CHAPTER SIX: PLEADING o A civil action is commenced in the federal system by the filing of a complaint by the plaintiff. FED. R. CIV. P.3. The Advent of the Federal Rules of Civil Procedure o Pleading is solely concerned with providing notice to the parties of the claims and defenses in the case. o Rule 11- created to impose a certification requirement intended to deter and punish the raising of frivolous claims or defenses. o Rule 15- the rule that permits parties to change their pleadings if necessary o Rule 56- provides for summary judgment; allows courts preliminary power to dispose of cases not worthy of consideration at trial by a jury due to the absence of any genuine, material factual dispute. o Rule 26 through 37- provides for extensive pre-trial discovery between the parties, eliminating the need for the pleadings to communicate the facts upon which each side relied for its position. A. THE COMPLAINT A civil action is initiated in the federal system by the filing of a complaint. Rule 8(a) provides the basic instruction regarding what information must be included in this document: FRCP 8(a). General Rules of Pleadings: Claim for Relief. (a) Claim for Relief. A pleading that states a claim for relief must contain: (1) A short and plain statement of the grounds for the court’s jurisdiction, unless the court already has jurisdiction and the claim needs no new jurisdictional support; (2) A short and plain statement of the claim showing that the pleader is entitled to relief; and (3) A demand for the relief sought, which may include relief in the alternative or different types of relief. The elements that a complaint should include are thus threefold: There must be a statement of the basis for the court’s subject matter jurisdiction, the plaintiff’s claim must be set forth, and the relief that the plaintiff seeks must be demanded. 1 1. Sufficiency of the Complaint under the Federal Rules What does it mean to set forth a “short and plain statement of the claim showing that the pleader is entitled to relief”? All the Rules require is ‘ a short and plain statement of the claim’ that will give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests. Conley v. Gibson, 355 U.S. 41, 47 (1957). o The simplified ‘notice pleading’ is made possible by the liberal opportunity for discovery and the other pretrial procedures established by the Rules to disclose more precisely the basis of both claim and defense and to define more narrowly the disputed facts and issues. Bell Atlantic Corp. et al. v. Twombly “While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a plaintiff’s obligation to provide the “grounds” of his “entitlement to relief” requires more than labels and conclusions and a formulaic recitation of the elements of a cause of action will not do. Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all the allegations in the complaint are true (even if doubtful in fact)”. Points for Discussion e. Plaintiff’s Pleading Obligations o The plaintiff’s pleading burden is limited to those matters for which the plaintiff will bear the burden of introducing evidence at trial. o Assume everything in the complaint is true, in a light most favorably to the plaintiff o The plaintiff must plead enough facts to show that discovery will provide evidence of illegal agreement o Complaint must plead enough facts to state a claim to relief that is plausible on its face. After Twombly there was a fact finding element in the pleading that was not present before (“plausibility”)  From speculative to the plausible  Disrupting the system—should not be done by judicial interpretation o Cases that have no entitlement to relief should be weeded out before the discovery process o This means that plaintiffs must plead their basic claims but ordinarily need not plead the nonexistence of various defenses 2 o Rule 8(a)(2)’s requirement of a “short and plain statement of the claim” not only permits a simple statement of the legal claim and its grounds, but it also prohibits overly lengthy hyper-pleading. Where the complaint strays too far from being “short and plain”, it may be subject to dismissal (although probably with the right to submit an amended complaint). o The Supreme Court appeared to have backtracked on its adherence to the notice pleading foundations of Rule 8 when it held that to defeat a motion to dismiss for failure to state a claim, the complaint in an antitrust conspiracy case must contain more than a mere allegation of parallel business conduct and a conspiracy. The allegation should “plausibly suggest” that the pleader is entitled to relief; i.e., the pleader must allege facts that would “raise a reasonable expectation that discovery will reveal evidence” of a conspiracy. Thus, in this case, patterned after Bell Atlantic, the court will grant the motion. But it is unclear whether this decision is limited to antitrust cases. f. Pleading Special Matters under Rule 9(b) Although notice pleading describes the general pleading system imposed by Rule 8(a)(2), the Federal Rules do provide for heightened pleading in two specific contexts. FRCP 9(b). Pleading Special Matters. (b) Fraud or Mistake; Conditions of Mind. In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person’s mind may be alleged generally. What additional information must claims of fraud—which are covered by Rule 9(b)’s particularity requirement—include to be sufficient under 9(b)? The requirement of Rule 9(b) is met when there is sufficient identification of the circumstances constituting fraud so that the defendant can prepare an adequate answer to the allegations. o Allegations of fraud and mistake were singled out for special heightened pleading requirements in the Federal Rule based on the idea that these allegations were too easily fabricated and in the case of fraud, too potentially detrimental to the defendant’s reputation. o Although the Federal Rules only impose heightened pleading for allegations of fraud or mistake, Congress has the authority to impose heightened pleading requirements for claims as it sees fit.  Congress exercised this authority when it enacted the Private Securities Litigation Reform Act of 1995 (PSLRA). h. Pleading Alternate & Inconsistent Allegations 3 o The Federal Rules permit plaintiffs to include multiple allegations that assert alternate grounds for relief based on a single set of facts and also allow plaintiffs to plead inconsistent allegations.  Illustration. A plaintiff who has been hit by a car can assert both that the driver intentionally hit the plaintiff with the vehicle and that the driver negligently hit the plaintiff. The ability to plead in this fashion derives from Rule 8(e)(2): FRCP 8(d)(2). Pleading To Be Concise And Directly Consistency. (2) A party may set forth two or more statements of a claim or defense alternatively or hypothetically, either in one count or defense or in separate counts or defenses. A party may also state as many separate claims or defenses as the party has regardless of consistency. o A plaintiff cannot allege inconsistent versions of the facts supporting his claim, unless he includes in his allegations a reason why he doesn’t know which version is true (i.e. a plaintiff alleges in one count that the defendant stabbed him, or, in the alternative, that the defendant ran him over with a car. In this case the plaintiff may claim that he was ran over by the defendant while he was unconscious from the defendant’s stab wound). FRCP 8(e) and 11. Rule 11(b)(3) requires that the attorney certify that the “allegations and other factual contentions have evidentiary support.” o However, the plaintiff can plead inconsistent legal theories (e.g. battery or negligence). FRCP 8(d)(3). o The inconsistent pleading cannot go too far; the rule makes clear that the ability to plead inconsistent allegations is subject to the obligations of Rule 11, which prohibits untruthful or baseless statements. i. The Prayer for Relief o Rule 8(a) includes a requirement to contain “a demand for judgment for the relief the pleader seeks.” FED. R. CIV. P. 8(a)(3). Such a demand is referred to as a prayer for relief. o Rule 54(c)- states that “A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings. Every other final judgment should grant the relief to which each party is entitled, even if the party has not demanded that relief in its pleadings.”  Under this rule, then, a plaintiff may collect more than they seek in the prayer, so long as the evidence supports the increased amount. If a plaintiff seeks so-called special damages, the Federal Rules provide that they must be “specifically stated.” FED. R. CIV. P. 9(g). Special damages are damages that are unusual for the type of claim in question and are not the natural damages associated with such a 4  o claim.  Ordinarily, failing to plead special damages as required by Rule 9(g) results in the plaintiff being unable to present evidence on those damages at trial and ultimately precludes recovery of the damages on the verdict.  Should plaintiffs be permitted to amend their complaints to plead special damages during trial to comply with Rule 9(g) and to enable the presentation of evidence in support of those damages? Plaintiffs are granted leave to amend the complaint in order to plead special damages specifically. 2. Serving the Complaint Once a plaintiff has drafted a complaint, not only must it be filed with the court to commence the action, it must also be served—in conjunction with a summons—on the defendants in the case. The summons and the complaint together are referred to as the process. The Federal Rules establish very specific guidelines governing how service of this process is to be accomplished. These requirements are set forth in Rule 4(e): FRCP 4(e): Serving an Individual Within a Judicial District of the United States. (e) Serving an Individual Within a Judicial District of the United States. Unless federal law provides otherwise, an individual—other than a minor, an incompetent person, or a person whose waiver has been filed—may be served in a judicial district of the United States by: (1) following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made; or (2) doing any of the following: (A) delivering a copy of the summons and of the complaint to the individual personally; (B) leaving a copy of each at the individual’s dwelling or usual place of abode with someone of suitable age and discretion who resides there; or (C) delivering a copy of each to an agent authorized by appointment or by law to receive service of process. • Rule 4(e) only governs service on individuals who can be located within the United States. Note also that the defendant’s agent for service of process may be one that she has personally appointed or one that is authorized to be such an agent by law. 5 Service on corporations or other collective entities within the United States is governed by Rule 4(h)(1), which in turn refers the reader back to Rule 4(e)(1) but also provides an additional means of service “by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process and —if the agent is authorized by statute and the statute so requires—by also mailing a copy of each to the defendant.” • Service upon individuals and corporations located outside of the United States is more complicated. Rule 4(f) states:  First, service can be made pursuant to the terms of an international treaty such as the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents which establishes a detailed regime for transmitting such documents to persons found within foreign countries. FED. R. CIV. P. 4(f)(1).  Second, in the absence of an international agreement, service can be made within the foreign country in one of three ways: o (1) in the manner defendants are ordinarily served within those countries for suits in their regular courts; o (2) as directed by that country in response to a letter rogatory from the U.S. court requesting instruction on service; or for individual defendants, o (3) through personal service or by “any form of mail that the clerk addresses and sends to the individual that requires a signed receipt,” provided the foreign country does not prohibit such service. FED. R. CIV. P. 4(f)(2). Third, Rule 4(f) includes a provision that permits service “by other means not prohibited by international agreement, as the court orders.” FED. R. CIV. P. 4(f)(3). Rio Properties, Inc. v. Rio International Interlink  4(h)(2) authorizes service of process on a foreign business entity in the manner prescribed by Rule 4(f)(3), permits service in a place not within any judicial district of the United States “by…means not prohibited by international agreement as may be directed by the court.” “Service under Rule 4(f)(3) must be (1) directed by the court; and (2) not prohibited by international agreement. No other limitations are evident from the text. In fact, as long as court-directed and not prohibited by an international agreement, service of process ordered under Rule 4(f)(3) may be accomplished in contravention of the law of the foreign country.” Rule 4(f)(3) is not subsumed within or in any way dominated by Rule 4(f)’s other subsections; it stands independently, on equal footing. Moreover, no language in Rules 4(f)(1) or 4(f)(2) indicates their primacy. •   6     Rule 4(f)(3) may allow the district court to order a “special method of service,” even if other methods of service remain incomplete or unattempted. Service of process under Rule 4(f)(3) is neither a “last resort” nor “extraordinary relief.” It is merely one means among several which enables service of process on an international defendant. Email service is not available absent a Rule 4(f)(3) court decree 5(b)(2)(e) doesn’t cover standard of process Points for Discussion a. The Notice Standard The Mullane Standard Due process requires that notice be “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”… “[t]he means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it”… “within the limits of practicability, notice must be such as is reasonably calculated to reach interested parties” b. Waiver of Service o In an effort to address the issue of defendants ceaselessly attempting to dodge service of process, and the associated delay and high costs resulting from such evasion, the Federal Rules were amended in 1993 to encourage defendants to waive formal service of process and accept service by mail. This is done in two ways:  Offering defendants who waive formal service additional time to respond to the complaint—60 days (90 days for defendants outside the U.S.) instead of the ordinary 20 days. FED. R. CIV. P. 4(d)(3).  Defendants located in the U.S. are threatened with having to cover the costs incurred in effecting formal service unless the defendant can convince the court that it had a good reason for not agreeing to waive formal service.  If the defendant does agree to waive formal service, Rule 4(d)(1) makes it clear that such a waiver does not also amount to a waiver of any objection to personal jurisdiction or venue. o Rule 4(d) set forth a number of detailed requirements that plaintiffs must satisfy to provide a defendant with proper notice of the action and a request that the defendant waive formal service of the summons and complaint. o The defendant has no obligation to respond to a request for waiver, in which case the plaintiff should proceed to achieve service through whatever means is authorized under remaining parts of Rule 4 o However, non-waiving defendants found within the U.S. then become subject to the obligation to cover the plaintiff’s cost of service as noted above. If the 7 defendant does agree to waive formal service, Rule 4(d)(1) makes it clear that such a waiver does not also amount to a waiver of any objection to personal jurisdiction or venue d. Service via Modern Methods of Communication Although the Federal Rules were recently amended to permit (with consent) the use of email for the service of various pleadings and papers, that rule does not cover service of the summons and complaint. B. Responding to the Complaint o Once served with the summons and the complaint, the defendant must respond in some way. The defendant’s two main options are to file an answer—in which the defendant responds to the specific allegations contained in the complaint—or to file one or several motions raising various legal defenses that highlight legal defects in the plaintiff’s action rather than addressing the merits of the plaintiff’s allegations. 1. Defenses and Objections under Rule 12 Rule 12(b) sets forth seven basic defects that serve as grounds for dismissing a complaint: FRCP 12(b). Defenses and Objections—How Presented. (b) How to Present Defenses. Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defenses by motion: (1) lack of subject-matter jurisdiction (2) lack of personal jurisdiction (3) improper venue (4) insufficient process (5) insufficient service of process (6) failure to state a claim upon which relief can be granted (even if everything the plaintiff claims in the complaint is true, the plaintiff is not entitled to relief); and (7) failure to join a party under Rule 19 A motion asserting any of these defenses must be made before pleading if a responsive pleading is allowed. If a pleading sets out a claim for relief that does not require a responsive pleading, an opposing party may assert at trial any defense to that claim. No defense or objection is waived by joining it with one or more other defenses or objections in a responsive pleading or in a motion. o Complaints are construed in the light most favorable to the plaintiff. The only time a complaint will be dismissed for failure to state a claim is where the 8 plaintiff has stated facts indicating the defendant cannot be liable as a matter of law. FRCP 12(b)(6). o The defect listed under 12(b)(4)—insufficiency of process—is different from the defect in 12(b)(5)—insufficiency of service of process. The former challenge asserts that there is some technical defect in the content of the summons, while the latter asserts that process was not served in compliance with the requirements of Rule 4. o When a defendant files a FRCP 12 motion, he must include in it all the defenses and objections available at that time (in order to avoid wasting the court’s time). Objections to the complaint’s form or to venue, process, or personal jurisdiction are waived if not filed with the FRCP 12 motion. o However, the following FRCP 12 motions are never waived until judgment is rendered—lack of subject matter jurisdiction (this objection can even be raised on appeal), failure to join a necessary party (Rule 19), or failure to state a claim upon which relief can be granted (Rule 12(b)(6)). American Nurses’ Association v. Illinois o A complaint cannot be dismissed merely because it includes invalid claims along with a valid one o When a defendant is unclear about the meaning of a particular allegation in the complaint the proper course is not to move to dismiss but to move for a more definite statement. o A complaint does not fail to state a claim merely because it does not set forth a complete and convincing a picture of the alleged wrongdoing. Points for Discussion a. The Motion to Dismiss for Failure to State a Claim under Rule 12(b)(6) o A motion to dismiss for failure to state a claim is a motion that states either, “You’ve failed to plead enough detail to satisfy your pleading burden” or “Even if everything you allege in your complaint is true, no legal liability attaches to the defendant.” o When a judge is reviewing a 12(b)(6) motion to dismiss he is considering whether claiming party should be entitled to moving to the discovery standard. o The motion can allege that the complaint is formally inadequate, meaning that it fails to give the minimum level of detail required under Rule 8(a)(2) such that the defendant is not put on notice of the claim being alleged against it. o When reviewing the complaint the test is not whether the plaintiff will prevail, the test is whether the plaintiff can present evidence to support claim. 9 o The other type of insufficiency that a 12(b)(6) motion can allege is substantive or legal inadequacy, which means that the allegations in the complaint fail to say anything that would render the defendant liable for a violation of the law.  Illustration. Consider a complaint in which P alleged, “Last Saturday, D came up to me and gave me a handshake.” Even if this is true, so what? P has no legal claim against D just because D gave P a handshake. So based on this complaint, taking all of the plaintiff’s allegations as true, P’s complaint fails to state a claim upon which relief can be granted. D should thus file a motion to dismiss under Rule 12(b)(6) and that motion should be granted. When evaluating a 12(b)(6), motion, a court must accept as true everything that that the plaintiff has alleged in its complaint. A 12(b)(6) motion is not the place for challenging the factual allegations of the plaintiff or to offer some sort of explanation or defense that justifies the defendant’s actions.  Illustration. A defendant who moves to dismiss under Rule 12(b)(6) cannot say, “No, that is not true; I did not shake P’s hand last Saturday and I never have.” That would be a denial, a response appropriate as part of the defendant’s answer. If either of the parties offers anything beyond what is in the pleadings in support of their position on the 12(b)(6) motion, such as an affidavit or some other evidence, the 12(b)(6) motion is to be treated as a motion for summary judgment and resolved according to the terms of Rule 56. b. Bell Atlantic v. Twombly and the Motion to Dismiss under Rule 12(b)(6) o Plaintiffs are given the benefit of the doubt in the face of a motion, with not only the plaintiff’s factual allegations being accepted as true but with all reasonable factual inferences being made in the plaintiff’s favor. o A motion to dismiss under Rule 12(b)(6) would now be appropriate if the plaintiff failed to plead facts showing “plausible entitlement to relief.” Twombly, 127 S. Ct. at 1967.  Illustration. In Twombly, this standard meant that the complaint— which alleged an antitrust conspiracy based largely on the conscious parallelism of the defendants—was insufficient because it alleged facts that were merely consistent with rather than suggestive of liability. According to the Court, there were more plausible innocent explanations for the observed conduct of the defendants and thus the complaint could be dismissed. c. Repleading After a Motion to Dismiss o Permission to amend in such circumstances is typically granted o Although repeated failures to state a claim could be met with a dismissal with prejudice, meaning the plaintiff will be unable to submit an amended complaint. 10 d. Other Defenses and Objections under Rule 12 Rule 12(c)—Motions for Judgment on the Pleadings. Once all of the pleadings have been submitted—usually meaning after the plaintiff has filed a complaint and the defendant has filed an answer—either party may move for a judgment on the pleadings, meaning that in the movant’s view, the information contained on the face of the pleadings alone reveals that the movant is entitled to a judgment as a matter of law. Rule 12(e)—Motion for More Definite Statement. If a defendant believes that the complaint is “so vague and ambiguous” that is “cannot reasonably be required to frame a responsive pleading,” the defendant may move for a more definite statement under Rule 12(e) Rule 12(f)—Motion to Strike. The final responsive motion included within Rule 12 is the motion to strike. Such a motion is appropriate when a party believes that a pleading contains an “insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” o The motion is also handy for plaintiffs who want to challenge the legal sufficiency of a defense raised by the defendant in its answer. This type of use mirrors the 12(b)(6) motion to dismiss for failure to state a claim except it is used to attack defenses rather then claims. e. Procedural Aspects of Filing Motions under Rule 12 o Rule 12 also sets forth the procedures for raising the defenses included in the rule. Regarding the defenses provided for in Rule 12(b), each of these may be made either through a motion or within the answer—they are waived and may not be raised subsequently. FED. R. CIV. P. 12 (h)(1). o These waivable defenses must be raised in a consolidated fashion; thus, if a party raises one of these waivable defenses in a pre-answer motion but neglects to assert one of the others, the party has waived those defenses and is barred from raising them at a later time. See FED. R. CIV. P. 12(g) & (h)(1). o The motion for a more definite statement under Rule 12(e) and the motion to strike under Rule 12(f) must be made before the movant’s responsive pleading is filed.  Illustrations. If a defendant believes that the complaint is too vague, she must submit a motion for a more definite statement before filing her answer. o A motion for judgment on the pleadings under Rule 12(c), on the other hand, may be made only after the pleadings are closed, which means that each party has submitted its pleadings and no more responsive pleadings are due or permitted. 2. The Answer 11 o If the case is not dismissed in response to a pre-answer motion the defendant will have to submit its pleading in response to the complaint, which is the answer. FED. R. CIV. P. 7(a). Components of an Answer under the Federal Rules o Denials and Admissions. Under Rule 8(b) a defendant must admit or deny all factual allegations of the complaint. o Defenses. A defendant may also include any defenses it intends to raise, including the defenses found in Rule 12(b) that have not been waived and any affirmative defenses such as those listed in Rule 8(c) o Claims. Finally, if the defendant has claims against the plaintiff or other parties that she wishes to assert she may do so in the answer. The heart of a defendant’s answer is the series of responses to the factual allegations contained in the complaint, of which there are three types under the Federal Rules. A defendant may: o Admit: simply means that the defendant admits the truth of the plaintiff’s allegation. o Deny: There are specific rules governing how denials must be made in order to be effective (see below). o Or assert they “lack knowledge or information sufficient to form a belief as to the truth of an allegation” FED. R. CIV. P. 8(b)(5). Rule 8(b) sets forth these requirements: FRCP 8(b). Defenses; Admissions and Denials. (b) Defenses; Admissions and Denials. (1) In General. In responding to a pleading, a party must: (A) state in short and plain terms its defenses to each claim asserted against it; and (B) admit or deny the allegations asserted against it by an opposing party. (2) Denials—Responding to the Substance. A denial must fairly respond to the substance of the allegation. (3) General and Specific Denials. A party that intends in good faith to deny all the allegations of a pleading—including the jurisdictional grounds—may do so by a general denial. A party that does not intend to deny all the allegations must either specifically deny designated allegations or generally deny all except those specifically admitted. 12 (4) Denying Part of an Allegation. A party that intends in good faith to deny only part of an allegation must admit the part that is true and deny the rest. (5) Lacking Knowledge or Information. A party that lacks knowledge or information sufficient to form a belief about the truth of an allegation must so state, and the statement has the effect of denial. (must be a good faith response) (6) Effect of Failing to Deny. An allegation—other than one relating to the amount of damages—is admitted if a responsive pleading is required and the allegation is not denied. If a responsive pleading is not required, an allegation is considered denied or avoided. Denials may be general in the sense that they deny everything in a particular of a complaint but only if such a complete, general denial is intended. However, if any part of a sentence or paragraph is true and worthy of admission, the defendant must specifically deny that portion of the allegation and then may generally deny the rest. Otherwise, the court may find that the defendant’s general denial is ineffective because it failed to “fairly respond to the substance of the allegation.” FED. R. CIV. P. 8(b)(2). Points for Discussion a. Lessons from Zielinski o One thing that should be clear from Zielinkski is that general denials should only be used when every single aspect of an allegation is intended to be denied. o If any component turns out to be something that the defendants had no intention of denying the court will be in a position to declare the entire denial ineffective o The consequences of an ineffective denial are severe; Rule 8(b)(6) provides that all allegations not properly denied are deemed to be admitted. b. Denials for Lack of Information o Rule 8(b) permits a third type of response other than an admissions or denial; a party may deny an allegation because it “is without knowledge and information sufficient to form a belief as to the truth of an averment.” FED. R. CIV. P. 8 (b) (5). The effect of such a response is the same as a denial. c. Improper forms of Denial o Note that the response of being without knowledge or information sufficient to form a belief is treated as a non-response, and will thus be treated as an admission under Rule 8(b)(6). 