the Δ’s defense. this case can be decided without consulting the Federal Copyright Statute §1338 5.
a. Interpreting the federal law is relevant to employer’s liability b. but the Π. COA—KY Employers Liability Act ii. Federal law used to determine whether employer can use Contributory Negligence (DEFENSE) iii. Despite Justice Holmes’ suggested test. DISSENT—Holmes dissented. it arises under the Constitution and is a Federal Question. rather.” b. the Federal law would be deemed unconstitutional—this obviously belongs in federal court
. but to decide the state claim. since the COA was created under state corporation law. and the bonds at issue in the case were invalid because the federal state authorizing them was unconstitutional. FACTS—Πs sued to enjoin Δ from investing in certain bonds issued by federal banks under the authority of a federal statute. Chesapeake & Ohio Railway Co. Moore v. HOLDING—NOT a Federal Question a. since there was no federal question jurisdiction under his “Creation Test” 6. iii. if the Π prevailed. The general rule is that where the right to relief depends on the construction or application of the federal law/Constitution. EXCEPTION TO MOTTLEY TEST v. b. in order to establish her state law claim. Π’s claimed that investing in the bonds would exceed the company’s corporate powers. must PROVE a proposition of federal law. Federal law is not central to the right to relief like it is in the Smith case. ISSUE—Did employer violate federal law? a. In Smith. 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. SUBSTANTIAL FEDERAL ISSUE APPROACH ii.i. SMITH TEST—the Π files what looks like a state law COA. federal courts have occasionally upheld arising-under jurisdiction where federal law does not create the COA. Court says YES b. the employer is just pointing to the Federal statute saying “we abided by the rule. so we can claim CN. Π’s COA—Breach of Fiduciary Duty claim (STATE LAW) a. since it was only authorized to invest in valid securities. ISSUE—Is there FEDERAL QUESTION JURISDICTION? (Does it arise under the Constitution?) a. the right to relief will depend on a constitutional question or on the construction of other federal law a. iv. Does NOT satisfy the Creation Test for Federal Question Jurisdiction.
Negligence Per Se a. but this is an application of Smith b. but it is not a CHALLENGE to federal law iv. under the Creation Test.1. Smith is still alive. DISSENT (Brennan) a. Negligence theory—Merrell Dow gave inadequate warnings of the risks of Bendectin. This is like Mottley—using federal law as a defense is not enough 7. 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. all the court has to do is figure out whether the employer followed federal law. District Court follows Smith line of cases—right to relief depends upon the application of federal law (FDCA) a. Speculation as to whether the Court was overruling Smith’s Federal-IssueEmbodied-in-a-State-Claim exception to the Creation Test a. the COA is not CREATED under federal law since there is no private right of action under the FDCA statute iv. Brennan feels that under Smith. Negligence per se claim depends on interpretation of the FDCA statute 2. because the warnings did not meet the labeling requirements of the FDCA b. So. 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. COA—State law quiet title action 27
. 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. Darue i. Thompson i. Grable & Sons v. But here in Moore. rather than have states interpret it differently v. Merrel Dow Pharmaceuticals v. Federal Courts should uniformly interpret the FDCA statute. Court’s decision in Grable & Sons put that speculation to rest 8. COA—Products Liability. Congress did NOT establish a private right of action for misbranding drugs under the FDCA 1. 2. Can’t follow Smith line of cases b. However. HOLDING—NOT Federal Question Jurisdiction (reversed district court) a. there should be a federal COA here 1.
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
Intent to remain indefinitely. Plaintiff sued for breach of K in federal court. 1. 6. For partnership. 3. The time for measuring citizenship for diversity purposes is as of the date on which the complaint is filed in federal court. has a CA law license. iv. 2. Holding: No. πs must be from different states than ∆s 5. etc. while the statute speaks of citizenship. b.need to know citizenship of each partner.d. if proven. 2. Allapattah: the CXN. Saadeh v. The two are not synonymous. at least one claimant diverse in citizenship from another. Different than corporation. but whose citizenship is in Jordan. as opposed to 1332. Test for state citizenship: i. Plaintiff also shifts the ground to a discussion of his connection with California which. f. (Strawbridge. Farouki (1997): a. requires only minimal diversity. and ii. However.limits the scope of 1332). Moreover. 1332: an alien admitted to the US for permanent resident shall be deemed a citizen of the state in which he is domiciled. his factual submissions are insufficient to demonstrate a CA domicile. 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. citing diversity jurisdiction. Present domicile. and considers CA his domicile. Plaintiff says that he has a CA DL. is searching for jobs there. Domicile = presence + intent to remain 3. Each plaintiff MUST be diverse from each defendant. e. would allow him to invoke diversity jurisdiction against NY citizens. Dismissed. (this is true even if the plaintiff has moved to another state for the sole purpose of establishing diversity) 4.
. that is. Facts: The plaintiff (Saadeh) is a Greek citizen and the defendant is a permanent resident of the US residing in Maryland. KEY POINT—Diversity is determined at the time the suit is filed for diversity jurisdiction purposes (doesn’t matter if it changes during litigation). Notes: 1. Reasoning: Plaintiff’s complaint speaks of residence. and for jurisdiction to exist plaintiff would need to be a citizen of France. Complete diversity requirement: interpretation attached by the courts.
28 U. ii. FRCP 14—if Δ is liable to Π. 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. §1367 2. 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. Δ is able to pass on liability to X.it’s all set at time of complaint f. 19. i. Holding: No. or 24 1. So. parties from the same state have nothing to worry about 2. Reasoning: The Court examines the legislative history behind the 1988 amendment in order to determine congressional intent. Congress then codified the case law results—28 U.S. Supplemental Jurisdiction broadens federal jurisdiction i. The Court discovers an intent to reduce diversity jurisdiction through the alienage provisions. if we’re worried about prejudice. 1. Parties actions cannot cure subject matter jurisdiction. Notes 1. logically. Main justification for diversity jurisdiction in the first place is to eliminate prejudice in home state courts. the court does NOT have supplemental jurisdiction over claims by Π against persons made parties under FRCP 14. 1367(b) does not allow jurisdiction over any claims Π then has against X. dismissed for lack of subject matter jurisdiction. 20. 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. if brought independently. would not have fit within the district courts’ subject matter jurisdiction. (c) District Courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if: 33
. 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.S.C.” 1. APPLIES TO ALL FEDERAL CASES THAT ARE NOT DIVERSITY JURISDICTION ONLY (b) When original jurisdiction in federal court is based on diversity only. Issue: Does Farouki (defendant) qualify as a “citizen of a state” under the 1988 amendment to 1332? d. §1367 (a) If federal district court has original jurisdiction.c. SUPPLEMENTAL JURISDICTION 1.C. e.
19. a. Gibbs 5. The claim raises a novel or complex issue of State law 2. The claim substantially predominates over the claim or claims over which the district court has original jurisdiction 3. so long as those facts are both common and operative. Efficiency ii. 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. Skanes alleges that Homestead’s agent. Issue: Whether the court has supplemental jurisdiction over the defendants for the state fraud claims (part of same “case & controversy”?) iii. Constitutional Basis for Supplemental Jurisdiction i. To determine whether the claims are connected by common and operative facts. United Mine Workers v. Skanes alleges a claim against Ameriquest under the Federal Truth in Lending Act (Count I). 2007): i. Reasoning: The court states that “a loose factual connection” may be sufficient to confer supplemental jurisdiction. 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. §1367(a)—original jurisdiction not based solely on diversity jurisdiction 1. Facts: Skanes (plaintiff) consummated a mortgage transaction with Ameriquest. In re Ameriquest Mortgage Co. Questions to ask in Supplemental Jurisdiction cases: i. In exceptional circumstances. or 24? 4. The district court has dismissed all claims over which it has original jurisdiction. there are other compelling reasons for declining jurisdiction. 20. Holding: Yes. The court holds that the state claim and the federal claim have common operative facts because both are based on intentional inflation
. Π claim against person made party under FRCP 14. §2—Federal Courts hear both the initial claim and the additional claims because the Federal Court is hearing the entire “case” a. as well as a state fraud claim against all defendants (Counts II and III). Which joinder rule does this case involve? ii. 3.1. Ameriquest ordered an appraisal of Skanes’ future home from codefendant Homestead. Article III. Does §1367 allow claim to be filed? a. §1367(b)—diversity jurisdiction alone b. iv. The court may also ask whether the state claims can be resolved or dismissed without affecting the federal claims. Same claim or controversy? iii. or 4. ii. (District Court.
ii. those claims are dismissed. b. defamation. iii. alleging violations of federal employment law (Title VII) and a number of claims under the laws of Puerto Rico (wrongful discharge. She reported her findings to outside counsel. we cannot deny our supplemental jurisdiction here. 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. but their scope also exceeds that of the federal claims
. The PR claims require a much fuller look into the performance of plaintiff as general counsel. 1. Canon 21 of the PR legal ethics rules addresses the matter of lawyers’ conduct. The Title VII discrimination and retaliation claims survive. The court finds that: a. §1367(c)—DISCRETIONARY EXERCISE OF SUPPLEMENTAL JURISDICTION i. Szendrey-Ramos v. and tortuous interference with contracts). Rule: The federal court may decline to exercise supplemental jurisdiction for the presence of complex or novel issues of state law. The PR law claims raise complex or novel issues. bank officials. Not only do the PR claims far outnumber the federal claims. and the Board of Directors. 2. §1367(c)(2)—state law claims do NOT substantially dominate over the federal claim 6. She received information that bank officials may have been committing ethical or legal violations. and both require the court to find fraud (basically. The PR law claims “substantially predominate” over 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. and conducted an investigation in which she concluded that violations occurred. violations of the PR CXN. b. This is an issue of PR law that must be addressed by PR courts. First Bancorp. iv. She was then fired. Holding: No. 1. Facts: Plaintiff Szendrey worked for the defendant bank in Puerto Rico as general counsel. (PR has not adopted the MRPC). (2007): i. and she sued. 1.of value. Issue: Whether supplemental jurisdiction exists for the Puerto Rican law claims. Reasoning: The court looks to 1367(c). this is one story). which enumerates the court’s discretionary reasons to refuse supplemental jurisdiction.” c. v. “Because we cannot conclude that the resolution of one of her state claims will have no effect on the resolution of her federal claims.
