Civ Pro II – Weston
Subject matter jurisdiction
Federal question
Diversity
Removal
Supplemental Jurisdiction
Personal Jurisdiction
Long-arm statutes, statutory authorization for personal juris.
Transient Jurisdiction
Consent
Transfer
Forum Non Conveniens
Enforcement of Contractual Forum Selection
Erie doctrine
Certification
Joinder
Crossclaim
Intervention
Interpleader
Class Actions
Claim Preclusion
Issue Preclusion
Mutuality of Preclusion
Interjurisdictional Preclusion
Venue
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1) Subject Matter Jurisdiction
2) Federal Question – “Arising Under”
a) Defined in Article III s. 2 – lists categories of cases fed. Courts can hear
i) b/w states, citizens and aliens, foreign ministers and consuls, cases arising under fed. Const.
b) Arising Under Fed. Law:
i) Only applies if plaintiff’s claim requires interpretation of federal law
c) The cause of action has to be constitutional, not the defense
i) Louisville and Nashville R.R. Co v. Mottley
(1) Husband & wife had K to get railroad passes forever
(2) Congress passed law prohibiting free railroad passes
(3) Sued for specific performance, brought suit in Fed. Ct.
(4) I: Federal jurisdiction?
(5) H: NO.
(6) R: P’s alleged refusal was based on this law (that was the defense) and that the defense was 5 th
amendment violation
ii) American Well Works
(1) Slander and libel allegations through alleging patent infringement not enough for subject mater
jurisdiction
(2) Holmes suggests: suit arises “under the law that creates the cause of action”
(a) Mottle would’ve been allowed
iii) Smith v. Kansas City Title & Trust Co.
(1) Suit to enjoin bank from buying tax exempt loan bonds
(2) Reason for opposing was the argument that congress didn’t have the power to issue these bonds
(3) Holmes dissented saying that Missouri law created the cause of action, would limit the bank’s charter
iv) Moore v. Chesapeake & Ohio R.R. Co.
(1) Inured railroad worker couldn’t bring suit against intrastate R.R. b/c it fell under state purview.
v) Shoshone Mining Co v. Rutter
(1) Congress passed a mining law stating that “adverse suit” is to take place in “court of competent
jurisdiction” (pretty ambiguous)
(2) The court held this to mean that a state court would have juris. b/c otherwise all such property
disputes about title would be federal.
(3) Brewer says congress can authorize suits, but they may come under the purview of state customs and
law
Merrel Dow v. Thompson
- Brought suit over a law that doesn’t explicitly create a private cause of action
- I: can they do that ?
- H: No
- R because not mentioned, no intent, so no original jurisdiction
Grable & Sons metal Products v. Darue
- Grable claimed it hadn’t received notice as required by a federal statue, so transfer of title was invalid;
- I: for subject matter jurisdiction, did the claim arise under federal law?
- H: yes.
- R: even though there’s a state law issue of title, the underlying issue was that they could only establish its
right to the property by proving a proposition of federal law
- Reaffirmed the “arising under” doctrine
Holmes grp. V. Vornado
- can a federal counterclaim constitute arising under for jurisdictional purpose?
- No, because it’s the plaintiff who has the power.
Diversity
- State courts are ct.’s of general jurisdiction
- Diversity granted by Art. III, § 2
- Different rules for class actions in §1332 – Class action fairness act of 2006
- In order to have fed. Juris. P must satisfy that claim is 1) fed. Question or 2) diversity (§ 1332)
- Must meet amount in controversy requirement > $75,000
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o This means that one plaintiff’s aggregate claims against one defendant > $75k
Also must be complete diversity under Strawbridge v. Curtis
Strawbridge v. Curtis – known as the “complete diversity rule” - Marshall opinion
o When alien is party or suit is between citizens of different states
o Need complete diversity on both sides of the v. subject to some exceptions
Why do we have the diversity rule?
o To protect out of state persons from bias
o It’s a due process concept
Residence defined:
- Remember, residence is defined at the time of the filing unlike for personal jurisdiction
- Bair v. Peck – Dist. Ct. KS 1990
o P: D’s moved to dismiss for lack of subject matter juris.
 Medical malpractice case
o P’s assert there’s diversity jurisdiction
o Have to be citizens of different states – this means they have to be domiciled in different states
 Means have to have residence and intent to remain there for an indefinite period
o Determination of diversity juris. Is made made from the compl.
o Party asserting diversity juris. Has burden by preponderance of the evidence
o Born & raised in KS, went to school there, transferred to the University of CO. In ’86 he lied about his
address and used an address to qualify for in-state tuition. Then the plaintiff moved to CO, brought
his personal belongings with him. He then drops out of school, but works at a ski resort.
o He gets injured and moves home for 2 wks. For surgery
o Then he moves to MO, changes his address and license registration
o P moved to CO for school, changed his voter registration, but kept tax withholding in KS
o Sues doctor for malpractice – he’s living in MO at the time.
 Again, diversity is determined when you filed the complaint
o H: Once defendant quit school he was no longer at school w/ his permanent address in KS
o Notes:
 What happens if defendant wins and P’s re-file? Why would someone do this?
 Client’s interest – you wouldn’t do this unless you believed your client would be better off
 What about the fact that he moved to MO once the suit was filed?
 Perhaps the Ct. was saying that as long as he moved to another state, he was OK
 Remember, he just can’t be a KS resident – anything else goes
Complete Diversity (all parties must be diverse)
- Angela Ocohoa v. PV Holding
o P injured by Paul Gulley driving Budget rental car. Accident happened in New Orleans
o Ochoa was a LA resident, sued Gulley, Budget, PV Holding (Budget’s holding corp.)
o Initially filed in St. Ct. defendant moved to remove to Fed. Ct.
o Gulley was served later than the 2 corps., but the residence determination occurs when the complaint
is filed.
o Gulley had evacuated to TX after Katrina. He had been working there
o I: diversity?
o H: no diversity because he couldn’t show that he owned property, where he filed taxes, bank
accounts, or his home. He had a LA driver’s license. His intention was to remain in LA.
o The fact that he intended to remain in TX was not dispositive
o Notes: crappy job by the judge
o Notes:
 He’s probably low-income, so he doesn’t likely have a lot of paperwork indicating his
residence
 And he says he’s never going back to LA
28 USC 1332 (c)
Corporate Citizenship – Corps. Are citizens of BOTH: 1) the state in which they are incorporated and 2) the state where
their principal placxe of business is located
- Egan v. American Airlines – E.D.N.Y. 1962
- Plane crash; P from N.Y. D is a Delaware corp. w/ head offices in N.Y.
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P’s compl. Alleges D is Delaware corp.
P’s allege assets are spread all throughout the country, so business done everywhere
H: No diversity.
R: Courts look to:
o “nerve center” of the corp.
o Location of the corp. HQ
o Sources of Corp.’s productive capacity (think manu. plants)
- WI Knife Works v. Nat’l Metal Crafters
o Ct. applies the nerve center test in determining that there is diversity jurisdiction
o Whether P, a division, can sue, is dependent on state law
o But in determining citizenship, you look to the parent co.’s “nerve center”
LLC’s – have citizenship in every state of their members
- Belleville Catering Co. v. Champaign Mkt. Place- Ct. App. 7th Cir.
o Champaign Mkt. was an LLC, Belleville misreported its place of incorporation. It was actually
incorporated in IL, not MO.
o For LLC’s, they have
o The lawyers failed to check this, and Easterbrook got pissed.
Unincorporated Associations
- Look at each of the individual members to see where they’re from.
- The association then is headquartered where each member is from
Amount in Controversy
§ 1332 says Amt. in controversy must exceed $75,000
- For a single plaintiff the aggregate of its claims must exceed $75k (not each claim separately)
- For multiple plaintiffs, only one’s amount in controversy must exceed $75k
o But the rest of the plaintiffs must meet requirements of §28 USC 1337
- In terms of multiple defendants, each defendant’s amount in controversy must be > $75k
- This doesn’t apply to Federal question jurisdiction
Do Federal Courts have exclusive jurisdiction over Federal questions?
- State and Federal Courts have concurrent jurisdiction over Federal questions
Removal
- Any civil action can be removed to federal Ct.
- 28 USC § 1441 lays down the rules as does § 1446 and ‘47
- § 1441 (a) says that unless expressly provided, a civil action is removable to Fed. Ct….
- Have to remove to the district in which it was filed
- Only removable if no defendants are citizens of that state
o No need to protect the defendant
- Cases like patent used to be not removable until ‘ 88 under § 1444 even if the state didn’t have original juris.,
the case can be removed
- Removal applies to cases, not claims
- In a multi-defendant case, all defendants must agree to remove
§1441 – 1453 Are All About Removal – Don’t just rely on the general rules for removal
§ 1441 – Actions Removable Generally
- If an action could’ve been filed in Fed. Ct. but was filed in State Ct., it can be removed to Fed. Ct.
- (b) Says any case w/ federal question can be removed w/o regard to citizenship or residence of the parties
o Except if any of the defendants is a citizen of the state in which the lawsuit is filed then it cannot be
removed to federal ct.
o Why would they do that? Convenience for the defendants
o How does bias apply when the defendant is already in their own state
o We’re always worried that courts will bias against out of state defendants
o We don’t want removal within the same state
o Weston calls this the “schizophrenia of diversity”
o This also limits the # of diversity cases they have to hear
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(c) lets you remove or remand joined actions
o You can send the State actions back or hear them
§ 1446 – How you Remove
- You file a written notice of removal – subj. to Rule 11 that you’ve
- You have 30 days to remove the case
§ 1447 – Procedure After Removal
- Deals w/ remanding
Breuer v. Jim’s Concrete – unanimous opinion by Souter (2003)
- F: Breuer sued his employer, Jim’s Concrete for violation of Fair Labor Standards Act
- The Act provides that an action to recover the liability may be maintained in any Fed. Or St. Ct. of competent
jurisdiction
- The plaintiff argues that this means that the case can be held in Fed. Ct.
- I: does the language of maintaining an action bar defendants’ removal to Fed. Ct.?
- H: It does not.
- Reasoning: nothing in FLSA expressly prohibits removal
o Ct. looked to definition of ‘maintain’ and took it to mean ‘bring’ or ‘file’
o Also, §1441 requires an ‘express’ provision prohibiting removal
o Other express provisions clearly state that the claims cannot be removed
City of Chicago v. Int’l College of Surgeons – ’97 O’Connor opinion
- Landmark commission made a determination that seven buildings qualified for landmark designation
- Claims and fact finding have to be made in IL administrative ct., can then be appealed to state cty. Ct.
- I: does a case brought under state law but alleging constitutional violations have original jurisdiction in Fed.
Ct.?
- Plaintiffs argue that this is a state cause of action, reviewed by administrative body and state ct.
- P: Dist. Ct. said there was original jurisdiction
- Appellate Ct. for 7th Circuit reversed, noting that because there wasn’t de novo review and fact finding was
done by a state agency that original jurisdiction was inconsistent with Fed. Original jurisdiction
- H: even though state law creates a cause of action, the case might still ‘arise under’ the laws of the U.S. if the
complaint establishes the right to relief requires resolution of a substantial question of Federal law
- In this case, 5th amendment and 14th amendment violations are such questions
- As fro the review by the administrative body, the court says they basically don’t care
The Study of Why People Remove
- Bias
- Outcome determinative factors
o Judge Qualities
 The view by defendants is that federal judges are better
 Only 26% of plaintiffs wanted fed. judges
o Jury Impact – meaning draw jury from a wider area, there was less bias
 Far more control over jury selection in federal court
o Law Rulings
o Court Rules
- Cost and Convenience factors
- Check out 81 Wash ULQ 119
§1367(b) – the intention is that the court should not hear the state claims
- Supplemental jurisdiction doesn’t apply if the parties aren’t diverse under §1367(b)
Supplemental Jurisdiction
- Common law used to recognize pendant and ancillary jurisdiction
- Under § 1367 if arising under the same “case or controversy”, there’s supp. Juris.
o The “nucleus of operative fact” test
o Doesn’t apply to parties the plaintiff joins under Rules 14, 19, 20, or 24, or intervening as plaintiffs
under Rule 24 when jurisdiction inconsistent w/ jurisdictional (complete diversity reqs.)