13 o Negative pregnant denial- involves an overly specific denial that repeats every detail of the assertion, leaving the possible impression that some other form of the allegation could be true.  Illustration. If the allegation states, “Last Saturday, D hit my vehicle with his vehicle,” and D’s response was, “I deny that last Saturday I hit P’s vehicle with my vehicle,” the denial is “pregnant” with the suggestion that D may have hit P on another day, or that he hit P’s vehicle with someone else’s vehicle rather than his own. Conjunctive denial- this type of denial comes in response to an allegation that asserts, “The defendant did A, B, and C.” If the defendant responds by saying, “ I deny that I did A, B, C,” that is a conjunctive denial because it leaves open the possibility that the defendant did one or two of the three but not all three of the things alleged. These types of denials are seen as evasive and should be avoided. d. Affirmative Defenses o In addition to admitting or denying the allegations of a complaint, the defendant must include any affirmative defenses it has in the answer. FED. R. CIV. P. 8 (c). o ‘An avoidance or affirmative defense’ encompasses two types of defensive allegations: those that admit the allegations of the complaint but suggest some other reason why there is no right of recovery, and those that concern allegations outside of the plaintiff’s prima facie case that the defendant therefore cannot raise by a simple denial in the answer.  For example, in some states, if the plaintiff’s own negligence in any way contributed to her injuries, the plaintiff is barred from recovery in a negligence action based on that incident. The plaintiff’s negligence in such an instance is referred to as contributory negligence and constitutes an affirmative defense that the defendant must specifically assert in its answer. The failure to plead an affirmative defense ordinarily results in the defense being waived. In the event that a party mistakenly omits an affirmative defense or any other matter it should have included or meant to include in its pleadings, the rules do permit the pleadings to be amended. e. The Answer to a Counterclaim and the Reply o What is the function of the defendant’s answer?  To put at issue the allegations in the plaintiff’s complaint. This is done by either denying some or all of the plaintiff’s allegations or raising affirmative defenses that are legally sufficient to avoid the effect of the allegations in the complaint.  The answer, in addition to admitting, denying, or pleading lack of knowledge as to every allegation, must include any affirmative defenses available to the defendant. FRCP 8(b) and (c). 14 o A defendant may include affirmative claims for relief that it wishes to assert in its answer. o After being served with process, how many days does a defendant have to file an answer in federal court?  20—unless a different time is prescribed by statute. FRCP 12(a)(1) (A).  EXCEPTIONS: If the defendant files a 12(b) motion in the time provided for answer, she’ll have ten days after the motion is denied in which to file her answer. If the defendant agrees to the plaintiff’s request for waiver of service of the summons, she will have 60 days from the date the request for waiver was sent by the plaintiff to file her answer  If the defendant’s answer includes a counterclaim, the plaintiff must similarly file his “answer” (called a “reply”) in 20 days. FRCP 12(a)(1)(B). o If the defendant’s answer includes a counterclaim, the plaintiff must similarly file his answer (called a “reply”) within 20 days after service of the counterclaim. FRCP 12(a) o If the defendant doesn’t file in time, the failure to answer will be considered a “default” and, as such, an admission of the claim against him. The defendant can attempt to set aside the default—in federal court, the defendant has one year after the default judgment is entered in which to do so under FRCP 60(b). The default typically will be set aside only if the defendant shows a valid excuse (e.g. fraud or excusable neglect) and a meritorious defense to the action. o In the event that the defendant asserts such a claim against the plaintiff, this will be considered a counterclaim and will entitle the plaintiff to submit a further pleading referred to as “an answer to a counterclaim.” FED. R. CIV. P. 7(a)(3). In the answer to the counterclaim, the plaintiff, who is now a defendant to the counterclaim, will have the same opportunity to answer the allegations lodged against it, with the obligation to admit or deny the allegations and submit any defenses or objections it may have. Failure to submit an answer to a counterclaim in response to a counterclaim will result in those allegations being confessed. o Plaintiffs may file a pleading called a reply with the permission of the court if they wish to respond to the defendant’s affirmative defenses. FED. R. CIV. P. 7(a)(7) (permitting, “if the court orders one, a reply to an answer”). However, plaintiffs are under no obligation to file a reply in response to affirmative defenses and if the court does not order such a reply, all affirmative defenses are simply deemed denied. o Because there is no further opportunity to respond, any allegations or affirmative defenses raised in the reply are automatically deemed to be denied. FED. R. CIV. P. 8(b)(6). C. Amending the Pleadings 15 As the action goes forward from the initial pleadings, there are two main circumstances that would lead parties to be interested in somehow altering or amending their pleadings (complaint and answer): the need to remedy an inadvertent omission or mistake, or the desire to add, alter, or remove claims or defenses in light of new information. 1. The Basic Rules Governing Amendments Rule 15(a) sets forth the conditions under which a party’s pleading may be amended before trial. After the rule, the case that follows demonstrates its application. FRCP 15(a). Amendments Before Trial. (a) Amendments Before Trial (1) Amending as a Matter of Course. A party may amend its pleading once as a matter of course: (A) before being served with a responsive pleading: or (B) within 20 days after serving the pleading if a responsive pleading is not allowed and the action is not yet on the trial calendar. (2) Other Admendments. In all other cases, a party may amend its pleading only with the opposing party’s written consent or the court’s leave. The court should freely give leave when justice so requires. (3) Time to Respond. Unless the court orders otherwise any required response to an amended pleading must be made within the time remaining to respond to the original pleading or within 10 days after service of the amended pleading, whichever is later. Beeck v. Aquaslide ‘N’ Dive Corp. o In Foman v. Davis, 371 U.S. 178 (1962), the Supreme Court declared this about Rule 15(a):  Rule 15(a) declares that leave to amend “shall be freely given when justice so requires,” this mandate is to be heeded… If the underlying facts or circumstances relied upon by a plaintiff may be a proper subject of relief, he ought to be afforded an opportunity to test his claim on the merits. In absence of any apparent or declared reason such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc. the leave sought should, as the rules require, be “freely given.” Of course the grant or denial of an opportunity to amend is within the discretion of the District Court… This Court in Hanson v. Hunt Oil Co. held that “prejudice must be shown”. 16 The burden is on the party opposing the amendment to show such prejudice. In ruling on a motion for leave to amend, the trial court must inquire into the issue of prejudice to the opposing party, in light of the particular facts of the case. Points for Discussion b. The Standard for Granting Amendments under Rule 15(a) o Although Beeck involved an amendment to change a response (answer) from an admission to denial, Rule 15(a) also encompasses amendments to change parties named in a pleading. c. Amendments as a Matter of Course o Rule 15(a) gives parties an absolute right to amend their pleadings without the court’s permission if they do so within particular timeframes. If a responsive pleading is due or has been permitted, the pleading party may amend at any time before that responsive pleading is filed. If no responsive pleading is due, the pleading party has twenty days to amend. d. Amendments During and After Trial o If a party presents evidence at trial that goes to an issue not raised in the pleadings, the opposing party may object to the presentation of such evidence. At that point, the party seeking to present the evidence can seek the court’s permission to amend the pleadings under Rule 15(b); such amendments are to be “freely” allowed unless the opposing party can show unfair prejudice to its case. o However, if the opposing party fails to object, and the issue is tried, under Rule 15(b) the issue will be treated as if it were raised in the pleadings. FED. R. CIV. P. 15(b). 2. Relation Back of Amendments Sometimes parties need to amend their pleadings after the applicable statute of limitations period has expired. When this is the case, amendments that raise new claims or defenses or introduce new parties into the action will have to relate back to the time the initial action commenced to not be barred by the statute of limitations. Rule 15(c) provides for the relation back of amendments, but under tightly controlled circumstances: FRCP 15(c): Amended and Supplemental Pleadings: Relation Back of Amendments (c) Relation Back of Amendments. 17 (1) When an Amendment Relates Back. An amendment to a pleading relates back to the date of the original pleading when: (A) the law that provides the applicable statute of limitations allows relation back; (B) the amendment asserts a claim or defense that arose out of the conduct, transaction, or occurrence set out—or attempted to be set out—in the original pleading or (C) the amendment changes the party or the naming of the party against whom a claim is asserted, if Rule 15(c)(1)(B) is satisfied and if, within the period provided by Rule 4(m) for serving the summons and complaint, the party to be brought in by amendment: (i) received such notice of the action that it will not be prejudiced in defending on the merits; and (ii) knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party’s identity. Worthington v. Wilson o Rule 15(c) states that an amendment changing the naming of a party will relate back if among other things, the party brought in by the amendment “knew or should have known that, but for a mistake concerning the identity of the proper party, the action would have been brought against the party. o An amended complaint which replaces fictitious names with actual names due to an initial lack of knowledge concerning the proper defendant does not involve a “mistake” and is therefore not entitled to relation back under Rule 15(c). o The court found that Worthington’s amended complaint did not relate back under Rule 15(c) because the amendment did not correct a “mistake,” but rather corrected a lack of knowledge at the time of the original complaint. Points for Discussion b. The Proper Interpretation of Rule 15(c) The court in Worthington also felt obliged to follow Seventh Circuit precedent holding that a prior naming of unknown defendants does not constitute a “mistake” under Rule 18 15(c); rather, the plaintiff must name particular individuals but later find that they were mistaken in thinking that those individuals were the proper defendants. c. Rule 15(c)’s “Conduct, Transaction, or Occurrence” Requirement o In order to relate back, the change being made to the pleadings must be part of the same “conduct, transaction, or occurrence” set forth in the original pleading.  “Relation back depends on the existence of a common core of operative facts uniting the original and newly asserted claims” (Mayle v. Felix, 545 U.S. 644 (2005)  “An amended complaint that ‘attempts to introduce a new legal theory based on facts different from those underlying the timely claims’ will not relate back” (La Wholesale Drug Co. v. Biovail Corp.) d. Supplemental Pleadings under Rule 15(d) o Why might a party need to supplement its pleadings with information pertaining to events that transpired after the pleadings were filed?  Diaz v. City of Inkster, “Permitting a plaintiff to add two newly arising retaliation claims to his existing discrimination claims based on the employer’s failure to promote the plaintiff after the filing of his lawsuit” Should supplemental pleadings be permitted to relate back under the same standards set forth in Rule 15(c)?  Kemper Ins. Co., “In deciding whether to grant a motion to supplement pursuant to Rule 15(d), the Court may rely on the doctrine of relation back. If the supplemental claim is sufficiently related to the prior claims, but based on transactions that occurred subsequent to the commencement of the action, then the supplemental pleadings relate back to the date the pleadings were filed.” D. Ensuring Truthful Allegations o The requirement to certify or verify the truthfulness of the pleadings has always been found within Rule 11. o The current version of the rule consists of two main parts: provisions outlining the representations that counsel makes when submitting a filing to the court and rules governing the imposition of sanctions (punishment) when Rule 11 is violated. 1. Representations to Court See Rule 11 on page 485 19 Points for Discussion b. Representations Made under Rule 11 Take note of the different representations that an attorney (or unrepresented party) makes when submitting a filing to the court. They fall into five general categories, as illustrated in Table 6.1: Table 6.1 Representations Reasonable inquiry undertaken Proper motivation for filing Soundness of legal arguments Basis for factual allegations Basis for denials Rule Rule 11(b) Rule 11(b)(1) Rule 11(b)(2) Rule 11(b)(3) Rule 11(b)(4) o The rule first imposes a general requirement that counsel has conducted a prefiling inquiry that is “reasonable under the circumstances.” o After requiring a reasonable pre-filing inquiry, there are four categories of representations laid out in the rule.  Motivation- Under the rule, the motivation behind the filing may not be sinister in that it is meant to drive up litigation costs or needlessly delay the litigation.  Soundness of legal arguments- Note that the rule does not simply permit arguments soundly based on existing law, but also permits arguments that argue for a change in the law if those arguments are “nonfrivolous”. How is the court to determine if the argument for legal change is “nonfrivolous”?: o “A ‘frivolous’ filing is both baseless and made without reasonable and competent inquiry. But Rule 11 must be read in light of concerns that it will chill vigorous advocacy. If, judged by an objective standard, a reasonable basis for the position exists in both law and in fact at the time the position is adopted, then sanction should not be imposed.” (Larez v. Holcomb, 16 F.3d 1513)  The rule requires that there be some basis for factual allegations made in the pleadings, either in evidence known to counsel or in evidence expected to be discovered by counsel. 20  Finally, the rule requires that there be an evidentiary basis for denials of factual allegations. 2. Sanctions under Rule 11 The consequences associated with the failure to comply with the strictures of Rule 11 FRCP 11(c). Sanctions See pg. 488 o What’s the purpose of the signature requirement of FRCP 11 (requiring that pleadings be signed by the party’s attorney, or, of the party doesn’t have an attorney, by the party himself)?  If an attorney violates the terms of the rule, the court may (it is discretionary) impose sanctions in the form of a non-monetary order (e.g. censure to the lawyer), a monetary penalty to be paid to the court, or reasonable attorney’s fees and other expenses to be paid to the other party “if imposed on motion and warranted for effective deterrence.” FRCP 11(c)(4)  If an offending party withdraws or corrects his pleading within 21 days of being served the motion seeking sanctions, he will not be sanctioned. This is contained in the “safe harbor” provision contained in FRCP 11(c)(2).  If a pleading that requires verification isn’t verified, the other party may move to strike it. Hadges v. Yonkers Racing Corp. See text pg. 489 Points for Discussion a. Sanctioning Procedures under Rule 11 The safe harbor provision at the center of Hadges refers to the following language from Rule 11: “The motion [for sanctions] must not be filed or presented to the court if the challenged paper, claim, defense, contention, or denial is withdrawn or appropriately corrected within 21 days after service [of the motion].” FED. R. CIV. P. 11(c)(2). b. Available Sanctions under Rule 11 Sanctions under Rule 11 are discretionary, meaning the court is not obligated to impose sanctions in the face of a violation of the rule. If the court chooses to impose sanctions, 21 they can range from a minor warning or reprimand to significant monetary sanctions in rare cases. d. Purpose of and Need for Rule 11 Rule 11 is in place as an additional part of our system’s attempt to screen out claims by deterring and punishing those who abuse the pleading system by filing claims and other court documents that lack merit. e. Other Sanctioning Provisions Beyond Rule 11, there are several other sources of authority for regulating the conduct of attorneys and parties litigating in the federal courts: Other Sources of Authority for Ensuring Truthful Allegations and Controlling Litigant Conduct See pg. 503 CHAPTER SEVEN: JOINDER OF CLAIMS AND PARTIES A. Claim Joinder Claim joinder, this section will review the rules determining when a party may assert multiple claims against its opponent and the rules governing when defending parties may assert whatever claims they may have. 1. Joinder of Multiple Claims Rule 18(a) covers joinder between a single plaintiff who wishes to assert multiple claims against a single defendant. FRCP 18(a). Joinder Of Claims. (a) Joinder of Claims. A party asserting a claim, counterclaim, crossclaim, or third-party claim may join, as independent or alternative claims, as many claims as it has against an opposing party. Points for Discussion a. The Scope of Rule 18(a) o FRCP 18(a) is permissive; it states that a party “may join” claims as it sees fit o FRCP 18(a) does not require joinder, rules that come from preclusion doctrine may compel a party to do so nonetheless 22 o “Rule 18 is merely the carrot, for it is not mandatory. The stick is claim preclusion, which. . . impels the claimant to assert all transactionally related elements of recovery in a single suit”. b. Subject Matter Jurisdiction over Joined Claims Although the pleading rules may allow the claims to be joined, separate subject matter jurisdiction determination will have to be made for each claim to see if the court has the authority to hear those claims. 2. Counterclaims o The defendant in an action has an array of responses that it may make to a complaint. Beyond asserting various defenses and objections and filing an answer responding to the complaint, the defendant is also permitted—and sometimes compelled—to file claims that it has against the plaintiff. These claims by the defendant against the plaintiff are called counterclaims. o Rule 13(a) and (b) set forth the basic rules governing the assertion of counterclaims: FRCP 13(a)-(b). Compulsory Counterclaim and Permissive Counterclaim (a) Compulsory Counterclaim. (1) In General. A pleading must state as a counterclaim any claim that—at the time of its service—the pleader has against an opposing party if the claim: (A) arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim; AND (B) does not require adding another party over whom the court cannot acquire jurisdiction. (2) Exceptions. The pleader need not state the claim if: (A) when the action was commenced, the claim was the subject of another pending action: or (B) the opposing party sued on its claim by attachment or other process that did not establish personal jurisdiction over the pleader on that claim, and the pleader does not assert any counterclaim under this rule. (b) Permissive Counterclaim. A pleading may state as a counterclaim against an opposing party any claim that is not compulsory. 23 United States v. Heyward-Robinson Co. o The main focus of this case is determining when counterclaims are compulsory or are permissive. o Under Rule 13(a) Fed. R. Civ. P., a counterclaim is compulsory “if it arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim: In practice this criterion has been broadly interpreted to require not an absolute identity of factual background for the two claims, but only a logical relationship between them… (Lesnik v. Public Industrials Corp.)‘Transaction’ is a word of flexible meaning. It may comprehend a series of many occurrences, depending not so much upon the immediateness of their connections as upon their logical relationship. (Moore v. New York Cotton Exchange). (this is the standard) o The requirement that counterclaims arising out of the same transaction or occurrence as the opposing party’s claim ‘shall’ be stated in the pleadings was designed to prevent multiplicity of actions and to achieve resolution in a single lawsuit of all disputes arising out of common matters. Points for Discussion a. The Meaning of “Transaction or Occurrence” o Between Rule 13(a) and Rule 13(b), a defendant can assert any claim as counterclaim without regard to whether it bears any relationship to the claim asserted against it. o The critical issue, then, is to determine when a defendant has a counterclaim that it must assert under the rules. Figuring out whether a defendant’s counterclaim is compulsory requires a determination of whether the claim “arises out of the transaction or occurrence that is the subject matter of the opposing party’s claim.” Fed. R. Civ. P. 13(a). b. Subject Matter Jurisdiction over Counterclaims o As was the case with basic claim joinder, the rules permitting and requiring counterclaims are pleading rules that indicate what types of claims may and must be pleaded. o A separate question is whether the court will have jurisdiction to hear the claims. Determining whether there is federal subject matter jurisdiction over a counterclaim involves the same analysis as a supplemental jurisdiction analysis.  Recall that in order for state law claims to qualify for supplemental jurisdiction they must “form part of the same case or controversy” under Article III. 28 U.S.C. 1367(a). 24 c. The Consequences of Failing to Plead a Counterclaim o Although Rule 13(b) states that a pleading “shall” state any transactionally related counterclaim, it does not specify the consequences of a failure to do so. “A defendant’s failure to assert a counterclaim will preclude him from asserting that claim in a later action if ‘[t]he counterclaim is required to be interposed by a compulsory counterclaim statute or rule of the court.” Stone v. Dept. of Aviation. o Rule 13(f) provides for the assertion of previously omitted counterclaims by amendment if the failure to plead the counterclaim was due to “oversight, inadvertence, or excusable neglect” or “when justice so requires.” 3. Crossclaims The Federal Rules provide for multiple defendants to be sued simultaneously within a single action. Rule 13(g) governs claims defendants wish to assert against fellow defendants in an action: FRCP 13(g). Crossclaim Against a Coparty. (g) Crossclaims Against a Coparty. A pleading may state as a crossclaim any claim by one party against a coparty if the claim arises out of the transaction or occurrence that is the subject matter of the original action or of a counterclaim, or if the claim relates to any property that is the subject matter of the original action. The crossclaim may include a claim that the coparty is or may be liable to the crossclaimant for all or part of a claim asserted in the action against the crossclaimant. Points for Discussion a. Types of Claims Permitted under Rule 13(g) o The rule does not make any crossclaims compulsory, regardless of whether they bear some relationship to the claims asserted in the original action. o Even though Rule 13(g) limits the types of claims that may be asserted as crossclaims, recall that Rule 18(a) permits a party asserting any claim, including a crossclaim, to join any other claim that they may have to their claim regardless of its relationship to the initial claim. b. Subject Matter Jurisdiction over Crossclaims Subject matter jurisdiction must exist over crossclaims even if they may be pleaded under Rule 13(g). o Note that Rule 13(g) does not only apply to claims by defendants; plaintiffs similarly may avail themselves of the rule to assert 25 crossclaims against co-plaintiffs if the claims satisfy the requirements of the rule. B. Party Joinder o There are many variations on party joinder. Plaintiffs may wish to unite with other plaintiffs and proceed jointly against a common defendant. o Alternatively, a single plaintiff may wish to assert claims against multiple defendants in one lawsuit rather then suing each of them separately. o A defendant may find that it is defending against claims for which some third party is liable and would like to join that third party to the action to hold it responsible. o Non-parties may find that their interests are going to be affected by an existing lawsuit and wish to interpose themselves in the action by joining themselves in the action by joining themselves as a party. o Or, there may be non-parties that are so integral to the interests being litigated in an action that the court will determine that they must be joined as a party regardless of their interest in being so joined. 