7. Π wants to argue that unpaid balance claim is a compulsory counterclaim. Do the joinder rules allow Blazer to bring this counterclaim against Plant? 1. Blazer a. which is not necessary to establish Title VII claims. CLAIMS BY THE DEFENDANT: COUNTERCLAIMS i. Rule: a permissive counterclaim must have an independent jurisdictional basis. HOLDING— Counterclaim: Court uses logical relationship test (flexible) – the debt counterclaim was compulsory because the subject of the case is the loan. c. Basis of the original jurisdiction over the case b. 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. FRCP Rule 13—permits Δs to assert counterclaims against Πs. vi. but permissive claims probably aren’t. The Rule authorizing the joinder of the party or claim over whom supplemental jurisdiction is sought. Notes: 1367(d) addresses the problem of plaintiffs being wrong about courts granting supplemental jurisdiction. Section(d) opens a 30-day “window” that tolls the SOL after the claim is dismissed. and the SOL running out on their state claims after their federal claims are dismissed.2. Plant v. which satisfies the “same transaction” test under 13(a). 1. Permissive—Δ may join any unrelated claim that he has against the Π b. Rule 13—compulsory v. The PR claims are all distinct and have their own elements of proof. 1367–grants supplemental jurisdiction based on three variables: a. because compulsory counterclaims are automatically within a court’s supplemental jurisdiction. The identify of the party–plaintiff or defendant–seeking to invoke supplemental jurisdiction c. arising from the same set of operative facts ii. must bring this counterclaim if you ever want to bring it at all a. “Same transaction/occurrence” Test—Logical relationship between claim and counterclaim. Compulsory—arises from same transaction/occurrence. ii. 2. 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. permissive counterclaim i. iii. 36
probably broader i. Yes. you also meet the supplemental jurisdiction standard of same case/controversy ii. 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. most likely to recover against OPPD (deepest pockets) 1. which falls within the supplemental jurisdiction test of “same case/controversy” iii. Reasoning: Purpose of compulsory counterclaim rule is to provide complete relief to the defendant who has been brought involuntarily into federal court.d. Kroger v. g. “same transaction/occurrence” 1. Herbert Cooper Co. court says this is a compulsory counterclaim. Do the supplemental jurisdiction rules allow federal court to hear this counterclaim? 1. then it will automatically meet the requirements of 1367 – “same case or controversy. but will hear Herbert’s anti-trust counter claim b.. OPPD interpleads Owen Equipment under Rule 14 (“we are not liable. This tells us that if you meet the standard of 13a. v. JOINDER i. diversity jurisdiction allows Kroger to sue OPPD in federal court. but if we are found liable. Permissive Counterclaim—meets “same case/controversy” test but do not meet the “same transaction/occurrence” test for compulsory counterclaims. Same case/controversy is at least as broad as same transaction/occurrence. Owen shares in that liability”) 2. Kroger then files its own claim against Owen b. “Same case/controversy” v. Kroger sues OPPD—employer Paxton is insulted by workers’ comp. Notes: If the claim “arises out of the same transaction or occurrence” (13a). e. Great Lakes Rubber Corp. This case was before §1367 was written
. Federal Court dismisses all of Great Lakes claims for lack of federal question jurisdiction. Omaha Public Power District a. 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.” f. a.
28 U. Respondent amended the complaint naming the PetitionerDefendant. RULE—Diversity jurisdiction does not exist unless each defendant is a citizen of a different state from each plaintiff. v. a citizen of Iowa. This statute and its predecessors 38
.S. filed suit against Omaha Public Power district. (Defendant). How would this work under §1367? 1. Owen Equipment & Erection Co. and §1367 now still allows for it a. d. 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. don’t let in cases to federal court that could not be heard under traditional diversity statute. we should at least allow them to bring any parties in that they believe actually share in liability ii. b. 19. §1367(b) only restricts supplemental jurisdiction over claims made by Π ii. Kroger’s argument—ancillary jurisdiction under Art. Owen Equipment & Erection Co. Kroger a. Rule 14 allows for it.c. FACTS—The Respondent-Plaintiff. §1367(b) does NOT allow supplemental jurisdiction over this claim 2. Owen’s argument—strictly construe §1332. Π’S CLAIM WON’T BE HEARD 1. ISSUE—Does the federal court have jurisdiction over the claim by the Π against the 3rd party Δ? 1. a Nebraska citizen.000 and is between citizens of different states. Start with §1332—no diversity jurisdiction 2. §1332(a)(1) allows federal jurisdiction over civil actions where the matter in controversy exceeds $75. HOLDING—No. an Iowa corporation. as an additional defendant. Kroger (Plaintiff). HOLDING—strictly construe §1332. III—same case/controversy. 20 & 24 e. Π’s claim against 3rd party Δ should be heard by Federal Court because the Federal Court is hearing the entire case 3.C. don’t let in cases to federal court that could not be heard under traditional diversity statute d. in federal district court. OPPD is the Δ dragged into court—once they’re there. but where the newly named third-party defendant is a citizen of the same state that the plaintiff is (no diversity). How do we explain the fact that OPPD is allowed to interplead Owen into the federal case even though it violates diversity jurisdiction? i. even where the nondiverse defendant is impleaded through ancillary jurisdiction. Πs are restricted from bringing claims against parties brought in under 14. The basis of federal court jurisdiction was diversity. c.
Their dissent viewed § 1332 as only requiring complete diversity between the plaintiff and the parties he initially brings into the suit. REMOVAL—28 U. since there is a Federal Question joined with an otherwise non-removable state negligence claim (due to Hometown Rule) brought in NC state court
. 3. diversity jurisdiction does not exist unless each defendant is a citizen of a different state from each plaintiff. B(NC)—if A brought suit in NC state court. [HOMETOWN RULE] 1. Jurisdictional statutes give Πs the initial choice of state or federal courts for cases in which federal and state court jurisdiction overlap. complete diversity was destroyed just as surely as if she had sued Defendant initially. §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. $80. 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. 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. That is. Δ may not remove to federal court (c) If a federal question is joined in state court with one or more otherwise nonremovable claims. This case is removable by Δ. the entire case may be removed and the federal court may determine all issues. If filed in SC state court.C.000 a. i. Δ can remove to federal district court in SC 2. A(SC) v.S. G. When the Plaintiff amended her complaint to assert a claim against the Defendant.have consistently been held to require complete diversity of citizenship. REMOVAL 1.000+ brought in NC state court 1. Π can file in state or federal court b. DISSENT—Justice White and Justice Brennan dissented. 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. B(NC)—ADA claim and negligence state claim $75. i. e. A(SC) v. or it may discretionarily remand all matters in which State law predominates. i. B(NC)—Negligence. A(SC) v.
If only basis for removal is diversity. i. which shall effect removal and the State court shall proceed no further unless and until the case is remanded. 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. §1447(c) contains a pair of provisions concerning remand to the state courts: a. Δ has 30 days to file for removal ii. If there’s a lack of subject matter jurisdiction. THE PROCEDURE FOR REMOVAL—28 U. (e) (1) Notwithstanding section (b).(d) Any civil action brought in a State Court against a foreign state may be removed by the foreign state to the Federal Court. and orders served upon such Δ. A motion to remand “on the basis of any defect other than lack of subject matter jurisdiction” has a 30-day time limit. Δ has 30 days after becoming aware of grounds for removal to file iii. if not. i. If basis for removal is NOT in existence at time of Π’s initial complaint (ie. 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.C. even if the original action to be removed couldn’t have been brought in federal court as an original matter 4. 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.C.S. together with a copy of all process. whichever period is shorter. §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. 5. CHALLENGING REMOVAL—28 U.. 2. 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. you are signing it under Rule 11 (reasonable investigation as to whether there is a legitimate basis for removal. 1. the Π may at any time ask for case to be remanded to state court. 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.S. FRCP 11—when you file a notice of removal as Δ’s attorney. pleadings. §1447 “Motion to Remand to State Court” i. federal question complaint is filed in amended complaint). If basis for removal exists when Π initially files complaint. 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
Inc. Lewis files for remand to state court. it then could’ve claimed they made a mistake and there was no federal jurisdiction c. Why did the Court get it wrong? a. b. Lewis settled with Whayne. Lewis sustained injuries while operating a bulldozer. Caterpillar is an outlier. Liberty Mutual Insurance Group (Mass. The question becomes whether the district court’s original jurisdiction is invalid because of removal. diversity was settled. At the time of removal. Unlike supplemental jurisdiction under 1367. ii. vii. (KY corp). by the time the trial came around. iv. Issue: Whether the absence of complete diversity at the time of removal is fatal to federal court adjudication. If Caterpillar had lost jury verdict. v. iii. Caterpillar. Remand is required if the district court lacks subject matter jurisdiction. and filed in KY state court against Caterpillar (incorporated in Delaware. intervened in the lawsuit as a plaintiff. Lewis (1996): i. Courts will almost always remand cases that improperly use diversity jurisdiction. However. the insurance carrier for Lewis’ employer. and asserted state law claims against defendants Caterpillar and Whayne Supply Co. Facts: Plaintiff Lewis is from Kentucky. 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). rather than at the time the case is removed from state to federal court.b. removal was improper because Liberty still had a claim against Whayne. 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. Notes: a. then Caterpillar filed a notice of removal in district court. is the appropriate time at which to examine whether complete diversity exists permitting federal court jurisdiction. and principal place of business in Illinois). or was okay because diversity was proper by the time of trial. 1. vi. and (2) that the federal district court will miss the original diversity problem. Diversity at the time judgment is entered. This includes absence of diversity or a federal question 6. 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. Corp with principal place of business in Mass). v. Upholding jury verdict of bad actor—Caterpillar should’ve never removed this case to federal court b. Holding: No. Π could’ve possibly won
. If case had been remanded to state court.
The federal law that is the source of the federal question is the law that applies. Tyson’s argument—even though the case is in Federal Court. HOLDING—No.S. Example—Federal Court has Diversity Jurisdiction over a state negligence claim a. Courts struggle with this language 3. the Court should apply NY state law because that is where the facts occurred. regulations. Diversity case filed in a federal court in NY. shall be regarded as rules of decision in civil actions in the courts of the US. NY Courts had spoken on the substantive issue.V. THE ISSUE—CHOICE OF LAW 1. Constitutions iii. federal statutes (none exist on the issue here). there are numerous defenses assertable by anyone sued for breach. Spot an Erie problem 2.C. a halfway step between a promissory note and a modern check. “The laws of the several states. The Erie Problem
A. With promissory notes. OBJECTIVES 1. ISSUE—Which law applied to the substantive question of how many defenses may be asserted. or a different issue of law that would require the application of state law or federal law? B. a. §1652—Rules of Decision Act i. it is clear that federal law applies. Possible laws to derive the answer from—state statutes. Swift v. in cases where they apply. b.28 U. When federal courts have jurisdiction by virtue of a federal question. ruling that bills were subject to a number of defenses. What are the more difficult questions about applying the Erie Doctrine? i. a. Does it apply the state law? Or Federal Law? ii. except where the Constitution or Acts of Congress otherwise require or provide. NY cases were not binding on federal court. It is more difficult when actions are brought on the basis of diversity jurisdiction iii. What does Erie Doctrine do? 3. which law does it apply? i. When a federal court sits in diversity jurisdiction. Tyson i. be sure that the case involves a federal court sitting in diversity jurisdiction 2. precedent. When is it an issue of substance.” a. a.