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That’s impleader, required joinder b/c something can’t be satisfied, permissive joinder,
intervention
Pendent is additional claims joined by plaintiff w/o SMJ
Ancillary is impleader or counterclaims w/o SMJ
o Claims need to be “logically related”
Can’t sue impleaded 3rd parties w/o SMJ
In the case of multiple defendants, joined under Rule 20, there’s no supplemental jurisdiction
o Note that rule 20 involves lack of SMJ, whereas Rule 19 provides it
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United Mine Workers v. Gibbs – SCOTUS established pendent jurisdiction claims
“case” interpreted to be more than just a claim
Supp. Juris. Depends on:
o Whether state law predominates
o Whether court would have to decide sensitive issues of State law
Ancillary Jurisdiction
o Compulsory counterclaims, impleader claims can be heard
o Permissive counterclaims are denied w/o SMJ
Jinks v. Richland Cty., SC
- SC Sup. Ct. declared 28 USC 1367 unconstitutional b/c it required tolling of state statute of limitations while
waiting in fed. Ct. (gave petitioners an extra 30 days if dismissed in fed. Ct.)
- I: Unconstitutional ?
- H: no.
- R: necessary and proper clause
City of Chicago v. Int’l College of Surgeons
- I: appropriate use of supplemental jurisdiction?
- H: Yes, supplemental jurisdiction appropriate in
- Reasoning: § 1367(a) lets the courts take on the issue
- But the courts don’t have to take on the case
- So why take on the case?
- Judicial economy, fairness, and comity
- It’s a constitutional question – the state law doesn’t predominate
- Why is supplemental jurisdiction ever appropriate?
o It would be a drain on convenience, economy etc.
Exxon Mobil v. Allapath Services – involves § 1367(b)
- Decided before Class Action Fairness Act put into law
o Important because it addresses
- There has been conflict over how to interpret § 1367(b) from the get go
- The general thrust of the statute is that the Court did not desire to allow non-diverse parties to get into
federal court under supplemental jurisdiction
o Kroger –added a defendant who was non-diverse, and when tossed out the case
(b) mentions the joinder rules, but doesn’t cover other rules like amount-in controversy
- This case does not deal with incomplete diversity like Kroger, but
- I: Is there supplemental jurisdiction over plaintiffs who are geographically diverse, but not all parties meet
the amount-in controversy ?
- Two cases being heard together by the Supreme Court – the Exxon case and the Ortega case
- Exxon case – 10,000 dealers filing class action over price fixing against Exxon
o Many of the class members do not satisfy the amount in controversy
- The other case involved a nine year old sued Stark-kist who satisfied the amount in controversy
o Her family members, who are also a party, do not reach the threshold
- Rule: only one plaintiff needed to reach the amount in controversy
- They dismiss the indivisibility and contamination theories
- They argue statutory construction most forcefully about § 1367(b)
o 1367 withholds jurisdiction for certain parties but not others, so it’s an exclusio argument
o 1367 does not mention rule 23 for class actions
o The case can’t be barred because the rules barring supplemental jurisdictions
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As for Star-kist case
o § 1367(b) deals with plaintiffs who attempt to join defendants!!
 Defendants are made parties
Ginsburg dissent:
o Talks about statutory construction and legislative history
o The law professors on the committee who drafted the law said the law was being misinterpreted
o Whereas majority opinion says legislative history is unnecessary b/c statute is ambiguous
o Also cites Snyder and Zahn, which the S. Ct. already addressed, so we shouldn’t infer silence means
that Congress wanted to overturn them
Williams v. Aztar Indiana Gaming Corp.
- Williams (he was an auditor w/ Indiana Dept. of Revenue) filed a case under Racketeering Influenced and
Corrupt Organizations
- Compulsive gambler – gambled away $150k+
- His girlfriend contacted the casino and tried to get the casino to force him to stop gambling
- He eventually checked into a mental institution and the casino sent him a letter saying that he couldn’t return
to the casino unless he was mentally stable
- He left treatment, came back to the casino w/o showing any proof,
- Tries to sue under the RICO statute for mail fraud
- Why is he suing at all?
o He wants $$ and because he worked for revenue, he reviewed tax returns, so he’s good w/ numbers
- Posture: District Court dismissed the RICO claim (federal), granted summary judgment on the state claims
- Are all the claims related?
o Yes, all the claims are stating that the casino should’ve stopped him from gambling
- H: The appellate court says the district court should vacate and remand the cases because there’s no federal
issue b/c the federal cases were dismissed
o In Gibbs they allowed the district court to hear the state claims after dismissing the federal claim
o The court didn’t dismiss the claims until the jury had already returned a verdict
o So, it’s judicial economy
o Similar to Belleville
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State Courts are courts of general jurisdiction
Fed. Ct.’s are courts of limited jurisdiction
Art. III – contains 9 types of cases that can be heard in Fed. Ct.
o Federal Cases
 Arise under the laws of the U.S.
 Pretty vague so we need a statute
 § 1331 – the question statute
 § 1332 – diversity
 § 1338 – patents
 Concurrent jurisdiction with trademarks
 § 1343 – civil rights cases
 § 1441 – Removal
 If you filed a case in state court, it can be removed to fed. If it falls under the other
sections
 § 1367 - Supplemental jurisdiction
 Judicial economy, etc.
o Also diversity cases
Personal Jurisdiction
- Personal jurisdiction involving domicile is at the time of the suit
- When jurisdiction is based on domicile, minimum contacts are irrelevant
- Need to have a statute that gives personal jurisdiction
- You can waive the requirements of personal jurisdiction if you don’t assert it
- Contacts
o Single acts give specific jurisdiction
o Need statutory authorization for this jurisdiction (long-arm, typically)
o Substantial or pervasive acts give general in personam jurisdiction
 Corporations have general in personam where they are incorporated or have big places of
business
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Introducting into the stream of commerce not enough
 W.W. Volkswagen – have to have purposeful availment of laws
 Asahi – foreign corporation
There may be personal jurisdiction subject to a waiver via a long-arm statute
 Burger King, Carnival Cruise
About 14th Amendment - in every state court action and federal court action
The question is: is it fair for the court to require a particular defendant to defend in this specific court based
on the presence or actions of a particular court
In order to do a personal jurisdiction case, you’re very concerned with where the defendant’s from
So just like diversity, you’ll need to know where the defendant’s from to determine diversity and to figure out
if it’s fair for him to appear in this particular court
o Comes from the U.S. constitution or the State constitution and the appropriate legislative body tends
to pass additional statutes about the work of the court
Personal Jurisdiction comes from the constitution and is about “what is fair”? Inevitably that question is
raised by the defendant because the plaintiff chooses the forum
When you analyze personal jurisdiction you have to ask: “where are these parties from”?
o Look at where the suit is brought and the citizenship of the respective parties
Choose an order in which to analyze jurisdiction – CRW likes subject matter jurisdiction then personal
jurisdiction
o If when you analyze subj. matter juris. And you’re talking about diversity
 By starting over by personal jurisdiction you’ll stay disciplined
Pennoyer v. Neff – 1877 –
- Plaintiff non-resident of Oregon acquired title to the land under the Donation Law of Oregon
- There was an additional requirement in the law about when you can attach
- Defendant resident of Oregon claims he acquired it under sheriff’s deed at property sale
- The question is whether or not the judgment is valid or not
- Non-resident was not personally served with process, but the Oregon code allows for this behavior
o Rather, the notice was served by publication
- Holding: the authority of a tribunal is necessarily restricted by the territorial limits of the State in which it is
established, so the judgment was invalid
o The court says they can adjudicate over a person’s property, but he has no property right now, so the
Oregon court doesn’t have the power to
o This is an action in rem
 For our purposes today, in personam is people and in rem is talking about things
- The court looks at the contacts and asks: “Is it fair?”
o Whereas under Pennoyer the question is: “Is it there?”
International Shoe v. State of Washington – 1945
- Int’l shoe, a Delaware corp. and HQ’ed in St. Louis has salesmen that travel the country selling shoes
o The corp. paid for the salesmen, their commission, hotel rooms, and store front space
o No salesman has the authority to make contracts
- Int’l shoe had salesmen in Wash. Who were served as was the corp. hq by certified mail for failing to pay into
the Washington unemployment fund and Wash. Brought suit
- I: Does bringing suit violate the Fourteenth amendment’s due process clause?
- P: State court and Supreme Court denied Int’l shoes motions to quash
- H: the defendant only need maintain “minimum contacts” with the state and the case being brought in that
- State must not offend the “traditional notions of fair play and substantial justice.”
o Must be systematic and continuous activities
o Depends on the quality and nature of the activities
o Can’t be simply mechanical or quantitative
o Or isolated and single acts unrelated to cause of action would not be sufficient to meet
minimum contacts
o The service was appropriate and the personal jurisdiction did not violate 14 th Amend.
- Reasoning: the corporation enjoys benefits from conducting business within the state including reaping
profits and protection under Washington’s laws, has
- How do we determine how a corporation acts?
o You have to look at the activities of the employees and what they’re authorized to do
- Dissent by Black
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Argues that the rules are vague (which they will prove to be in later cases)
He argues this is ‘natural law’ and the majority is going ad hoc, warns us that the shoe test is bad
Hypothetical about two people driving to field of dreams in Iowa
o Accident between two parties both out of state
o Can the lawsuit be brought in WI?
o There’s clearly diversity jurisdiction, but is there personal jurisdiction?
o No, because there are no minimum contacts?
o If D is from IL, can you bring the case? Yes, because D has minimum contacts
 Remember it’s about the minimum contacts
o What about bringing the case in Iowa?
 Well, it’s related to the cause of action, so yes
 How would it not be fair for Iowa to make the Defendant accountable for his / her actions
when the accident occurred in Iowa?
o What if they correspond by e-mails and they lend each other money when their friendship began in
Iowa – can you sue there?
 No, not systematic and doesn’t relate to the cause of action
o Truck full of shoes driving to WA (owned by Int’l shoe) – driver causes truck to be in an accident
 Can the person injured in the accident file this lawsuit in WA if the accident occurred in WY?
 No, because the cause of action has to be related to the forum AND
 MO – yes, you can file it there
 DE – you can file there, because you choose to be affiliated there
o So it has to relate to the cause of action or you can sue someone in their home?
Shaffer v. Heitner – 1977
- Delaware statute allows state courts to take jurisdiction of any lawsuit by sequestering any property of the
defendant that happens to be located in DE
- Appellant (Greyhound Corp.) argue it's a violation of the 14th Amendment
- The plaintiffs alleged that Greyhound’s directors violated their duties to the corp. by engaging in activities
that resulted in the corp. being held liable for damages in an antitrust suit – all of which took place in
OREGON
o Greyhound is incorporated in CA, principal place of business in Phoenix
- Plaintiff filed a motion to sequester 3% of Greyhound’s common stock subject to Del. Tit. 10 § 366
o As a result of the order, 82,000 shares of common stock belonging to 19 of the defendants and
options belong to another 2 were seized by placing a stop transfer
o None of the seized property was physically present in DE
o But DE Tit. 8 § 169 makes the shares of a DE corp. property of DE
- Defendants notified by certified mail of the sequestration and also by publication
o Moved to quash sequestration b/c the ex parte sequestration denied them due process
o They argued they did not have sufficient contacts under International Shoe
- The DE trial court and Supreme Court argued that the sequestration procedure was not designed to retain
property, but to compel a court appearance
- They also argued the law protected against mismanagement of DE corp.’s
- I: should in rem jurisdiction be subject to Int’l shoe minimum contacts test? Yes.