1. Permissive Party Joinder Within a single action, parties may voluntarily join together as plaintiffs, or a plaintiff may choose to join several parties together as defendants provided the requirements of Rule 20(a) are satisfied: FRCP 20(a). Permissive Joinder of Parties: Persons Who May Join or Be Joined. (a) Persons Who May Join or Be Joined. (1) Plaintiffs. Persons may join in one action as plaintiffs if: (A) they assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and (B) any question of law or fact common to all plaintiffs will arise in the action. (2) Defendants. Persons—as well as a vessel, cargo, or other property subject to admiralty process in rem—may be joined in one action as defendants if: (A) any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences; and 26 (B) any question of law or fact common to all defendants will arise in the action. (3) Extent of Relief. Neither a plaintiff nor a defendant need be interested in obtaining or defending against all the relief demanded. The court may grant judgment to one or more plaintiffs according to their rights, and against one or more defendants according to their liabilities. Mosley v. General Motors Corp. • All persons may join in one action as plaintiffs if they assert any rights to relief jointly, severally, or in the alternative in respect of or arising out of the same transaction, occurrence, or series of transaction or occurrences and if any question of law or fact common to all these persons will arise in the action. Additionally, Rule 20(b) and Rule 42(b) vest in the district court the discretion to order separate trials or make such other orders as will prevent delay or prejudice. The purpose of the rule is to promote trial convenience and expedite the final determination of disputes, thereby preventing multiple lawsuits…Single trials generally tend to lessen the delay, expense and inconvenience to all concerned: o Under the Rules, the impulse is toward entertaining the broadest possible scope of action consistent with fairness to the parties; joinder of claims, parties and remedies is strongly encouraged. Permissive joinder is not, however, applicable in all cases. The rule imposes two specific requisites to the joinder of parties: (1) a right to relief must be asserted by, or against, each plaintiff or defendant relating to or arising out of the same transaction or occurrence, a series of transaction or occurrences; and (2) some question of law or fact common to all the parties must arise in the action. In ascertaining whether a particular factual situation constitutes a single transaction or occurrence for purposes of Rule 20, a case by case approach is generally pursued. No hard and fact rules have been established under the rule. However, construction of the terms ‘transaction or occurrence’ as used in the context of Rule 13(a) counterclaims offers some guide to the application of this test. For the purposes of the latter rule:  “Transaction” is a word of flexible meaning. It may comprehend a series of many occurrences, depending not so much upon the immediateness of their connection as upon their logical relationship. Accordingly, all “logically related” events entitling a person to institute a legal action against another generally are regarded as comprising a transaction or occurrence. The analogous interpretation of the terms as used in Rule 20 would permit all reasonably related claims for relief by or against different parties to be tried in a single proceeding • • • • • • 27 • The second requisite necessary to sustain a permissive joinder under the rule is that a question of law or fact common to all the parties will arise in the action. The rule does not require that all questions of law and fact raised by the dispute be common. Yet, neither does it establish any qualitative or quantitative test of commonality.  Specifically, with respect to employment discrimination cases under Title VII, courts have found that the discriminatory character of a defendant’s conduct is basic to the class, and the fact that the individual class members may have suffered different effects from the alleged discrimination is immaterial for the purposes of the prerequisite. Points for Discussion b. The Requirement of Rule 20(a) o Although, as the Mosley Court indicated, Rule 20(a) shares similar language with Rule 13(a), there is a difference in the standard articulated in Rule 20(a) for permitting party joinder. In addition to providing that the claims asserted by or against the joined parties that arise out of the same transaction or occurrence can satisfy the first part of the rule, Rule 20(a) also permits party joinder when the asserted claims arise out of the same “series of transactions or occurrences.” o Note also that Rule 20(a) imposes an additional requirement beyond requiring a transactional relationship: the Rule adds that party joinder will be permitted only if “any question of law or fact common to all defendants will arise in the action.” FED. R. CIV. P. 20(a). c. Severance under Rule 21 In the event that the judge in a case feels that the Rule 20 joinder attempted by the plaintiff is improper, that judge is empowered by Rule 21 to sever the claims so that they may be proceeded with separately. See Fed. R. Civ. P. 21. 2. Third-Party Practice o Rule 20 enables plaintiffs to shape the litigation by determining whether to assert their claims along with others or to assert their claims against multiple defendants within a single action. Defendants are afforded the opportunity to join parties to the litigation through Rule 14 which provides for the joinder of and assertion of claims against nonparties: FRCP 14(a)(1). Third-Party Practice: When a Defending Party May Bring in a Third Party. 28 (a) When a Defending Party May Bring in a Third Party. (1) Timing of the Summons and Complaint. A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it. But the third-party plaintiff must, by motion, obtain the court’s leave if it files the third-party complaint more than 10 days after serving its original answer. o Joinder by defendants under this rule is referred to as impleader *****Lehman v. Revolution Portfolio L.L.C. See text pg. 529 Points for Discussion a. Permissible Claims under Rule 14(a) Rule 14(a) does not permit the assertion of claims simply based on being part of the same transaction or occurrence as the original claim, the standard in some of the other joinder rules. b. Subsequent Joinder under Rule 14 Under what circumstances may third-party defendants assert claims against the thirdparty plaintiff or the original plaintiff? Rule 14(a) addresses this issue as well: FRCP 14(a)(2). Third-Party Practice: Third-Party Defendant’s Claims and Defenses. (a) When a Defending Party May Bring in a Third-Party Defendant’s Claims and Defenses. (2) Third-Party Defendant’s Claims and Defenses. The person served with the summons and third-party complaint—the “third party defendant”: (A) must assert any defense against the third-party plaintiff’s claim under Rule 12; (B) must assert any counterclaim against the third-party plaintiff under Rule 13(a), and assert any counterclaim against the third-party plaintiff under Rule 13(b) or any crossclaim against another third-party defendant under Rule 13(g); (C) may assert against the plaintiff any defense that the third-party plaintiff has to the plaintiff’s claim; and 29 (D) may also assert against the plaintiff any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff’s claim against the third-party plaintiff. **** Notice that the joinder rules must be considered as a whole because once one party asserts a claim under a rule, that may in turn permit their adversary to assert various claims under other rules, which in turn could permit still other parties to assert further claims. This process can become quite convoluted, so diagramming the parties and ensuing claims can be helpful. o Even if the third-party defendant does not assert any claims against the plaintiff, Rule 14(a) states that “The plaintiff may assert any claim against the third-party defendant arising out of the transaction or occurrence that is the subject matter of the plaintiff’s claim against the third-party plaintiff.” FED. R. CIV. P. 14(a)(2)(d). o Once a party is able to assert a claim by satisfying the requirement of a particular joinder rule, that party may then assert any additional claims it has —related or unrelated—under Rule 18(a). c. Subject Matter Jurisdiction and Third-Party Claims o Even though joinder may be permissible under the joinder rules, it is still necessary to consider separately whether there is proper subject matter jurisdiction and personal jurisdiction over the claims and parties sought to be joined o How will subject matter jurisdiction questions generally be resolved in the case of third-party claims, given the relationship such claims must have with original claims and given the language of the federal supplemental jurisdiction statute 28 U.S.C. 1367?  “It is well settled that supplemental jurisdiction exists over a properly brought third-party complaint.” (Grimes v. Mazda North American Operations)  Plaintiffs may assert claims against third-party defendants under Rule 14(a) provided there is a basis for subject matter jurisdiction. Remember that even though third-party claims will enjoy supplemental jurisdiction, additional joined claim under Rule 18(a) – such as was present in Lehman—require their own subject matter jurisdiction analysis in light of the fact that such claims need not bear any relationship to the claims to which they are joined. d. The Real Party in Interest Rule o Rule 17(a) requires that “[a]n action must be prosecuted in the name of the real party in interest.” FED. R. CIV. P. 17(a)(1). 30 o Does Rule 17(a) also apply to defendants, requiring that defendants identify and join parties that should be viewed as the real party in interest on the defendant’s side of the action? The Supreme Court recently said no.  “Rule 17(a) applies only to joinder of parties who assert claims.” (Lincoln Property Co. v. Roche). e. Fourth-Party Claims under Rule 14(a) o Can a third-party defendant make use of Rule 14(a) to turn around and assert a derivative liability claim against a fourth party? FED. R. CIV. P. 14(a)(5).  “A third-party defendant may proceed under this rule against a nonparty who is or may be liable to the third-party defendant for all or part of any claim against it.” (Bank of India v. Trendi Sportswear, Inc.) 3. Compulsory Party Joinder Under certain circumstances, however, whether a non-party should be joined is not a matter of choice but one of compulsion. Such compulsory party joinder is provided for in Rule 19. The rule consists of two parts. Rule 19(a) sets forth the criteria for determining whether a party is “needed for just adjudication,” a status that would make them a necessary party in the common parlance under the rule: FRCP 19(a). Required Joinder of Parties: Persons Required to Be Joined if Feasible? (a) Persons Required to Be Joined if Feasible. (1) Required Party. A person who is subject to service of process and whose joinder will not deprive the court of subject matter jurisdiction must be joined as a party if: (A) in that person’s absence, the court cannot accord complete relief among existing parties; or (B) that person claims an interest relating to the subject of the action and is so situated that disposing of the action in the person’s absence may: (i) as a practical matter impair or impede the person’s ability to protect the interest; or (ii) leave an existing party subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligation because of the interest. 31 (2) Joinder by Court Order. If a person has not been joined as required, the court must order that the person be made a party. A person who refuses to join as a plaintiff may be made either a defendant or, in a proper case, an involuntary plaintiff. (3) Venue. If a joined party objects to venue and the joinder would make venue improper, the court must dismiss that party. Temple v. Synthes Corporation, Ltd. o “The most significant reason for requiring joinder was the interest of judicial economy.” o “The interest of the courts and the public in complete, consistent, and efficient settlement of controversies” is one focus of Rule 19. o “It has long been the rule that it is not necessary for all joint tortfeasors to be named as defendants in a single lawsuit.” o “The Advisory Committee Notes to Rule 19(a) explicitly state that “a tortfeasors with the usual ‘joint-and-several’ liability is merely a permissive party to an action against another with like liability.” Points for Discussion a. The Requirement of Rule 19(a) The Court in Temple concludes that joint tortfeasors are not necessary parties under Rule 19(a). b. Feasibility under Rule 19(a) Once a non-party is deemed to be a necessary party under Rule 19(a), the court is required to join that party to the action “if feasible”. Joinder of the party is feasible if the court is able to exercise personal jurisdiction over the party, if joinder would not undermine the subject matter jurisdiction of the court, and if the party to be joined has no valid objection to venue. FED. R. CIV. P. 19(a). c. Challenging a Failure to Join under Rule 19 o The proper mechanism for challenging an opposing party’s failure to join a party under Rule 19 is either to move for the court to join the party under Rule 19 or to file a motion to dismiss under Rule 12(b)(7) for failure to join a party under Rule 19. o Rule 19(b) permits courts to dismiss actions where it is not feasible to join important necessary parties to the action. o Rule 19(b) provides for the dismissal of an action when joinder of a necessary party under Rule 19(a) is not feasible: FRCP 19(b). Required Joinder of Parties: 32 When Joinder Is Not Feasible. (b) When Joinder Is Not Feasible. If a person who is required to be joined if feasible cannot be joined, the court must determine whether, in equity and good conscience, the action should proceed among the existing parties or should be dismissed. The factors for the court to consider include: (1) the extent to which a judgment rendered in the person’s absence might prejudice that person or the existing parties; (2) the extent to which any prejudice could be lessened or avoided by: (A) protective provisions in the judgment; (B) shaping the relief; or (C) other measures; (3) whether a judgment rendered in the person’s absence would be adequate; and (4) whether the plaintiff would have an adequate remedy if the action were dismissed for nonjoinder. o If a necessary party’s presence in an action is so important that the case must be dismissed in her absence based on a Rule 19(b) analysis, that party is referred to as an indispensable party. Wilbur v. Locke o Application of Rule 19 involves “three successive inquiries”: First, the court must determine whether a nonparty should be joined under Rule 19(a). We and other courts use the term “necessary” to describe those “[p]ersons to be joined if feasible.”…if an absentee is a necessary party under Rule 19(a), the second stage is for the court to determine whether it is feasible to order that the absentee be joined. Finally, if joinder is not feasible, the court must determine at the third stage whether the case can proceed without the absentee, or whether the absentee is an “indispensable party” such that the action must be dismissed…Rule 19 uses “the word ‘indispensable’ when he cannot be made a party and, upon consideration of the factors [in Rule 19(b)], it is determined that in his absence it would be preferable to dismiss the action, rather than to retain it.” o An analysis also includes “whether in equity and good conscience the action should proceed among the parties before it, or should be dismissed, the absent person being thus regarded as indispensable.” Fed. R. Civ. P. 19(b). In making this determination, we consider four issues: 33     First, to what extent a judgment rendered in the person’s absence might be prejudicial to the person or those already parties; Second, the extent to which, by protective provisions in the judgment, by the shaping of relief, or other measures, the prejudice can be lessened or avoided; Third, whether a judgment rendered in the person’s absence will be adequate; Fourth, whether plaintiff will have an adequate remedy if the action is dismissed for nonjoinder. Points for Discussion a. The Consequences of a Failure to Join a Party under Rule 19 o The consequences of being unable to join a party deemed necessary under Rule 19(a) can be severe: the case is dismissed. o Rule 19(b) instructs the court to make its dismissal determination “in equity and good conscience.” What does this mean?: “ The phrase emphasizes the flexibility that a judge may find necessary in order to achieve fairness in the judge’s choice of solutions, a choice to be marked by ‘mercy and practicality’.” (Merrill Lynch, Inc. v. ENC Corp.) b. Applying the Factors of Rule 19(b) How should courts apply the four factors listed in Rule 19(b) when making their dismissal determinations? Do any of the factors deserve more weight than the others? o “Rule 19(b) lists several factors as bearing on this determination, of which the two most important in this case are ‘to what extent a judgment rendered in the person’s absence might be prejudicial to’ him and ‘whether the plaintiff will have an adequate remedy if the action is dismissed for nonjoinder’.” (Extra Equipamentos E Exportacao Ltd. v. Case Corp.) o “Given the absence of an alternative forum, proceedings to the merits in this action is the plaintiffs’ only hope of obtaining an adequate remedy. In my view, this single factor makes dismissal of the suit so harsh that it may outweigh the other three factors combined.” (Confederated Tribes of Chehalis Indian Reservation v. Lujan). c. Using Other Joinder Devices o Defendants who feel that certain absent parties should be joined in the action need not always rely upon compulsory joinder under Rule 19. For example, if a defendant feels that a joint tortfeasors should be joined in an action, it can 34 implead that party as a third-party defendant under Rule 14(a), even though that party would not qualify for compulsory joinder under Rule 19(a). o Note also a defendant’s ability to join non-parties through Rule 13(h), which permits defendants that assert counterclaims or crossclaims to join non-parties to those claims pursuant to Rule 19 or 20. CHAPTER EIGHT: Discovery Litigants need to engage in some measure of discovery in order to obtain information germane to their claims or defenses. This information in turn helps each side build their case and prepare for trial or, in most cases, a summary judgment battle or settlement negotiations. It is only through the exploration of all the facts that the parties can develop a fuller understanding of the disputed events and issues and formulate how they intend to make their case before the court. A. The Scope of Discovery: Relevance o Discovery in the federal system is traditionally regarded as quite broad. Ours is a system in which litigants in theory do not rely upon surprise and ambush to prevail, but rather on the full exchange of information so that resolution on the merits is possible. FRCP 26(b)(1). Discovery Scope and Limits: Scope in General REFER TO CASEBOOK PG. 580 REFER TO BLUEBOOK PG. 64 o There are several aspects to this rule:  First, the basic scope of discovery is all information relevant to a claim or defense of any party.  Second, relevant material that is privileged is not discoverable.  Third, the scope of discovery may be expanded by the court to cover any matter relevant to the subject matter involved in the action rather than simply a claim or defense of any party.  Fourth, relevant material under the rule does not have to be “admissible” but rather simply must be reasonably calculated to lead to the discovery of admissible evidence.  Finally, there are limitations applicable to the rule, which may be found in Rule 26(b)(2). The core requirement here, then, is that the information must be relevant to a claim or defense of any party. 35 American Roller Co., LLC v. Foster-Adams Leasing, LLP o Rule 26 (c) authorizes a court “for good cause shown” to issue a protective order barring or limiting discovery when “justice requires to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense.” o No showing of good cause as required by Rule 26(b)(1) has been made to expand the scope of discovery to the broader “subject matter” standard. o “This Court “has the authority to confine discovery to the claims and defenses asserted in the pleadings.” o The 2000 Amendment explicitly limited the scope of discovery to the “claim or defense of any party” identified in the pleadings without leave of the court. The 2000 Amendment to Rule 26(b)(1) “signals to the parties that they have no entitlement to discovery to develop new claims or defenses that are not already identified in the pleadings.” Advisory Committee Notes to 2000 Amendment to Rule 26(b)(1). Points for Discussion a. Scope of Discovery after the 2000 Amendments to Rule 26(b)(1) o As mentioned previously, the 2000 Amendments to the FRCP narrowed the scope of discoverable information from that relevant to the “subject matter” of the action to information relevant to “a claim or defense” raised in the action. o Often, plaintiffs may not have a full picture of the wrongdoing that may have been perpetrated by the defendant when a suit is filed and thus they hope to use discovery to obtain information that may permit then to add additional claims to their complaints. Under the old “subject matter” language of the rule, such “fishing expeditions” were allowed. o The court in American Roller indicated that under the amended version of the rule, discovery related to unasserted claims is no longer permissible. b. “Subject Matter” Discovery for Good Cause o Rule 26(b)(1) indicates that a court may order discovery of information relevant to the subject matter of the action “[f]or good cause.” c. Protective Orders o Rule 26(c) is the rule permitting the targets of discovery efforts to seek a protective order from the court if they object to the production of requested information. 36 o Under Rule 26(c), persons who seek protective orders must first “meet and confer” with the requesting party and make a good faith effort to resolve the discovery dispute without court action. o Then, “good cause” must be shown and the rule indicates that such orders are appropriate “to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense. FED. R. CIV. P. 26(c). o What should constitute “good cause” under this rule?  Good cause exists when a party shows that disclosure will result in a clearly defined, specific and serious injury, but broad allegations of harm are not sufficient to establish good cause. (Pansy v. Borough of Stroudsburg) Protective orders are also appropriate when the court determines that the discovery request seeks information that lies beyond the scope of discovery under Rule 26(b)(1). o o Protective orders are also appropriate when the court needs to impose some of the limitations found within Rule 26(b)(2) The remedies that the court can provide through a protective order can include ordering that the information be kept confidential, an order narrowing of the scope to the request, an order permitting the responding party to produce the information in a particular format, or an order denying the discovery of the information altogether. Courts have enormous discretion in this area to shape protective orders to workout the wide array of discovery disputes that arise between parties during the course of a lawsuit. d. Discovery from Non-Parties o When non-parties are the object of discovery, the mechanisms for obtaining information from them are more limited under the Rules because not all of the discovery mechanisms are applicable to nonparties.  For example, the rules providing for interrogatories and physical examinations may not be used to obtain information from non-parties. However, Rule 45 permits non-parties to be subjected to depositions and document inspection via subpoenas. FED. R. CIV. P. 45(a)(1)(A). o When discovery is sought from non-parties, requesting parties are under an affirmative obligation not to impose “undue burden or expense” on the responding nonparty. FED. R. CIV. P. 45(c)(1). B. Limits on the Scope Discovery o 37 o Limitations set forth in Rule 26(b)(2):  Subsection A of the rule permits courts to limit the number and length of depositions or the number of interrogatories in its discretion.  Subsection B protects parties against the burden of having to produce electronically stored information that is “not reasonably accessible.”  Subsection C permits the court to limit discovery based on factors intended to ensure that discovery requests are proportional to the needs, costs, and burdens of all parties involved. 1. Burden and Proportionality Limits Generally • • Rule 26(b)(2)(C) enables the court to limit discovery if the court finds that the discovery is too burdensome in relation to its utility to the litigation. The concern reflected in this rule is one of proportionality, meaning that although discovery is broad and the parties are entitled to certain information, discovery of information whose cost and burden far outweigh the contribution the information can make to the case need not be permitted. FRCP 26(b)(2)(C): Discovery Scope and Limits: When Required. REFER TO PG. 599 IN THE CASEBOOK REFER TO PG. 64 IN BLUEBOOK • Because parties are ordinarily required to cover their own costs of producing information in response to discovery requests (costs that can include the time and expense of retrieving and reviewing information before it is produced), if the costs or burdens appear to be prohibitive or unreasonable, responding parties can and often do seek protection from the court under the terms of Rule 26(c). Gonzales v. Google, Inc. • Rule 45 of the FRCP governs discovery of nonparties by subpoena. o The Advisory Committee Notes to the 1970 Amendments to Rule 45 state that the “scope of discovery through a subpoena is the same as that applicable to Rule 34 and other discovery rules.” Rule 45 advisory committee’s note (1970). Under Rule 34, the rule governing the production of documents between parties, the proper scope of discovery is as specified in Rule 26(b). FED. R. CIV. P. 34 Rule 26, in turn, permits the discovery of any non-privileged material “relevant to the claim or defense of any party,” where “relevant information need not be admissible at trial if the discovery appears reasonably calculated to lead to the 38 • • discovery of admissible evidence.” Rule 26(b)(1). Relevancy, for the purposes of discovery, is defined broadly, although it is not without “ultimate and necessary boundaries.” Rule 26 also specifies that “[a]ll discovery is subject to the limitations imposed by Rule 26(b)(2)(i), (ii), and (iii)  The Advisory Committee Notes to the 1983 amendments to Rule 26 state that “the objective is to guard against redundant or disproportionate discovery by giving the court authority to reduce the amount of discovery that may be directed to matters that are otherwise proper subjects of inquiry.” However, the commentators also caution that “the court must be careful not to deprive a party of discovery that is reasonably necessary to afford a fair opportunity to defend and prepare the case. • In addition to the discovery standards under Rule 26 incorporated by Rule 45, Rule 45 itself provides that “on timely motion, the court by which a subpoena was issued shall quash or modify the subpoena if it… subjects a person to undue burden.” FED. R. CIV. P. 45(3)(A). • “If the sought-after documents are not relevant, nor calculated to lead to the discovery of admissible evidence, then any burden whatsoever imposed would be by definition ‘undue’”. Compaq Computer Corp. v. Packard Bell Elec., Inc. • Any information sought by means of a subpoena must be relevant to the claims and defenses in the underlying case. More precisely, the information sought must be “reasonably calculated to lead to admissible evidence.” Rule 26(b). This requirement is liberally construed to permit the discovery of information which ultimately may not be admissible at trial. • Under Rule 45(c)(3)(A), a court may modify or quash a subpoena even for relevant information if it finds that there is an undue burden on the nonparty. Undue burden to the nonparty is evaluated under both Rule 26 and Rule 45. • Rule 45 (c)(3)(B) provides additional protections where a subpoena seeks trade secret or confidential commercial information form a nonparty. Once the nonparty shows that the requested information is a trade secret or confidential commercial information, the burden shifts to the requesting party to show a “substantial need for the testimony or material that cannot be otherwise met without undue hardship and assures that the person to whom the subpoena is addressed will be reasonably compensated.” Rule 45(c)(3)(B). • A district court may in its discretion limit discovery on a finding that “the discovery sought is unreasonably cumulative or duplicative, or is obtainable from some other source that is more convenient, less burdensome, or less expensive.” Rule 26(b)(2)(i). Points for Discussion a. Undue Burden & Proportionality under Rule 26(b)(2)(C) 39 • • • • Because parties are entitled to all relevant information as they develop their claims or defenses, if there is no serious burden on the person being asked to produce the information, then there is no real basis for denying the discovery of relevant, non-privileged information. However, when such a burden would result from having to comply with a discovery request, the issue becomes whether the burden is sufficiently substantial to warrant protecting the responding party from having to produce the desired information. Rule 26(b)(2)(C) instructs courts to take into account the “parties’ resources” in making these determinations. Burden can also be measured by negative consequences that will result from compliance with the requested discovery, such as bad publicity or the disclosure of confidential or protected trade information. b. Cumulative & Duplicative Discovery Rule 26(b)(2)(C) indicates that courts may limit discovery if it is unreasonably cumulative or duplicative. c. Cost-Shifting The general rule in discovery is that the responding party must pay the expenses associated with responding to a discovery request. 