. Involved a bill of exchange. with checks those defenses are much more limited ii. When determining whether to apply Erie and its progeny. b. Were these NY cases part of “the laws” of that state and thus binding on the federal district court? c.
CXN (US and state). but can look to federal common law/general law to declare what the best law is C. However. Pennsylvania law required that the railroad have committed “wanton negligence” since Tompkins was a trespasser (higher standard of negligence. The accident occurred in Pennsylvania. (obviously Swift encourages forum shopping). Tyson. Holding: The law to be applied in any case is the law of the state. he did not apply Pennsylvania law based on Swift v. an open door struck him. a. federal courts sitting in diversity did not have to apply precedent set forth by State courts. instead. CONSTITUTIONALIZING THE ISSUE 1. RULE—The Court held that the Rules of Decision Act did not include state common law precedent. After Swift. Therefore. Erie requires that federal courts apply state common law when they are sitting in diversity. Statutes. Erie Railroad v. Federal Court says it can look to “general law” and can declare what the best law is 2. It does not include state courts’ interpretations of laws. the federal court instructed the jury on ordinary negligence. STILL MUST FOLLOW THAT STATE STATUTE!! vi. Issue: When a federal court is sitting in diversity. Tompkins (1938) i. He kept several feet between him and the tracks. Federal Courts were basically free to ignore state case law. knocked him down. The “laws of the several states” only included statutes and other forms of positive law. Tompkins brought suit against Erie Railroad in federal district court in New York based on diversity. 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.1. case law (Evidence of what the law means) v. what law should apply in terms of the substance of the case? iii. the Rules of Decision Act only requires that federal courts apply state statutes. State case law just becomes one of the reference sources Federal Courts can look to in deciding what the Federal Law should be b. IF THERE IS A STATE STATUTE. What does “law” mean? 1. a. Swift went on to reach a conclusion different from that reached by the NY courts on the issue iv. KEY POINT—When a Federal Court is sitting in Diversity. regulations. they need not follow state case law. As a train passed. Facts: Tompkins was walking home alongside the railroad tracks of the Erie Railroad. There is no federal general common law. federal law allowed ordinary negligence). Reasoning:
. iv. and he severed his arm underneath the train.
Brown & Yellow Taxicab Co. One of the companies decides to reincorporate in Tennessee. 3. a. i. Swift introduced a way for non-citizens to discriminate against citizens. 4. There is no Constitutional basis for holding a federal common law. 3. RR and taxi companies want to execute exclusivity agreement b. 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. Swift could be in violation of the CXN. This changes the analysis from simply a statutory construction case to a case with cxnal implications. so that any controversies can be settled by Diversity in Federal Court to take advantage of general law. but also the common law of the states. the Court finds that the Swift court misinterpreted the Rules of Decision Act. 5. Kentucky (where both were from) does not allow these agreements c. equal protection concerns there may be 44
.III. which gave Congress the power to create lower federal courts of limited jurisdiction. 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. Black & White Taxicab Co. 2. which allows exclusivity agreements 2. The purpose of the Act was to include not just written statutes. Policy concerns with Swift: 1. The argument is rooted in Art. b. Constitutional basis: 1. Lack of uniformity. However. the Court also determined that there was no such thing as federal common law. The Court also argues that the Swift decision created federalism concerns. 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. First. Swift encourages non-citizens to forum shop within the state to find favorable law. v. Diversity jurisdiction was intended to provide a neutral forum for litigation between citizens of a state and non-citizens.a. takes away power that is given to the several states (federalism argument).
ii. Conflicts question: which state law applies? D. substance (state law) iv. 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. Tyson. Action is barred. Plaintiff argued that the SOL did not bar the suit because it was on the “equity side” of federal court. d. QUESTION REMAINING—When may Federal Courts use Federal Law instead of State law? 3. the Supreme Court has addressed questions in an effort to mediate between opposing principles: i. v. A state rule that was outcome-determinative was to be followed. a federal court in equity can take cognizance of the suit because there is diversity of citizenship between the parties. Facts: Plaintiff sued a bond trustee in a federal diversity action alleging misrepresentation and breach of trust. when no recovery is possible in state court because the action is barred by the SOL. Therefore. Would the law effect the outcome of the case—substance vi. 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. Procedure rule 45
.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. instead. Notes: 1. 6. vii. Traditional Substance v. Courts in equity did not traditionally consider themselves bound by SOLs. Guaranty Trust Co. Manner /means (fed. KEY POINT: When a Federal Court is sitting in diversity. Issue: Whether. the federal court sitting in diversity is bound to follow the law of that state. This case overrules Swift v. (no federal doctrine of laches) v. That Erie requires deference to State Courts as lawmaking bodies ii. the Court holds that there is no federal common law. NY substantive law governed. 2. In the years since Erie. York (1945): i. a. no matter how it might be labeled. 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.” viii. the leading pre-Erie case. Law) vs. iii. That Federal Courts are an independent judicial system 2. THE LIMITS OF STATE POWER IN FEDERAL COURT 1. Defendant invoked NY SOL. Holding: No. even if it is judge-made common law.
Ragan v. defendant contended plaintiff was doing the same work as defendant’s regular employees and. If the law to be applied relates to the manner & means—APPLY FEDERAL LAW xi. or whether such statutory limitation is a matter of substance in the aspect that alone is relevant to our problem.1958): a. sued in tort. Woods v. If applying state law and applying federal law would give rise to different outcomes b. Substance Question—apply state law b. Beneficial Indus. i. Cohen v. Interstate Realty Co. HOLDING—State law followed 5. i.1 did not so require ii. If the law to be applied significantly affects the result of a litigation— APPLY STATE LAW 4. i. Rule 23. TEST—MANNER & MEANS a. as recognized by the State. therefore. Merchants Transfer & Warehouse Co. HOLDING—State law followed 6. The issue of 46
. is enforced. ISSUE—NJ statute required small shareholder suing corporation to post bond for expenses. The question is whether such a statute concerns merely the manner and the means by which a right to recover. ISSUE—VT barred arbitration of employment practices. Facts: Plaintiff was injured while on a construction job for defendant. Blue Ridge Rural Electric Cooperative (SC. federal statute arguably required arbitration ii.a. TEST—OUTCOME DETERMINATIVE TEST a. 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. namely. ISSUE—MS statute barred out-of-state corporations not paying MS taxes from suing in state courts. should federal diversity court do so? ii. for statute of limitations purposes—when filed (Rule 3) or when served (KS practice)? ii. HOLDING—State law followed (Court didn’t consider possible effect of Rule 17(b): look to state of incorporation) 8. Loan Corp. Byrd v. of America i. ISSUE—When does a lawsuit begin. The way in which the Π goes about vindicating his rights b. HOLDING—State law followed 7. Polygraphic Co. procedure rule a. Court says—don’t give too much weight to this substance v. Although he was employed by an independent contractor. Procedure Question—apply federal law ix. was a “statutory” employee whose exclusive remedy was under the SC Workmen’s Comp Act.
Looking to see what kind of importance the state places on whether a judge or jury hears these cases in the statute ii. 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. Is it an issue of form and mode + Outcome Determinative (if outcome determinative. Justice Brennan find that it is NOT b. This is an issue of FORM & MODE a. which is a matter for the judge under SC law. ii. If no—apply federal law b. then state law should apply) iii. If yes—apply state law 2. Is there an “affirmative countervailing consideration?” 2. looking to affirmative countervailing considerations 2.
immunity came up. Brennan finds that we don’t know if it’s outcome determinative 1.b. In this case. e. [If found that it was—he would apply state law] iii. Is this outcome determinative? 1. 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. RULE: The federal practice will be used when it is not certain that using the federal rule will be outcome-determinative. Here. First look at SC Workmen’s Compensation Act—Erie requires that Federal Court sitting in diversity examine the substance of the state law i. apply state law.
c. 7th Amendment—APPLY FEDERAL LAW
(1) “Bound up with rights and obligations”? o If “yes”. but a matter for a jury under federal law. Questions Brennan asks: i. Reasoning: 1. d. 47
. Reversed. Is choice of judge/jury “bound up with state-created rights and obligations”? a.
whether federal courts should follow the state practice is a constitutional question. Defendant argues: Guaranty Trust (York) says that if the rule is outcomedeterminative. Plumer i. 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. Would applying FRCP disturb purposes of Erie? ii.S. Reversed. State RCP conflict i. FRCP v. Hanna v. § 2072: The SupCt has the power to prescribe. Is this a rule of civil procedure? b. a. i.C. pleadings. While purporting to overrule none of the cases in the Erie line. law required personal service of process on a defendant served as executor of an estate.
o If “no”. this case reframes the issue as one of statutory rather than constitutional interpretation. allowed for the complaint to be left with a competent adult at the residence of any defendant. That framing of the issue is consistent with Erie itself. but Rule 4. (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. it is a “Form & Mode” issue. Mass. Facts: This case arose out of a diversity suit for personal injuries where the defendant was the estate of one of the drivers involved. De-Constitutionalizing Erie 1. Rules Enabling Act. the state rule must be applied iii. 2. §1 power to create federal court also gives Congress power to write rules of Civil Procedure that govern federal courts ii. which rejected the invitation to reach its decision as an interpretation of the Rule of Decision rather than the Constitution. Plumer (1965): i. Under both Guaranty Trust and Byrd. Article III. Hanna v. Questions to ask: a. Plaintiff left the complaint with the defendant’s wife at his house. by general rules. and 48
. Erie questions are constitutional matters. (This is outcome-determinative because the legitimacy of service depends on which one we use). in a civil action where the jurisdiction of the US district court is based upon diversity of citizenship between the parties. ii. the forms of process. writs. 28 U. Issue: Whether. 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. 3. which plaintiff followed. v. FRCP governs in Federal Court 4. Holding: The Rule under the FRCP is the standard against which the district court should have measured the adequacy of the service.
We’re not worried about forum shopping because no one is going to choose fed or state court based on service of process rules. c. a. 2. procedure or Congress’ attempt to exercise that power in the Enabling Act.“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. (Through this Act. Is the Rules Enabling Act constitutional?
. Is the statute/rule constitutional? If yes. no one will argue about this again. The Erie rule has never been invoked to void a federal rule. Such rules shall not abridge. b. The court says this rule is not a “talisman. vii. enlarge.motions. Concur [Harlan]: The proper line of approach in determining whether to apply fed or state law. ix. enlarge of modify any substantive right and shall preserve the right of trial by jury. If yes. RULE: If there is a conflict between a state law and federal rule of procedure. 1. follow federal law if the rule is made pursuant to the REA and does not abridge.” 1. then use fed rule. Hanna analysis (fed practice flowing from fed rule/statute): Do the rules conflict? If no. 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.” vi. Summary: Outcome determinative judgments are important for deciding if a state or federal rule applies. a. Erie and the CXN require that the state rule prevail. viii. “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. and the SupCt gives the power to the rules committee) b. If so. the court must follow the dictates of that statute. but in this case. even in the face of a conflicting fed rule. 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. go through this analysis: 1. whether substantive or procedural. or modify a substantive right. Public uncertainty over which laws govern would be debilitating. and the practice and procedure of the district courts of the US in civil action. denying the federal rule would remove any power whatsoever that the fed courts have over their procedures. We’re not worried about inequitable administration of laws because once this case is settled. Notes: 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. Congress gives the SupCt the power to make the federal rules.