- Holding: jurisdiction in rem is subject to the same minimum contacts and fair play standard as Int’l Shoe
- Majority argues that because DE law bases jurisdiction not on the directors’ status as fiduciaries but rather on
property in their state
o They argue DE could’ve passed laws putting Defendants on notice
o It requires more for quasi in rem jurisdiction
- Dissent argues this is too broad of a reading and that part IV should be considered dicta
o Brennan: Also, they didn’t argue the shoe test, so
o Hurting a DE corp. should allow suit in DE
Armstrong v. Pomerance - 1980
- derivative action by shareholders against directors of a DE corp.
- DE statute amended after Shaffer to put directors on notice that if they became fiduciaries in a DE corp., they
would be compelled to appear in DE court
o Consistent with in personam jurisdiction
- I: violation of due process clause under the Fourteenth Amendment?
- H: No violation of the 14th amendment
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Reasoning: DE has a significant and substantial interest in overseeing those owing fiduciary duties to
shareholders of DE corp.’s and that interest outweighs any burden to defendants
o They also look to N.C.’s ong-arm statute
Will help judicial economy
The Court calls part IV of Shaffer pure dicta
They say because you consented to be brought to suit when you were appointed as a director, we get personal
jurisdiction
o So consent outweighs the shoe test?
World-Wide Volkswagen v. Woodson
- Car crash took place in OK as plaintiffs were moving an Audi they purchased in NY to AZ
- Plaintiff drivers sued the auto dealer, manufacturer, and distributor
- I: violation of due process to require forum in OK?
- H: Yes, violation – there are no minimum contacts
- Reasoning: the dealership doesn’t maintain minimum contacts, because it doesn’t sell it’s autos there
o Nor did the dealership expect the car to end up there
- Dissent: it was foreseeable a car would make its way to OK – cars are moveable!
o The dealership has a network of dealers that sell parts
o And OK has good interstates, the accident took place on a major highway
o The plaintiffs were injured in OK – witnesses, evidence, investigation all took place there
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W.W. Volkswagen –
Only two parties contested personal jurisdiction – the distributor and the dealership
Why didn’t Audi and VW move to dismiss for lack of personal jurisdiction?
o The minimum contacts test must be done for each defendant
o Audi makes car to be sold throughout the United States
o VW brings over all the cars from Audi into the U.S.
o So, which ever state this case was brought into, there would be jurisdiction
o The dealership and distributor do not have such a broad market
The basis for removal is what in this case?
o There was diversity because defendants were HQ’d in New York and the Plaintiffs had left N.Y. and
were on their way to AZ but P’s weren’t residents of
Personal jurisdiction
o What was the majority looking for that it could not find?
o The Court couldn’t find continuous and systematic activities nor purposeful availment of OK’s laws
that it’s foreseeable that the defendant would be “haled into court”
o The defendant has to show a conscious attempt to knowingly create contents and to take advantage
of that State’s laws
Surprising language from Justice White about federalism in the 14th Amendment
o Goes away in the Bauxite case, and personal jurisdiction is a 14 th Amendment issue
Brennan Dissent
o The idea of having the burden on the defendant needs to be re-examined because it’s not that hard
for the defendant s to appear
o He also believes the minimum contacts test is met
o The product in this case is a car, which is mobile, so how can’t it be foreseen that a car dealer would
sell
Marshall Dissent
o Said there was a network of cross-country dealerships
o Seaway is benefitting from the network of dealers throughout the country
Brennan seems to be unimpressed with this definition of purposeful availment and that if you profit from
interstate business, that’s enough
W.W. should enforce how fact-specific these rulings are
Blackmun says I don’t know why the parties are litigating this, but I don’t care
o If the Defendants are held responsible, the damages would be paid for by Audi and VW, and since
those two weren’t protesting personal jurisdiction, why did the plaintiffs even care?
o A: Creek Cty. OK was perceived as being more beneficial
Keeton v. Hustler - 1984
- Petitioner NY citizen is Keeton (Penthouse employee) who sued Hustler for libel in New Hampshire
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Her previous complaint was dismissed in her home state of Ohio because of Statute of Limitations
Hustler is an Ohio Corp. w/ principal place of business in CA
Keeton has no contacts w/ NH, but it’s about the defendant’s minimum contacts w/in the state
Petitioner then filed suit in New Hampshire under its “long-arm” statute and because they have a longer SOL
Hustler doesn’t sell a lot of magazines NH because there’s a low population
o But the court doesn’t care about this because Hustler would expect the protection of NH’s laws
CRW: “Minimum Contacts != best contacts”
A single publication rule applies here – if you file one suit for libel, you can only do it in one state to avoid
excessive litigation, but you can also recover damages for all states from the one state
Issue: Is bringing Hustler into New Hampshire constitutional under the Due Process Clause of the
Constitution?
Holding: Yes, it’s permissible to bring suit
Reasoning: Libel suits can be brought anywhere there’s circulation, and there’s enough circulation in NH
o There were damages in NH
o Libel torts occur wherever there’s circulation – so the plaintiff doesn’t need to be a resident
o NH deleted the requirement that torts under long-arm be committed against a resident
o As for the fact that other states’ SOL’s had run, that’s a choice of law issue, which the forum gets to
choose (in this case NH)
o Hustler’s conduct meets a systematic and continuous contact test
o Hustler availed itself of the state laws by circulating its magazine there
Calder v. Jones
- Calder (Respondent), a CA resident brought suit in CA superior ct. for libel under long-arm statute against the
Nat’l Enquirer’s editor (Petitioner) Caleder. Calder edited and approved the article in question
- Jones was the mother in the Partridge Family
- Nat’l Enquirer doesn’t have a chance of dismissing for lack of personal jurisdiction, but Calder and another
defendant have never been to California
o Again, the analysis for each defendant must be made individually
- The Enquirer has its principal place of business in FL, circulates 600k magazines in CA
- Petitioner editor has been to CA twice – (i.e. few ‘contacts’)
- Petitioner South the reporter frequently travels to CA on business
o Travels many times each year to CA
- I: Is having personal jurisdiction a violation of the Due Process Clause?
- H: No, it’s not Whether the petitioners are physically there or not doesn’t matter to physical availment
- “effects test” – it is appropriate in some cases to find minimum contacts because the effect of your act is
significantly felt in a particular place
o You see this test used in intentional tort cases
- Reasoning:
o Petitioners’ negligence was directed at citizens of CA
o Largest circulation of the Enquirer is in CA
o The writer and editor took aim at a plaintiff in CA and they knew it would damage her in CA where
the magazine had its largest circulation
o And an individual injured in CA need not go to FL to seek redress
Helicopteros Nacionales De Colombia S.A. v. Hall - 1984
- Petitioner is Helicol, a Colombian Corp. w/ principal place of business in Bogota
- Respondents’ decedents were employed by a Peruvian consortium that was really a joint venture between a
Texas-based co. and a Peruvian Co. to build an oil pipeline
- Helicol CEO flew to Houston to contract w/ Consortium. It was written in Spanish, said any controversies
arising out of the K would be subject to Peruvian jurisdiction
- Helicol flew helicopters, and as a result of a crash, killed four Texans working for Consortium
- Helicol purchased 80% of its helicopters from Texas-based Bell Helicopters. And as a result, sent its pilots for
training to Bell
- Helicol never had any place of business, employees residing, solicited business, or recruited an employee
from TX
- Respondents instituted wrongful-death actions and Helicol filed special appearances and moved to dismiss
for lack of in personam jurisdiction
- TX Supremes initially ruled in favor of Helicol, but on motion for rehearing reversed the judgment
- I: is there in personam jurisdiction or does this violate the Due Process Clause?
- H: There is not in personam jurisdiction
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Reasoning:
o “claims against Helicol did not ‘arise out of’, and are not related to Helicol’s activities within Texas”
o The contact between Helicol and TX can’t be described as continuous or systematic as
o As for drawing from a TX bank for payments from the Consortium, there’s no indication they chose to
do it that way
o The TX Supremes focused on expenses incurred during trips to TX, but that wasn’t held to be enough
in Rosenberg
Dissent:
o Argues that the court is saying more than it thinks in this decision
o Specifically, the majority doesn’t make a distinction between “arising out of” and “relat[ing] to “ the
contacts
o Brennan focuses more on the notions of fair play and substantial justice
o Also, nothing suggests that “continuous and systematic” contacts are necessary for general
jurisdiction of a foreign coproration
o And as for Rosenberg, Brennan argues it’s outdated law that does not comport with the fundamental
transformation of our national economy
 He says we should expand the scope of respective jurisdictions
o He argues Helicol is engaged in frequent transactions in TX because they purchased helicopters and
sent personnel
o Also the wrongful death claim “arises out of” the laws of TX and is related to the negligence of Helicol
o Finally, if the plaintiffs had argued negligence in training as an element of training for the pilot error
cause of action, there would be jurisdiction under the majority’s holding
o The majority says there’s no general jurisdiction, but Brennan does a specific jurisdiction analysis
General v. Specific jurisdiction analysis
- specific = specific minimum contacts so we can hail them into court
o e.g. car crash in Iowa
- general = under any set of circumstances it’s appropriate to sue that defendant in that place
o There are grounds when: you’re a resident of a state, you’re a corporate citizen, or if you’re physically
present at the time of service
o CRW has never seen general jurisdiction without the citizenship
Burger King v. Rudzewicz
- BK terminated Rudzewicz’s franchise
- The agreement between the franchisees and franchisors stated that FL law controlled under the long-arm
statute
- I: does a franchise agreement between two diverse parties confer in personam jurisdiction?
- BK has its principal offices in Miami, the franchisees are located in Michigan
- Due to economic recession, the franchisees attempted to reform their K, realized the district office in MI had
little power, got rent lowered, and other concessions out of the FL BK headquarters
- The franchisees fell behind on their payments to BK HQ, were ordered to vacate or turn over the premises
- Ct. of appeals reversed saying the franchisees were unprepared for the franchise litigation and holding
otherwise would offend the fundamental fairness of due process
- I: does such an agreement (considering the circumstances) violate due process?
- H: no, it does not
- Reasoning:
o Franchisees intentionally reached out to BK in its home state
o “parties who ‘reach out beyond one state and create continuing relationships and obligations with
citizens of another state’ are subject to regulation and sanctions in the other State for the
consequences of their activities”
o Also, parties frequently stipulate or give consent to personal jurisdiction, which is what the
boilerplate in the BK contract did
o If defendants derive benefit from their interstate activities, they may be subject to interstate
jurisdiction Kulko
o The fact the defendant did not foresee the injury arising in another state is not enough World-Wide
o That said, a contract alone is not enough to confer personal jurisdiction
o Systematic and continuous contacts with the state were accomplished by use of BK’s trademarks,
service marks
o All payments sent to FL
- Dissent by Stevens, White
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o
o
They argue that the burgers, etc. were all sold in MI, the franchisees had never been to FL
They’re worried the boilerplate will create an unequal bargaining power
Asahi Metal Indus. Co. v. Superior Court, (1987)
- Gary Zurcher lost control of his motorcycle in CA, brought products liability suit in CA state court, claiming
rear tire and tube were defective
- One of co-defendants was Cheng Shin, Taiwanese manufacturer of the tube and impleaded Asahi, the
manufacturer of tube’s valve assembly and sought indemnity from them
- Zurcher settled leaving Cheng Shin’s impleader against Asahi
- Cheng 20% of tire tubes found in a typical motorcycle store had been produced by Asahi, and there was
evidence Asahi knew its valves would end up in the U.S., but Asahi had no offices or agents there, and did not
control the system of distribution that carried products into the state
- All nine members of the Court believed they couldn’t adjudicate the indemnity claim
- Five justices believed Asahi Had minimum conacts but couldn’t adjudicate the case because
o (1)the burden of defending in a foreign legal system, (2) the slenderness of California’s and Cheing
Shin’s interests in having indemnity claim heard there and (3) the strong federal and state interest in
not creating foreign relations problems by deciding an indemnity claim between two foreign
defendants
- O’connor’s main opinion held:
o No minimum contacts b/c D contacts had to be purposefully directed toward the forum State
o A defendant’s awareness the stream of commerce may or will sweep the product into the forum State
does not convert the mere act into a purposeful act of carrying it into the state
o Joined only by Rehnquist, Powell and Scalia
o She also said even if there were minimum contacts, it would violate due process
- Brennan, White, Marshall, Blackmun disagreed
o As long as participant is aware the final product is being marketd in the forum State, the lawsuit can’t
come as a surprise. The D benefits economically
o Big difference between a fortuitous act carried the product into the forum State (V.W.) vs. where
products are regularly sold
o But Brennan agreed it would be unreasonable to require Asahi to defend 3rd aprty
o Weston would say “unfair”
- Stevens said no need to decide minimum contacts b/c it would be unreasonable, but that 100k units shipped =
purposeful availment
- First time in recent years that Court found it unreasonable and violation of due process for a state to exercise
jurisdiction over a defendant that had minimum contacts
o The case is the slenderest example of minimum contacts: tube manufacturer to tire manufacturer to
motorcycle manufacturer – really carried around by stream of commerce
o Interesting analysis if Zurcher had not settled its claim
Boit v. Gar-Tec Products
- Bought a hot air gun from a catalog; the catalog resold the guns to people in Maine
- The manufacturer never sold, marketed, employed, had anyone in Maine
- I: personal jurisdiction?