2. Proportionality Limits on Electronic Discovery When the liberal discovery regime of the federal system was overlain with this technological reality, a problem occurred. With massive volumes of electronically stored information (“ESI”) in one’s possession, responding to a discovery request became much more burdensome affair in several ways.  A larger universe of documents makes the discovery process more expensive  Various electronic formats differ in the degree to which they can be accessed and searched (i.e. active data on one’s hard drive is relatively easy to access, while information stored on archival backup tapes may require time-consuming and costly restoration processes before the information can be reviewed) Because of the unique challenges that ESI presents to the discovery process, in 2006 the Federal Rules were amended in several respects. Under the 2006 amendments the core measure of burdensomeness and proportionality is a new concept: accessibility Revised Rule 26(b)(2)(B) protects parties against having to produce ESI that they deem to be “not reasonably accessible.” • • • 40 FRCP 26(b)(2)(B). Discovery Scope & Limits: Limitations on Frequency and Extent REFER TO PG. 615 IN CASEBOOK REFER TO PG. 64 Zubulake v. UBS Warburg LLC • The “simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims.” (Swierkiewicz v. Sorema) “Broad discovery is a cornerstone of the litigation process contemplated by the FRCP.” The Rules contemplate a minimal burden to bringing a claim; that claim is then fleshed out through vigorous and expansive discovery. (Hickman v. Taylor) Legal Standard • FRCP Rule 26(b)(2) imposes general limitations on the scope of discovery in the form of a “proportionality test”. Under the discovery rules, the presumption is that the responding party must bear the expense of complying with discovery requests, but it may invoke the district court’s discretion under Rule 26(c) to grant orders protecting it from ‘undue burden or expense’ in doing so, including orders conditioning discovery on the requesting party’s payment of the costs of discovery. When electronic information will be costly to retrieve, the solution the courts have created is to consider cost-shifting: forcing the requesting party, rather than the answering party, to bear the cost of discovery. Electronic documents that may have been deleted and now reside only on backup disks are discoverable as well (as long as the information is relevant to claims made in pleadings). Cost-shifting does not have to be considered in every case involving the discovery of electronic information. If costs are shifted from the producing party to the requesting party it will cripple cases involving private parties and large corporations. It would “undermine the “strong public policy favoring resolving disputes on their merits,” and may ultimately deter the filing of potentially meritorious claims. Cost-shifting should be considered only when electronic discovery imposes an “undue burden or expense” on the responding party. The burden or expense 41 • • • • • • of discovery is, in turn, “undue” when it “outweighs its likely benefit, taking into account the needs of the case, the amount in controversy, the parties’ resources, the importance of the issues at stake in the litigation, and the importance of the proposed discovery in resolving the issues. • Whether production of documents is unduly burdensome or expensive turns primarily on whether it is kept in an accessible or inaccessible format (a distinction that corresponds closely to the expense of production). o A document is accessible if it is readily available in a usable format and reasonably indexed. o Examples of inaccessible paper documents could include:  (a) documents in storage in a difficult to reach place  (b) documents converted to microfiche and not easily readable;  (c) documents kept haphazardly, with no indexing system, in quantities that make page-by-page searches impracticable. Whether electronic data is accessible or inaccessible turns largely on the media on which it is stored. Five categories of data, listed in order from most accessible to least accessible, are decided in the literature on electronic data storage:  Active, online data (most accessible): hard drives; access frequency is high and the speed is very fast  Near-line data (readily usable): optical disks; relatively fast access rate  Offline storage/archives (readily usable): removable optical disks or magnetic tape media; slow access speed; used for making archival records and disaster records  Backup tapes(not readily usable): the data on a backup tape are not organized for retrieval of individual documents or files—must read all preceding blocks; to restore these tapes is very time-consuming and expensive  Erased, fragmented or damaged data (not readily usable): can only be accessed after significant processing. Cost-Shifting Analysis In order to maintain the presumption that the responding party pays, the costshifting analysis must be neutral; close calls should be resolved in favor of the presumption. Seven-factor test: o The extent to which the request is specifically tailored to discover relevant information; utility; most important o The availability of such information from other sources; utility; most important o The total cost of production, compared to the amount in controversy;  cost issues • • • 42 • o The total cost of production, compared to the resources available to each party; cost issues o The relative ability of each party to control costs and its incentive to do so;  cost issues o The importance of the issues at stake in the litigation;  will only rarely come into play o The relative benefits to the parties of obtaining the information  least important When evaluating cost-shifting, the central question must be, does the request impose an “undue burden or expense” on the responding party? Conclusion (Three Step Analysis) • First, it is necessary to thoroughly understand the responding party’s computer system, both with respect to active and stored data. For data that is kept in an accessible format, the usual rules of discovery apply: the responding party should pay the costs of producing responsive data. A court should consider cost-shifting only when electronic data is relatively inaccessible, such as in backup tapes. Second, because the cost-shifting analysis is so fact-intensive, it is necessary to determine what data may be found on the inaccessible media. Requiring the responding party to restore and produce responsive documents from a small sample of the requested backup tapes is sensible approach in most cases. Third, in conducting the cost-shifting analysis, the seven factors should be considered, weighted more-or-less in the order presented. Points for Discussion • • b. Dispute Resolution Procedure under Rule 26(b)(2)(B) • Rule 26(b)(2)(B) permits the responding party not to produce relevant, responsive ESI that is contained within not reasonably accessible formats based on its own judgment regarding accessibility. After the responding party identifies the sources that are not reasonably accessible, the requesting party may then file a motion to compel production of the information, which in turn obligates the responding party to demonstrate inaccessibility based on undue burden and cost. If undue burden is established, the requesting party must show “good cause” to obtain a court order forcing the responding party to produce the information. • • c. Relevance and Inaccessible ESI 43 • The discovery questions that we are considering generally involve a two-part inquiry: o Is the information relevant o If so, would it be unduly burdensome to produce it? o What should courts do when the inaccessibility of ESI prevents any initial determination of relevance without great expense?  Ordering the random sampling of requested backup tapes to determine relevance and cost of retrieval. (Zubulake v. UBS & McPeek v. Ashcroft) 3. Privilege and Work-Product Protection The Attorney-Client Privilege A matter is privileged if it is covered by a privilege rule that gives certain persons the right to withhold the information from disclosure for various reasons • Society values the relationships protected by privileges and prioritizes free communication in the context of these relationships more than the contribution such information could make to improved accuracy of litigation outcomes were it obtainable • Public Policy: The right to the representation of legal counsel is a deeplyembedded value in American society and a critical component of protecting that relationship is enabling clients to be completely candid with their attorneys so that they might be better able to represent their clients’ interests. • Generally speaking, the elements of the attorney-client privilege are as follows: (1) the asserted holder of the privilege is or sought to become a client (2) the person to whom the communication was made (a) is a member of the bar of a court, or his or her subordinate, nad (b) in connection with this communication is acting as a lawyer; (3) the communication relates to a fact of which the attorney was informed (a) by his client (b) without the presence of strangers (c) for the purpose of securing primarily either (i) an opinion of law or (ii) legal services (iii) assistance in some legal proceeding, and (d) not for the purpose of committing a crime or tort; and (4) the privilege has been (a) claimed and (b) not waived by the client • The client must be communicating with the attorney for the purposes of securing legal advice, and the privilege does not hold if it has been waived. • In Upjohn Co.v. United States the Supreme Court explained that the privilege applied throughout the organization, not just to communications with key managers. 44 The Work-Product Doctrine Separate from the attorney-client privilege is another similar doctrine that protects materials prepared in anticipation of litigation from being disclosed to a certain extent: the work-product doctrine. The doctrine today is covered in Rule 26 (b)(3). Hickman v. Taylor • The various instruments of discovery now serve (1) as a device, along with the pretrial hearing under Rule 16, to narrow and clarify the basic issues between the parties, and (2) as a device for ascertaining the facts, or information as to the existence or whereabouts of facts, relative to those issues. Discovery has ultimate and necessary boundaries. As indicated by Rules 30(b) and (d) and 31(d), limitations inevitably arise when it can be shown that the examination is being conducted in bad faith or in such a manner as to annoy, embarrass or oppress the person subject to the inquiry. And as Rule 26(b) provides, further limitations come into existence when the inquiry touches upon the irrelevant or encroaches upon the recognized domains of privilege. For present purposes, it suffices to note that the protective cloak of this privilege does not extend to information which an attorney secures from a witness while acting for his client in anticipation of litigation. Nor does this privilege concern the memoranda, briefs, communications and other writings prepared by counsel for his own use in prosecuting his client’s case; and it is equally unrelated to writings which reflect an attorney’s mental impressions, conclusions, opinions or legal theories. The court in this case found that the information that the petitioner was requesting from opposing counsel had been revealed to him already through the interrogatories or is readily available to him direct from the witnesses for the asking. Not even the most liberal of discovery theories can justify unwarranted inquiries into the files and the mental impressions of an attorney. “Work product of the lawyer” o o o o o o o Interviews Statements Memorandum Correspondence Briefs Mental Impressions Personal beliefs • • • • • 45 Were such materials open to opposing counsel on mere demand, much of what is now put down in writing would remain unwritten • We do not mean to say that all written materials obtained or prepared by an adversary’s counsel with an eye toward litigation are necessarily free from discovery in all cases. Where relevant and non-privileged facts remain hidden in an attorney’s file and where production of those facts is essential to the preparation of one’s case, discovery may properly be had. But the general policy against invading the privacy of an attorney’s course of preparation is so well recognized and so essential to an orderly working of our system of legal procedure that a burden rests on the one who would invade that privacy to establish adequate reasons to justify production through a subpoena or court order. That burden, we believe, is necessarily implicit in the rules as now constituted. Rule 30 (b), as presently written, gives the trial judge the requisite discretion to make a judgment as to whether discovery should be allowed as to written statements secured from witnesses. (not applicable) Under ordinary conditions, forcing an attorney to repeat or write out all that witnesses have told him and to deliver the account to his adversary gives rise to grave dangers of inaccuracy and untrustworthiness. No legitimate purpose is served by such production. The practice forces the attorney to testify as to what he remembers or what he saw fit to write down regarding witnesses’ remarks. Such testimony could not qualify as evidence; and to use it for impeachment or corroborative purposes would make the attorney much less an officer of the court and much more an ordinary witness. The standards of the profession would thereby suffer. Points for Discussion a. Work-Product Protection under the Federal Rules Rule 26(b)(3) was added to the Federal Rules in 1970 to set forth rules governing the discovery of work product FRCP 26(b)(3). Discovery Scope and Limits; Trial Preparation: Materials REFER TO PG 641IN THE CASEBOOK REFER TO PG 65 IN BLUEBOOK • Documentary materials prepared in anticipation of litigation or for trial by or for another party or that party’s representation are protected from discovery unless the requesting party can show a substantial need for the materials • • • 46 • However, “mental impressions, conclusions, opinions, or legal theories” of a party’s representative are never discoverable. b. Asserting Privilege and Work-Product Protection • Although the Federal Rules exclude privileged and work-product protected materials from the scope of discovery, responding parties are obliged to indicate the material that is being withheld based on assertions of privilege or workproduct protection in a privilege log. An attorney does not have to disclose to opposing counsel who has relevant information or who attorney believes has relevant information because that is work product disclosure (i.e., mental impressions and legal theories) Rule 26(b)(5) provides that parties asserting such protections “must: (i) expressly make the claim; and (ii) describe the nature of the documents, communications, or tangible things not produced or disclosed—and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim.” • • c. The Meaning of “In Anticipation of Litigation” • The work-product rule—Rule 26(b)(3)—uses the phrase “in anticipation of litigation.” How far in advance can a party anticipate litigation and thereby obtain work-product protection for the material?  Courts have reached two different conclusions regarding how the phrase “in anticipation of litigation” should be interpreted. Some courts adhere to the notion that documents are protected by workproduct privilege if they are prepared “primarily or exclusively to assist in litigation.”  The majority of courts, however, reject such a definition as unsupported by the language of the rule and follow the “prepared because of litigation” approach. Under this formulation of the work-product rule, a document should be deemed prepared “in anticipation of litigation,” if “in light of the name of the document and the factual situation in the particular case, the document can fairly be said to have been prepared or obtained because of the prospect of litigation d. The Meaning of “Substantial Need” • To overcome work-product protection, a requesting party must show a “substantial need” for the information. Why type of showing should be necessary to demonstrate substantial need? o To demonstrate substantial need, a party must demonstrate an inability to obtain equivalent evidence without undue hardship. (In re Natural Gas Commodities Litig.) • The attorney-client privilege only holds up if it has been waived, which can occur whenever the protected communication is disclosed to third parties. 47 • • • It is important to note, however, that if a waiver occurs, that can jeopardize not only the confidentiality of the disclosed communication but the confidentiality of all communications relating to the same subject matter. The breadth of a subject matter waiver is compounded by the fact that once a waiver occurs with respect to one party, the communication can no longer be claimed as privileged with respect to others. Because subject matter waivers can result in the permanent loss of privilege protection and the resultant required disclosure of significant amounts of otherwise privileged information in current and future litigation, attorneys rightly take great care when conducting a privilege review of material before it is disclosed to requesting parties during discovery. f. Experts and Trial Preparation How should such experts be treated for purposes of discovery? • Rule 26(a)(2) requires the disclosure of the identity of all experts that a party intends to call at trial and requires the expert to prepare a report detailing her expected testimony, the basis for her opinions, the data or other information “considered” in forming those opinions, her qualifications, experience as an expect witness, and level or compensation to be received for serving as a witness in the present case. Parties must be careful in what they disclose to experts in the course of litigation. Experts who will appear at trial may be deposed, FED. R. CIV. P. 26(b)(4)(A), and any material that serves as a basis for their opinions must be disclosed, FED. R. CIV. P. 26(a)(2)(B). Indeed, courts have held that testifying experts must disclose all material they have consulted during litigation, regardless of whether that material is relied upon for their testimony. 4. Electronic Discovery & Protected Materials • • • As a result of these conditions, it is virtually inevitable that both sides will end up inadvertently disclosing material that is privileged or protected by the workproduct doctrine. The consequences of such disclosures typically are a waiver of the privilege, and in the worst case a waiver of privilege with respect to the subject matter covered by the material. With the consequences of inadvertent disclosure being so severe, attorneys have no choice but to be meticulous about privilege review, which ultimately drives up the time and expense associated with screening material before it is produced. • • a. 2006 Amendments to the Federal Rules of Civil Procedure 48 • First, the Federal Rules of Civil Procedure were amended in 2006 to encourage parties to enter into various “non-waiver” agreements by which they agree not to treat certain disclosures as privilege waivers. One type of non-waiver agreement has been referred to as a “claw-back” agreement, so labeled because under such agreements parties are entitled to reclaim (or “claw-back”) material that they produced but should have withheld based on privilege or work-product protection. Such agreements can be useful because the party receiving the inadvertently disclosed material agrees not to treat the disclosure as a waiver and they agree to return the material to the producing party, or at least to sequester the material until the court decides on the merits of the claims of privilege. The other major type of agreement concerning privilege reviews are so-called “quick peek” agreements.  These agreements permit requesting parties to review a body of material in possession of the responding party prior to a privilege review by the responding party in order to identify the subset of material that the requesting party is actually interested in having produced. The responding party then conducts a fullscale privilege review for that smaller subset of material rather than the entire universe of material they would have otherwise been obliged to review The benefit of this approach is that he time and expense of privilege review can be dramatically reduced by permitting parties to focus on the material that actually matters in the case. • • •   • • Rule 26(f)(3)(D) instructs the parties to include any agreements they reach on matters pertaining to privilege and inadvertent disclosures within their discovery plan while Rule 16(b) permits courts to incorporate such agreements into their pre-trial scheduling orders. However to the extent there is no party agreement in place, revised Rule 26(b)(5) (B) opts for the claw-back approach to resolving disputes related to inadvertent disclosure: FRCP 26(b)(5)(8). Discovery Scope and Limits: Information Provided REFER TO PG. 649 IN THE CASEBOOK REFER TO PG 66 IN THE BLUEBOOK • “The better approach is to assume that complete pre-production privilege review is required, unless it can be demonstrated with particularity that it would be unduly burdensome or expensive to do so…to protect themselves against the 49 waiver with respect to third-parties, they should conduct as extensive and disciplined a pre-production privilege review as they would were no non-waiver agreement in place. Unfortunately, though the result of having to take such an approach will be that little if any of the time and cost of savings sought by the rule change will be achieved. C. Discovery Devices 1. Rule 26(a): Initial Disclosures Rule 26(a)(1) requires the parties to disclosure certain information to one another at the beginning of the action without awaiting a specific request for the material: FRCP 26(a)(1). Duty to Disclose; General Provision Governing Required Disclosures REFER TO PG. 653 IN THE CASEBOOK REFER TO PG. 61 IN THE BLUEBOOK • • Rule 37(c)(1) provides that information that is not disclosed as required under Rule 26(a)(1) may not be used as evidence at trial. The topic of initial disclosures is something that the parties are supposed to discuss at the discovery conference provided for in the Rule 26(f). o At this conference, if the parties do not actually make the required initial disclosures, they are to make arrangements for doing so. o These arrangements may include an agreement to alter the default timing applicable to initial disclosures or any of the requirements surrounding initial disclosures required under Rule 26(a)(1) are to be made within 14 days of the discovery conference. Discovery; 2. Rule 34: Production of Documents, ESI, and Things Under Rule 34 parties may request that other parties produce documents, electronically stored information, or tangible things in their possession that fall within the scope of Rule 26(b). The rule reads as follows: FRCP 34(a). Producing Documents, Electronically Stored Information, and Tangible Things: In General. REFER TO PG. 654 IN THE CASEBOOK REFER TO PG. 82 IN THE BLUEBOOK 50 • • • • • • • • The problem with the less focused document requests is that the responsive material may be so voluminous that it will be difficult for the receiving party to identify the truly relevant information that may be found therein. This is particularly so if the documents are produced “as they are kept in the usual course of business” rather than being organized by reference to the categories in the request as is permitted under Rule 34(b)(2)(E)(i). Once receipt of a document request, the responding party may either produce the requested material or object on any applicable grounds such as relevance or privilege. When disagreements arise, the parties must meet and attempt to resolve their differences before either of them petitions the court for a forced resolution of the matter. The dominance of electronically stored information (ESI) among the universe of potentially discoverable material has brought two highly contentious issues to the fore: o (1)The exact form in which responding parties must produce ESI—such as in printed-out hard copies, in native format, or in a converted, easier to use format of some sort; and o (2) whether metadata—data about data—that accompanies ESI must be produced. The requesting party may want the information produced in its native format or in Microsoft Word format so that it is completely word searchable, a feature that will facilitate document review. Conversely, the producing party may prefer production in a PDF or TIFF format because those formats are less subject to manipulation or can make word searches more difficult or impossible. Parties are explicitly instructed to discuss “any issues about disclosure or discovery of electronically stored information, including the form or forms in which it should be produced. Any agreement regarding form of production may be incorporated to the court’s scheduling order under Rule 16(b). If no agreement regarding form of production is reached, then requesting parties may specify the form in which they would like ESI to be produced. FED. R. CIV. P. 34(b). The responding party may object to the requested form of producing ESI and must then specify the form that it intends to use. Even if the requesting party does not specify form of production, the responding party must indicate the form in which it intends to produce the information. Either party who is dissatisfied with the form of production requested or supplied may petition the court for an order resolving the matter. Finally, if there is no agreement and no court order on the issue, the rule sets forth a default standard: FRCP 34(b)(2)(E)(ii). Production of Documents, Electronically Stored Information, and Tangible Things: Procedure. • • 51 REFER TO PG. 656 IN THE CASEBOOK RFER TO PG. 82 IN THE BLUEBOOK b. Metadata • • The other contentious issue surrounding the production of ESI is whether parties have an obligation to produce such information with its metadata intact. The Committee Note to Rule 26(f) defines metadata as “information describing the history, tracking, or management of an electronic file” and indicates it “is usually not apparent to the reader or viewer a hard copy or a screen image.” Committee Note, FED. R. CIV. P. 26(f). An example of metadata would be the information that appears when a Microsoft Word user open the “Properties” dialog box for a document. In that box one can find information such as the date on which the document was created, when it was last modified, printed, or accessed, and the identity of the author of the document. Metadata can prove quite useful in tracking the manipulation of documents, which may be a concern in instances where there is some question as to the authenticity or integrity of documents that have been produced. A responding party has an obligation to produce the metadata if it meets the relevance standard of Rule 26(b)(1), which one can easily imagine being the case in many instances given the type of information that metadata can reveal. If the information reported by metadata is privileged, it is not discoverable. That means that counsel will have to be sure to review metadata for privilege before producing ESI with its metadata intact. Further, if metadata exists, but for technical reasons is “not reasonably accessible” or is unduly burdensome to retrieve and produce under the terms of Rule 26(b)(2), the court may conclude that a responding party need not produce the information. The critical point to remember here is that these are not determinations that responding parties should make on their own without informing their adversaries and the court to the extent a party feels that metadata should not be produced, it must make that assertion and either convince the requesting party or the court to agree 3. Rule 33: Interrogatories • Under Rule 33 a party may send written questions or interrogatories that the receiving party must answer “under oath.” FED. R. CIV. P. 33(a)(1), 33(b)(3). • • • • • • 52 • Parties issuing interrogatories fall within the scope of discovery as outlined in Rule 26(b)(1) and can seek opinions, contentions, or even the application of law to facts. FED R. CIV. P. 33(a)(2). The parties are limited to 25 of these questions unless the court grants permission to issue additional interrogatories. FED. R. CIV. P. 33(a)(1). Although it is relatively easy to craft interrogatories, it can be quite expensive and burdensome to respond to them. To answer some questions fully and truthfully, parties may have to undertake an extensive investigation and review of their own internal files, which could take a significant amount of employer or attorney time. If responding to the interrogatory appears likely to be too burdensome, responding parties may object on any ground applicable to other discovery requests such as privilege, relevance, or undue burden under Rule 26(b)(2). However, Rule 33 also gives responding parties the option to permit the questioning party to view the responding party’s business records to figure out the answer’s for themselves: • • • • FRCP 33(d). Interrogatories to Parties: Option to Produce Business Records REFER TO PG. 659 IN THE CASEBOOK REFER TO PG. 279 IN THE BLUEBOOK • Subparagraph (1) of this provision was added in 1980 to prevent parties from simply giving their adversaries access to mass of undifferentiated business records without any guidance as to how the sought information might be found. 