Case

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State Farm Fire & Casualty Co. v. Tashire (1967, US) [app. 24-32]

Facts: Greyhound bus got into accident with a truck. 2 bus passenger were killed and 33 injured, + bus driver, truck driver & passenger of the other car also injured. 11 were Canadian citizens and the rest were citizens of 5 states. 4 of the injured brought an action against Greyhound (CA corp), bus driver, truck driver & its passenger, who owned the truck, who were all citizens of Oregon. Before this and any other cases could come to trial, petitioner, State Farm (an Illinois corp), brought this action of interpleader (per 1335 - the statute) against all injured and dead passenger of the bus, greyhound, the bus driver, truck driver & passenger. State farm says that at the time of the accident, the amount of their insurance policy covering the truck driver was up to $10k/person, and $20k/ occurrence. Since the injured passengers (and only 4 of them) sought well in excess of this amount, ($1million), State Farm paid the court $20k and asked to be dismissed from any further liability, and that all possible claimants to come forth in this single proceeding and no other . Alternatively, they requested this deposit back since coverage excluded accidents where the truck was being used by someone else other than the owner. The lower court granted State farm the injunction they sought (to make all claimants put their claim now or never). Issue: Whether it was appropriate for State Farm to bring the action of interpleader. Reasoning: Although the court held that the interpleader statute permitted an injunction to consolidate the claims against petitioner (State Farm), it also held that lower court erred in extending it to the other defendants who were not related to the fund of insurance proceeds.

Notes • Bus collides with a truck in CA. • State farm is an IL corp, who insures Clark, which requires it to defend against any legal actions brought, and to pay up to $20k. • 4 injured passenger bring suit in CA. • Damages may be more than $20k, so state farm not liable for the excess, but State farm would have to defend all the lawsuits also, and that would exceed $20k, and they would have to pay. ○ So if all passengers brought this action, state farm invokes SMJ under statutory interpleader, and sued all potential claimants in Oregon (b/c they are an Oregon Corp). Deposited $20k in court, for D to fight it out. ○ In the alternative, State farm asserts they don’t owe anyone anything b/c policy doesn’t cover this type of accident ○ This is ok under the statute - which says you can claim under the statute, whether or not you own an interest in the property • District court issued the injunction, where all claimants can only pursue claim against Clark in this one suit. ○ One of the passengers appeals the injunction, b/c they would rather sue in home state. • First thing that happens on appeal, is that supreme court looks at the SMJ ○ Diversity of the parties - the interpleader statute says there is SMJ over actions under this statute, as long as there are any 2 claimants from diverse states (only minimal diversity is required) § This might be a problem - the statute may be unconstitutional (art 3

- same as 1332). Which requires complete diversity, which means congress cannot create a statute allowing for minimal diversity. However, Strawbridge v Curtis interpreting the statute, not the constitution, therefore if congress wants to legislate on minimal diversity, they can do that. ○ State Farm (IL corp) suing a bunch of D's from 5 diff states, assuming that none of the Ds was a citizen of IL § Why did state farm need the statutory interpleader? Why not just sue them all for a declaration and require them to interplead, invoking rule 22. □ All D's would have had to come to Oregon to argue against the declaration. But, it would lack personal jurisdiction. So state farm needs to use the statute, that has the nationwide service of process ® It might have been possible, for any D in interpleader, to challenge PJ in Oregon. It would be unconstitutional to deprive someone of due process if made to go to Oregon, when they never went there. □ So in order to get the suit in Oregon, they needed to invoke the interpleader statute, which would solve the PJ problem. • In district court of Oregon - the injunction issued by district court served State farm's purpose of getting all claims in that court ○ But this was not what the statute was designed for ○ State farm legitimate interest in this case - what risk is appropriate to protect state farm with? § They don’t want multiple inconsistent judgments □ Where each claimant gets $20k in diff states, to total of $400k, which state farm doesn’t have to pay b/c of the policy limit. □ So what should happen? - every P get to sue where there is PJ; and when verdict comes in where Clark is liable, goes to some central place, so that the $20k is divided up among all claimants. ® " petitioner had to wait for those claims to be reduced to a judgment." - court rejects this ??? □ State farm's legitimate interest does not require all claimants to litigate in Oregon ® Their legitimate interest - they shouldn’t have to pay more than $20k total of all judgments against Clark. • The re-written injunction will say sue greyhound, sue Clark, but any claims against Clark has to be centralized • Court of appeals reversed the injunction, b/c no judgments yet against Clark, and so State farm doesn’t owe anything yet • 1968 - Judicial Panel of multi-district litigation - selected panel of judicial judges ○ D could go to the panel if appropriate

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