- H: no. not sufficient contacts
Dehmlow v. Austin Fireworks
- Guy working on fireworks in IL sued manufacturer who distributed through a WI co. for tort damages
- I: personal jurisdiction?
- H: yes.
- R: they entered into extensive negotiations w/ the City of Chicago, the Co. that sold the fireworks was located
closed to the IL border,
Personal Jurisdiction: “An Open Discussion”
- Where does personal jurisdiction come from?
- The notion is that the defendants’ due process is violated by dragging a defendant into court
- Asahi further complicated things by limiting in rem jurisdiction
- Weston says even though there are disagreements, the key test is: “is it fair?”
- You need ample facts to determine if there is personal jurisdiction – pleading standards are changing
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Cybersell v. Cybersell
- Plaintiff Cybersell is an AZ corp. they have a servicemark for their name
- Defendant Cybersell is a FL corp.
- Cyber AZ alleges Cyber FL can be sued because cyberspace is w/o borders
- Defendant had a local telephone # posted on its website, did not do business in FL
- I: is the out-of-state corp. subject to personal jurisdiction because cyberspace is w/o borders?
- H: no.
- Reasoning: No minimum contacts, also no directed contacts like in Calder or Keeton
- Note: this case was about specific jurisdiction, as both parties conceded there was no general jurisdiction
- The test the court laid down was that the likelihood personal jurisdiction can be constitutionally exercised is
directly proportionate to the nature and quality of commercial activity that an entity conducts over the
internet
- The court didn’t take evidence from the father & son – they just wanted to thwart the spam king
- The holding just put a lot of emphasis on the site being passive
- Personal jurisdiction doesn’t speak to today’s economy
Cable News Network v. CNNews.com
- CNN is plaintiff, Atl. GA corp.
- CNNews is defendant, a Chinese website
- CNNews registered its domain name through a TLD in Virginia, originally (Verisign)
- CN is meant to be understood as ‘China’ and only gets revenue from China, only in Chinese characters
- Because it was a .com domain, VeriSign was the registry in charge of all the domains even though the
Defendant transferred the domain name from a US registrar to a Chinese one
- But they transferred it back to the U.S. after the court order
- Case is most analogous to Shaffer
- The P’s tried a WHOIS request, and didn’t get a response so they served via publication
- The test for brining an action in the Anti-cybersquatting (consumer protection) Act is: the registrar has to
exist in the state and there must be no in personam jurisdiction, which there is not in this case
- The court then goes on to discuss types of quasi in rem jurisdiction, because Shaffer (the DE shares case)
seems to bear on the instant case
o Quasi in rem I: action which allocates property rights as against particular named persons – action to
remove a cloud on a land title or actions seeking quiet title
o Quasi in rem II concerns the rights of a particular person or persons to a thing but is distinguished
from in rem I claims b/c the claims for in rem II are separate from the res that provides jurisdiction
(e.g. Shaffer)
o The court then says in personam and in rem II requrire minimum contacts, but it’s not clear how the
court believes in rem and quasi I cases
o So, the court says any language in Shaffer is dicta and can be ignored so no minimum contacts
necessary for ACPA actions and moreover in rem and quasi I actions
- Note the court doesn’t care if CNNews intended to infringe on CNN’s servicemark
- This is a true in rem case because the actual domain name is the thing that brings about the res
Hy Cite Corp.. v. Badbusinessbureau.com
- P is WI corp w/ place of business in Madison
- D is LLC in St. Kitts/Nevis
- D runs a website where people can complain about bad businesses, can also buy a business revenge guide
- P is subject of 31-40 complaints
- Only one book sold in WI
- Companies can also join the site’s advocacy program or pay for a rebuttal
- P contacted D about making a rebuttal / joining the program and was told it would cost $50k
- There’s a discussion of the various case law, with a bit on the Zippo case, which points to a site’s interactivity
as a barometer for personal jurisdiction, but the judge dismisses this as not relevant
- Minimum contacts test applies for specific jurisdiction and systematic and continuous applies for general
jurisdiction, the court says
- Because only 1 book was sold and the only contact w/ the P was through an e-mail they solicited, not enough
for either specific or general jurisdiction
- In discussing general jurisdiction, judge says it borders on frivolous
o She talks about minimum contacts
o It’s the only test, effectively
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Weston says internet law re: personal jurisdiction is an open question
Long-Arm Statutes & Statutory Authorization
- They basically allow states to hale / haul anyone into court as long as it comports with Due Process
Gray v. American Radiator Corp. – Sup. Ct. Ill. ‘61
- Appeal from judgment of circuit court of Cook Cty. Dismissing P’s damages claim, but the appellate court
quashed the Plaintiffs’ service
- Suit brought against Titan valve, a ‘foreign’ corporation – meaning they’re hq’d in Ohio
- Titan supplied the valves for radiators to American Radiator, the Defendant
- The claim is for negligence that the valve caused injury to the plaintiff
- Titan does no business in IL
- Amer. Radiator alleges titan made warranties about their valves, and therefore has to indemnify the
o American’s cross claim against Titan was denied by the circuit court
- Titan argues that the word “tortuous act” was used by the legislature and this is a separate from the
consequences of the tort
- I: was the tortuous act committed in IL and (2) does the statute violate due process
- H: Tortious act was committed in IL and statute does not violate due process
- Reasoning:
o Tortious acts are committed where the last event takes places, so the tort was committed in IL (citing
Rest. Confl. Laws)
o The court dismisses the tortuous act argument saying that it the act and the injury are inseparable,
legislation should be read in its popular sense and the adoption of such a theory would promote
litigation over extraneous issues concerning the elements of a tort
o As for the due process argument, the court turns to the usual suspects:
 “substantial contacts within the state” test
 Whether there’s a reasonable method of notification
 Continuous and systematic contacts
 Sufficient ties to with the state to comport with fair play and substantial justice
o In this case, service was made on their HQ, so that prong is satisfied
o The court talks about cases in other states where personal jurisdiction is found to exist similar to this
one
o Court says it’s a reasonable inference that Titan’s commercial transactions result in use substantial
use and compensation within the state
o It enjoys the benefits from the laws of the state and has benefitted from the protection of the laws
o Also, the court of the place of injury usually provides the most convenient forum for trial
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Kopke v. Hartrodt – Sup. Ct. WI – 2001 – opinion by: Bablitch
P is a worker injured unloading a truck, D is an Italian cooperative that packs paper for another Italian
company.
o P’s loading plans said “appleton”, “Neenah” and CTI – indicating they were bound for those places
and for CTI (the WI company) – the state was never listed though
CTI, the purchaser of the paper, had been purchasing paper from the Italian paper co. from ’91-‘98
Similar the Italian paper Co. (Binda) entered into a K with D’s
D loaded at least 45 cargo containers for shipment to WI; 39 of which arrived between Nov. ’96 and May ‘98
Posture: the circuit court judge denied D’s motion to dismiss for lack of personal jurisdiction
I: do the facts satisfy the long-arm statue and (2) does the coop have minimum contacts
H: Yes1
Reasoning:
Again, we look to due process requirements and the statute itself
The statute mentions ‘processing’ of products, which d’s argue means mechanical transformation of a product
o Court looks to statutory construction rules, concludes that processing has a broad meaning
D’s point to a FL case where a fisherman was injured unloading cargo and personal jurisdiction was found to
be lacking.
o Court dismisses this by noting different FL statutory construction rules (liberal vs. strict) and FL
courts require more than due process to find personal jurisdiction
They then turn to due process requirements and guess what….:
o Minimum contacts – plaintiff caries the burden
o ‘fair play and substantial justice’ – defendant carries the burden
o Defendant should reasonably anticipate being haled into court
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There’s jurisdiction if D invokes benefits and protections of the forum’s laws
There’s also the purposeful availment requirement
They then examine the stream of commerce theory – that there must be more introducing into the
stream of commerce – there must be additional conduct
o The court says D’s had a regular course of dealing resulting (multiple deliveries over the course of
years)
o The label of the cargo’s destination as Neenah or Appleton indicates the cargo was destined to go
there
 They differentiate from Asahi because it’s not shipping parts from one manufacturer to
another – the two are in this case working in tandem
 D’s gained an economic benefit from their business in WI by contracting with the paper co
that dealt in WI, so minimum contacts test is satisfied
 Finally, the court says that having constructive knowledge rather than actual knowledge of
where the cargo was headed is enough to meet the purposes of minimum contacts
o As for the burden on the defendant, must examine: (1) the forum state’s interest in adjudicating the
dispute; (2) the plaintiff’s interest in obtaining convenient and effective relief (3) the burden on the
defendant; (4) the interstate judicial system’s interest in obtaining the most efficient resolution of
controversies; and (5) the shared interest of the several States in furthering fundamental substantive
social policies
 In response: WI has an interest in adjudicating its citizens’ claims there
 P has undeniable interest in obtaining relief there
 (3) D argues allowing personal jurisdiction would subject packing and portage companies
everywhere to jurisdiction (citing cases)
 Ct. says these cases were “merely fortuitous” unlike the instant case
 D also contends the real dispute is between the two foreign companies, but the court says
the K between the two contains a choice of forum provision, so that won’t be a hassle
Dissent by: Crooks, Sykes
o They argue now anything will meet minimum contacts, that D didn’t anticipate being haled into ct.,
that D’s didn’t control the paper shipping system, and that they didn’t know where the containers
were headed because there were multiple Appleton’s and Neenah’s in the world, that D’s didn’t
benefit because they didn’t depend on Wisconsin for the benefit
o
o
o
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Republic of Panama v. BCCI Holdings
- Panama filed an action under RICO against American banks. RICO provides nationwide service of process
- Dist. Ct. dismissed the action for lack of personal jurisdiction
- I: Personal jurisdiction?
- H: yes.