Federal Practice—Reexamination clause of 7th Amendment iv. case-by-case consideration of convenience and fairness and trumps state’s blanket rule 4. But not always—the Federal Courts have encountered a few cases in which the federal interests overcame state practices 2. the choice of law problem is solved. §1404 iv.3. They’re never ruled against a FRCP) i. F. Explanation—Unlike Byrd. Gasperini v. Practice at Issue—Is forum selection clause enforceable? ii. Under Hanna’s reading of Erie. even if it differs from the state practice in a significant way. Burlington North R. DETERMINING THE SCOPE OF FEDERAL LAW: AVOIDING AND ACCOMMODATING ERIE 1. 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. Holding—Federal Practice: NO PENALTY v. v. State Practice—No: AL case law iii. ii. Center for Humanities. Stewart Org. then it must be applied. Ricoh i. State Practice—Yes: NY Statute requiring such review by state appellate courts iii. v. Federal Practice—28 U. Explanation—Section 1404 is intended to place discretion in the district court to adjudicate motions for transfer according to an individualized. So long as the statute is constitutional and one knows what the statute requires. Practice at Issue—Is Δ who stays damage judgment but loses appeal liable for 10 percent penalty? ii. Holding—Modify federal practice—by allowing district courts to examine verdicts for effectiveness v. IF the rule passes these tests.C.S. i. Explanation—The Rule’s discretionary mode of operation unmistakably conflicts with the mandatory provisions of Alabama’s affirmance penalty statute 3. or trial by jury according to the federal practice. where “the court faced a one-or-the-other choice: trial by judge as in state court. give substantial weight to clause v. Woods i. Inc i. 50
. State Practice—Yes: AL statute iii. Federal Practice—FRAP 38 (discretionary award of extra costs for frivolous appeal) iv. Holding—Federal Practice: ignore state case law. 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. Practice at Issue—Must federal circuit court decide if damages exceed “reasonable compensation”? ii.
i. MD state court looks to federal law (FRCP 41(b)). this is not a traditional Erie problem (not in federal court sitting in diversity) b.here the principal state and federal interests can be accommodated” by district court review. under Dupasseur. alleging breach of K and other business torts. Court rejects this FRCP 41 argument 1. decision on the merits b. Court doesn’t say whether claim would be precluded. 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. and successfully moved to dismiss plaintiff’s claims as barred by CA’s 2 year SOL. under a longer SOL. 1. Court decides not to apply this rule because it was based off of law created before the FRCP (predates REA) b. Inc. Question is—WHAT LAW SHOULD A STATE COURT APPLY? c. 5. fully litigated. Since the case is now in Maryland State Court.—decides that a state practice overcomes both a Rule and what Byrd called “affirmative countervailing considerations” of the federal judicial system. just advises to look at the CA law to determine this. FRCP 41b—a dismissal under this subsection operates as an adjudication on the merits 1. Example of when a state court would have to respect a Federal law—Federal Civil Procedure 41b dismissal with prejudice iii. So. but CA state practice says that a SOL dismissal is not with prejudice. Why is this in the Erie line of cases? 1. Other rule: Involuntary Dismissal rule (41(b)) ii. Defendant removed to fed district court in CA on diversity. Lockheed Martin Corp. The federal rule is that SOL dismissals operate on the merits with prejudice. 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. same claim or claims that were available at the time. alleging the same COA. a. Semtek Intl. ISSUE—Is the claim preclusion an Erie Problem? a. This matters because plaintiff filed suit again in MD. judgments in CA fed courts would not be preclusive because CA state court practice states that SOL dismissals are without prejudice. This leads to claim preclusion—same parties. Plaintiff says that the case is controlled by Dupasseur v. Why do we look to CA law?
. CONFLICT—FRCP 41 and 3 year SOL in Maryland a. v. FACTS—Plaintiff filed a complaint in CA state court. ii.
– limitation on ability to file class action c. Dichotomy of substances vs. Does the Federal rule answer the question? (rule 23) c. iv. fed court should not follow state rule because fed courts need to protect the integrity of their judicial process. Diversity with conflict of federal and state law b. Shady Grove v. Class action dismissed under NY law v. a subsequent state court should adopt the rule of the original state in which the district court sits. Lady hurt in car wreck. a. If no. vi. v. Allstate i.non statutory penalty. b. Erie purposes: apply substantive state law to avoid forum shopping and make sure there is an equitable administration of justice. it’s just the manner in which they are suing (class action) Not the substance of the suit. HW: not critical to our understanding of Erie 6. Is rule 23 substantive or procedural? a. EXCEPTION: Don’t follow state rule if it is incompatible with federal interests. II A—Majority a. Procedure regulates judicial process by enforcing rights and duties viii. NY: class action. 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. II-B—plurality a. Notes: a. Procedural: all litigants have a right to sue ∆. The language of FRCP 41 says it wouldn’t apply c.a.don’t go through Erie vii. assigned rights to insurance to her doctor ii. Example: if state law does not preclude subsequent claim after dismissal for discovery abuse. substance is an expanding of rights. It’s not a strict application of the Erie doctrine because this court isn’t sitting strictly in diversity c. procedure b. How do we know this is an Erie case? a. RULE: When a federal court decides a case in diversity. 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. 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. unless. Allstate paid the claim late but there was unpaid interest iii. Issue of SOL is outcome determinative (look to state law) b. b. Steps in a circumstance with conflicting laws b. Does the rule exceed Congress’ rulemaking authority (not a rule or procedure)? 1.not here (majority) 52
. HW: why is this not an Erie case? 1.
compared to Symtec a. Theoretical i. D. Policy justifications—Efficiency/use of judicial resources/client v. States could override Congress’ authority
VII. the person seeking to represent the class must show that each of these requirements are satisfied: i.b. What do lawyers get from it (ethics) iv. 53
. Erie Issues. (technically a joinder device) 1. Class Actions
A. but the attorney’s fees comes from the entire amount received. Outlines of rule 23 ii. When to use? When several parties are similarly situated and it is not physically possible to join them all 1. Before a class is certified it is called a “Putative Class Action” E. Categories of class actions B. Typically about 100 Πs ii. Class should consist of persons who share characteristics that matter in terms of the substantive law involved. whereas joinder would require participation of all people who want relief. from damages to attorney’s fees. CERTIFICATION 1. Substantive: (dissent) changing it from a $500 case to a $5 million dollar case—huge shift in the rights. C. Purpose ii. Established if the class representative can show that enough persons are in the class to make joining them as individuals impractical b. Numerosity a. etc. Benefit to clients (Π & Δ) iii. Class action allows claimant representatives to get relief for all members of the class. attorney interests 2. 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. Commonality a. and from litigation to settlement. Working understanding of prerequisites iii. Objectives 1. Doctrinal i. ix. 1. Common substantive law claim—products liability. Federalism concerns of Shady Grove 1. securities and exchange act violations. because the class members may have less interest in the suit (able to receive less money per person). PROBLEM: The ability to aggregate large numbers of litigants tends to shift the focus from the client to the lawyer. FRCP 23(a)—to establish a case as a class action.
Inconsistent verdicts ii. Prevents “varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class” i. Common remedy 3. in significant respects. Class representative will be controlling the litigation. After meeting the 23(a) prerequisites. Common question of fact/injury—Exxon spilled oil and all fisherman suffered injury b. Lawyer should have no conflicts that would cloud the representation. the lawyer seeking class certification still has to show that the litigation fits within one of the three categories of Rule 23(b): a. Should not be an employee or a relative of the lawyer 2. Example—Should environmental agencies allow permits for filling of wetlands for certain purposes? i. Individual actions dispositive of others’ rights 2. iii.
. In order to protect the interests of the absent class members. Representative’s relation to the lawyer should be straightforward. Class representative herself must have some stake in the litigation. making the decisions that a client would be making in a one-client suit. 1. one would want the representative client to have the same incentives and motivations as the average class member. FRCP 23(b) i. 1. Adequacy of Representation a. 3. b. Limited to cases in which the Πs are primarily seeking injunctive or declaratory relief. Much litigated question—whether the members of the class have enough in common to justify certification.2. 2. in the same shoes as the average class member. Class—all property owners in a particular area who may be affected by the granting or denial of this particular permit b. 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. Rule 23(b)(1)— Similarly situated parties should be treated alike 1. iv. Lawyer must be sufficiently skillful and equipped with sufficient support and resources to handle the case. Requirement that class representatives stand. c. Named representative must be typical of the class b. Typicality a.
2. In 23(b)(1&2)—once a class is certified. school integration—by a Δ. a fire. Notice is optional in 23(b)(1&2) classes—[23(c)(2)(A)] a. Once a decision is made in terms of granting or denying class action certification. EXAMPLE—Class representatives say “give us each $1 million and we’ll voluntarily dismiss the class claim for $50 million” 6. “Small Claims Lawsuits”—actions in which many persons allege small amounts of damage ii “Mass Tort”—an airplane crash. Takes class action certification into the realm of interlocutory appeal ii. MUST DIRECT NOTICE TO THE CLASS!—[23(c)(2)(B)] i. on knowledge of the applicable law. Rule 23(b)(3)—comprises all the class actions not captured in 23(b)(1)&(2) 1. EXAMPLE—civil rights cases where relief sought is an injunction requiring some action—voter registration. 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. on the resources the lawyer can bring to bear on the case. Flow: i. i. Places substantial weight on the entrepreneurial activity of counsel in unearthing and investigating the claim. Prevents Δ from making side-deals with the named Πs and leaving others with nothing b. you can apply for an appeal immediately after decision 4. All claims in which the Πs are seeking primarily money damages. on experience in handling class actions. 5. 55
. Establishes both guidelines and a procedure for appointing class counsel. FRCP 23(g) i. i. First. Class action claims may be settled or voluntarily dismissed only with COURT APPROVAL a. FRCP 23(e)—SETTLEMENTS i. FRCP 23(f) i. Class action is superior to allowing individual lawsuits 4. NO MEMBERS CAN OPT OUT! ii. Notice IS required in 23(b)(3) because 23(b)(3) has an opt-out procedure 3. ii. asbestos exposure 2. Communities for Equity c. Common claims of class predominate over the individual questions 3. and on the fee she proposes to seek if successful.