4. Rule 30: Oral Depositions Through oral depositions, parties may question, under oath, any person thought to have testimony relevant to their dispute, without the court’s permission. FED. R. CIV. P. 30(a)(1). These witnesses or deponents do not have to be parties to the action. The format for depositions mirrors the format of witness examinations during a trial, except that no judge is present. The attorney conducting the deposition examines the deponent by asking a series of prepared or extemporaneous questions. The deponent will typically have her own legal counsel representing her at the deposition who may make objections to questions based either on the confusing nature of the question or based on a view that the question delves into an area protected by privilege, confidentiality, or some other similar ground. Objections are also proper based on relevance. • • • • • 53 • • • • Given that no judge is present during the deposition, what should the questioning attorney do in the event that a deponent refuses to answer a question?  The attorney may continue with the deposition and later seek an order compelling a response from the court.  Or, if the matter is vital to the attorney’s subsequent line of questioning, the attorney may suspend the deposition and seek the court’s intervention. Once the attorney is finished examining the deponent, the deponent’s attorney may then question the deponent as well. Deponents are limited to one day of seven hours unless the court allows additional time. FED. R. CIV. P. 30(d)(1). A stenographic record is kept of the deposition and upon its completion, a transcript is produced which the deponent or a party may request a copy of to review and correct if necessary. FED. R. CIV. P. 30(e). 5. Rule 35: Physical or Medical Examination • In actions where a party makes his own physical or mental health an issue, the need may arise for the opposing party to conduct its own examination of the physical or mental condition of that person Under what circumstances should parties be permitted to compel this type of discovery? Rule 35 addresses the issue: FRCP 35. Physical and Mental Examinations: Order for an Examination • REFER TO PG. 661 IN THE CASEBOOK REFER TO PG. 84 IN THE BLUEBOOK • Under the terms of the rule, the critical requirements are that the person to be examined must be a “party” (or someone under the control of a party), that party’s mental or physical condition must be “in controversy,” and the party seeking the examination must demonstrate “good cause” to justify the examination. How can requesting parties demonstrate “good cause” and what puts a party’s physical or mental condition “in controversy”? o The Supreme Court addressed these questions in Schlagenhauf v. Holder, a case involving the alleged negligence of a bus driver involved in an accident, as follows:  Mental and physical examinations are only to be ordered upon a discriminating application by the district judge of the limitations prescribed by [Rule 35] After examinations are conducted under the rule, the examined party may request a copy of a detailed written report of the examiner’s findings. FED. R. CIV. P. 35(b)(1). • • 54 • • Conversely, if the examined party requests such a report, the party that caused the Rule 35 examination to take place is entitled to receive a copy of the report arising from any similar examination the examined party has been subjected to for the same condition. Further, if the party examined under Rule 35 requests a copy of the examiner’s report, that party waives any doctor-patient privilege “concerning testimony about all examinations of the same condition” FED. R. CIV.P. 35(b)(4). D. Discovery Disputes 1. Discovery Offenses and Sanctions • The paradigm discovery dispute is that a requesting party wants certain information to be produced and the responding party refuses to produce it, the refusal might be justified based on privilege, work product protection, or a belief that the information is not reasonably accessible. The refusal also might be unjustified either because the responding party erroneously believes that the material is protected or not discoverable, or worse, because party is trying to hide the information from its opponent. When parties are at loggerheads over a discovery issue, the rules provide that they must meet and confer to try to negotiate a resolution of the dispute before they can seek intervention from the court. FED. R. CIV. P. 26(c); 37 (a)(2) (A); 37(d). • • Orders to Compel and Protective Orders FRCP 37. Failure to Make Disclosures or to Cooperate in Discovery; Sanctions REFER TO PG. 664 IN THE CASEBOOK REFER TO PG. 86 IN BLUEBOOK • Motions to compel are particularly appropriate when the requesting party feels that the responding party is not legitimately claiming protection for the withheld material or if the responding party has dragged its feet in complying with the production request and appears to be stonewalling rather than making a good faith effort to produce the requested material Alternatively, the responding party who feels it should not be required to comply with a particular discovery request and disclose certain information may file a motion seeking a protective order under Rule 26(c): • FRCP. 26. Protective Orders REFER TO PG. 665 IN THE CASEBOOK REFER TO PG. 61 IN THE BLUEBOOK 55 • • • • Protective orders are particularly useful to protect responding parties against abusive discovery requests, such as those that seek a large amount of unnecessary information that it would cost the responding party great expense to produce. In our system, we follow the “American Rule”, which means that litigants are responsible for their own litigation expenses, including the cost of producing information in response to discovery requests. As a result of this rule, however, requesting parties are able to inflict costs on their adversaries through discovery requests. Unfortunately, advocates have been known to take advantage of this ability to make discovery requests more for the purpose of inflicting cost and bringing about delay than for the value the sought information would actually provide the party’s claim or defenses. Protective orders give responding parties a way to combat this practice. Discovery Certification Requirement In an effort to discourage abusive discovery practices, parties requesting or producing information must certify that their disclosures is complete. FED. R. CIV. P. 26(g)(1), and that the request or response is consistent with the following provision: FRCP 26(g)(1). Signing Disclosures and Discovery Requests, Responses, and Objections. REFER TO PG. 666 IN THE CASEBOOK REFER TO PG. 69 IN THE BLUEBOOK This certification requirement is akin to that imposed by Rule 11 (recall that Rule 11 is inapplicable to discovery). Parties found to have violated the rule may be sanctioned as deemed appropriate by the court Sanctions. In most instances, it is knowledge of the court’s authority to impose sanctions that compels compliance with the parties’ discovery obligations. When parties persist in non-compliance, however, the courts can and have imposed a wide range of sanctions on those parties, some of which are set forth in Table 8.2. Table 8.2 Sanction An order that designated facts shall be taken to be established for purposes of the action An order preventing the disobedient party from introducing certain documents, or supporting or opposing designated claims or defenses The entry of dismissal or default Rule Rule 37(b)(2)(A)(i) Rule 37(b)(2)(A)(ii) Rule 37(b)(2)(A)(v) & (vi) 56 The striking of the pleadings of the offending party The award of reasonable expenses, including attorney’s fees • • Rule 37(b)(2)(A)(iii) Rule 37(b)(2)(C) These sanctions, which are authorized under various portions of Rule 37, are not an exhaustive list. Rule 37 itself states that courts are empowered to impose “further just orders.” FED. R. CIV. P. 37(b)(2). Further, courts have inherent power to impose sanctions for discovery abuses, authority that supplements courts’ sanctioning power under Rule 37. Poole ex rel. Elliot v. Textron • Rules pertinent in this case: o FRCP 37: o FRCP 37(a)(4)(A): o FRCP 26(g): o FRCP 26(g)(3): The Supreme Court has cautioned restraint in the exercise of he inherent powers “because of their very potency,” Chambers and “because inherent powers are shielded from direct democratic controls.” Roadway Express, Inc. v. Piper. Accordingly, whether default judgment or some lesser punitive sanction, such as an award of attorney’s fees, is imposed under the inherent powers, courts require evidence of misconduct, usually characterized as “contumacious,” “fraudulent” or “bad faith,” with some courts requiring that the misconduct be shown by “clear and convincing” evidence An award of attorney’s fees appear to be the sanction most commonly imposed in reported decisions Sanctions are to be awarded “against parties or persons unjustifiably resisting discovery.” Advisory Committee Notes to the 1970 Amendments to Fed. R. Civ. P. 37. o Rule 37 sanctions must be applied diligently both “to penalize those whose conduct may be deemed to warrant such a sanction, and [and] to deter those who might be tempted to such conduct in the absence of such a deterrent.” Nat’l Hockey League v. Metro. Hockey Club Rule 26(g) is designed to curb discovery abuse by explicitly encouraging imposition of sanctions.” Advisory Committee Notes to 1983 Amendments to Fed. R. Civ. P. 26. However, in the absence of a bad faith finding, the Court is not justified in awarding sanctions beyond the relief afforded by Rule 37(a)(4)(A) and Rule 26(g), and certainly not entry of default judgment. o When there is a lack of bad faith: “The remedy available to the Court is thus limited to an award of the “reasonable expenses incurred in making the motion, including attorney’s fees.” Fed. R. Civ. P.37(a)(4)(A). • • • • • • 57 • • Consequences of Textron’s actions: o Depositions are taken without benefit of later received discovery o Later received discovery might have eliminated whole areas of inquiry or suggested entirely different questioning at deposition. o A lawyer is faced with the dilemma of whether to spend the time and expense to seek another deposition session or “to make do.” o Belatedly received information may impact an expert’s opinion, requiring additional analysis and a further report and even a further deposition. In complex litigation cases are shaped, if not won or lost, in the discovery phase. Points for Discussion In determining sanctions Table 8.2 (from previous) does not come into play until a party has violated court order (the court may use the inherent powers however). In this case default judgment was not appropriate because Textron complied with court order. Because there was no bad faith, the court could not use inherent powers. a. Over-Discovery and Stonewalling • The vast majority of cases do not proceed to trial but rather are resolved through pretrial dismissals, summary judgment, or through settlement. • From the time a case is filed through its resolution by one these means, time and effort is expended principally on a lengthy and costly discovery process. Tactics used during discovery that promote adversarial nature of litigation: • Often this can become a war of attrition where some defendants prefer an extended pretrial phase during which maximum cost is inflicted on their opponents, all in the hopes of nudging them towards giving up on a trial in favor of settling the matter Over discovery: making the discovery requests that fall within the scope of discovery but solicit material that is not really of any great interest to the requesting party. Because the responding party must pay for the cost of locating, reviewing, and producing material to the requesting party, its expenses can quickly become prohibitive in relation to the value of their claim. Stonewalling: delaying the production of responsive material as long as possible without attracting the ire of the court • • b. Dump-Truck Tactics • A related approach to causing delay, expense, and general aggravation for one’s adversaries through over-discovery or stonewalling is to product 58 • • massive amounts of information in response to a discovery request with critical or even harmful information buried deep within it. The idea is that the requesting party will have to spend large amounts of money paying attorneys to review he material carefully, a task that will take a long time and one that the producing party might hope will be insufficiently diligent to locate the problematic document, To avoid getting hit with dump-truck tactics, carefully tailor your discovery request so that you are only getting information that you are truly interested in to build your case. Be careful, however, to avoid being too narrow, if you fail to ask for something important, you won’t get it. 2. Preservation Obligations and Spoliations • • • In order for discovery to work, discoverable information in the possession of he parties must be available and preserved for the litigation. Clearly if parties were free to destroy harmful documents once litigation initiated, that would frustrate the effort of the court to resolve the dispute on the merits. To forestall this possibility, the courts have devised a preservation obligation that binds parties once they have notice of a dispute that is in litigation or likely to result in litigation. Zubulake v. UBS Warburg LLC (“Zubulake V”) • • Litigation hold: is an instruction from one’s own legal counsel to suspend any processes for the destruction of information relevant to a prospective lawsuit and to preserve all such information at least until a final resolution of the dispute. The duty to preserve relevant evidence is a common law duty that arises when the party has notice that the evidence is relevant to litigation or when a party should have known that the evidence may be relevant to future litigation. Fujitsu Ltd. v. Federal Express Corp. Spoliation is “the destruction or significant alteration of evidence, or the failure to preserve property for another’s use as evidence in pending or reasonably foreseeable litigation.” West v. Goodyear Tire & Rubber Co. “The determination of an appropriate sanction for spoliation, if any, is confined to the sound discretion of the trial judge, and is assessed on a case-by-case basis.” The authority to sanction litigants for spoliation arises jointly under the FRCP and the court’s inherent powers. Adverse Inference Instruction: an instruction to the jury to conclude that missing evidence would have been detrimental to the case of the party who was responsible for producing the evidence. o The spoliation of evidence germane “to proof of an issue at trial can support an inference that the evidence would have been unfavorable to the party responsible for its destruction. • • • • 59 o A party seeking an adverse inference instruction (or other sanctions) based on the spoliation of evidence must establish the following three elements:  That the party having control over the evidence had an obligation to preserve it at the time it was destroyed.  That the records were destroyed with a “culpable state of mind” and • A “culpable state of mind” for purposes of a spoliation inference includes ordinary negligence.  That the destroyed evidence was “relevant” to the party’s claim or defense such that a reasonable trier of fact could find that it would support that claim or defense • When evidence is destroyed in bad faith (i.e., intentionally or willfully), that fact alone is sufficient to demonstrate relevance. By contrast, when the destruction is negligent, relevance must be proven by the party seeking the sanctions. • The concept of “relevance” encompasses not only the ordinary meaning of the term, but also that the destroyed evidence would have been favorable to the movant. • “This corroboration requirement is even more necessary where the destruction was merely negligent, since in those cases it cannot be inferred from the conduct of the spoliator that the evidence would even have been harmful to him.” This is equally true in cases of gross negligence or recklessness; only in the case of willful spoliation does the degree of culpability give rise to a presumption of the relevance of he documents destroyed. • A. Counsel’s Duty to Monitor Compliance • • Once a party reasonably anticipates litigation, it must suspend its routine document retention/destruction policy and put in place a “litigation hold” to ensure the preservation of relevant documents. As a general rule, that litigation hold does not apply to inaccessible backup tapes (e.g., those typically maintained solely for the purpose of disaster recovery), which may continue to be recycled on the schedule set forth in the company’s policy. On the other hand, if backup tapes are accessible (i.e. actively used for information retrieval), then such tapes would likely be subject to the litigation hold. • 60 • Counsel must oversee compliance with litigation hold, monitoring the party’s efforts to retain and produce the relevant documents. Proper communication between a party and her lawyer will ensure:  That all relevant information (or at least all sources of relevant information) is discovered.  That relevant information is retained on a continuing basis; and  That relevant non-privileged material is produced to the opposing party Counsel’s Duty to Locate Relevant Information • • • • Once a “litigation hold” is in place, a party and her counsel must make certain that all sources of potentially relevant information are identified and placed “on hold”. To do this, counsel must become fully familiar with her client’s document retention policies, as well as the client’s data retention architecture. This will invariably involve speaking with information technology personnel, who can explain system-wide backup procedures and he actual implementation of the firm’s recycling policy. It will also involve communicating with the “key players” in the litigation, in order to understand how they stored information. It is not sufficient to notify all employees of a litigation hold and expect that the party will then retain and produce all relevant information. Counsel must take affirmative steps to monitor compliance so that all sources of discoverable information are identified and searched. Counsel’s Continuing Duty to Ensure Preservation Once a party and her counsel have identified all the of sources of potentially relevant information, they are under a duty to retain that information and to produce information responsive to the opposing party’s requests. There are thus a number of steps that counsel should take to ensure compliance with preservation obligation:  First, counsel must issue a litigation hold at the outset of litigation or whenever litigation is reasonably anticipated. The litigation hold should be periodically re-issued so the new employees are aware of it, and so that it is fresh in the minds of all employees.  Second, counsel should communicate directly with the “key players”.Because these “key players” are the “employees likely to have relevant information,” it is particularly important that the preservation duty be communicated clearly to them. As with the litigation hold, the key players should be periodically reminded that the preservation duty is still in place. Finally, counsel should instruct all employees to produce electronic copies of their relevant active files. Counsel must also • •  61 make sure that all backup media which the party is required to retain is identified and stored in a safe place. In cases involving a small number of relevant backup tapes, counsel might be advised to take physical possession of backup tapes. In other cases, it might make sense for relevant backup tapes to be segregated and placed in storage. B. Remedy • Sanctions: In this case the sanctions were put in place to restore Zubulake to the position that she would have been in had UBS faithfully discharged its discovery obligations. o Adverse inference instruction o Restore and produce relevant documents o UBS ordered to pay the costs of any depositions or re-depositions required by the late production of documents o Pay for all “reasonable expenses, including attorney’s fees Phoenix Four, Inc. v. Strategic Resources Corp. • A court has the authority to impose sanctions on a party for spoliation and other discovery misconduct under its inherent power to manage its own affairs or under Rule 37 of the FRCP. • Where the alleged discovery misconduct consists of the non-production of evidence, a district court has broad discretion to fashion appropriate sanctions on a case-by-case basis. • The sanctions imposed should serve the threefold purposes of deterring parties from engaging in spoliation, placing the risk of an erroneous judgment on the party who wrongfully created the risk, and restoring the prejudiced party to the position it would have been in had the misconduct not occurred. • An adverse inference instruction is a severe sanction that often has the effect of ending litigation because “it is too difficult a hurdle for the spoliator to overcome.” Zubulake IV • 37(c) provides backdoor availability to default judgment 37(b) Points for Discussion a. The Common Law Duty to Preserve & Spoliation • The duty to preserve information because it is potentially relevant to pending or future litigation is a common law duty that courts have devised in aid of the need to encourage litigation to retain material that their adversaries will have a right to discover as the case unfolds. • A breach of this duty is referred to as spoliation. As noted in Zubulake V, this duty attaches once a party receives notice of a dispute or can reasonably anticipate future litigation. 62 • In Zubulake IV the court determined that the “trigger date” for UBS’s duty to preserve was April 1, 2001—four months before Zubulake filed her EEOC complaint—because her emails showed and deposition testimony confirmed that in April 1, 2001 Zubulake’s co-workers were concerned about the possibility that Zubulake might sue. b. Statutory Duties to Preserve • In addition to the common law duty to preserve, many statutes and regularly impose legal obligations to preserve certain documents or materials. • Violations of such statutory duties to preserve may carry their own penalties under their respective statutes • Some courts have held that violation of statutory duties give rise to an inference of spoliation. • Attorney may be sanctioned if counsel does not make the company suspend deleting operations • The better view seems to be that a breach of a statute or rule-based duty to preserve may only be the basis for a spoliation finding when “the party seeking the inference is a member of the general class of persons that the regulatory agency sought to protect in promulgating the rule.” Byrnie v. Town of Cromwell. c. Sanctions for Spoliation • Courts have a wide array of sanctions at their disposal when it comes to punishing parties for spoliating evidence. Penalties can range from monetary sanctions to an adverse inference instruction, to the dismissal of the party’s case and entry of judgment against the party. d. The “Safe Harbor” Provision of Rule 37(f) The Federal Rules were amended in 2006 to provide some measure of protection for litigants who inadvertently destroy electronically stored information. Specifically, subdivision (f) was added to Rule 37 and reads as follows: FRCP 37(e) Failure to Provide Electronically Stored Information REFER TO PG. 699 IN THE CASEBOOK REFER TO PG. 90 IN THE BLUEBOOK • • Under this new provision, when ESI is destroyed due to “the routine, good faith operation of an electronic information system,” courts may not impose rule-based sanctions absent “exceptional circumstances.” Observers have referred to this as a “safe harbor” provision because it provides protections against rule-based sanctions for spoliation if he destruction occurred accidentally as a result of the regular operations of an electronic information system. Two clear questions arise: o (1) what is the routine good-faith operation of an electronic information system and • 63 “routine operation”: the alteration and overwriting of information, often without the operator’s specific direction or awareness, a feature with no direct counterpart in hard-copy documents. Advisory Committee Notes to 2006 Amendment to Rule 37(e)  “good faith”: “Good faith in the routine operation of an information system may involve a party’s intervention to modify or suspend certain features of that routine operation to prevent the loss of information, if that information is subject to a preservation obligation. • The good faith requirement of Rule 37(f) , means that a party is not permitted to exploit the routine operation of an information system to thwart discovery obligation by allowing that operation to continue in order to destroy specific stored information that it is required to preserve. • Among the factors that bear on a party’s good faith in the routine operation of an information system are the steps the party took to comply with a court order in the case or party agreement requiring preservation of specific ESI o (2) what are the exceptional circumstances  e. Document Retention Policies • • Properly crafted retention policies can include such instruction but the critical component is having a strategy for suspending such automated destruction processes when the duty to preserve based on anticipated litigation arises. Demonstrating good faith effort to suspend such processes will go a long way toward avoiding sanctions and benefiting from the safe harbor provision of Rule 37(f). CHAPTER NINE: Disposition without Trial • Once a lawsuit is initiated, both plaintiffs and defendants are under an obligation to prosecute and defend the case, meaning that defendants must diligently respond to the complaint and plaintiffs must move forward with the development of their respective cases and pursue an ultimate resolution of their claims by the court. When either side fails to do its part—either by failing to answer a complaint as a defendant or failing to prosecute one’s claims as a plaintiff—the Federal Rules provide for a way to terminate the action against the party who has dropped the ball • 64 1. Default & Default Judgment • After the plaintiff files its complaint, the defendant is then obliged to respond to the complaint in some way. The defendant either can file an answer raising various defenses and admitting or denying the allegations of the complaint. FED. R. CIV. P. 7(a) & 8(b), or the defendant may simply raise certain objections by motion—such as a motion to dismiss for lack of personal jurisdiction or improper venue—before filing an answer to the complaint. FED. R. CIV. P. 12(b). After being served with the summons and complaint, the defendant then has 20 days to respond in whichever way it intends, FED. R. CIV. P. 12(a)(1)(A), unless it has