- Reasoning:
o Statutory basis is satisfied b/c D’s are corporations doing business in the U.S.
o Then there’s the Constitutional issue
 5th Amendment constrains nationwide service, but there’s debate on this
- Jim Walter requires only “minimum contacts with the United States” for defendants in federal suits
o But the Sup. Ct. rejected this, saying personal jurisdiction is based on a restriction on judicial power
not as a matter of sovereignty but as a matter of individual liberty
o The court says SCOTUS never addressed the jurisdictional issues under 5th amendment, but did do it
under the 14th amendment, so here we go again…
- Traditional notions of fair play and substantial justice
- Need to protect D against dangers of litigating in far away or inconvenient forum
- Need fair notice
- Need to purposefully direct D’s activities at the residents of the forum
- Need purposeful availment,
- The Defendant corporations are hq’d in America, and the fact they haven’t had significant contacts in FL is
insufficient to render it inconvenient b/c discovery will be worldwide and no more inconvenient than other
forums. D’s presented no evidence their defense will be compromised in FL
Notes 10/8/09
- She’s having us go back and look at the long-arm statutes from all the cases
- They’re all statutes from different states
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She asked why she made the assignment? Apparently the reason was to show that long-arm statutes codify
personal jurisdiction
She’s saying that there are two pieces to personal jurisdiction: (1) constitutional analysis and (2) the longarm requirement
To have personal jurisdiction, the legislative body has to have chosen to exercise personal jurisdiction in that
state and then you have to figure out if the exercise of that constitutional power is constitutional
Why isn’t there an issue if the defendant is a resident of the forum?
o How can you say it’s unfair to go to court where you are / where you voluntarily affiliated yourself
There are statutes where we’ve statutorily created consent by alleging the connection to the state, the
connection of which is essentially theoretical
o E.g. by driving in the state, you are consenting to appear in court w/ respect to your driving
o Also comes up in statutes where they say a government agent is authorized to be served by process
o It’s a way of short circuiting the test
 And we can get away with this because you’re presumed to know the law when you drive
After Shaffer when DE passed the law saying if you’re a director you consent to personal jurisdiction
o But directors have no idea they can be hauled into court
When you determine whether there’s personal jurisdiction again, there must be a statutory and constitutional
basis
And states have chosen very different ways of writing their long-arm statutes
o WI’s is specific, CA’s is very general
Weston points to § 11 of WI long-arm statutes
o Custody determinations and divorce actions themselves (not property division) fall under this
section
o There’s a line in there saying that there is personal jurisdiction if you were married for a minimum of
six months within the six years before the divorce proceeding is filed
Notes on Gray v. American Radiator – IL 1961 (apparently a chestnut case)
- Gray injured by explosion of water heater manufactured by American Radiator
- Titan valve supplied the valve that blew and caused the injury
- Gray is suing both Titan and American Radiator
- What does the IL long-arm require?
o Requires that a tortuous act be committed in IL
o The factual dispute on this is where the tortuous act occurred
- The argument is whether there was a valve defect
o And Titan argues if they did anything wrong it’s in Ohio
o We care about this because you can’t exercise personal jurisdiction over the defendant unless the
legislature has said it’s an appropriate case to bring in this state’s court
o The court says the place where the tort occurs is where the injury occurs (i.e. IL)
o Titan also tries to argue the statute says “tortuous act” and Titan argues this refers to the act
committed
- What’s the difference between this case and World-Wide?
o Because there’s a constitutional question in addition to the statutory one
- It might be offensive under the constitution if the statute is construed to be in conflict with the defendant’s
constitutional rights
- 2 questions in this case: ‘minimum contacts’, ‘
o The main case is Int’l Shoe.
o Need ‘minimum contacts’ and the court says there are contacts in this case
- The service statutes say the state’s procedure for service (duh)
o Must comply w/ service statute and minimum contacts
Kopke v. Hartrodt – WI 2001
- Kopke sued Binda and l’Arciere, L’Arciere moved to dismiss for lack of personal jurisdiction
- Binda entered into K w/ L’Arciere to load cargo containers
- Kopke was injured when he opened a cargo container and the pallet loaded by L’Arciere fell on him and
injured him, causing him to be a quadriplegic
- Court relies on 801.05(4)(b) – an injury occurring in the state, which requires the defendant process materials
- Why does the WI statute require the defendant to be involved in process, service, or manufacturing ?
o The legislature can’t craft a statute that grants personal jurisdiction when someone gets injured by
anyone outside of the state for any act.
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Basically they’re trying to get it within the bounds of what the Supreme Court’s due process
jurisprudence allows
 Prevents questioning whether the statute is facially constitutional
L’Arciere makes arguments about the word ‘process’
o L’Arciere says this means the product has to be ‘changed’ in some fashion
o Secondly they argue this definition of process doesn’t fit with the other uses in the constitution
o The court dismisses the argument with dictionary definitions and also uses the rule of looking to
surrounding words in the statute – namely that if process was what the defendants mean it to be,
then it would be redundant and finally that the statute should be construed liberally under case law
o also point to FL cases
The court has to take a position on Asahi, and they agree w/ Brennan and Reject O’Connor, saying you don’t
need deliberateness the way she described it – that placing something into the stream of commerce alone is
consistent with due process and there is personal jurisdiction
Also, there have been a significant # of shipments over the years
The dissent by Crooks and :
o They argue that it says Appleton and Neenah and CTI, which could mean ANY Neeenah, or Appleton
o Except that there are only 3 Neenah’s and 12 Appletons
What is the dissent worried about?
o They’re worried about protecting business – (bs IMHO)
o
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Panama v. BCCI Holdings
- Panama Filed suit under RICO against a bunch of banks – they wanted to be able to bring suit anywhere
- In Fed. Ct. in cases arising under Fed. Law, there are laws that discuss jurisdiction (state law doesn’t apply)
- Generally, you can serve someone personally as long as it conforms with the state laws you sue in
- There are some laws that define their service rules within the law
o This case only exists b/c there’s a federal cause of action under RICO that has a provision for
nationwide service of process
o Not the only Federal law like this. But not all Federal laws are like this either
- The question is in this case: is it fair to make the defendant go to court in the united states
o Because the country is so big, they entertain the argument that it may be too inconvenient to be
brought into suit anywhere in the United States
o It’s the 5th amendment not the 14th amendment in this case, and you look at fairness not in one state
but in the united states
o This case is limited to the existence of a Federal statute that says jurisdiction is nationwide
Transient Jurisdiction
Burnham v. Superior Ct. of CA- gave states powerto assert jurisdiction over individuals when Int’l. Shoe not met
- Burnham was served process while in CA for just a few days
- I: whether that was enough for personal juris. Even w/o minimum contacts
- It was
Consent
Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee
- CBG brought suit against its insurer to recover from a loss
- Insurer claimed lack of in personam jurisdiction, but failed to comply w/ discovery orders
- The court declared that there was in personam jurisdiction.
- I: whether a defendant’s failure to answer a question that might establish personal jurisdiction, can result in a
sanction granting the court personal jurisdiction
- H: it can.
Transfer
Hoffman v. Blaski
- P brought an action against D, and D successfully moved to transfer to a more convenient district. However,
the transferee district was nto a place where D was previously subject to service, and did not have proper
venue at the time the P brought the action.
- Posture: circuit ct. granted mandamus, ruling that 1404(a) did not authorize the transfer
- I: whether D may seek transfer to a more convenient forum after commencement of the action if the
transferee forum was nto one where P could have initially brought the action
- H: no.
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R: transfer may only be to a more convenient forum “where it might have been brought”, not “where it may
now may rebrought with the defendant’s consent.” D could theoretically move the case anywhere, leading to
discrimination and harassment.
Ferens v. John Deere
- Plaintiffs sue John Deere, file in MS, then transfer to PA
- I: whose rules apply?
- The transferee court must apply the transferor court’s rules
Forum Non Conveniens
Gulf Oil v. Gilbert
- Negligence action brought in Fed. Dist. Ct. in NY. D sought dismissal under forum non conveniens, claiming VA
was the appropriate location since it was amenable to suit there, and all of the evidence and witnesses were
in Va.
- I: FNC appropriate even though D subject to personal jurisdiction and venue were proper?
- H: yes.
- R: the doctrine is one of discretion of the court. P may not choose an inconvenient forum to harass the
defendant
Piper Aircraft v. Reno
- Plane crashed in Scottish highlands
- Reno was a legal secretary, administratrix for the plaintiffs and was the secretary for the plaintiffs
- The propellers were manufactured in Ohio, the plane in PA
- She files wrongful death suits against both parties in the superior court of CA
- How did she get appointed?
o CA lawyer was a specialist in these airplane cases recruited these plaintiffs
- Piper moved to transfer to the Middle Dist. Of PA, and
- Piper moved to dismiss on forum non conveniens and relied on the balancing test on Gulf Oil
o Both cases held that forum should rarely be disturbed
- District Court said that the connections are “overwhelming “ to Scotland
o The said choice-of-law provisions, and witnesses pointed toward Scotland as the forum
- The 3rd Circuit Reversed and remanded saying the District Court abused its discretion
- Holding: The Court of Appeals erred in holding that plaintiffs may defeat a motion to dismiss on the ground of
forum non conveniens by showing that the substantive law would be applied in the alternative forum is less
favorable to the plaintiffs than that of the present forum
- Take home message: Look how hard the lawyers worked – your responsibility is that you must satisfy three
criteria
o Must choose location where there’s subject matter, personal, and there’s venue
o The court is saying they can deprive you of your right to trial if they just think it’s a bad idea
- Reasoning; it would clog the courts, difficult choice of law provisions
- This case was decided in 1981 – and very similar to Asahi – Court seemed to hang its hat on the fact that
everything was in Scotland and that the law in Scotland is so different
- Is this the right result?
o The planes are made in the US, regulated by the US, the forum is more convenient in the US
o Citizens of the US are most likely to be injured
- Dissent by: Stevens and Brennan
- Why the difference in results?
o In Gulf Oil there was suggestion that Congress passed the Federal Statute
o If the right place is not in the Federal Court system, forum non conveniens applies
Annkenbrant v. Annkenbrant
- Family law case where the parties were clearly diverse, the amt. in controversy was satisfied
- Filed in Federal Court, and it was alleged there was no subject matter jurisdiction
- The Fed. Cts. Said they couldn’t handle the case because they’re ill-equipped to do family law
- And boom: no more family law cases in Federal Court
Bremen v. Zapata Off-Shore Co. –
- American Co. contracted w/ German Co. to two a drilling rig from Louisiana to Italy
- Rig damaged and towed into port
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Because the parties had bargained extensively, the contractual choice of forum was relatively neutral and
being haled into court was clearly foreseeable
Enforcement of Contractual Forum Selection
Carnival Cruis v. Shute
- Shutes bought travel tickets for a carnival cruise
- The tickets contained a choice of forum provision requiring suit in FL
- Shutes are from Washington state and one of them got injured
- They tried to sue in Wash. Dist. Ct., but got dismissed for lack of personal jurisdiction
- The Court of appeals reversed saying that but for petitioner’s solicitation of business in Wash. The Shutes
wouldn’t have taken the cruise, and that there were sufficient contacts in Wash. St.
- Respondents also made an argument that the choice of forum was prohibited under Federal Admiralty law
- I: Is there personal jurisdiction in the contract of adhesion?
- H: There is jurisdiction and it’s in FL –
- Reasoning: the Shutes knew about the fine print, may lower the cost of litigation, may dispel confusion about
where the suit is to be brought and undoubtedly the Shutes got the benefit of cheap tickets form lower
lawyering costs
o Also, FL is not an alien forum
o Petitioner has its place of business in FL
o In response to the Admiralty law argument, the Court says there’s no legislative intent that Congress
intended the law to protect people from being brought into distant forums to litigate
- Dissent By: Stevens, Marshall
o The Shutes got their tickets after they purchased them – can’t return the tickets
o Also, higher scrutiny for contracts of adhesion
o The print is apparently very small with the choice of forum provision
o Also, the doctrines of unconscionability and contracts limiting the forum have generally been found
against public policy
Erie Doctrine
- pre-Erie, you apply natural law to common law, not if codified by States in statute
- Erie said apply state law – but not so simple
o Only applies in diversity cases
- Statute of limitations is substantive state law – Guaranty Trust v. York
o Origin of the “outcome determinative” test
- Byrd v. Blue Ridge - right to jury trial would be outcome-determinative
o “form and mode”: follow state matters
- Hannah v. Plumer
o Modified outcome-determinative test
o Part 1: avoidance of forum shopping and inequitable administration of the laws in determining
whether federal policies should be followed
 Outcome determinative test: follow state rules
o Part 2: entirely different analysis for cases where an official FRCP conflicts with state law
 Fed. Authority if the rule is “arguably procedural”
 Applies to laws passed by Congress. Stewart v. Ricoh
o Constitution controls over substance and procedure
o Federal Rules:
 “rationally capable of classification” as a procedural regulation
 but cannot “abridge, enlarge or modify” a substantive right under the second subsection of
the REA

Swift v. Tyson
- Swift sued Tyson for not honoring a bill of exchange
- Tyson gives the bill to Norton, who has the Bill transferred to Swift to pay off some debt
- Tyson decided he wanted to dishonor the bill
- I: could Tyson bring up this problem as a defense when it’s Swift, not Norton, who wants to …
- I: what substantive body of law should control this case? The case is taking place in the N.Y. FEDERAL COURT
- I: Is there a federal common law?