1. (most difficult hurdle here) 1. 2. High School Athletic Assn (1999): i. differences in damages sustained by class members will usually not defeat certification. Mich. c. inability to bear these costs may en the suit. Falcon case: Mexican-American brought a discrimination in employment class action suit. 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. Reasoning: a. but does not require. b.ii. Falcon does not bar because: 56
. Once it is determined that there are common questions of law and fact as to a legal claim. Class included all MexicanAmerican employees and applicants for employment. $5 million plus ii. Because the Supreme Court has held that the representative Π must initially pay for such notice. Numerosity exists because thousands of female high school athletes and would-be athletes are subject to the discrimination. 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. By contrast. 7. Second. iv. iii. Issue: Whether plaintiffs can be properly class certified. (SupCt requires a rigorous analysis on this issue) i. stating that one allegation of specific discriminatory treatment is not enough to support an acrossthe-board attack. SupCt denied class certification. Typicality is satisfied and not precluded by the Falcon case. Does not require complete diversity—just need one member of the class to be diverse from any ∆ 8. 23(c)(2)(A) allows. “appropriate notice” to the class in 23(b)(1) and (b)(2) cases. Where the nature of the legal claims are such that individuals would have to submit separate proofs to establish liability. Holding: Yes. Facts: Plaintiffs bring suit against the athletic association. Rule 23(c)(2)(B) requires individual notice to class members in all 23(b)(3) classes a. 1332(d)(2) statutory requirements for federal jurisdiction for class actions i. Commonality satisfied because the common question is whether the defendant in fact acted through the illegal policy or procedure. b. ii. class actions are disproved due to lack of commonality. Communities for Equity v.
c. b. Presence of compulsory counterclaims can be a basis for denying class certification. Issue: Whether Heaven met the requirements of 23(b)(3) to certify a class action. Reasoning: The district court correctly concluded that Sun Trust’s counterclaims were compulsory under 13(a). stating that the individual class members had defaulted on the terms of their lease agreements and/or made false statements in their lease applications. There is proof of an underlying policy of discrimination here. Holding: No. v. then brought an action alleging that it failed to comply with the disclosure requirements of the Consumer Leasing Act.a. The SupCt has held that the cost of individual notice must be borne by the plaintiff (probably his lawyer). thus increasing the expense of the suit. Notes: a. Thus. the class would have to broken into subclasses to avoid these difficulties. b. She sought to certify a class action. and the trial court abused its discretion. Facts: Plaintiff Heaven leased a car from Sun Trust. Standard of review owes deference to lower court’s denial of certification iv. 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. 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. v. An action seeking monetary damages cannot fall under (b)(2) unless the final injunctive relief or corresponding declaratory relief is the primary relief sought. a. Moreover. 9. Notes:
. 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. Trust Company Bank (1997): i. Sun Trust counterclaimed. ii. Adequacy is satisfied. 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. d. in this case. Heaven v. An association is the class representative. b. (deferential standard of review b/c of efficiency and b/c it’s a fact intensive inquiry) iii. Thus.
An adequately represented class is bound by a judgment or settlement 10. Π introduced lots of evidence on commonality—sociologist testimony on culture of Walmart. Distinguish from Michigan: in Michigan. the Court here suggests that Appellate Courts should also do a rigorous analysis of class certification ii. Ms. Walmart v. Dukes i. Theory of Π’s case—Walmart gives individual store managers the discretion over pay and promotion of employees. b. Walmart is aware of this discrimination and hasn’t done anything about it iv. demoted to greeter. Pattern of discrimination arising from discretion requires much more proof b. anecdotal evidence b. 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. 3rd—brushed off when asked about applying for managerial position. No commonality of Π—no common questions of law or fact 1. MAJORITY OPINION (Scalia) a. Plant v. and this discretion is being exercised in a disproportionate way in favor of men and against women. One supervisor that was failing to promote) as well as common resolution across the class 58
. 2nd—was told to doll up and dress better (harassment) c. male greeters were paid more than her (retaliation and disparate pay) b. eventually was fired (failure to promote) **Various claims of named Πs was clearly a way for Πs to address Falcon opinion v. plaintiffs needed to prove individual instances. whereas here. Blazer determined that defaults on loans were compulsory counterclaims. Must be same contention (ex. Dukes—series of disciplinary actions. What is the impact of this case on class actions? a. c. Named Πs—3 women a. statistical evidence of pay discrepancies. This may be the end of the nationwide class action certification 1.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. Without overtly changing the abuse of discretion standard of review.5 million females—largest class ever certified in US iii. 1. Instead. CLASS—current and former female employees of Walmart a. defendant needs to prove specific compulsory counterclaims.
even a single question of law or fact in common will satisfy the commonality requirement a. When measuring commonality in this case. MUST BE A PATTERN TO HAVE A COMMON QUESTION OF LAW/FACT d. Not an appropriate 23(b)(2) classification—23(b)(2) is for injunctive relief and Πs here are asking for back-pay vi. Not good enough here—Scalia says that Πs weren’t able to prove that all 1. Is this gender discrimination so common that it’s a pattern such that there’s a common question of law/fact that 1. THE CLASS ACTION AND THE CONSTITUTION 1. Disparate Impact Theory—discretion given to manager results in disparate impact towards women 1. District Court did not abuse its discretion—should’ve been left undisturbed F. Fundamental to the class action is the idea that a suit. conducted by a representative on behalf of a number of persons who are not formal parties.5 million women. may nevertheless bind the entire represented class. Two ways around this: i. HOLDING—an individual’s claim of discrimination cannot be extrapolated into a class action 2. One test used for all employees used to hire/promote that is discriminatory and is used systematically ii.c. Falcon 1. but instead asks whether there are questions of law or fact that predominate over individual questions of law/fact—this is improper b. Appellate Court’s Standard of Review for Class Certification—abuse of discretion 1. Official company policy is discriminatory e. having different managers.
.5 million women are suffering from gender discrimination?—probably not 1. The majority doesn’t ask the question of whether there is ANY question of law or fact. Representative Adequacy i. DISSENT—the rule does not require that ALL questions of law or fact in the litigation be common. 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. 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.
naming as defendants the Hansberrys and the people from whom they bought the property. vi. vii. 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 covenant did not take effect unless signed by owners of 95% of the frontage – but the signers represented only 54%. A selection of representatives for the purposes of litigation. In that case. Lee brought an action to enjoin breach of the covenant. The court upheld the covenant in Burke. Departure from the ordinary proposition that one may be bound only by litigation to which one is a party b. iii. Kleiman. 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. a. 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. DUE PROCESS CONCERN 2. 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.
. Notes: a. The Hansberrys said that the covenant was unenforceable because not enough owners signed it but – but Lee refers to Burke v. Lee (1940): i. Holding: Yes. does not afford that protection to absent parties which due process requires. Neither the plaintiffs or defendants in the earlier action represented the Hansberrys – plaintiff wanted an opposite effect. Hansberry v. 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. Denial of the Hansberrys’ right to litigate is a denial of due process.a. ii. 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. Facts: The Hansberrys. and defendants only purported to represent themselves (thus no class action that could bind people later). v. Hansberry rule: a judgment in a class action binds absentee members of a class only if they have been adequately represented. a black family. even though those findings were factually erroneous. iv.
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. is joint. 4. 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. Reasoning: A forum state may exercise jurisdiction over the claim of an absent class-action plaintiff. and less than 1. Facts: Phillips produces and sells natural gas. 2. Shutts sues in Kansas state court and provides the best possible notice.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). What is needed for adequate representation? 1.b. Must be PRESENT to be bound for litigation – exception is class actions f.00 people in Shutts’ position who get together to sue for the interest – but none of these people have much interest. 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. Phillips makes a personal jurisdiction argument that only the KS plaintiffs can sue. Holding: Yes. Phillips Petroleum v. 3. 61
. OR where the interest of the members of the class. Shutts wants to recover interest on the money that was withheld. Shutts (1985): i. while a negligible part of the oil and gas leases are in Kansas. There are 33. d. ii. iii. KEY POINT—Res Judicata may not bind a subsequent plaintiff who had no opportunity to be represented in the earlier civil action.100 members. c. iv. Issue: Whether Ks may exercise jurisdiction over absent plaintiffs in this class action suit. only a small amount. Phillips was selling gas at a higher price and then only paying royalties on a lower price. 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. OR where they actually participate in the conduct of the litigation in which members of the class are present as parties. some of whom are present as parties. The final class contains 28. JURISDICTION 1. such as Shutts. 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.
then use law based on where plaintiffs are from. But what about diversity cases? a. The notice must be the best practicable. the decision is binding if the plaintiff is given adequate notice. this is different from plaintiffs. This concept that notice is a constitutional concept for plaintiffs in the class action realm – plaintiffs do receive minimal due process protections. 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.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). c. Notes: a. However. H.” v. whether in person or through counsel. a. including the right to receive notice b. Supreme Tribe of Ben-Hur v. The state (not the parties) must have a connection to the litigation so as not to make applying its law unfair or arbitrary. Any state class action statute will need a NOTICE PROVISION: 1. use the principles from the state where the case is filed. 62
. jurisdiction will arise under federal law and §1331. CLASS ACTION FAIRNESS ACT OF 2005 1. “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. Supreme Tribe thus created an exception to the complete diversity rule for class actions. 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. i. Absent class members in cases involving money judgment must be given notice. When a class suit is based on a federal statute. is adequately represented and does not opt out. Due Process—Π must receive notice plus an opportunity to be heard and participate in the litigation. a. When you have nationwide class actions and state law applies. Cauble—held that for purposes of diversity. and to that extent lowered jurisdictional barriers to the multistate diversity-based class action. 1. 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. courts should look to the citizenship only of the class representatives and ignore the class members.
b. 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. 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. Allapattah Services. Inc. the harm. Makes broad use of the principle that Article III requires only minimal diversity ii. c. 2. What state’s law will apply to the claims 4. Exxon Mobil Corp. the injuries giving right to the claim occurred in state. Makes broad use of the principle that Article III requires only minimal diversity.b. and the Δ. Class Action Fairness Act of 2005 i. Supreme Court held that both the named Π and each member of the class had to satisfy the amount in controversy requirement. The connection of the forum to the class members. or under the provisions of §1453. Relative size of the in-state and out-state class membership 2. “Whether the claims asserted involve matters of national or interstate interest 3. 1966 Rules Revisions 1. §1332(d)(3) defines the factors relevant to the discretionary power to decline federal jurisdiction 1. The Act allows federal courts to remand actions in which state interests seem to predominate a. whether or not a citizen of the state in which the action arose [GETS RID OF HOMETOWN RULE FOR CLASS ACTIONS!] v. v. if more than 2/3 of the class members are in state. 2. Also allows aggregation of claims of all class members to reach the $5 million amount in controversy requirement. 63
. iv. 28 USC § 1332(d)(4)—circumstances in which a federal court MUST decline jurisdiction 1. a. vi. 1. at least one significant defendant is in state. so long as the named party satisfied the amount in controversy requirement. may be removed by any Δ.” b. Ability to aggregate claims of all class members to reach the $5 million amount in controversy requirement. iii. and 3. Court interpreted the supplemental jurisdiction statute (28 USC §1367) to allow such smaller-claims actions under the basic diversity statute. Such suits may be brought under original jurisdiction.