waived formal service, in which case the defendant may respond within 60 days. FED. R. CIV. P. 4(d)(3). Courts do not favor default judgment because courts want to decide the case in the merits. However default judgment can be entered against “contumacious” parties Rule 55 addresses when the defendant fails to respond within the prescribed time: FRCP 55. Default; Default Judgment REFER TO PG. 704 IN THE CASEBOOK REFER TO PG. 162 IN THE BLUEBOOK Points for Discussion • This rule sets up a two-stage process. o First, once the defendant fails to plead as required by the rules or fails to otherwise defend itself via motion, the opposing party may bring that fact to the attention of the court clerk and seek the clerk’s entry of the defendant’s “default.” o An entry of default is distinct from the second step in this process, a default judgment. After the clerk has entered a default, the opposing party may then seek a default judgment from the court In cases where the defaulting party has made an “appearance” in the case—for example, by filing a preliminary motion but subsequently failing to file its required pleading in response to the complaint—the court must notify that party at least seven days in advance of a hearing on the opposing party’s application for default judgment. The defendant may then appear at that hearing and raise arguments demonstrating why the Court should not enter a default judgment against it. Courts generally disfavor default judgments and therefore advocates probably should not be too overzealous in pursuing them. In some cases the failure to meet a required response deadline does not suffice for an entry of default. Goodwin v. Libbey Glass, Inc. Has a defendant defaulted if it answers the complaint but fails to appear for the trial? • • • • • • • • 65 o When Bass by his attorney filed a denial of the plaintiff’s case, neither the clerk nor the judge could enter a default against him. The burden of proof was put on the plaintiff in any trial. When neither Bass nor his attorney appeared at the trial, no default was generated; the case was not confessed. The plaintiff might aproceed, but he would have to prove his case. o It is not the defendant’s job to carry the burden of proof—that is the responsibility of the plaintiff. Case can be decided on the merits without the defendant’s presence. b. Setting aside an Entry of Default • Rule 55(c) also indicates that a default judgment may be set aside, but in such a case it may only be set aside in accordance with the standards of Rule 60(b), in conjunction with the good cause factors generally used to evaluate motions to set aside entries of default Under 60(b) courts are more willing to set aside default judgments than judgments reached after some consideration of the merits, provided there is no evidence of willful conduct on the part of the defendant. • d. Damages for Default Judgments • In the event that a plaintiff successfully obtains a default judgment, Rule 54 (c) limits her recovery to the amount prayed for in the complaint. FED. R. CIV. P. 54(c). (“A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings”) 2. Involuntary & Voluntary Dismissals Involuntary Dismissals: • • Rule 41(b) provides, “If the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it.” Fed. R. Civ. P. 41(b) Unless the court states otherwise in its order, the effect of an involuntary dismissal is a dismissal with prejudice, meaning that he matter is deemed to have been adjudicated on the merits. Fed. R. Civ. P. 41(b). o Exception: “Unless the dismissal order states otherwise, a dismissal under this subdivision (b) and any dismissal no under this rule—except one for lack of jurisdiction, improper venue, or failure to join a party under Rule 19—operates as an adjudication on the merits.” An adjudication on the merits is ordinarily entitled to res judicata preclusive effect, which means that the plaintiff will not be able to refile the dismissed claims—or in some cases related claims—in the future. o Res judicata: prohibits lawsuits on any claims that were raised or could have been raised in a prior action • 66 Voluntary Dismissals • If a plaintiff determines that it is better to terminate the action rather than proceed, the Federal Rules provide the plaintiff with the ability to dismiss its own case voluntarily. • The plaintiff may do this without the court’s permission or the consent of the other parties in the suit if the plaintiff files a “notice of dismissal” prior to the filing of an answer or a summary judgment motion, whichever comes first. FED. R. CIV. P. 41(a)(1)(A)(i). • After such time the plaintiff must obtain the consent of the parties, evidenced by a “stipulation of dismissal,” Fed. R. Civ. P. 41(a)(1)(A)(ii), or the permission of the court, Fed. R. Civ.P. 41(a)(2). • “A decision whether to allow a party to voluntarily dismiss a case rests upon the sound discretion of the court. In exercising that discretion, a court should consider factors such as whether the party has presented a proper explanation for its desire to dismiss, whether a dismissal would result in a waste of judicial time and effort, and whether a dismissal will prejudice the defendants.” Hamm v. Rhone-Poulenc Rorer Pharm. • Before an answer or summary judgment motion is filed or with the consent of all the parties, a plaintiff may voluntarily dismiss the case without the court’s permission, for any reason. The plaintiff only must justify the dismissal in the event that she requires the court’s approval. • Unlike involuntary dismissals, voluntary dismissals under Rule 41(a) are without prejudice (unless otherwise stated by the court), meaning that he plaintiff is free to pursue the claim again in the future. Fed. R. Civ. P. 4(a)(1) • There is an important caveat, however: the plaintiff may only voluntarily dismiss its case under 41(a)(1) without prejudice once. A subsequent voluntary dismissal will result in a dismissal with prejudice, which—as was the case for involuntary dismissals—operates as an adjudication on the merits entitled to res judicata effect. • Rule 41(d) provides courts with the authority to impose costs on plaintiffs under such circumstances: “If a plaintiff who previously dismissed an action in any court files an action based on or including the same claim against the same defendant, the court: (1) may order the plaintiff to pay all or part of the costs of that previous action; and (2) may stay the proceedings until the plaintiff has complied.” Fed. R. Civ. P. 41(d). C. SUMMARY JUDGMENT • • Summary judgment is the means by which courts dispose of claims that plaintiffs cannot prove. It also the vehicle through which courts may hand a pretrial victory to plaintiffs having claims that defendants cannot refute. In federal system, the process for seeking and the standard for granting summary judgment are set forth in Rule 56: FRCP 56. Summary Judgment 67 • • • • • REFER TO PG. 745 REFER TO PG. 110 The main purpose of a trial is to resolve factual disputes between the parties, something that is typically done by a jury. If the court is able to determine that there is “no genuine issue as to any material fact,” there is no factual for a jury to resolve, meaning that a trial would be pointless. In the absence of any genuine factual dispute, resolution of he action becomes simply a matter of applying the law to the facts, something that the court itself may do without the aid of the jury. Take Note: To understand these questions regarding the movant’s showing and the respondent’s burden, one must understand the concept of burden of production. The party asserting a claim has the burden of coming forward with evidence sufficient to support a finding in that party’s favor.  When the opposing party makes a summary judgment motion, the question is what information, if any, should the opposing party have to produce to establish its entitlement to summary judgment? Either plaintiffs or defendants may seek summary judgment if they believe that there is no genuine issue of material fact that the law entitles them to judgment as a matter of law. Adickes v. S.H. Kress & Co.: o …the responding party has the burden of showing the absence of a genuine issue as to any material fact, and for these purposes the material it lodged must be viewed in the light most favorable to the opposing party. o Respondent (Kress) did not carry its burden because of its failure to foreclose the possibility that there was a policeman in the Kress store while the petitioner was awaiting service, and that this policeman reached an understanding with some Kress employee that petitioner not be served. o Given these unexplained gaps in the materials submitted by respondent, we conclude that respondent failed to fulfill its initial burden of demonstrating what is a critical element in this aspect of the case—that there was no policeman in the store(respondent produced no evidence that would justify grant of summary judgment) • Because respondent did not meet its initial burden of establishing the absence of a policeman in the store, petitioner here was not required to come forward with suitable opposing affidavits • Respondent would have carried its burden if it had, for example, submitted affidavits from the policemen stating that they were not in the store at that time • If the respondent had met its burden, Rule 56(e) would then have required petitioner to have done more than simply rely on the contrary allegation in her complaint. To have avoided conceding this fact for purposes of summary 68 judgment, petitioner would have had to come forward with evidence rebutting petitioner’s assertion that there was no genuine issue of material fact. Celotex Corp. v. Catrett • Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial A party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,” which it believes demonstrate the absence of a genuine issue of material fact. Rule 56(a) and (b) provides that claimants and defendants, respectively, may move for summary judgment “with or without supporting affidavits”. Regardless of whether the moving party accompanies its summary judgment motion with affidavits, the motion may, and should, be granted so long as whatever is before the district court demonstrates that the standard for the entry of summary judgment, as set forth in Rule 56(c), is satisfied. One of the principal purposes of the summary judgment rule is to isolate and dispose of factually unsupported claims or defenses, and we think it should be interpreted in a way that allows it to accomplish this purpose. Rule 56(e) therefore requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the “depositions, answers to interrogatories, and admissions on file,” designate “specific facts showing that there is a genuine issue for trial.” Rule 56(e) permits a proper summary judgment motion to be opposed by any of the kinds of evidentiary materials listed in Rule 56(c), except the mere pleadings themselves, and it is from this list that one would normally expect the nonmoving party to make the showing to which we have referred. Instead, as we have explained, the burden on the moving party may be discharged by “showing”—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party’s case. Any potential problem with such premature motions can be adequately dealt with under Rule 56(f), which allows a summary judgment motion to be denied, or the hearing on the motion to be continued, if the nonmoving party has not had an opportunity to make full discovery. • • • • • • • 69 • Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed “to secure the just, speedy and inexpensive determination of every action.” Justice White Concurrence • More than conclusory statements to meet the burden of the Rule 56. However Justice White does not explain what that “more” is Justice Brennan Dissent • Summary judgment has two distinct components: an initial burden of production, which shifts to the nonmoving party if satisfied by the moving party; and an ultimate burden of persuasion, which always remains on the moving party The party moving for summary judgment may satisfy Rule 56’s burden of production in either of two ways: o First, the moving party may submit affirmative evidence that negates an essential element of the nonmoving party’s claim. o Second, the moving party may demonstrate to the Court that the nonmoving party’s evidence is insufficient to establish an essential element of the nonmoving party’s claim. If the nonmoving party cannot muster sufficient evidence to make out its claim, a trial would be useless and the moving party is entitled to summary judgment as a matter of law. A party who moves for summary judgment on the ground that the nonmoving party has no evidence must affirmatively show the absence of evidence in the record. o This may require the moving party to depose the nonmoving party’s witnesses or to establish the inadequacy of documentary evidence. If there is literally no evidence in the record, the moving party may demonstrate this by reviewing for the court the admissions, interrogatories, and other exchanges between the parties that are in the record. o Either way, however, the moving party must affirmatively demonstrate that there is no evidence in the record to support a judgment for the nonmoving party. o If the moving party has not fully discharged this initial burden of production, its motion for summary judgment must be denied, and the Court need to not consider whether the moving party has met its ultimate burden of persuasion 70 • • • • Accordingly, the nonmoving party may defeat a motion for summary judgment that asserts that the nonmoving party has no evidence by calling the Court’s attention to supporting evidence already in the record that was overlooked or ignored by the moving party. o In that event, the moving party must respond by making an attempt to demonstrate the inadequacy of this evidence, for it is only by attacking all the record evidence allegedly supporting the nonmoving party that a party seeking summary judgment satisfies Rule 56’s burden of production. Points for Discussion What is the obligation of the moving party? • • Properly make the motion Support the motion a. Definitions material fact: effects the outcome of the case genuine issue present: when a reasonable jury can reach a differing conclusions concerning that fact b. The Celotex Trilogy Anderson v. Liberty Lobby • In Anderson, the Court decided that the substantive evidentiary standard of proof applicable to a matter at trial was the standard which a summary judgment motion should be judged. o Prima Facie Evidence: Sufficient evidence that, when standing alone, supports a claim for the party asserting it o Preponderance of Evidence: Convincing the fact finder that, given competing evidence, it is more likely than not that the facts alleged by the party bearing the burden are true o Clear and Convincing Evidence: Evidence that the thing to be proved is highly probable or reasonably certain o Beyond a Reasonable Doubt: the most stringent standard, used in criminal cases, requiring that there can be no doubt about the outcome; a likelihood or substantial likelihood that the outcome is correct is not enough. • There is no genuine issue if the evidence presented in the opposing affidavits is of insufficient caliber or quantity to allow a rational finder of fact to find actual malice by clear and convincing evidence. • That there is enough evidence that a reasonable jury would rule in favor of the non-moving party at trial 71 • If the jury can come at on one side of the other summary judgment cannot be granted The question here is whether a jury could reasonably find either that the plaintiff proved his case by the quality and quantity of evidence required by the governing law or that he did not. • If the person opposing summary judgment presents insufficient affidavits to rebut the motion, such that a jury would not find a genuine issue, motion summary judgment granted. • Matsushita Elec. Indus. Co. v. Zenith Radio Corp. • To survive a motion for summary judgment or for a directed verdict, a plaintiff… must present evidence “that tends to exclude the possibility” that the alleged conspirators acted independently. Respondents in this case, in other words, must show that the inference of conspiracy is reasonable in light of the competing inferences of independent action or collusive action that could not have harmed respondents The absence of any plausible motive to engage in the conduct charged is highly relevant to whether a “genuine issue for trial” exists within the meaning of Rule 56(e). Trial affidavit is no substitute for trial by jury which so long has been the hallmark of “even handed justice.” • • c. The Impact of the Celotex Trilogy • Professor David Shapiro: o “Each case, in addition to expressing a general view more favorable to summary judgment than the Court had expressed in the past, laid aside some specific shibboleths that had long affected summary judgment practice, e.g., that the moving party (even one who did not have the ultimate burden of proof) had to support its motion with evidence negating the fact or facts to be proved; that summary judgment was to be avoided in complex cases; that the faintest possibility that the opponent on summary judgment might come up with sufficient evidence by the time of trial was enough to warrant the denial of the motion; and that certain subjective matters that may be especially hard for a party to prove (like the adversary’s state of mind) are always inappropriate subjects for summary judgment against that party. Additional Points (In Class) 12(b)(6) motion and its relation to Rule 56 motion for summary judgment o With a 12(b)(6) motion, the judge is assuming that everything in the complaint is true (favorable to the plaintiff). Therefore, the motion is not on the merits. However, with a summary judgment motion the case is decided on the merits and facts are not assumed to be true. 72 • o With a 12(b)(6) motion to dismiss the judge is just reviewing the information in the pleadings, however with a Rule 56 motion for summary judgment the court is looking at extrinsic evidence to decipher whether it is necessary to go to trial. o The motion is limited to what the pleadings state, when reviewing sufficiency of the complaint. o 12(c): allows expansion of scope (all of the pleadings considered) o 12(d): allows the introduction of extrinsic evidence; moving for summary judgment based on additional facts o Rule 56: most cases are adjudicated at the summary judgment level Chapter 10: Trials 3. The Role of the Jury The jury is tasked with making findings of fact, while the judge is charged with determining the law and instructing the jury on the law. Markman v. Westview Instruments, Inc. o “The Seventh Amendment provides that “in Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved…” o We said in Miller v. Fenton that when an issue “falls somewhere between a pristine legal standard and a simple historical fact, the fact/law distinction at times has turned on a determination that, a matter of the sound administration of justice, one judicial actor is better positioned than another to decide the issue in question.” o The construction of written instruments is one of those things that judges often do and are likely to do better than jurors. The judge, from his training and discipline, is more likely to give a proper interpretation to such instruments than a jury; and he is, therefore, more likely to be right, in performing such a duty, than a jury can be expected to be:  Critical explanation or interpretation of a text or portion of a text  Special occupation/special training/practice o A jury’s capabilities are geared more towards evaluating demeanor, to sense the “mainsprings of human conduct,” or to reflect community standards. These capabilities are less significant than a trained ability to evaluate the overall structure of a patent. Uniformity o The court also looked to the importance of uniformity in regards to who should be charged with the question of construction. The court decided that uniformity would, however, be ill served by submitting issues of document construction to the juries. o Treating interpretive issues as purely legal will promote (though it will not guarantee) intrajurisdictional certainty through the application of precedent on 73 those questions not yet subject to interjurisdictional uniformity under the authority of the single appeals court. Points for Discussion a. The Law/Fact Distinction In the federal system, questions of fact are reserved for the jury b. The Markman Court’s Analysis The holding in Markman relies heavily upon the conclusion that judges are better suited than juries to construe the meaning of terms in a patent. 5. The Phases of a Trial o After the plaintiff rests, the defendant may seek the entry of judgment as a matter of law in its favor if it feels that the plaintiff has failed to present sufficient evidence to carry its burden of proof. FED. R. CIV. P. 50(a)(1). o If that motion is rejected or not made, the defendant proceeds with the presentation of its evidence in an effort to rebut the plaintiff’s case. o After the defendant has presented its case, both parties may raise motions for judgment as a matter of law. o The judge instructs the jury on the law to be applied once all the facts are presented to the jury. B. Judicial Control of the Verdict o If the evidence is insufficient to support a verdict in favor of one party, the opposing party may move the court to enter judgment as a matter of law, something that either preempts or reverses a jury’s verdict. o If the case is to be submitted to the jury, the judge has some ability to control the jury’s decision through the instructions to the jury and through special verdicts or general verdicts with interrogatories. o The judge also exercises control over the verdict through her ability to throw out the jury’s verdict and order a new trial or grant relief from judgment under Rule 60. 1. Judgment as a Matter of Law o At various points in the trial the Federal Rules permit either party to seek judgment as a matter of law (“JMOL”) if they believe that their adversary has failed to present evidence sufficient to meet their evidentiary burden of proof. 74 o If the court agrees with the movant, judgment in their favor is entered and, depending upon the timing of the motion, the jury never gets the opportunity to render a verdict or its previously rendered verdict is reversed. o After a party has been heard on an issue—but before the matter is submitted to the jury—if the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue, the court may enter judgment against that party on the issue or grant a motion requesting the same. After the jury returns its verdict, the court may only enter judgment as a matter of law on a renewed motion for judgment made by a party who made such a motion before the case went to the jury. FRCP 50(a). Judgment as a Matter of Law in a Jury Trial REFER TO PG. 822 IN THE CASEBOOK REFER TO PG 102 IN THE BLUEBOOK Reeves v. Sanderson Plumbing Products, Inc. • Under Rule 50, a court should render judgment as a matter of law when “a party has been fully heard on an issue and there is no legally sufficient evidentiary basis for a reasonable jury to find for that party on that issue.” FED. R. CIV. P. 50(a). The standard for judgment as a matter of law, “mirrors” the standard for granting summary judgment. It therefore follows that, in entertaining a motion for judgment as a matter of law, the court should review all of the evidence in the record. In doing so, however, the court must draw all reasonable inferences in favor of the nonmoving party, and it may not make credibility determinations or weigh the evidence. Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions not those of a judge. Thus, although the court should review the record as a whole, it must disregard all evidence favorable to the moving party that the jury is not required to believe. The court should give credence to the evidence favoring the nonmovant as well as that “evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that that evidence comes from disinterested witnesses. Points for Discussion a. In Class Notes • • • • 75 • • If the judge allows a judgment as a matter of law motion and the case goes to appellate court, reversing lower court remand for a new trial If a verdict is rendered and a party’s motion is granted, appellate court can reinstate verdict b. The Renewed Motion for Judgment as a Matter of Law • An unsuccessful motion for judgment as a matter of law may be renewed after the jury returns its verdict. Rule 50(b) permits the renewal of such motions: FRCP 50(b). Judgment as a Matter of Law in a Jury Trial REFER TO PG. 832 IN THE CASEBOOK REFER TO PG. 102 IN THE BLUEBOOK Note the wording of the rule: it only speaks of permitting the movant to “renew” its request for judgment as a matter of law. Thus, any post-verdict consideration of a motion for judgment as a matter of law may only be on the basis of a preverdict motion that has been renewed. No such motion may be made for the first time after the verdict. c. Timing of the Motion • As Rule 50 states, “A motion for judgment as a matter of law may be made at any time before the case is submitted to the jury. FED. R. CIV. P. 50(a)(2). When can such motion be renewed?  In 2006, Rule 50 was amended to permit a motion for judgment as a matter of law to be renewed after the entry of judgment so long as a motion had previously been made under Rule 50(a), which may have been made at any time before the case was submitted to the jury. • d. The Constitutionality of Entering Judgment as a Matter of Law • In light of the Seventh Amendment right to a jury trial, how is it that courts that are constitutionally permitted to take a case away from a jury by preempting their decision with an entry of judgment as a matter of law?  The Supreme Court felt that the practice was consistent with the Seventh Amendment and thus affirmed its constitutionality in Galloway v. United States. • Does the entry of judgment as a matter of law post-verdict present any difficulties under the Seventh Amendment?  The second clause of the Seventh Amendment indicates that “no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of common law. However, the Committee Note accompanying the revised rule suggests, Rule 50(b)’s requirement of a motion for judgment as a matter of law prior to submission of the case to the jury as a 76 prerequisite to the court’s consideration of the motion after the verdict is seen to be necessary to the constitutionality of a postverdict entry of a judgment on the motion. • Once the trial has commenced and there is a jury, the fact that a judge can usurp the power of the jury becomes a problem because constitutionally an individual has the right to a jury. e. Sua Sponte Entry of Judgment as a Matter of Law Reread Rule 50(a) and Rule(b). Unitherm Food Sys., Inc. v. Swift-Eckrich, Inc. • FRCP 50 sets forth the procedural requirements for challenging the sufficiency of the evidence in a civil jury trial and establishes two stages for such challenges— prior to submission of the case to the jury, and after the verdict and entry of judgment. Rule 50(a) allows a party to challenge the sufficiency of the evidence prior to submission of the case to the jury, and authorizes the District Court to grant such motions at the court’s discretion Rule 50(b), by contrast, sets forth the procedural requirements for renewing a sufficiency of the evidence challenging after the jury verdict and entry of judgment. “In absence of such a motion” an “appellate court is without power to direct the District Court to enter judgment contrary to the one it had permitted to stand. A postverdict motion is necessary because “determination of whether a new trial should be granted or a judgment entered under Rule 50(b) class for the judgment in the first instance of the judge who saw and heard the witness and has the feel of the case which no appellate printed transcript can impart. Moreover, the “requirement of a timely application for judgment after verdict is not an idle motion” because it “is an essential part of the rule, firmly grounded in principles of fairness. In Cone, this Court concluded that, Rule 50(b) permits the district court to exercise its discretion to choose between ordering a new trial and entering judgment…a party may only pursue on appeal a particular avenue of relief available under Rule 50(b), namely entry of judgment or a new trial, when that party has complied with the Rule’s filing requirements by requesting that particular relief below.” A party is not entitled to pursue a new trial on appeal unless that party makes an appropriate postverdict motion in the district court. 