- H: There is a common law, but not a statutory one, i.e. have to follow the state statutes but not common law
- Remember had this case been in State Court, this case would’ve been determined by state law
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So the Erie Question is what law should be used when you have a diversity case in the Federal Court
system
Story says “law” in the RDA means common law, not statutory law – a very narrow interpretation
o Story speaks of “General commercial law” – and that the Court doesn’t have to be concerned with
cases decided in New York
Background – we needed good foreign trade and there was economic instability, so Story was probably doing
this to have a uniform interpretation of commercial law
The jurisprudential stance is that there is natural law – that you’re supposed to look all the bodies of law that
exist and then choose the right one – that it will come to you
RDA – something USC § 1652 (Rules and Decision Act)
o Basically, you use state law unless there’s a law that says otherwise
Remember, you apply natural law in all circumstances when there’s not a state statute
o
-
Brown & Yellow Taxi v. Black & White
- Brown & Yellow reincorporated in another state, was able to sue in Fed. Ct. to get the exact opposite decision
under Tyson
- Law was really unpredictable
- So Smith had the opposite effect
- The great dissenter was Oliver Wendell Holmes – Had no use whatsoever for natural law
Erie Railroad Co. v. Tompkins – 304 U.S. 64 (1938) – opinion by Brandeis
- Tompkins a PA citizen injured by Erie R.R. train, principal place of business in New York
- The parties were not being argued that swift be overruled – the court used this as their opportunity to
overturn Swift
- Brandeis was probably just waiting for a case like this to come along
- Tompkins claimed his injuries were due to negligence, jury awarded him $30k
- He sued in federal court in NY, saying that they had to apply the federal common law ordinary negligence
standard
- Erie said they had to apply PA state law, which was a ‘wanton or reckless’ negligence standard rather than the
federal common law, which was ordinary negligence
- I: Federal common law?
- H: abolishes federal common law because it’s unconstitutional
o Need to apply state law in diversity cases
- Reasoning:
o They cite an abundance of discontent with the law and new legal scholarship about the Rules of
Decision Act, which J. Story had relied upon in Swift
o And that law means all law, not just common law
o Changing the rule will curb judicial activism
o Common law is crap
o That Swift didn’t have the right interpretation – State courts continued to perform their traditional
common law function
o It’s a denial of due process because outcome is determined by which place you file your lawsuit in
o And the purpose for diversity jurisdiction was to avoid bias and unfairness
- Many people question whether there’s really a 14th amendment issue
- Dissent:
o Argues judicial activism
o
Mason v. American Emery Wheel Works – 1957
- Filed suit in Dist. Ct. of RI – for injury sustained by negligently manufactured emery wheel
- Trial court dismissed because the plaintiff wasn’t in privity with the manufacturer (trial ct. applied MS state
law)
- But McPherson v. Buick - held that absence of privity was no bar for suit
- Plaintiff appealed and the Appeals Ct. said the MS Supreme Ct. was inclined to adopt the new rule because of
some dicta in a recent opinion
- MS did decide the law in 1928 and it required privity
- So the holding here is that the courts need to think about how the State courts would decide the case
o How crappy
- The question then becomes – does MS have to follow the Fed. Ct.? No, they don’t have to follow it
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McKenna v. Ortho Pharmaceutical
- McKenna is P, took oral contraceptive made by Orhto, later suffered medical injuries, later had a stroke
- Lower Ct. denied Ortho’s MSJ
- Lawsuit brought in PA, but the general rule is that PA courts normally apply statutes of limitations of the
forum state, and this case was brought in State Ct. in PA, then removed to Federal Ct.
- Borrowing statute in PA provide a statutory exception, which is when a cause of action is barred by the state
in which it arose, [and the claim arose in Ohio], it is also barred in PA
o Apparently borrowing is important
- The complexity of the Ohio law is that a claim for bodily injury shall be brought within two years after the
injury arose
- Under Erie, the Federal Ct. has to determine how the PA ct. will determine Ohio Law
- The argument is that it begins to run as soon as discovery of the injury occurred vs. when the pills were taken
- She can only proceed if the discovery rule is applied and
- The dispute is the Ohio case in which the rule applies was one in which stuff was left behind in the patient
o Very different fact pattern
Certification
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Wisconsin Certification Statute
o WI Supreme Court has the power to declare the law of any other state, Fed. Ct. appellate Ct. when
they follow this procedure:
o Shall be construed to make uniform the law
o The Supreme Court may have the power
Deweerth v. Baldinger
- Monet painting stolen by Baldinger from Deweerth
- Ended up in a gallery, was sold by someone else
- When she brought suit to recover her painting, the court said you have to show reasonable diligence to
acquire your property. Why?
o NY law said that you have to show reasonable diligence
o Another case said you did not have to show reasonable diligence
- The court held that you can’t reopen a federal case because a state court decided differently after the case was
decided
- They said that she knew she was facing this risk when she filed in federal court
o At some point, the case should be over
- Remember Erie requires the courts to guess what the state law should be and they guessed wrong
o Oh well, case has to be over sometime
Guaranty Trust v. York
- Van Sweringen offered bond for $30 million
- Guaranty trust was in charge of administering the bonds
- In Oct. 1930, they made a large cash advance to a company the Van Sweringens owned
- So Guaranty said they’d give the holders 50% of the face value + 20% of the corp. for teach $1k they held in
bonds
- York had $6k of the notes they received as a gift in 1934
- In apr. of ’43, the noteholders filed a suit, saying that they’d
- York tried to add herself to the suit, but was denied
- And then York filed her own suit and brought it as a diversity case
- Guaranty defends themselves by moving for summary judgment by the authority on the previous case
- The appeal found that the Hackner decision didn’t foreclose the suit because other cases had indicated that
was no longer the law
- But there was another issue – the court held that a suit brought on the equity side of a Fed. Dist Ct. – the Fed.
Ct. is not required to apply the state statute of limitations for the suit
- The nature of the lawsuit is equitable
- If not the statute of limitations, what would it be?
o The law courts generally determine the eligibility of suit via a statute of limitations
o Historically in England, equity courts not bound by statutes of limitations
o Instead controlled by the doctrine of laches – figure out what’s fair
 E.g. lawyer malpractice case – CRW is a referee
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 Bulk of evidence centers on something that happened 20 yrs. Ago
 Some of the people are dead and gone, lots of contradictory testimony
 So CRW barred the claim by laches
I: statute of limitations ran? And what body of law do we apply
Didn’t Erie address this? The RDA said the laws of the several states shall be regarded as rules of decisions of
civil actions in the United States in cases where they apply
There’s also a law called the conformity act, which said procedure in common law actions in fed. Ct. should be
that of the state court
In 1938 Fed R. CP adopted in this year in addition to the conformity act
o Standardized federal rules
The argument is: Erie should be construed to mean that federal courts should be required to apply the
substantive law of the State where the court is sitting, but the Federal Rules of Civil Procedure
So is a statute of limitations procedural or substantive?
o On the one hand it’s a rule, on the other it’s a classic expression of policy
Justice Frankfurter says there are things on the line which we don’t want to classify as one or the other
o So he looks for another test to classify them
Called the outcome determinative test – assuming it’s not clearly substantive or procedure, since the
purpose of Erie is to make sure the Fed. Ct. is to make it uniform, is it really going to control the outcome of
the case, and if it is, then we should use the State law
The difficulty of York is that it is capable of very broad interpretation
This case blurred the neat boxes of substantive and procedural
Erie said follow state substantive law and Federal procedural law
o York suggests we use the outcome-determinative test instead
Why isn’t this helpful as a rule?
o Think of paper sizes – state and federal used different sizes
o The justification would be that in order to function, courts have to be able to fashion their own
administrative rules. Not really about Erie – if the courts can’t rely on certain administrative things it
would interfere with the courts’ job
o
The next three cases are in chronological order
Byrd v. Blue Ridge – retreat from the acceptance of the outcome determinative test
- Plaintiff sued for negligence in a fed. Ct. in SC based on diversity. Defense argued plaintiff was a “statutory
employee” of the defendant rather than an independent contractor, and therefore workmen’s compensation
benefits were his sole remedy. State law required judge and no jury for these cases.
- Holding: Decision by judge: The SCOTUS held that federal policy of having factual matters decided by a jury,
not the state approach of having the judge decide the issue, must be followed. The Court reasoned:
o Outcome-determinative: On one hand, the state policy might be outcome-determinative, and
therefore “in the absence of other considerations,” the federal courts should follow it.
o Federal policy: On the other hand, the federal policy requiring jury trial of such “factual” issues was
a very strong one and could override the state policy. “It cannot be gainsaid that there is a strong
federal policy against allowing state rules to disrupt the judge-jury relationship in the federal courts.”
 The Court says that having a jury is symbolic of
o Weak state interest: Also the state interest in having the trial judge decide the question of
employee status did not seem to be a strong one; it was “not a rule intended to be bound up with
the definition of the rights and obligations of the parties”
o Probability of outcome determination: In any case, the decision between judge- and juryadjudication was less likely to determine the outcome of the suit than would be a choice say between
an already expire state statute of limitations and no statute of limitations at all. The decision here
might influence the outcome, but it was less likely to make a decisive difference than in most of the
other cases where the Court had applied outcome-determination
- Case’s Effect – showed that state decisions that are basically are basically procedural (though they may
affect substantive rights) are not necessarily controlling even if they are outcome-determinative. The
federal interest in the proper maintenance of the federal judiciary has to be given some respect, and controls
if the federal policy is significantly stronger than the state policy. The test seems to be one of rough
“balancing”
- Forum non conveniens: The Byrd rationale means that federal policies on when a case should be dismissed
for forum non conveniens should be followed, rather than state policies, even though the choice of policies
may be outcome determinative
- According to CRW, it’s the strong federal policy test
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Many many Erie questions are still out there.
Hannah v. Plumer – 380 U.S. 1965 – removed the FRCP entirely from the scope of the Erie Doctrine
- F: P filed diversity suit in Fed. Ct. of Mass. Serving process on the wife of the defendant-executor, according to
Rule 4(d)(1) (now 4(e)(2)), by by leaving copies of the summons and complaint with her at his dwellingplace. Defendant claimed that this service conflicted with a Massachusetts statute making special provision
for service upon the executor of an estate
- Remember the Rules Enabling Act created FRCP and the authority to create procedural rules
- The Court first examines whether Rule 4 is Const. They look to the Rules Enabling Act, and say – yep. It’s in
harmony w/ Rule 4(d)(1). If Rule 4 is constitutional, why do we care? The Supremacy Clause. This is a whole
different approach.