Can be newspaper ads. that the regulatory authorities be notified of the suit and a pending settlement (28 USC §1715) a. and the lawyer may not settle without the client’s agreement i. the client pays the lawyer’s fee because she agreed to do so. Rule 23(e)(1)—To order such approval. online postings. 23(e)(5)—to prevent objectors being “bought off” by the settling parties. In ordinary litigation. courts apply the “common fund” doctrine: i. “The Lodestar” Method—start with the appropriate hourly rate of the lawyer taking into account factors such as special risk. the judge must first “direct notice in a reasonable manner to all class members who would be bound by the proposal. A Π whose efforts create a fund is entitled to have those who benefit contribute to his lawyer’s fee ii. 2. Such notices include information about the terms of settlement and that those objecting to the terms of the settlement may do so. CAFA both allows and commands federal courts to remand actions in which state interests seem to predominate.c. Requires that if the Δ is subject to state or federal regulation. using the analogy of contingent fee arrangements. Neither holds true for class actions 2. Notice must occur without regard to what sort of class action is involved b. I. A simple percentage is appropriate.” a. objections may not be withdrawn without court approval ii. radio spots. etc. FEES 1. novelty of the issues. Idea is that a regulator could appear at a settlement hearing and offer an opinion about the appropriateness of the settlement B. etc. 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. c. Class Action Fairness Act of 2005 a. 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. How should the court calculate such a fee? 1. 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. Rule 23(e)—Requires court approval of any settlement of a class action i. Does NOT require individual notice: 1. SETTLEMENTS OF CLASS ACTIONS A. In class actions that recover money damages. 64
At that hearing. who will have agreed on an appropriate amount of fees. but a limited role only. the representatives of the Π and Δ.
. are unlikely to raise questions casting doubt on the agreed amount or on the vigorousness of the litigation leading the settlement ii. The district court approved the plan and certified the class. The 3rd Cir vacated the order and found that the requirements of class certification had not been met – specifically.3. reasonable. In this instance. Inc. findings. Windsor i. Suppose a class with great potential liability could be certified—and the claims then settled for far less than they were worth. the class failed to demonstrate that common issues predominated over other questions (23(b)(3)). Rule 23(e) i. Such a settlement would. in determining the propriety of class certification? iv. Amchem Products. Requires notice. but not yet on trial. the certification requirements of Rule 23 must still be met as though the case were going to trial. bar its members from individual suits. through the doctrines of former adjudication. and opportunity to object to fees C. Fee award is made in the context of a settlement approval hearing a. to the Eastern District of Pennsylvania. The proposed settlement provided for set compensation for certain asbestos-related diseases. 2. After the cases were consolidated. To prevent the Π’s lawyer from being “bought off” *higher fees for lower relief settlement]: a. under Rule 23. i. Issue: May settlement play a role. hearing. 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. iii. Just because it’s a settlement class DOES NOT MEAN you can over look 23(a)&(b) certification requirements!! ii. Settlement and Dismissal 1.” b. the court held that while a class may be certified for the sole purpose of settlement. Rule 23(h) creates a process the court must use to approve any fees—including those embodied in a settlement: 1. and adequate. v. Rule 23(e) requires notice to the absent class members and a hearing and judicial finding that the proposed settlement is “fair. 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. or that the named plaintiffs would fairly and adequately protect the interests of the class. Holding: Yes.
b. Must show that Π lost in some way—there was something to gain on the fraud theory that they lost out on (punitive damages. Aetna: Π prevailed on contract theory but did not prevail on fraud theory. we have to ask whether you received the type of remedy requested. 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. This case demonstrates the importance of subclasses – can’t have nine named plaintiffs representing everyone in a single class. you need: i. and those that had injuries were not all the same (23(b)(3)). a. All lawyers represented different issues – some plaintiffs have already filed claims and some haven’t filed. doesn’t mean it’s the role of the courts to step in. c. vi. Just because these cases are unmanageable and Congress hasn’t dealt with the problem. NO—goes to trial on the issue and there will be a finding
. Reasoning: A court considering a class for settlement need not consider whether certification would present intractable management problems at the trial stage. These groups have very different interests. Notes: a.
VIII.) 2. If you have multiple COAs and you only win on one COA. What circumstances could Π appeal? i. Here. Adversity (ruling must be something other than what was requested) a. To appeal. Appeals
A. the requirements were not fulfilled. ie. Furthermore. This applies to a winning Π appealing for further relief—must have adverse ruling to you b. b.v. but the remaining requirements of Rule 23 must be met. 1. can Δ appeal this immediately? 1. HOLDING—Ruling for breach of contract but not fraud is adverse because relief would be different among the two COAs d. B. Who can appeal? 1. If Δ’s summary judgment is denied. The US litigation system operates with a heavy presumption that the trial court decision is correct (80-90% affirmance rate). Common issues did not predominate given that some of the class members had not yet manifested physical disease.
EXCEPTION—May be appealed without a final judgment—§1292: INTERLOCUTORY APPEAL 1. District Court must make all 3 of these findings to certify the interlocutory appeal ii.2. 1292(a)(1)—Injunctions. granting continuing. d. i. Final Judgment Rule—may not appeal unless there is a final judgment [§1291] b. party seeking appeal must appeal to Appellate Court within 10 days iii. and 2. Defines the moment at which appeal is proper. 1292(b)—controlling question of law as to which there is substantial ground for difference of opinion. Appointing Receivers (bankruptcy). Don’t want to punish the party for lawyer’s mistake (DUE PROCESS) ii.” (Catlin v. or dissolving is immediately appealable 2. Pre-trial motion for SJ is not enough to preserve the issue ii. District Court can STAY the case ii. What happens when interlocutory appeal is granted? i. Take other questions to trial if they can be separated 67
. Granting. Δ must actually object at trial i. Grants jurisdictions for the appellate courts to hear that appeal. Federal Appellate Court has jurisdiction over all “final decisions” of federal district courts [§1291] 1. Request in Jury Instructions 3. or Collateral Order Doctrine) Ripeness. If so. Can move for Rule 50 Motion for New Trial iii. integrity or public reputation of the judiciary proceedings i. 1292(a). Admiralty i. Finality (Must satisfy 1291. or (b). Plain Error Exception—if Δ forgets to object during trial. refusing. Δ can still argue that the error has seriously affected the fairness. and that will materially affect the case. United States) c. Appellate Court can then either hear or refuse interlocutory appeal 3. modifying. §1291 has two functions: 1. A final decision “is one which ends the litigation on the merits and leaves nothing for the court to do but execute the judgment. To preserve the issue for appeal later. a.
a. and a. however. District court believes there is a controlling question of law with a substantial ground for difference of opinion. and thus appealable. Holding: The district court’s order was not appealable to the Court of Appeals. a court may give partial final judgment where there are multiple claims for relief. Liability ruling but no relief. Appellate court agrees. The district court ruled in favor of respondents on the issue of petitioner’s liability under the Act. v. iii. Not certified as an interlocutory appeal—now certification under 1292(b) and not a 1292(a) b/c there was no injunction. Reasoning: Under 54(b). we would condone a practice whereby a district court in virtually any case before it might 68
. 1. Wetzel (1976): i. 54(b)—if multiple causes of action. which affirmed on the merits. Issue: Whether the district court’s judgment was final. Same for claim and counter—can get a ruling on counter and claim go to trial. 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. 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. 54(b) does not apply and the decision was not final. “Were we to sustain the procedure followed here. Not a proper interlocutory appeal iv. Note: If issue not raised through JMOL/JNOV – plain error review on appeal C. granting continuing. Here. can get final judgment on one cause. a. b. a. and the other go to trial. District court must believe immediate appeal may materially advance the end of litigation. and iii. and petitioner appealed to the 3rd Circuit. the plaintiffs only assert a single claim or legal theory. Novel issue or significant circuit split ii. Appellate Court raised the issue of Final Judgment Sua Sponte ii. The district court’s decision was not final because it did not grant any relief asked for by plaintiffs. Citing 54(b) and using the words “final judgment” in an order does not make an order a final judgment. Liberty Mutual Insurance Co. or dissolving injunctions (immediate appeal) 3) 1292(a)(2): District court interlocutory appointments (immediate appeal) 4) 1292(b): (immediate appeal) Order where: i. even though the order said the policies violated Title VII. 2. FRCP Rule 8 D. even though they brought multiple requests for relief – thus.e.
Lauro Lines s. 23F iii. 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. 54(b) applies to single-claim actions. citing the forum-selection clause printed on each passenger ticket. Statutory exception? a. Lauro sought to appeal to the 2nd Circuit.” v. The basic argument for the final judgment rule involves a cost-benefit calculation f. District court denied motion to dismiss. we must find a final judgment (possibly under 54(b)). Use of 54(b) will create a 1291 and 1292 issue. Exceptions to the Final Judgment Rule 1. HW Appeals Check List i. g. Lauro moved to dismiss the actions. Notes: a. Without moving for certification for immediate appeal under 1292(b).
. Collateral Order Doctrine 2. If not a final judgment. Final decision is jurisdictional 2. ii. Common law exception? a. b. v.r. Procedure: a. The use 1291.l. which purported to obligate the passenger to institute any suit in connection with the contract in Italy.render an interlocutory decision on the question of liability of the defendant. Final judgment? a. Petitioner owns the ship. Collateral order doctrine E. Appellate courts have the power and duty under 1291 to consider appealability even if neither party raises the issue c. ii. Chasser (1989): i. 1292 b. not multiple claim actions b. Partial summary judgment: doesn’t dispose of every issue in the case d. we must use 1292. 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. holding that ticket did not give reasonable notice of waiver. 1291 can be brought by the court sua sponte e. 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.
a. iii. ii. Resolve an important issue completely separate from the merits of the action. On the contrary. Be effectively unreviewable on appeal from a final judgment. such an order ensures the litigation will continue in the district court. – the orders did not fall within the exception to the rule of nonappealability carved out for collateral final orders. doesn’t end the litigation on the merits. a. and iii. If you don’t have the opportunity to raise this issue now. The Court holds that the district court’s order is not effectively unreviewable. Is this a 1292 interlocutory appeal exception? 1. An order is effectively unreviewable only where the order at issue involves “an asserted right.c. rights asserted in the action. Beneficial Industrial Loan Corp): i. Is this a final judgment?—No. Collateral Order Doctrine: an exception for a “small class” of prejudgment orders that “finally determine claims of right separable from. 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. 1292(b)—no evidence that there is substantial ground for difference of opinion iv.” 1. and collateral to. a. litigation will continue even after the interlocutory decision b. Holding: No. 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. Although Lauro argues that they will lose their contractual right not to stand trial in America. the legal and practical value of which would be destroyed if it were not vindicated before trial. b. then you’ll lose your right forever. v. the case is not effectively 70
. 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. 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. 1292(a)—doesn’t fit these categories 2.” 2. Must conclusively determine the disputed question. 1. Three Conditions of Doctrine (from Cohen v.