77 • • • • • • • Cone, Globe Liquor, and Johnson unequivocally establish that he precise subject matter of a party’s Rule 50(a) motion—namely, its entitlement to judgment as a matter of law—cannot be appealed unless that motion is renewed pursuant to Rule 50(b). The respondent in this case did not seek to pursue on appeal the precise claim it raised in its Rule 50(a) motion before the District Court—namely, its entitlement to judgment as a matter of law. Rather, it seeks a new trial based on the legal insufficiency of the evidence. But if as in Cone, Globe Liquor, and Johnson, a litigant that has failed to file a Rule 50(a) motion—i.e., the entry of judgment—then surely respondent is foreclosed from seeking a new trial, relief it did not and could not seek in its preverdict motion. In short, respondent never sought a new trial before the District Court, and thus forfeited its right to do so on appeal. While a district court is permitted to enter judgment as a matter of law when it concludes that the evidence is legally insufficient, it is not required to do so. To the contrary, the district courts are, if anything, encouraged to submit the case to the jury, rather than granting such motions. • • • Points for Discussion • • • The defendant Unitherm made a motion for judgment as a matter of law under Rule 50(a) before the case was submitted to the jury; the district court denied the motion. After the verdict was issued, the defendant failed to renew its motion for judgment as a matter of law under 50(b), or seek a new trial under Rule 59 [a device that we will consider below]. On appeal, the defendant sought and obtained a new trial order from the circuit court, but the Supreme Court reversed that order 2. Instructions & Verdicts a. Jury Instructions • Before a case is submitted to the jury for a decision, the court must first instruct the jury on the law that it is to apply to the facts as it decides them. Juries are not free to interpret the law themselves or apply their own sense of what the law should be. Rather, the jury is constrained to follow the law as given to them by the judge, having the freedom only to render their judgment as to the facts and how the law should be applied to those facts. The shaping and giving of these instructions are governed by Rule 51: 78 FRCP 51. Instructions to the Jury REFER TO PG. 842 IN THE CASEBOOK REFER TO PG. 103 IN THE BLUEBOOK • • The litigants have the opportunity to shape the content of the jury instructions through their proposals, but it is ultimately the court’s decision as to what instructions will actually be given. Parties may object to their adversary’s proposed instructions and to the instructions that the court intends to give. FED. R. CIV. P. 51(c)(1). o “ A party who objects to an instruction or the failure to give an instruction or the failure to give an instruction must do so on the record, stating distinctly the matter objected to and the grounds for the objection.” Any unraised objections will be waived, meaning that the offended party will not have the opportunity to challenge an instruction (or the failure to give a certain instruction) on appeal. FED. R. CIV. P. 51(d). o “A party may assign as error (A) an error in an instruction actually given, if that party properly objected; or (B) a failure to give an instruction, if that party properly requested it and…also properly objected.” • b. Verdicts • After receiving instructions from the court, the jury retires to deliberate in order to reach a verdict. These deliberations are in private and the discussions are kept confidential. In the federal system, the verdict in civil trials must be unanimous unless the parties agree to the contrary. FED. R. CIV. P. 48. Mistrial- when a jury is unable to arrive at a verdict; a new trial or new jury ordered General verdict- If the jury is able to reach a verdict, the typical form of the verdict is ordinarily a simple finding either in favor of the plaintiff or the defendant. There are two potential problems with general verdicts:  It is not possible to determine whether the jury properly considered and resolved each of the necessity issues to reach its result or if they simply found in favor for a particular party based on their own instincts, emotions, or general sense of the case.  Second and more importantly, general verdict make it more difficult to discern whether an erroneous instruction tainted the verdict when multiple grounds for a given result exists. • If there are three potential bases fro finding the defendant liable, for example, and the court’s instructions on one of those bases is erroneous, a general verdict will leave unclear whether the jury’s 79 • • finding against the defendant was based on that one basis or one of the other two. FRCP49. Special Verdict; General Verdict and Questions REFER TO PG. 844 IN THE CASEBOOK REFER TO PG. 100 IN THE BLUEBOOK 3. New Trials Once a verdict is announced, the court has the authority to throw out the jury’s verdict and order a new trial. Rule 59 speaks to this authority. FRCP 59. New Trial REFER TO PG. 845 IN THE CASEBOOK REFER TO PG. 113 IN THE BLUEBOOK • Notice that the rule itself does not state the grounds on which a new trial may be ordered but rather refers to “any reason for which a new trial has heretofore been granted in an action at law in federal court.” Dadurian v. Underwriters at Lloyd’s of London • • The motion for judgment notwithstanding the verdict (or jnov) was renamed as the renewed motion for judgment as a matter of law after Rule 50 was amended in 1991. Lloyd (defendant) was an insurance company that had issued a policy to Dadurian (plaintiff) who claimed to have lost jewelry. Lloyd’s refused to pay out the policy to the plaintiff because of false statements that the plaintiff made about his claim. Dadurian sued Lloyd. At trial, the jury entered a special verdict and Lloyd made a renewed motion as a matter of law which was denied. On appeal Lloyd claimed that plaintiff had lied about several material facts related to his claim. Lloyd contended that evidence presented at trial was so overwhelming against Dadurian on both these issues that no reasonable jury could have rendered a verdict in his favor. Two issues that were presented to the COA for review: o The COA the court found that a reasonable jury could have concluded that Dadurian’s statements regarding his acquisition of the jewelry was true because there was ample evidence to prove such. o Under the defendant’s insurance policy if the insured gives false information related to claim he/she is eligible to receive pay out. Where Dadurian obtained the cash used for his jewelry purchases was “material” to his claim. • • • 80 • • • • Material: To be considered material, a statement need not “relate to a matter or subject which ultimately proves to be decisive or significant in the ultimate disposition of the claim; rather, it is sufficient if the statement was reasonably relevant to the insurance company’s investigation of a claim. The Court found that the information presented at the trial showed that plaintiff had given false statements about how he had acquired the money to pay for jewelry. Therefore, the jury’s verdict was against the clear weight of the evidence. The COA held that the district court abused its discretion in denying defendant’s motion for a new trial, and remand the case for retrial by a new jury. Lloyd wanted a directed verdict. But the COA stated that most courts are reluctant to direct a verdict for the party having the burden of proof, therefore this judicial control was not used in his case. When an issue involves a determination of credibility is the better alternative when a court believes that a reasonable jury would not have found for a party, but it did, is to remand for a new trial with a new jury.  Points for Discussion a. The Standard for Granting a New Trial • In Dadurian, the court granted a new trial because the jury’s verdict was against the great weight of evidence, even though the court acknowledged that there was sufficient evidence to prevent the court from entering judgment as a matter of law. Other grounds for ordering a new trial exist: the court may feel that the damages awarded are excessive, that the conduct of the trial itself was somehow unfair to the moving party, or that there were substantial legal errors pertaining to the admission or exclusion of evidence or the content of instructions to the jury. The discovery of new evidence may also provide grounds for ordering a new trial. A new trial is favored over a judgment as a matter of law because the case is still being submitted to a jury and power is not being usurped from them. • • b. Remittitur and Additur • When the court feels that the damages award is so excessive that it “shocks the conscience,” rather than ordering a new trial the court can give the prevailing party the option of accepting a reduced, more appropriate damages award or face a new trial. In such a situation, the prevailing party is faced with a difficult choice: take less than a jury has given them or face a new trial in which they may lose entirely. This practice is referred to as remittitur. The converse practice—asking a losing defendant to accept a verdict for a higher amount or face a new trial because the court feels that the damages are shockingly inadequate—has been declared unconstitutional in the federal system 81 • Points for Discussion a. The Relationship Between Rule 50 and Rule 59 Motions • • The renewed motion for judgment as a matter of law and the motion for a new trial are frequently made together. More importantly, Rule 50 indicates that when faced with both motions, the district court must decide both of them. Rule 50(c) and (d) then specify how the court should proceed depending upon whether it grants or denies the motion for judgment as a matter of law: FRCP 50(c) and (e). Judgment as a Matter of Law in a Jury Trials Related Motions for a New Trial; Conditional Ruling 4. Relief from Judgment under Rule 60(b) REFER TO PG. 860 IN THE CASBOOK REFER TO PG IN THE BLUBOOK Recall that Rule 59(b) requires that a new trial be sought “no later than 10 days after entry of the judgment.” After that time has elapsed, the Federal Rules provide another means of getting the trial court to reconsider its decision—the motion for relief from judgment under Rule 60(b) FRCP 60(b) & (c). Relief from a Judgment or Order REFER TO PG. 861 IN THE CASEBOOK REFER TO PG. IN THE BLUEBOOK • Relief under Rule 60(b) is rare. Once a court has entered a final judgment, our system’s interest in finality weighs heavily against reopening the decision for reconsideration. Thus courts understand the provisions of Rule 60(b) in that light when interpreting and applying them. a. Timing for the Motion Movants seeking relief for any of the first three reasons under Rule 60(b) must do so within one year of the final judgment. This time limit is jurisdictional, meaning that courts are not at liberty to extend it. b. Mistake or Excusable Neglect • What consideration should warrant relief from judgment under Rule 60(b)(1). Which permits relief from judgment in the face of mistake or 82 excusable neglect? The court in Pioneer Investment Services Co. v. Brunswick Associates Ltd., Partnership.  The risk of prejudice to the non-movant  The length of the delay  The reason for the delay, including whether it was in the control of the movant  Whether the movant acted in good faith c. Newly Discovered Evidence • Courts have also developed a multi-faceted analysis for determining whether relief from judgment should be granted under Rule 60(b)(2) on the basis of newly discovered evidence. Daeda v. School Dist. Of Lee County 1. the evidence must be newly discovered since the trial 2. Due diligence on the part of the movant to discover the new evidence must be shown 3. The evidence must not be merely cumulative or impeaching 4. The evidence must be material; and 5. The evidence must be such that a new trial would probably produce a new result d. Fraud • To obtain relief under Rule 60(b)(3) courts have held that there must be clear and convincing evidence that the adverse party obtained he verdict through fraud and that the fraud prevented the movant from fully presenting its case. e. Other Reasons • Judgments are not often set aside under Rule 60(b)(6); “the Rule is used sparingly as an equitable remedy to prevent manifest injustice and is to be utilized only where extraordinary circumstances prevented a party from taking timely action to prevent or correct an erroneous judgment.” Latshaw v. Trainer Wortham & Co. What do you think would qualify as “extraordinary circumstances” under Rule 60(b)(6)?  Holding that where the plaintiff’s attorney ignored court orders, neglected motions, missed hearings and other court appearances, and failed to file pleadings or serve them on opposing counsel, the plaintiff was entitled to Rule 60(b)(6) relief from a default judgment on account of his counsel’s gross negligence Note that “if the asserted ground for relief falls within one of the enumerated grounds for relief subject to the one-year limit of Rule 60(b), relief under the residual provision of Rule 60(b)(6) is not available.” Arrieta v. Battaglia • • B. Appellate Review 83 1. The Final Judgment Rule In the federal system, the jurisdiction of the U.S. Court of Appeals is limited by the finaljudgment rule, which is codified at 28 U.S.C. 1291: 28 U.S.C. 1291. Final Decisions of District Courts. The courts of appeal…shall have jurisdiction of appeals from all final decisions of the district courts of the United States. • • Generally speaking a final decision is a final resolution of the case such that nothing remains to be done at the trial level (except enforcement). Dispositions of a case, for example, through a dismissal for lack of personal jurisdiction would be preverdict resolution that ended all proceedings in the trial court. Thus, such a ruling would seem to qualify as a final decision appealable under 1291. The general rule then is that any trial court decision that conclusively resolves a case and brings it to close will be an appealable final decision. Pre-trial and trial rulings that do not end the case are generally not appealable until the end of all trial and post-trial proceedings, or until the matter is brought to a close by a final pre-trial decision such as the entry of summary judgment • Liberty Mutual Ins. Co. v. Wetzel • Rule 54(b) “does not apply to a single claim action…It is limited expressly to multiple claims actions in which ‘one or more but less than all’ of the multiple claims have been finally decided and are found otherwise to be ready for appeal. o In this case the respondents set forth but a single claim. Their complaint advanced a single legal theory which was applied to only one set of facts. • Was the interlocutory summary judgment final in this case? o The order, viewed apart from its discussion of Rule 54(b), constitutes a grant of partial summary judgment limited to the issue of petitioner’s liability. Such judgments are by their terms interlocutory, see Fed. R. Civ. 56(c), and where assessment of damages or awarding of other relief to be resolved have never bee considered to be “final” within the meaning of 28 U.S.C. 1291. The respondents requested damages, but were not awarded any; they requested attorney’s fees, but received none. • The only possible authorization for an appeal from the District Court’s order would be pursuant to the provisions of 28 U.S.C. 1292: “The court of appeals shall have jurisdiction of appeals from: (1) Interlocutory orders of the district courts of the United States…granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions.” 84 o If the District Court had granted injunctive relief but had not ruled on respondents’ other requests for relief, this interlocutory order would have been appealable under 1292(a)(1). o What if the court failed to discuss an injunction? Would that be similar/virtually like denying an injunction?  It might be argued that the order of the District Court, insofar as it failed to include the injunctive relief requested by respondents, is an interlocutory order refusing an injunction within the meaning of 1292(a)(1). But even if this would have allowed respondents to then obtain review in the Court of Appeals, there was no denial of any injunction sought by Petitioner and it could not avail itself of that grant of jurisdiction. Were we to sustain the procedure followed here, we would condone a practice whereby a district court in virtually any case before it might render an interlocutory decision on the question of liability of the defendant, 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. Points for Discussion b. Exceptions to the Final-Judgment Rule Liberty Mutual highlights several important exceptions to the final judgment rule 28 U.S.C. 1291. • Two important exceptions mentioned by the Court are found in 28 U.S.C. 1292. o Section 1292(a)(1) permits appeals of interlocutory orders “granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modifying injunctions.” 28 U.S.C. 1292 (a)(1). o Section 1292(b) permits appeals of interlocutory orders if the trial court certifies that (1) the order involves a controlling question of law, (2) there is substantial ground for difference of opinion (3) an immediate appeal from the order may materially advance the ultimate termination of the litigation Even if the trial court makes the requisite certifications, the party seeking an appeal must do so within ten days and the Court of Appeals then has discretion to accept or reject appellate jurisdiction. c. Rule 54(b): Judgments upon Multiple Claims • Although not strictly speaking an “exception” to final-judgment rule, Rule 54(b) —mentioned in Liberty Mutual—authorities a trial court to enter a final judgment as to one or more (but not all) of the claims in a multi-claim or multi-party action if the court “expressly determines that there is no just reason for delay.” FED. R. CIV.P. 54(b). • • d. The Collateral-Order Doctrine 85 • o Under what is now referred to as the collateral order doctrine, the Supreme Court has interpreted.28 U.S.C. 1291—the statute imposing the final-judgment rule—as permitting appeals of interim trial court orders that are unrelated to the merits of the action when those orders will not be susceptible to review on appeal from a final judgment • In Cohen v. Beneficial Indus.: o The purpose [of 1291] is to combine in one review all stages of the proceeding that effectively may be reviewed and corrected if and when final judgment results. o This decision appears to fall in that small class which finally determine claims of right separable from, and collateral to, rights asserted in the action, 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. The Court has long given this provision of the statute this practical rather than a technical construction. Can you extract from Cohen the specific contours of the collateral-order doctrine? We have held that to fall within the Cohen exception, an order must satisfy at least three conditions: It must conclusively determine the disputed question, resolve an important issue completely separate from the merits of the action, and be effectively unreviewable on appeal from a final judgment • Keep in mind that orders qualifying for review under the collateral-order doctrine comprise a “small class,” a fact that is evidenced by the many times the Supreme Court has rejected application of the doctrine. e. The Writ of Mandamus • Beyond these exceptions, it is possible to circumvent the final-judgment rule through recourse to the writ mandamus. This is an extraordinary writ that petitions the appeals court for an order directing the district court judge to withdraw the contested order. Strictly speaking, mandamus review is not an appeal but rather an equitable remedy having the same ultimate effect—the reversal of the trial court’s order. The Supreme Court has held that U.S. Courts of Appeals have the authority to issue writs of mandamus pursuant to the All Writs Act. In a subsequent case, however, the Court stated, “The writ is appropriately issued…when there is ‘usurpation of judicial power’ or a clear abuse of discretion…” Generally speaking, case law has reflected that the remedy is appropriate when the adversely affected party requires immediate review to forestall some irreparable harm resulting from a district court’s abuse of discretion that will not be remediable on appeal from an ultimate final judgment • • • • f. Appeals from Contempt Orders 86 Where no appeal is available of an interim order and none of the exceptions or special circumstances warranting interlocutory or mandamus review are present, it may be possible to obtain review by disobeying the order and appealing the ensuing finding of contempt.  “One to whom a subpoena is directed may not appeal the denial of motion to quash that subpoena is directed may not appeal the denial of a motion to quash that subpoena but must either obey its commands or refuse to do so and contest the validity of the subpoena if he is subsequently cited for contempt on account of his failure to obey.” United States v. Ryan  “The rule is settled in this Court that except in connection with an appeal from a final judgment or decree, a party to a suit may not review upon appeal an order fining or imprisoning him for the commission of a civil contempt.” Fox v. Capital Co. g. Time to Appeal • • Litigants have ten days to appeal interlocutory decisions The time appeal final judgments is governed by the Federal Rules of Appellate Procedure, specifically Rule 4 of those rules. The general rule is as follows: “In a civil case…the notice of appeal…must be filed with the district clerk within 30 days after the judgment or order appealed from is entered.” FED. R. APP. P. 4(a)(1)(A). Post-trial motions such as a motion for judgment under Rule 50(b) or for a new trial under Rule 59 will postpone the running of this 30-day period until the time when the district court rules on such motions. FED. R. APP. P. 4(a) (4)(A). The district court is empowered to extend the 30 day time period at the request of a party or, if 30 days has expired, if the party can demonstrate “excusable neglect” or “good cause.” FED. R. APP. 4(a)(5)(A). 2. Scope of Review • If a decision has the requisite finality to be appealable or is treated as appealable under an exception to the final judgment rule, the appellate court is limited in the scope of its review. There are two aspects to an appellate court’s scope of review. • • • Reviewability • The first aspect of an appellate court’s scope of review is the reviewability of decisions within a case presented to the appellate court. Not all decisions that a trial court has made with respect to an action are reviewable once the case makes its way to one of the courts of appeals. 87 • • • • • Adverse interlocutory rulings by the trial court are not reviewable on appeal when those rulings went against the party who ultimately prevailed on the final verdict. Relatedly, when a verdict-loser challenges certain interlocutory rulings on appeal, if those rulings are found not to have impacted the verdict and thus can be described as harmless errors, appeals courts will treat those decisions as unreviewable. Another way in which an interlocutory decision can be rendered unreviewable is through the failure of the adversely-affected party to enter a timely objection to the ruling before the trial court. This contemporaneous-objection rule applies to purportedly erroneous evidentiary rulings; the disgruntled party is obligated to challenge the ruling before the trial court to preserve the right to raise the challenge on appeal. FED. R. EVID. 103(a). The same principle applies, for example, to challenge to jury instructions FED. R. CIV. P. 51, or even erroneous verdicts, FED. R. CIV. P. 50; in most instances in these and other contexts, the dissatisfied litigant must first raise the objection with the trial court in order to make such matters reviewable appeal. The Seventh Amendment prohibits the reexamination of factual determinations made by juries, so jury findings of fact are unreviewable on appeal. However, when a judge rather than a jury has been responsible for findings of fact at trial, those findings are reviewable by the appeals court. Rule 52(a) provides that such findings may not be set aside unless they are “clearly erroneous”. De Novo Review • De novo review is the least deferential standard of review; indeed, when an appellate court exercises de novo review it is not giving any deference to the trial court’s decision. • When this standard applies, the appeals court is considering the question anew without regard to what the lower court had to say about the matter. • Because de novo review completely second-guess the trial court’s determination, it is a level of review that is only appropriate when the appellate court is reviewing matters for which it is in as good a position to determine the correct answer as was the district court. • That means that de novo review is inappropriate when appellate courts are reviewing trial court determinations that involve to some degree any level of factual determination or any decisions that are the result of a very factspecific injury. Rather, de novo review is reserved for those questions of law decided by the trial court. b. Review for Clear Error • When trial judges themselves make factual determinations—either because they have conducted a trial without a jury or because they have to make factual 88 • • determinations in order to rule on various motions—those factual determinations may be scrutinized by the appeals courts, but such scrutiny is deferential. Specifically, appeals courts may not reverse such determinations simply because they would have made a different finding; rather, reversal in such instances is only permissible if the appeals courts believes that the district court’s decision is clearly erroneous. See Fed. R. Civ. P. 52(a). Clear error review means that it is not really a close question; the district court is clearly quite wrong. c. Review for Abuse of Discretion • Finally, there are those trial court decisions that are reviewed for an abuse of discretion. This level is the most deferential because it permits the trial judge’s decision to stand as long as there is some rational basis for the decision and the proper legal standard was used, even if the appeals court disagrees with the decision and would have gone the other way. Decisions subject to this level of review include most decisions connected with the conduct and management of the pre-trial and the trial process but also apply to provisional decisions such as whether to grant a preliminary injunction. • C. Preclusion Doctrine • The preclusive effect of a judgment refers to the extent to which a judgment prevents parties to the action that resulted in the judgment—or other persons— from relitigating the claims, defenses, or issues raised in the prior action. o Merger: o Bar: The two main wings or preclusion doctrine are claim preclusion and issue preclusion Claim Preclusion • • The doctrine of claim preclusion prohibits the relitigation of claims that have been conclusively resolved between the same parties Because claim preclusion is a common law doctrine, its details can vary across jurisdictions. However, the states are bound by the Constitution’s Full Faith and Credit Clause (and its implementing statute, 28 U.S.C. 1738) to give the judgments of other American jurisdictions the same preclusive effect that those judgments would enjoy in the jurisdictions where they were rendered. In the federal system, whether claim preclusion applies to prevent litigation in a particular case is ordinarily determined by reference to the preclusion law of the state where the initial judgment was issued. • • Nestor v. Pratt & Whitney 89 • • • • The doctrine of res judicata bears on “the effect of a judgment in foreclosing litigation of a matter that never has been litigated, because of a determination that it should have been advanced in an earlier suit.” It is a rule against the splitting of actions that could be brought and resolved together. In considering the preclusive effect of a state court judgment on a subsequent federal action, under the Full Faith and Credit Act, 28 U.S.C. 1738, the court will usually consult the preclusion laws of the state in which the judgment was issued. “Under the doctrine of res judicata, or claim preclusion, a former judgment on a claim, if rendered on the merits, is an absolute bar to a subsequent action [between the same parties or those in privity with them] on the same claim…or any claim based on the same operative facts that might have been made.” In determining what claims were or could have been litigated in a prior action, Connecticut law applies the “transactional” test described in Section 24 of the Restatement (Second) of Judgments: The claim that is extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. • Section 26(1)(c) of the Restatement (Second) of Judgment provides an exception to the rule against splitting an action where: The plaintiff was unable to rely on a certain theory of the case or to seek a certain remedy or form of relief in the first action because of the limitations on the subject matter jurisdiction of the courts or restrictions on their authority to entertain multiple theories or demands for multiple remedies or forms of relief in a single action, and the plaintiff desires in the second action to rely on that theory or to seek that remedy or form of relief… Public Policy: “Doctrines of preclusion…should be flexible and must give way when their mechanical application would frustrate other social policies based on values equally or more important than the convenience afforded by finality in legal controversies. • Points for Discussion a. The Doctrine of Claim Preclusion • There are three basic requirements for claim preclusion to apply: (1) the prior action must have concluded in a valid, final judgments on the merits, (2) the claim in the subsequent action must be the same as the claim that was raised or should have been raised in the previous action, (3) and the parties in the subsequent action must be identical to—or in privity with—the parties in the first action. 