- H: The SCOTUS held that Rule 4(d)(1) was “in harmony with the Rules Enabling Act,” and that Rules thus valid
are not overridden by state policies or laws. Erie doctrine is not controlling when a valid Federal Rule is in
conflict w/ state common-law policy
o Rationale: holding otherwise would make Fed. Rules unworkable. Erie was created to serve another
purpose altogether. TO hold that FRCP must cease when it alters mode of enforcing state-created
rights would disembowel Constitution…
- Rejection of outcome-determination: The Court claimed even in the access of a Federal Rules applicable
to the question before it, state policy on service to executors might still not control. Outcome-determination
test never intended to serve as a talisman. … It cannot be read without reference to the twin aims of Erie:
discouragement of forum shopping and avoidance of inequitable administration of the laws
o It was inconceivable that plaintiff chose fed ct. b/c manner of service of process was slightly different,
so no forum-shopping considerations
o No discrimination: Nor was discrimination against residents really at issue: serving the wife wasn’t
‘substantial discrimination’ to raise the equal protection problems of Erie
- Harlan Concurrence:
o Stricter test for Fed Rule: A Fed. Rule should not be automatically deferred to. So long as a reasonable
person could characterize any duly adopted federal rule as ‘procedural’, the Court, unless would have
to apply no matter how seriously it frustrated a State’s substantive regulation of the primary
conduct and affairs of its citizens. Unadulterated outcome and forum-shopping tests may err too far
toward honoring state rules. Harlan says the ‘arguably procedural ergo constitutional’ test may go
too far in the other direction
o Primary decision test:
 Inquire if the choice of rule would substantially affect those primary decisions respecting
human conduct which our constitutional system leaves to state regulation. If it would, state
law must be applied even in the face of State law to the contrary.
 Substantive common law of the US is developed by the states, so does the application of
Federal law detract from the State’s power to interpret what the substantive rights of the
public are. Which is the human conduct – how you conform how you behave to what the
law requires of you.
 He also sees this a question of constitutional proportions - Validity of rule: the case does not by itself immunize a Fed. Rule against being found to be invalid under the
Rules Enabling Act. The Fed Rule must not “abridge, enlarge or modify any substantive right.” Rules which
incidentally affect litigants’ substantive rights to not violate the provision if reasonably necessary to
maintain the integrity of that system of rules.
o This case only authorizes disregarding State law when there’s a conflict between the two:
 Direct collision: Fed. Rule and state law cannot be simultaneously satisfied
 Occupation of field: Fed. Rule’s legislative intent may show intent to occupy the field of
operation
Sibach v. Wilson
- Rule 34 & 35 - - Discovery rules that permit courts to order physical and mental examinations of people
o Was challenged as a violation of privacy
o And These rules upheld
Walker v. Armco Steel Corp – 446 U.S. 740 (1980) – upheld Erie as valid; no conflict found, OK stat. applies
- I: whether in a diversity action, the fed. Ct. should follow the state law, or alternatively, Federal Rule 3, in
determination of when an action is “commenced” for the purpose of satisfying the statute of limitations
o FRCP Rule 3 says commences when filing
o State law said the suit commences upon service
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H: Hanna v. Plumer does not apply b/c Fed Rule 3 does not speak to the issue of when a state statue of
limitations is tolled; Rule 3’s statement that a civil action is commenced by the filing of the complaint is
merely designed to give a starting point for the measurement of various time periods in the federal suit. Since
there is no conflict between Rule 3 and the state law on tolling, the Court stated, a conventional Erie analysis
must be done. State law must be chosen in this question.
o Remember, this is outcome determinative
Is there a conflict between the state statute and the federal law? If they don’t conflict, then we don’t have an
Erie issue. Then determine if the federal rule’s procedural, then apply the federal rule, but you don’t go
through that test until you’ve determined. If they’re not in conflict, then we have to look at the dicta in
Hannah
o Is there a direct conflict? On a literal reading, it appears there is a conflict [oh but wait]
o If it’s not the same thing (not in conflict), OK state law applies? I’m confused
o If it’s procedural, the Federal rules wins if they’re in conflict – b/c Hannah says apply the federal rule
o The court’s opinion is that there is no direct conflict. How does this come about? Rule 3 doesn’t mean
what it says insofar as it can’t start the state statute of limitations, whereas the OK law governs the
OK statute
o But didn’t Frankfurter say in York that we should defer to the state under the outcome determinative
test? Yes.
Reasoning: Use of federal rule would not lead to forum shopping (there was no evidence that P chose fed ct.
b/c he didn’t think he could comply w/ the state service of process requirements before the statute of
limitations had run.)
However, use of such a federal principle would lead to inequitable administration of the laws. And liability
of the defendant would be depend on the fortuity of whether he had been sued in federal or in state court
So the rule in this case is: if conflict between FRCP + state law, + FRCP is “arguably procedural”, use Fed.
Law. (supremacy clause)
Walker: If conflict does not exist, i.e. no “direct conflict” we use the “twin aims test”
Conflict between congressional statute and state policy
Stewart Org. Inc. v. Ricoh Corp. – 487 U.S. 22 (1988) (Right near Carnival Cruise Lines)
- A contract between P and D contained a “forum selection” clause, which provided that any dispute arising out
of the contract would be litigated only in a court in Manhattan. P sued in AL Dist. Ct. D moved to have the case
transferred to Manhattan. AL, as policy refused to enforce or attach weight to, a contractual forum-selection
clause, so AL courts would have heard P’s suit. In the Fed. System, 28 U.S.C. § 1404(a) allows Dist. Ct. to
transfer the case to a different court for the convenience of the parties. And has long been interpreted to give
weigh to forum selection clauses in K’s.
- So, a fed. Ct. interpreting the clause might well grant the transfer.
- I: should the district court follow the policy behind § 1404(a) or follow AL policy?
- H: Federal statute must be followed.
o SCOTUS held the federal statutes must be followed. When law is sought to be applied is a
congressional statute, the first question is whether it’s sufficiently broad to control the issue before
the Court. If the Dist. Ct. determines that a federal statue covers the point in dispute, it proceeds to
inquire wither the statute represent a valid exercise of Congress’ authority under the Constitution. If
congress intended to reach the issue before the Dist. Ct. and if it enacted its intention in a manner
that abides w/ the Const., that is the end of the matter. The statute in this case did cover the point in
dispute. And the section was clearly a valid exercise of congress’ constitutionally-granted power to
run a federal judiciary. Therefore, fed. Statutory law controlled over the state policy.
- This is like the Hannah rule but simpler – because there’s just a staute and not a rule and a statute.
- Rule of Stewart: valid federal statutes prevail over state
- The Court says there is a direct conflict in this case – remember a direct conflict is when both can’t be
satisfied simultaneously
- How the hell do you reconcile Walker and Stewart? Well, you can argue just about anything under Erie at this
point. This is the Erie problem in modern times
CRW – quotes Ginsberg – saying that Fed. Procedural law applies and state substantive law applies
- CRW doesn’t want us to leave the unit thinking about how hard Erie is in the real world – rarely will you
encounter an Erie question where you’ll have to stop and think about it
Gasperini v. Center for Humanities – Ginsberg is trying to create uniform rules
- P brings a federal-court diversity suit, gets a large verdict, D appeals
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(stuff we don’t need) – he earned $1500 per photo after the first trial – this is an average for a commercial
photograph over 50 years, but Gasperini’s really not a photojournalist – he’s a reporter who brought a camera
o The center that had lost his photos moved for a new trial alleging the verdict was excessive.
o The center attacks the amount on the grounds that Gasperini’s not really a professional photographer
o And the appellate division says some photos were unique, but some depicted generic scenes
o Also he’d never planned to publish a book
o The jury awarded $1500 x 300 slides = $450k and the appellate court set aside the verdict
o This is a rule 59 motion – the trial court denies this motion.
o The trial court denies the motion without any comment
o The Court of appeals vacates the judgment and they apply NY law and try to apply the New York
statute – they said what had happened so far was inconsistent w/ NY law
o Prior to this, the standard had been whether the verdict “shocks the conscience” in the trial court–
that’s the federal standard.
o So what’s the standard of review? Well, normally it’s the shocks the conscience standard, but the NY
state leg
You can probably axe this stuff above
NY has passed a statute limiting jury verdicts – the rule about verdicts is “deviates materially” from what
would be material compensation
o How is the court to determine what reasonable compensation is?
o The court is to compare the verdict against other similar cases
o This is supposed to lower compensation – it’s tort reform, an attempt by the legislature to reduce
damages in tort
In the context of Erie, the question is: is this statute substantive or procedural
o Remembering that quote from Ginsberg: classification of a law of “substantive” or “procedural” is
sometimes a challenging endeavor
o Why is this a challenging case on that issue? Damages have procedural and substantive aspects
o Specifically, it’s procedural in that it allocates review and it’s substantive in that it affects the
outcome of the case – it’s both a rule and an outcome-determinative rule
D appeals, claims NY statute limiting jury verdict applies. P claims Federal standard applies
I: which statute applies? [At what level should there be what kind of judicial review]
H: The jury capping law is substantive., so State law applies
Reasoning: If the federal and state courts don’t agree, larger recoveries will be obtained in federal court, and
forum-shopping will be encouraged and order a new trial if the verdict “deviates materially” from what would
be reasonable compensation.
o The trial court applies the “deviates materially” standard,
o The appellate court applies the abuse of discretion
o But Ginsberg made up an outcome that nobody was arguing for. The question was what should the
appellate court do?
 Do what they do traditionally – review the outcome as an abuse of discretion standard
o But Ginsberg changed what the trial court should do
 She has them apply the “deviates materially” standard in a post-trial motion
 Because it’s a substantive rule
 Again, the rule governing damages is in fact substantive, so it should determine what the
trial court is doing at the trial level
o Why not change things at the appellate level?
 Even though the NY statute says appellate courts apply the “deviates materially” standard
 This is federal appeals court – she doesn’t really speak to the role of the federal appeals court
 She sidesteps the issue – says the 7th Am. Controls
 She cites a case we’ve already read which we can apply instead, specifically Byrd
 Byrd – the first section of the 7th Am. – the strong federal policy test – you don’t ask if it’s
outcome determinative if there’s a federal statute exists
Stevens Concurrence: (apparently clear in his explanation)
o If NY passed a law stating max amt. of recovery is $xyz dollars, then under Erie the federal court
would have to apply the law, because it’s outcome-determinative. So if we agree a damage cap is
substantive and a fed. Ct. would have to apply it, then this is a variety of damage cap. The legislature
just prescribed a damage cap, which is the amount of other cases
Dissent argues:
o Having state standards prescribe how federal judges review jury verdicts might well destroy “the
uniformity of federal practice and the integrity of the federal court system.” Dissenters also argued
that use of a uniform federal standard instead of the New York std. wouldn’t be very outcome-
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determinative anyway. Lastly, letting an appellate court overturn a district court’s refusal to set aside
a jury verdict was a violation of the Seventh Amendment’s right to a jury trial.
o Stevens feels that the materially deviates standard is correct, but he just would’ve just affirmed the
Court of Appeals, and rejects the 7th Am. analysis
o Scalia, Thomas, Rehnquist dissent argues: they don’t think the state standard should be applied at all
because it’s disruptive to the federal courts. They say on p. 294 that just because something changes
the outcome does not make it substantive. E.g. the paper size rule. (Citing Byrd).
o CRW says Scalia’s opinion comes closest to being right?
 Reading the 7th Am. – no fact tried by a jury shall be re-examined in a court then according to
the rules of common law. So, you examine the common law when the constitution was
ratified. And back then, the judges had the power to set aside verdicts. Appellate court judges
did not have this power to set aside jury verdicts. So he’s saying, I guess, that appellate
courts shouldn’t be mucking with this.
 He also characterizes the underlying NY statute as procedural
It’s a 5-4 decision over whether this is substantive or procedural
Weston says Ginsberg’s opinion is a marvel because it weaves in all the previous Erie cases
It really looks like Ginsberg’s opinion is trying to please everyone. The appellate courts only ask if the trial
court followed the rule.