Bessemer City (1985): i.forum selection clause is not a protection from suit it just restricts where the suit can be filed. Important exclusion to the final judgment rule: 1. the right is not sufficiently important to overcome the policies militating against interlocutory appeals. Real question the case turned on—How important is the issue? 1. De novo (least deferential) ii. Case will be ordered to be dismissed if this is proven F. d. This should be element #4 of the Collateral Order Doctrine vii. Abuse of discretion iii. a.unreviewable because Lauro could still argue not to enforce in Italy. vi. No review (most deferential) 2. High bar—show that the lower court is abdicated its judicial role. Scope of Review 1. Writ of Mandamus: i. b.” c. Concur [Scalia]: In this case. HW: there are many reasons why this court would want this case to be heard in the states. She was the only woman who applied out of 5 other men. refusing to fulfill its judicial obligations i. The district court made several findings supporting its holding that Anderson had been denied
. modifying. Critique of how test is applied b. obtained in an original proceeding in the court that issues the writ. alleges that she was denied a position with the city due to her gender.protection from being sued anywhere. 1292(a): allows appeals from interlocutory orders of the district courts “Granting. Collateral Order Doctrine should not be applied in many cases 3. Anderson v. continuing. Notes: a. or refusing to dissolve or modify injunctions. refusing or dissolving injunctions. orders a public official to perform an act required by law. 1292(b)—300 a year certified by district courts and only 100 a year accepted by courts of appeals (rare) 1. This is a rare and drastic issuance b. Spectrum of Review (Holley-Walker): i. Immunity cases. (may be a judge of a lower court) (§ 1651) a. A writ of mandamus. What do you have to argue to establish you’re entitled to Writ of Mandamus? 1. Facts: Anderson brings a gender discrimination in hiring case under Title VII.
With experience comes expertise 4. whether based on oral or documentary evidence. v. the conduct of her interview. Rule: FRCP 52(a)—findings of fact shall not be set aside unless clearly erroneous. c.) iv. Trial court judges become experts at making factual findings – an expertise that he court of appeals doesn’t have. Notes: a. b. The 4th Cir reversed. US Gypsum Co. Holding: No. De novo review on the appellate level would also be very expensive and time consuming. Clearly erroneous means that although there is evidence to support a finding. the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. ii. 4. look anew to questions of law and don’t have to defer at all to the district court’s findings 2. Issue: Whether the district court’s finding was actually clearly erroneous. least deferential. the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. 3. and due deference should be given to trial court a. class action certification and discovery are all reviewed under abuse of discretion standard
. iii. 1. Legal finding: de novo standard. and held that three of the findings were clearly erroneous. must not be set aside unless clearly erroneous. Rule 52: findings of fact and findings of law have different standards of review on appeal. Better at determining credibility 3.employment because of her sex. “A finding is clearly erroneous when although there is evidence to support it.” (US v. Closer to the action 2. 56(a)(6): Findings of fact. v. Reasoning: The findings of the district court regarding Anderson’s qualifications. The Court of Appeals misapplied the clearly erroneous standard. Why is the standard of review clearly erroneous when reviewing the trial court’s findings of fact? 1. a. Efficiency b. Decisions about admissibility of evidence. 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. 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.
as required by Rule 56. iii. Note: Harmless Error. 1. which made the body. When the repairs did not fix the vehicle. Reasoning: An error is harmless if it does not affect any party’s substantial rights. (6th Cir.” (courts typically do so by speculating about the likely outcome of the case in the absence of the error). admissible or not. Notes: a. iv. This strips both jury and trial judge of the deference granted to such fact-finding and law-application. In the area of punitive damage awards. and Bridges. Admission of the report was a harmless error. well in advance. Federal courts are forbidden to reverse for “errors or defects that do not affect the substantial rights of the parties. which will grant the same outcome. CLAIM PRECLUSION (RES JUDICATA)
. even though it was not in the proper form of an affidavit or sworn statement. in Michigan state court. Harnden v. At trial. Jayco. Respect For Judgments
A. 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. All claims against Ford and Bridges were either dropped or dismissed. Zonker’s report was allowed by the court as admissible evidence. 1. he sued Ford. but the court did not take him up on it. The 6th Cir notes that sending this case back to the trial court will just result in the report being submitted in admissible form. Jayco’s counsel offered to submit the report in an admissible form. and had ample time to procure his own expert report. Issue: Whether the district court erred in admitting the Zonker report into evidence. Erie: a court of appeals should review de novo a district court’s determination of state law. the Court has not only permitted but required searching appellate review of facts and their application to law. Facts: Harnden purchased a vehicle and returned it several times for repairs. the dealer who sold the vehicle. Jayco.d. v. Inc. relying in part on an expert report prepared by Zonker. Holding: No. ii. RULE: trial court conclusions of law are not entitled to any deference. Harnden appeals the court’s order granting summary judgment on this basis. 2007): i. Harnden knew of the report. Jayco moved for summary judgment on all claims against it. f. their employee. 3. which made the chassis and motor. e.
Efficiency 1. Frier v. Same Claim—claims arising out of the same transaction or occurrence (leading test. After Final Judgment d. Express Agreement to be Bound by a Decision to which One is not a Party iii. Judgment on the Merits 1. or could and should have been raised. Π should get at least 1 leave to amend ii. Between Same Parties 1. Avoidance of Inconsistent Judgments
. Why it should be a final judgment on the merits—if all claims in complaint are taken to be true. Dismissal after a Rule 12(b)(6) Motion for Failure to State a Claim—GOES EITHER WAY i. Preserve scarce resources 3. not drag out a resolution. Finality 1. i. Exception—parties in privity (consecutive ownership or contractual relationship) 2. Court wants people to put the judgment behind them and move on. City of Vandalia b. Claim preclusion forbids a party from litigating a claim that was.1. Defendant doesn’t have to worry that plaintiff will come back and sue 10 years from now c. Elements: a. Three Situations Resulting in Binding a Nonparty: i. Why it’s not a final judgment on the merits—if it is a drafting mistake. Dismissal after Rule 12(b)(2) motion for want of personal jurisdiction 6. there are no grounds for relief (this is on the merits) ii. Full Jury Trial 2. Instances of “Procedural Representation” b. Goals: a. Substantive Legal Relationships ii. Argue all claims arising out of one occurrence between the same parties at one time 2. Judgment as a Matter of Law 3. Dismissal for Failure to Prosecute [without good cause— determined case by case] 5. in former litigation. stated in Frier concurrence and Restatement) c. NOT: i. Summary Judgment [if it is granted] 4.
One suit precludes a second suit where the parties and the COAs are identical. (NOT Erie doctrine because it’s not founded in diversity). 12(b)(6)—“failure to state a claim upon which relief can be granted” motion to dismiss on the basis of res judicata c. 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). COAs are identical where evidence necessary to sustain a second verdict would 75
.e. and he wants them returned to him (replevin COA). Plaintiff sues defendant for personal injury and jury finds defendant not liable for the accident. He then filed a federal civil rights claim based on the Due Process clause in federal court. stating that the city had a right to take his cars for parking them in the street. Plaintiff files a suit against defendant and seeks separate damages for the car. the IL state court).1. City of Vandalia (7th Cir. 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. 2. Inc. Full Faith & Credit 4. McDonald’s System. 1985): a. Reasoning: Court states that causes of action are identical where the evidence necessary to sustain a second verdict would sustain the first. Under IL law. Issue: Whether Frier’s claim was precluded under the doctrine of res judicata. The Court uses Illinois law to decide even though the case is in federal court on the basis of a federal question. i. Holding: Yes. The city filed a motion to dismiss based on res judicata. 1. The state court found for the city. Respect for Rule of Law 3. 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. COA is different. Hypo—Car accident. iv. Martino v. d. Facts: Several of Frier’s cars have been towed by the city. FRCP 8(c)—Δ must affirmatively raise defense in the answer ii. Defendant can be liable in one proceeding. we get the SAME EVIDENCE STANDARD (minority standard): i. 1. iii. (IL law) 1. remedy sought is different b. Frier v. Defendant raises claim preclusion as a defense. and the claim will be precluded—same parties out of same transaction or occurrence. HOW TO RAISE PRECLUSION: i. where the causes of action are based upon a common core of operative facts..
Martino’s anti-trust claim was a compulsory counterclaim in the first action (same transaction or occurrence) ii. c. d. Majority of courts uses the SAME TRANSACTION STANDARD (adopted by the Restatement): i. f. where the COAs are based upon a common core of operative fact). the court says that McDonald’s is correct to say that Martino’s new claim is precluded by res judicata. It is possible for someone not formally 76
. 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. (1979): a. Martino then brought a claim against McDonalds. Issue: Whether a consent judgment against Martino precludes the cause of action set forth in the complaint. and the suit ended with a consent judgment agreeing that Martino would sell his franchise.sustain the first (i. 1. e.. Six years later. McDonalds brought a suit to enforce the no-relative clause. If Martino wanted to bring up antitrust as a defense in the first suit. Frier’s law (generally accepted): in trying to decide the preclusive effect of a judgment. However. Parties can be in privity – meaning that both parties are bound to one judgment. A broader standardall claims arising from a single transaction – broadly defined to include matters related in time. claiming that it violated Section 1 of the Sherman Antitrust Act. one should look to the jurisdiction rendering the judgment.e. The district court held that res judicata and the compulsory counterclaim rule of FRCP 13(a) barred Martino from suing. Reasoning: The court says that Martino is correct – Rule 13(a) has no effect because Martino never filed a pleading. Inc. e. 3. Martino v. McDonald’s System. Martino’s son purchased a Burger Chef franchise. Affirmed. Notes: 1. origin. v. Holding: Yes. Notes: 1. Res judicata claim preclusion—same COA b. space. and motivation— must be litigated in a single initial lawsuit or be barred from being raised in subsequent litigation. Theory as to why 2nd lawsuit should be precluded: i. all possible issues related to that claim are considered settled even if they weren’t brought up in the first suit. 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. RULE: Once a judgment has been rendered on a claim.