90 • When satisfied, the doctrine operates to bar sequent litigation of the claim at issue b. Same Claim Requirement & the “Transactional” Test • The Fifth Circuit provided a useful summary of the Restatement’s transactional test in Petro-Hunt: o Under that test, the preclusive effect of a prior judgment extends to all rights the original plaintiff had with respect to all or any part of the transaction, or series of connected transactions, out of which the [original] action arose…The critical issue is whether the two actions under consideration are based on the same nucleus of operative facts Because the transactional test prevents parties from dividing what is in effect a single claim into multiple actions to be litigated separately, the rule is sometimes referred to as a “rule against claim splitting.” There are exceptions to this rule, however. The one worth mentioning is the exception discussed by the court in Nestor : the prohibition against claim splitting does not apply if it was not actually possible to have raised the claim in the previous action. See Restatement (Second) of Judgments 26(1)(c) • • c. Raising a Claim Preclusion Challenge • • • Claim preclusion is an affirmative defense that must be set forth in a responsive pleading if a party intends to challenge a claim on preclusion grounds or it may be waived. FED. R. CIV. P. 8(c). However, courts permitted the defense to be raised for the first time in a motion to dismiss or for summary judgment if the tardy assertion of the defense does not unfairly prejudice the claimant. After raising the defense in a responsive pleading, litigants may press their preclusion defense by seeking dismissal or summary judgment on preclusion grounds, demanding a judgment in their favor on the basis that the current action is barred by a judgment in a prior action. “If a court is on notice that it has previously decided the issue presented, the court may dismiss the action sua sponte, even though the defense has not been raised. This result is fully consistent with the policies underlying res judicata: it is not based solely on the defendant’s interest in avoiding the burdens of twice defending a suit, but is also based on the avoidance of unnecessary judicial waste.” Burrell v. Armijo Courts have no obligation to raise the defense sua sponte because preclusion bars are not jurisdictional defects. The fact that a claim may be precluded does not deprive a court of jurisdiction over the claim, similar to the effect of an expired statute of limitations period. Rather, these are defenses that the litigants are obligated to raise. The Same Parties Requirement • • • 91 • • • In addition to involving the same or transactionally related claims, subsequent actions must involve the same parties as were involved in the prior action to be barred by claim preclusion. The more challenging question is the extent to which non-parties may be bound by prior actions Claim preclusion has been extended to embrace subsequent actions involving different parties when they are in “privity” with those who were parties to the previous action, meaning they have a sufficiently close relationship such that it is fair bind them to the earlier judgment. Benson v. Wanda • • The conclusive effect of a prior judgment may only be invoked against a party or a privy o “First, a nonparty who has succeeded to a party’s interest in property is bound by prior judgments against that party…Second, a nonparty who controlled the original suit will be bound by the resulting judgment… Third, federal courts will bind a nonparty whose interests were represented adequately by a party in the original suit… “To have control of litigation requires that a person have effective choice as to the legal theories and proofs to be advanced in behalf of the party to the action. He must also have control over the opportunity to obtain review.” Examples of the “control” necessary to preclude a nonparty are: the president and sole shareholder controls his company; a parent corporation controls its subsidiary; a liability insurer assumes control of a defense; and the indemnitor defends an action against an indemnitee. Lesser measures of participation without control do not suffice. Thus it is not enough the nonparty supplied an attorney or is represented by the same law firm; helped to finance the litigation; appeared as an amicus curiae; testified as a witness; participated in consolidated pretrial proceedings; undertook some limited presentations to the court; or otherwise participated in a limited way. Even a nonparty who was ‘heavily involved’ may remain free from preclusion. It is essential that he nonparty have actual control • Adequate representation: refers to the concept of virtual representation, by which a nonparty may be bound because the party to the first suit ‘is so closely aligned with his [the nonparty’s] interest as to be his virtual representative.” For a nonparty to be so “closely aligned…requires more than a showing of parallel interest or, even, a use of the same attorney in both suits.” • As explained in Pollard v. Cockrel: o Virtual representation demands the existence of an express or implied legal relationship in which parties to the first suit are accountable to nonparties who file a subsequent suit raising identical issues. • • 92 • • • In this case, despite having the same attorney and the same claim from the same set of fats, there is no indication that Ford and Shelby had any expressed or implied legal relationship. There was no implication that Shelby was in any way accountable to Ford. Virtual representation does not apply. The general rule is “that a nonparty is not obligated to seize an available opportunity to intervene in pending litigation that presents question affecting the nonparty.” (Ford was not obligated to join the Shelby case) RE-READ PAGE 913 (COME BACK) Points for Discussion a. Defining Privity • The Benson and Ford case aptly sets forth the three broad circumstances under which courts will consider non-parties to be bound by judgments issued in prior litigation: First, a nonparty who has succeeded to a party’s interest in property is bound by any prior judgments against that party…Second, a nonparty who controlled the original suit will be bound by the resulting judgment…Third, federal courts will bind a nonparty whose interests were represented adequately by a party in the original suit… • The first rule refers to the common understanding that successors-in-interest, meaning those who are the successive owners of property for example, are bound by former adjudication respecting that property to the same extent the previous owner would have been bound. The final circumstances, in which non-parties are bound because they were adequately represented in the prior litigation, is perhaps the most expansive basis for binding non-parties.  This category can refer both to situations in which the nonparty was actually represented in a prior case and to situations in which nonparties are found to be sufficiently aligned with parties to be treated as if they were represented in the previous action.  The former set of circumstances are summarized in the Restatement (Second) of Judgments: • Restatement (Second) of Judgments 41. Person Represented by a Party REFER TO PG. 914 93 • Some courts will go beyond requiring actual representation in a prior suit and will bind non-parties based on virtual representation, the notion that he non-party’s interests are sufficiently aligned with the party in the prior suit that it is fair to bind the nonparty to the previous result. b. Privity and Due Process • The requirement of privity is one that is rooted in due process. Specifically, it is a violation of due process to conclude someone’s rights through judicial action to which that person was not a party. The Supreme Court restated this long-held principle in Martin v. Wilks: o All agree that “it is a principle of general application in Anglo-American jurisprudence that one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process.” Hansberry v. Lee This rule is part of our “deep-rooted historic tradition that everyone should have his own day in court.” A judgment or decree among parties to a lawsuit resolves issues as among them, but it does not conclude the rights of strangers to those proceedings. o Exceptions: where a person was adequately represented in or had control over the prior litigation. The Requirement of a Valid Final Judgment The third requirement for claim preclusion is that only valid final judgments will be accorded claim preclusive effect. Finality for purposes of claim preclusion requires specificity. In particular, traditional formulations of this requirement have alluded to three aspects of the rule: validity, finality, and the need for the judgment to be “on the merits.” Validity: means that the rendering court was a court with proper jurisdiction over the matter and the over the parties, not that the prior judgment was legally correct. Finality: the Supreme Court has defined a final decision as one that “ends the litigation on the merits and leaves nothing for the court to do but execute the judgment.” Firestone Tire & Rubber Co. v. Risjord. The more nettlesome issue can be whether the resolution of the matter was one “on the merits.” Semetek Int’l Inc. v. Lockheed Martin Corp. • With regard to the claim preclusion issue involved in the present case, for example, the traditional rule is that expiration of the applicable statute of limitations merely bars the remedy and does not extinguish the substantive right, so that dismissal on that ground does not have claim-preclusive effect in other jurisdictions with longer, unexpired limitations periods. The primary meaning of “dismissal without prejudice,” we think, is dismissal without barring the plaintiff from returning later, to the same court, with the same underlying claim. Thus, Black’s Law Dictionary defines “dismissed without prejudice” as “removed from the court’s docket in such a way that the plaintiff may refile the same suit on the same • • 94 claim,” and defines “dismissal without prejudice” as “[a] dismissal that does not bar the plaintiff from refiling the lawsuit within the applicable limitations period.” Points for Discussion a. The Holding of Semtek • What is the Semtek Court’s holding regarding the preclusive effect of dismissals in federal diversity actions? “The [Semtek] court concluded that the phrase ‘adjudication upon the merits’ in Rule 41(b) does not mean that the judgment must result in claim preclusion” • The point of Semtek is that what ultimately matters in determining the preclusive effect of a dismissal is not the label placed on the dismissal by Rule 41(b) but rather the underlying basis for the dismissal: “The state court’s decision regarding whether claim preclusion prevents a state lawsuit will depend upon the basis of the federal court’s dismissal, not the nomenclature employed by the federal court to describe the dismissal.” Styskal • If the federal court’s ruling is based on the substance of the claim (what has often been termed an “adjudication on the merits,”) the doctrine of claim preclusion would ordinarily prevent further proceedings on the claim in a later state action. But if the federal court’s dismissal is based on a procedural ground (here because of statute of limitations), the federal ruling is unlikely to have any preclusive effect in state court, even though the dismissal may bar the plaintiff from returning to federal court. b. Preclusion in Non-Diversity Cases • Semtek addressed the preclusive effect of dismissals in federal diversity cases. What is the relevant standard for determining the preclusive effect of dismissals in nondiversity cases in federal court? It is federal law that applies in this context: The federal standard applied is a federal common law standard that is virtually identical to the version of claim preclusion prevalent among the states: “Before res judicata will apply, three factors must be present: (1) a final judgment on the merits in the earlier action; (2) an identity of the cause of action in both the earlier and later suits; and (3) an identity of parties or privies in the two suits.” c. The Preclusive Effect of 12(b)(6) Dismissals The Supreme Court has stated, “the dismissal for failure to state a claim under FRCP 12(b)(6) is a ‘judgment on the merits.’ d. Judgments on Appeal Do judgments that are on appeal have preclusive effect or must all appeals be exhausted before a judgment may bar a subsequent suit? • 95 The general rule is that a pending appeal does not impact the preclusive effect of a judgment unless the appeals court reverses or alters the judgment. e. Default judgments Default judgments, although not the product of fully contested litigation, are nonetheless given full claim preclusive effect so long as they are invalid from a jurisdictional perspective. f. Foreign Judgments To what extent should the judgments rendered by courts in foreign countries be given claim preclusive effect in the U.S. jurisdiction? • • • • • Previously litigated claims should not be retried if the reviewing court finds that the foreign court provided a full and fair trial of the issues in a court of competent jurisdiction The foreign forum ensured the impartial administration of justice The foreign forum ensured that the trial was conducted without prejudice for fraud The foreign court had proper jurisdiction over the parties The foreign judgment does not violate public policy Issue Preclusion Issue preclusion (also referred to as collateral estoppel) refers to the preclusive effect that prior judicial determinations have on the relitigation of certain issues rather than claims. To invoke the doctrine of issue preclusion: (1) the issue to be precluded in subsequent litigation must be the same issue that was raised in the prior litigation that resulted in a valid final judgment, (2) the issue must have been actually litigated and determined in the first case, (3) resolution of that issue must have been necessary to the judgment in the initial action, and (4) the subsequent action must involve the same parties or their privies. • Issue preclusion requires that the issues be identical—not merely transactionally related —and that the issues have actually been raised and litigated; having had the opportunity to raise an issue but failing to do so is not enough to trigger issue preclusion. A further unique aspect of issue preclusion is the requirement that the resolution of the issue in the prior action must have been necessary to the outcome in the case. • Cromwell v. County of Sac 96 • In considering the operation of a judgment, it should be noted that there is a difference between the effect of a judgment as a bar or estoppel against the prosecution of a second action upon the same claim or demand, and its effect as an estoppel in another action between the same parties upon a different claim or cause of action. o In the former case, the judgment, if rendered upon the merits, constitutes an absolute bar to a subsequent action. It is a finality as to the claim or demand in controversy, concluding parties and those in privity with them, not only as to every matter which was offered and received to sustain or defeat the claim or demand, but as to any other admissible matter which might have been offered for that purpose. But where the second action between the same parties is upon a different claim or demand, the judgment in the prior action operates as an estoppel only as to those matters in issue or points controverted, upon the determination of which the finding or verdict was rendered. o • In all cases, therefore, where it is sought to apply the estoppel of a judgment rendered upon one cause of action to matters arising suit upon a different cause of action, the inquiry must always be as to the point or question actually litigated and determined in the original action, not what might have been thus litigated and determined. Only upon such matters is the judgment conclusive in another action. Various considerations , other than the actual merits, may govern a party in bringing forward grounds of recovery or defense in one action, which may exist in another action upon a different demand, such as: the smallness of the amount or the value of the property in controversy o the difficulty of obtaining the necessary evidence o the expense of the litigation o and his own situation at the time A party acting upon considerations like these ought not to be precluded from contesting in a subsequent action other demands arising out of the same transaction. • o • A judgment by default only admits for the purpose of the action the legality of the demand or claim in suit: it does not make the allegations of the declaration or complaint evidence in an action upon a different claim. The declaration may contain different statements of the cause of action in different counts. It could hardly be pretended that a judgment by default in such a case would make the several statements evidence in any other proceeding. Points for Discussion • a. The Actually-Litigated Requirement • • As the Court clearly stated in Cromwell, in order to be given preclusive effect, a previously raised issue must have actually been litigated and decided. How are courts in subsequent actions to go about determining whether an issue was actually litigated and decided in a previous case? 97 The major practical problems posed by the actual decision requirement lies in the need to discover what it was that has been actually decided. In cases tried to a judge, express findings of fact and conclusions of law often show clearly what has been—and what has not been—decided. Special verdicts or interrogatories may bring equal clarity to decisions reached by a jury. At times, a court also may take pains to make it clear that specific issues are not being decided so as to remove any doubts as to possible issue preclusion So too, in conjunction with the actual litigation requirement it may be determined that an issue was never decided because it was never raised or was withdrawn before decision. Help also may be found by asking whether the court in the first action lacked authority to decide a particular issue, reasoning that it was not likely to have actually decided an issue it lacked authority to decide. In other cases, a prior judgment may not indicate clearly what issues were resolved. Although this problem may be most common with respect to a jury’s general verdict, it also can arise with respect to decisions by a judge. A variety of techniques have been adopted to identify the issues decided; to the extent that they fail, the result is that he opaque judgment fail to preclude litigation. b. The Necessarily Decided Requirement • • The Cromwell Court also alluded to an equally important and closely related aspect of issue preclusion: the resolution of the issue must have been necessary to the result reached in the previous action. Russell v. Place: o It is undoubtedly settled law that a judgment of a court of competent jurisdiction, upon a question directly involved in one suit, is conclusive as to that question in another suit between the same parties o But to this operation of the judgment it must appear, either upon the face of the record or be shown by extrinsic evidence, that the precise question was raised and determined in the former suit. o If there be any uncertainty on this head in the record…the whole subject-matter of the action will be at large, and open to a new contention, unless this uncertainty be removed by extrinsic evidence showing the precise point involved and determined. To apply the judgment, and give effect to the adjudication actually made, when the record leaves the matter in doubt, such evidence is admissible. The Same Parties Requirement and Non-Mutuality Initially the rule of mutuality was thought to be necessary to achieve fairness: it did not seem fair to permit a nonparty to the previous action to invoke an adverse determination on an issue in that action against a party to that action. For example, if A sued B for negligence and it was determined in that action that B was negligent for crossing the double-yellow line in the street, mutuality held that in an action that B was negligent for crossing the double-yellow line in the street, mutuality held that in an action by C (the driver of another vehicle) against B for negligence arising out of the same accident, C could not invoke the decision in A v. B regarding B’s negligence as conclusive against B in C v. B. Thus, B would 98 traditionally have been able to challenge C’s assertions of negligence even though B had previously done so and lost in the first action. Parklane Hosiery Co. v. Shore • • • Defensive Collateral Estoppel: occurs where a new defendant seeks to prevent a plaintiff from asserting a claim the plaintiff has previously litigated and lost against another defendant. Offensive Collateral Estoppel: occurs where a new plaintiff seeks to foreclose the defendant from litigating an issue that the defendant has previously litigated unsuccessfully with another party. Why defensive collateral is preferred over offensive collateral estoppel: o Defensive collateral estoppel gives a plaintiff a strong incentive to join all potential defendants in the first action in order to decrease the amount of litigations. This promotes efficiency. o Offensive collateral estoppel increases the amount of litigation because the plaintiff can adopt a “wait and see” attitude (wait to see if the first action will result in a favorable judgment). This approach is inefficient, unfair, and inconsistent. In addition:  If a defendant in the first action is sued for small or nominal damages, he may have little incentive to defend vigorously particularly if future suits are not foreseeable.  Allowing offensive collateral estoppel may also be unfair to a defendant if the judgment relied upon as a basis for the estoppel is itself inconsistent with one or more previous judgments in favor of the defendant. Still another situation where it might be unfair to apply offensive estoppel is where the second action affords the defendant procedural opportunities unavailable in the first action that could readily cause a different result. • In Professor Currie’s familiar example, a railroad collision injures 50 passengers all of whom bring separate actions against the railroad. After the railroad wins the first 25 suits, a plaintiff wins in suit 26. Professor Currie argues that offensive use of collateral estoppel should not be applied so as to plaintiffs 27-50 automatically to recover. General Rule • • The preferable approach for dealing with these problems in the federal courts is not to preclude the use of offensive collateral estoppel, but to grant trial courts broad discretion to determine when it should be applied. The general rule should be that in cases where a plaintiff could easily have joined in the earlier action or where, either for the reasons discussed above or for other reasons, the application of offensive estoppel would be unfair to a defendant, a trial judge should not allow the use of offensive collateral estoppel. A litigant who has lost because of adverse factual findings in an equity action is equally deprived of a jury trial whether he is estopped from relitigating the factual issues against the same party or new party. In either case, the party against whom estoppel is asserted has litigated questions of fact, and has had the facts determined against him in an earlier 99 proceeding. In either case there is no further factfinding function for the jury to perform, since the common factual issues have been resolved in the previous action. Points for Discussion a. The Holdings of Parklane • The Court also ruled that invoking collateral estoppel to preclude a party from being able to have a jury resolve an issue that was previously decided by a judge in an earlier equitable proceeding did not violate the Seventh Amendment. c. Offensive versus Defensive Use of Issue Preclusion • The Court in Parklane discusses the distinction between offensive and defensive use of issue preclusion. Be sure to understand the nature of this distinction. Parklane addressed facts involving offensive issue preclusion. d. Binding Non-Parties • Do not allow the relaxation of the mutuality doctrine to lead you to conclude that issue preclusion can be invoked against those who were not parties to the previous action. It is a fundamental violation of due process to bind someone to a determination arising from proceedings to which they were not a party. e. Law of the Case Doctrine • Preclusion can operate between the parties to bind them to prior determinations made within the confines of the same case, just as they may be bound by prior determinations in subsequent cases. • The doctrine that binds litigants within a case to prior rulings on matters and treats such decisions as controlling throughout the litigation is referred to as the law of the case doctrine. • Under the doctrine re-examination of prior determinations is typically appropriate only in limited circumstances: o The law of the case “must be followed in all subsequent proceedings in the same case in the trial court or on a later appeal in the appellate court, unless the evidence on a subsequent trial was substantially different, controlling authority has since made a contrary decision of the law applicable to such issues, or the decision was clearly erroneous and would work a manifest injustice.” Execute Summary • • Appellate Review: Under 28 U.S.C. 1291 the courts of appeals have jurisdiction of appeals from all final decisions of the district courts of the United States. 28 U.S.C. 1292 provides two exceptions to this rule, permitting appeals of interlocutory orders concerning injunctions and appeals of interlocutory orders concerning matters that the trial court certifies are sufficiently contentious and important to the case to warrant immediate review. Finality: through the final-judgment rule, the civil justice system promotes efficiency by preventing interim appeals from disrupting the litigation process and by preventing litigants from wasting appellate court time with many harmless errors that turn out not to have an impact on the ultimate outcome in case. 100
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