Substantive legal relationships b. The trial court held that claim and issue preclusion barred this action. 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.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). The sons brought suit against Edlean for their half interest because they said Slaugh House had been paid for with partnership funds. Gargallo v. General rule—Agents and principals do not have any mutual or successive relationship to rights of property and are not. 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. Facts: Edlean Searle sued Woodey Searle for a divorce. b. d. The usual rule is that a judgment is final even when an appeal is pending. the sons were not in privity with their parents – their interest was neither mutual nor successive. 1990): 77
. as a consequence thereof. However. Notes: 1. Reasoning: The court states that in general. Holding: No. i. The term merely expresses the conclusion that the person whose name was not on the caption of the first case should nevertheless be bound. 1. 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. The final judgment requirement for claim preclusion doesn’t always receive a completely literal interpretation. vi. e. Searle (Utah 1978): a. vi. a divorce decree. 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. The court awarded the entire property to Edlean to even out the distribution of marital property. 3. is conclusive as to parties and their privies and operates as a bar to any subsequent action. Express agreement to be bound by a decision to which one is not a party c. Searle Brothers v. Instances of “procedural representation” 2. The court determined that a piece of property recorded in Woodey’s name (Slaugh House) was part of the marital property. Courts will bind nonparties to judgments if: a. 2. Merrill Lynch (6th Cir. 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. like other final judgments.
ii. Issue: (1) Whether the original dismissal was “on the merits” for purposes of claim preclusion. 2. the dismissal with prejudice in the first suit was a final judgment rendered on the merits. The Full Faith and Credit Clause required the federal court to follow the preclusive effect that the state court would apply – in this case. When he did not pay his debts. the requirements for application of claim preclusion are the same as those applicable in a federal court. 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. In Ohio. Ohio Claim Preclusion Law—a judgment rendered by a court lacking subject matter jurisdiction ought not to be given preclusive effect 3. Gargallo’s strongest argument—dismissal under FRCP 37 is not a judgment on the merits i. for the same claims asserted. (2) How the jurisdictional defect in the first proceeding ought to affect claim preclusion a. Would Ohio treat this as claim preclusion? i. ISSUE PRECLUSION (COLLATERAL ESTOPPEL) 78
. event as to claims within the exclusive jurisdiction of the federal courts ii. Thus.1. However. pursuant to the law of the state in which the judgment was entered. Holding: No. Ohio claim preclusion law ultimately determines the outcome of this case. Facts: Gargallo opened a brokerage account with Merrill Lynch and losses occurred. 4. Note: Rule 8(c): former adjudication is an affirmative defense. Gargallo then filed a complaint in federal court. OH would have said that a judgment rendered by a court lacing SMJ ought not to be given preclusive effect. 6. BUT—Court says it is a judgment on the merits b. with the same charges against ML. absent any regard for subject matter jurisdiction. The federal district court dismissed the suit against ML on res judicata grounds. 5. The federal courts are required under 28 USC §1738 to determine the preclusive effect of prior state court judgments. under Ohio law. The state court dismissed with prejudice because Gargallo failed to comply with discovery orders. alleging the ML lost his funds and that the firm had violated federal securities laws. Ohio claim preclusion law would bar the claim in an Ohio court. Gargallo counterclaimed. 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. ML filed suit for collection in Ohio. B. Thus. the plaintiff brought his claim in a federal tribunal. Reasoning: i.
A valid and final judgment iv. Jessie then sued separately for his own injuries. Issue preclusion bars from relitigation only those issues actually litigated and determined. the determination is conclusive in a subsequent action between the parties. 1979): i. An issue of fact or law is ii. Rule: Claim preclusion precludes the re-litigation of a COA for which there has been a final judgment. The party raising the claim has the BOP of demonstrating that issue preclusion applies vi. Issue: Whether Jessie’s claim is actually precluded. Black letter law of issue preclusion [RESTATEMENT]: i. The determination is essential to the judgment. whether on the same or a different claim v. Notes: a. v. Claim preclusion bars all contentions of plaintiff (even those she did not advance). 2. Facts: Jessie and Bertha Parks were injured when their car collided with an Illinois Central train. The opacity of the general verdict made it difficult to determine what the first judgment had decided. 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
. Holding: No. 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. its okay to try the issue over again because the court thinks its wasn’t really litigated and determined with finality. a. Parks (Ind. b. 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. 3. iii. Bertha recovered a judgment. Illinois Central Gulf Railroad v. 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. Since there’s no way of knowing why the jury came to the conclusion they did. iv. However. 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). The railroad moved for summary judgment. ii. 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.1. App. However. Actually litigated and determined by iii. 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 Parks sued the railroad for personal injuries to Bertha and loss of consortium to Jessie. but Jessie got nothing because judgment was rendered for the railroad on his claim. but the trial court held that his claim was not barred by claim preclusion or issue preclusion on the issue of contributory negligence. The court says that issue preclusion may apply to the matter of Jessie’s contributory negligence.
Parklane Hosiery Co. Shore then moved for partial summary judgment against Parklane. Shore (1979): i. 4. 1. which the 2nd Cir affirmed. 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. Shore then brought this stockholders’ class action against Parklane in federal district court. issue preclusion is not a concern if the party doesn’t answer the complaint – doesn’t make issues “actually litigated. District Court found that the statement was false and misleading and entered a declaratory judgment. The complaint alleged that Parklane had issued a materially false and misleading proxy statement which had violated regulations promulgated by the SEC. but recently many courts have abandoned the requirement for issue preclusion. vii. Facts: a. mutuality was a requirement for both claim and issue preclusion. and 2nd Cir reversed. who had determined (1) that Illinois Central had not been negligent and (2) that Jessie Parks had been contributorily negligent. 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.” 1. In a trial to the bench. v. The Second Restatement on Judgments §27 Comment I opines that NEITHER determination should be binding in subsequent litigation. The Securities and Exchange Commission (SEC) filed suit against Parklane. NOW. citing alternative grounds for its decision – lack of federal SMJ and lack of PJ. Default judgments: usually. it continues to be a requirement for claim preclusion. Issue that is essential to the judgment 1. BOTH should be precluded in subsequent litigation. At common law.
. asserting that they were collaterally estopped (issue preclusion) from litigating the issues that had been resolved against them in the first action. Imagine that the trial in Parks had taken place before a judge. alleging that the proxy statement issued by Parklane was materially false and misleading. The First Restatement of Judgments took the position that when alternative grounds for decision existed. b.litigation of an issue that previously has been considered by a competent tribunal. 2. District court denied the motion. Rule 52(a) requires the judge to set forth findings of fact and conclusions of law. e. c. d. Ruhrgas case: defendant makes a pretrial motion seeking to dismiss a case. Mutuality: former and present lawsuits involve same parties. a.
none of the risks exist. Holding: Yes. protects litigants from burden of relitigating an identical issue with the same party or his privy. A party may not have litigated the issue aggressively in the first suit if the stakes were small or the forum inconvenient. Court notes risks posed by offensive use of estoppel: 1. In this case. Instead held that lower courts should exercise discretion in deciding whether to allow such offensive assertions of estoppel.a plaintiff was estopped from asserting a claim that the plaintiff had previously litigated and lost against another defendant. (Whether a litigant may use a judgment “offensively” to prevent a defendant from relitigating an issue).ii. d. c. Mutuality requirement was abandoned in Blonder-Tongue Laboratories v. 4. University of Illinois Foundation. Shore could not have joined the previous SEC suit. Reasoning: The Court calls this offensive nonmutual collateral estoppel. Notes: a. Goals of issue preclusion: judicial efficiency. however. iii. 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. but trial courts should be granted broad discretion to determine when it should be applied. iv. Blonder-Tongue involved a defensive use of CE. the Court does not categorically endorse or reject nonmutual collateral estoppel. Parklane had a full and fair hearing previously. v. 1. a trial judge should not allow the use of offensive collateral estoppel. b. 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.
. 3. and there would be no different procedural opportunities available to Parklane in the second suit. there are no inconsistent rulings in this case. 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). 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. b. 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. One or more prior inconsistent judgments on the issue may suggest that it would be unfair to give conclusive effect to any of them. In this case.
Unfair to Δ? *opportunity to fully litigate. Neese—Verdict for Π In the current case. Rule—Currieabsent mutuality. Π filed summary judgment. Issue—When you have multiple cases decided. Sylvester—Judgment for Δ c. “Wait and see” mentality—doesn’t encourage judicial economy 2. ie. look to whether it would be unfair 1. Did Π have ability to join previous lawsuit? ii. State Farm Fire & Casualty Co. IF A sues the US and prevails. d. collateral estoppel should not be applied where a defendant potentially faces more than two successive actions.) 6. it is a strong indication that the application of collateral estoppel would work an injustice. (More easily justified) 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. Kovach v. Note: the principles of Parklane do not apply to the United States – US cannot be subjected to nonmutual-issue preclusion. etc+ e. Century Home Components i. Looking to be able to say there are not inconsistent findings on a particular issue (blame it on bad lawyering rather than merits. some in favor of Π and some in favor of Δ. overturned +new trial for procedural error. 1. 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. ii. Claim Preclusion ii. 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. can you use issue preclusion against the Δ? iii.c. Boundaries of Preclusion i. Issue Preclusion 7. 1. Apply General Rule from Parklane i. B may not in a later suit use against the US those issues determined in A’s favor 5.—Jury verdict for Δ. No blanket rule. Pacific N. District of Columbia
. Three in particular: a. Facts—50 lawsuits surrounding a fire. iv. v. Gives plaintiff a strong incentive to join all potential defendants in the first action if possible. where there are extant determinations that are inconsistent on the matter in issue. 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.W. Holding—Court agrees to the extent at least that. judgment for Π b. 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.
The court noted however. Res judicata applies not only to judicial adjudications. But subject matter jurisdiction can’t be waived—a court must have subject matter jurisdiction to render a binding judgment. Duke refiled in Missouri Federal District Court. not Nebraska. but also to determinations made by agencies other than courts. 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. state removal rules—don’t just jump to subject matter jurisdiction 2. HOLDING—Here. RULE—Res judicata can be applied when you have an admission of liability made by an administrative agency a. follow through with Smith and Grable with federalizing state law COA
. so long as those jurisdictional issues were contested and ruled upon by the state court. Nebraska State Court had jurisdiction over the subject matter controversy ONLY if the land in question was in Nebraska [found that it was]. Oh well. If it’s a removal question. or sovereign immunity. but issue preclusion DOES apply a. FACTS—Durfee brought quiet title action in Nebraska over land situated on Nebraska/Missouri border. claim preclusion doesn’t apply. Don’t mix together personal jurisdiction concepts with subject matter jurisdiction 3. when such agencies are acting in a judicial capacity ii. Issue of whether Kovach actually ran the red light can be precluded 1. By paying the fine without contesting the ticket. Durfee v. the state court’s judgment will stand. but the Federal Court still owes Full Faith and Credit to the Nebraska State Court’s decision. Full Faith and Credit as a bar to collateral attack ii. iii. he admitted that he actually ran the red light [CONSIDERED ACTUALLY LITIGATED] 8. Duke i. District Court in Missouri found the land was in Missouri. All issues were fully litigated. a.
EXAM ISSUES: 1.i. even though it didn’t have subject matter jurisdiction. that this rule is subject to doctrines of federal pre-emption. If not on face of the complaint. EXAMPLE—Federal Question Jurisdiction—on the face of the complaint (Mottley) a. Make sure to follow issue through it’s full analysis i.