More likely than not you arrive in the same place because if the trial court doesn’t use the deviates materially
standard, then the appellate court applies it instead, but this way we preserve the federal judiciary standard
Joinder
- Addresses the issues of when multiple claims and/or multiple parties may be combined within a single
lawsuit
- Not a lot of litigation w/ one plaintiff and one defendant on one claim in federal court
- The rules do not give the court the power to hear a case it otherwise would not have
- Rule 14(a) gives defendants the right to implead 3rd parties who have claims related to the main action
o Contribution is one such example
o Indemnity is another
o Can’t use Rule 14 to join other defendants who the plaintiff would’ve chosen to sue
- Rule 19(a)
- 19(a)(1)(a): court cannot adequately provide redress to parties who are before the court unless an absentee
is brought into the court
- 19(a)(1)(B)(i): absentee should be made a party “if feasible”
o e.g. getting stock retitled from the parent corp., need to join the other joint holder of the stock
 the Haas and Glueck’s example
- 19(a)(1)(B)(ii): If adjudicating the case w/o her would expose one of the original parties to a risk of multiple
or inconsistent obligations
- Intervention:
- Rule 24(a)(1) allows intervention as of right if a statute authorizes it
- Rule 24(a)(2) authorizes a person who is not a party to a case to intervene if three conditions are met:
o The person claims an interest relating to the property or transaction that is subject matter of the
action
o That interest may, as a practical matter, be impaired if the person is not allowed to participate in the
case, and
o The absentee’s interest is not adequately represented by those already parties to the action
o Motion to intervene must be “timely” and existing parties must not adequately represent the interest
- Permissive intervention: Rule 24(b)(1)(B):
o Allows parties to intervene that shares with the main action a common question of law or fact”
o
- Rule 17 – who sues whom requires some thoughtfulness
o The basic rule is that the party is the effective person
o An example of this would be a consortium claim – when someone’s a tort victim, someone who’s
indirectly affected has a claim (e.g. loss of society and companionship), that claim has to be brought
by that person in their name, but there are exceptions to this rule
o When someone is acting as an executor or administrator, they can bring on behalf of someone else
o But you have to check § 1332
- Three basic rules that apply to joinder: 18, 19, 20, 22
o Rule 18 – about joinder of additional claims: Says a party can join as many additional parties
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(a) party asserting claim, crossclaim or counterclaim, may assert as many claims as he has
against an opposing party
 If a sues b for stepping on a’s foot, if five years ago I made a loan to b and they haven’t paid
me back, can you join? Yes you can, as long as you have jurisdiction
 Remember, rule 18’s not the whole story – you need to have jurisdiction and the joinder
rules do not confer jurisdiction
 Check out § 1332 for this
 Another example – CRW won’t hire you, you allege sex discrimination – it’s a federal
question and 5 years ago you made me a loan
 Supplemental jurisdiction affects this – the court does not have to hear related state claims.
Rule 19 – Required joinder of parties:
Rule 20 – Permissive joinder of parties
 Who can be joined?
 Anyone who can get relief out of the same transaction, occurrence, or series of occurrences?
 The first test is that there’s some test that each plaintiff can get relief. At least when you file
the lawsuit, it must be that each plaintiff must be entitled to something (a case or
controversy)
 You must ALSO arise under the same transaction or occurrence
 So if all of us get together and decide to sue, we must all have a claim for relief and
there must be some incident or series of incidents that we all share
 20(a)(1)(b) states: that any question of law or fact must be common to the plaintiffs
 The same rules apply to the defendants under 20(a)(2)(A) and (b)
 So if you want to sue multiple defendants, if you can get relief for the same claim,
you can sue all those people
 You can sue them in the alternative, also
o Think about suing a pilot an a manufacturer for mechanical defect or pilot
error, but we’re talking about one incident under either theory you would
recover against either of them
 E.g. we all went to the field of dreams, bus driver went off the road, and everyone sustained
an injury, but big difference in injuries. Could you all sue together?
 Yes, but you don’t have to
 There’s no requirement under rule 18 that you must affiliate with other parties
 Under rule 20, or 18 do you have to sue together? No.
 There may be consequences though. You may be precluded from bringing a case
 You have to analyze for preclusive effect when you’re choosing not join people
 Rule 20(b) protective measures:
 Court may issue orders including separate trials to protect a party against things
like embarrassment, delay, expense, etc.
 So the court can undue your joinder if it so chooses
Rule 42 also applies –
 If actions involve a common question of law or fact, the court may consolidate the actions,
join the hearing or trial, or issue any other orders to avoid unnecessary cost or delays
 (b) for convenience, to avoid prejudice, or to expedite and economize, the court may order a
separate trial of one or more separate issues, claims crossclaims, counterclaims or third
party claims…
Rule 13 – has two joinder devices – crossclaims and counterclaims
 So if you have a compulsory counterclaim, you must make it or you lose the right to bring it
 Remember a compulsory counterclaim is very closely related to the action
 If you have a permissive counterclaim, you can bring it as another time or place


o
o
o
o
Sparrow v. Mazda American – E.D. CA 2005
- Cobrain Sparrow moves to dismiss counterclaim of D Mazda American
- - Allegation is that D violated state & federal law by engaging in abusive practices in attempts to collect a debt
from Plaintiff (violation of FDCPA)
- P filed original complaint in Sup. Ct. of CA, later removed
- D filed three state law counterclaims alleging breach of K, money had & received & claim and delivery
- P moves to dismiss counterclaim for lack of subject matter jurisdiction under 12(b)(1)
- Original juris. Does not exist over the counterclaims
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Non-moving party bears the burden to establish subject matter jurisdiction
2 types of claims: compulsory and permissive
o Compulsory apply the “logical relationship” test – arising out of same “transaction or occurrence”
o All other claims are permissive meaning the court can hear them
Other jurisdictions use the “so related that they form part of the same case or controversy” test under Art. III
The problem is that the same case or controversy test used by other circuits is broader than the same
transaction or occurrence test
In this case, the counterclaims are not compulsory – D will have to prove different facts than the P namely
unfair debt collection vs. breach of K, etc.
So we do the “case or controversy test”
o They look to SS 1367(a), which says exceptional circumstances or other reasons may allow dismissal
of counterclaim – in this case there would be a chilling effect on policy of FDCPA by letting
counterclaims and debt holders in the same ct.
Crossclaims
- Levied by one party against a co-party
- No such thing as a compulsory cross-claim
Kirkaldy v. Richmond
- Smith a principal sues the board who’s defending him for denial of due process
- A worker at the school sues the board, the principal
- Board maintains that the crossclaim is based on the separate and different transaction occurrence which
involved the Board and Individual School Defendants’ conduct in conducting and preparing the meeting
leading to the principal’s termination
- I: Crossclaim permitted?
- H: no
- Reaasoning: they apply the same test used in Rule 13(g) which is whether the claims arise from the same
“transaction or occurrence”
- In this case they don’t because using 3 prong test:
o (1) are issues of fact and law raised in complaint and cross-claim largely the same (2) will
substantively the same evidence support or refurte the complaint as well as the cross-claim (3) is
there any logical relationship between the complaint and the cross-claim
o None of these factors is dispositive
- In this case, the due process and sexual harassment claims overlap very little – very little of the same
evidence needed
Joinder
Rule 14 – different from all the rules we’ve read so far – because it’s where one of the parties bring in one of the
parties not originally a paty to the lawsuit
Maxfour Engineers – v. ARB
- P construction contractor was awarded the prime K for construction management
- BLF gave K to maxfour, it subcontracted w/ ARB, P alleges ARB breached
- Western moves to dismiss
- -They assert breach, others against ARB
- ARB files third party complaint against Western alleging they deviated
- Western argues that the provision doesn’t give rise to an indemnification claim because the Plaintiffs claim
didn’t arise out of the same transaction
- We call this derivative liability
- Maxfour only has to prove what ARB does, and if they get nailed, then
- I: where is the
Frazier v. Harley –
- P claimed defective motorcycle
- D claimed the negligence was on part of driver
- P moved motion to strike 3rd party claim
o 2 Grounds in favor of motion to strike
- So Frazier->Harley->MCCormick
- Frazier argued the Harley wasn’t crashworthy
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-
They’re not saying there’s anything about the manufacture that caused the injury, but the design could’ve
been better
Why did they sue Harley? Because McCormick the 3 rd party defendant was dead?
Harley seems to be denying fault and saying the 3rd party was at fault, so there’s not derivative liability
o DL is to the extent that I’m found to be at fault then someone else owes me
But Harley says but should we be found at fault, we want the court to determine contribution between the
two parties
o And this is the part that implicates Rule 14
Joinder impermissible in this instance b/c PA passed uniform contribution of tortfeasors act
The cite a malpractice case where the injurer in a car accident & doctor sued in tort
If there are different torts, you can’t join them
How you set your lawsuit up on day 1 is really important – need to figure out the best posture, to sue
everybody or not
§ 1367(b) was the codification of Kroger – just discussed, not given in the book – Case about Rule 14 joinder
- If you go look back at § 1367(b) you’ll see that Kroger still reflected in § 1367(b)
Rule 18 – Multiple Claims
Rule 13 – Counter and Crossclaims
Rule 14 – Can add someone if derivative or shared liability
Rule 19 – Required Joinder – if you convince the court it is unfair to go ahead and try the case w/o the party, you can
add them
- What constitutes this unfairness defined in 14(a)
- Required party must be joined if in that party’s absence, cannot order complete relief or that person claims an
interest such that disposing of the action in that person’s absence may impair or impede that person’s ability
to protect their interest or may cause the person to incur multiple or inconsistent obligations
- If bringing in the party doesn’t destroy diversity they can join –
- Also if the person isn’t subject to service of process
- (2) says
- 19(B) talks about when joinder is not feasible
o When would joinder not be feasible? Destroys subject matter jurisdiction or persons not subject to
process (personal jurisdiction?)
Keweenaw Bay Indian Community vs. State of Michigan
- Treaty w/ Michigan and Chippewa
- 3 Bands – Keweenaw, Bad River, and the Red Cliff
- Purpose of the treaty is to preserve fishery waters of lake Sup. To benefit the Chippewa Indians
- Keweenaw file a lawsuit against certain members of the other Indian tribes and the State of Michigan
- What’s the theory of the suit?
- They allege that Michigan didn’t properly enforce the treaty
- Why did the suit name the other individual members
o The band tried to work things out within each other –
o The Red Cliff and the Bad River band made their own agreement
- So Keweenaw have issues w/ Michigan and it’s unhappy with the Bad River and the Red Cliff
- Why do these parties need to be in the case?
o Because if there’s a dispute about who has fishing rights, it necessarily affects all the parties, so
they’d all have to be brought in
- But can they be brought in?
o No – the bands have sovereign immunity and therefore no subject matter jurisdiction
- So then you hit prong B, which asks whether the case can go forward even w/o the party?
o And the Court says no , the case cannot proceed
Intervention – Rule 24 – brings someone in involuntarily – involves an outside party joining the case
- Allows an outsider to become a party in ongoing litigation
- Similar structurally to rule 19
Americans United for Separation of Church and State v. City of Grand Rapids,….
- Chabad house is an arm of the Jewish faith, puts a Menorah in Calder Plaza in a publicly-owned area near a
number of buildings of the City of Grand Rapids during Chanukah
- Suit was filed challenging it as a violation of 1st Am., seeking an injunction
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-
-
Judge Granted an injunction, no transcript in the case, and set the decision for after the end of Chanukah,
denying Chabad meaningful review
Chabad appealed for “denial of its right to intervene” once it learned that the city was not going to appeal
Rule 24(a) – intervention
o Timely intervention permitted when the applicant claims an interest relating to the property or
transaction which is the subject of the action and the applicant is so situated that the
disposition of the action may as a practical matter impair or impede the applicant’s ability to
protect that interest unless the applicant’s interest is adequately represented by existing parties
24(a)(2): Applicants for intervention must show that (1) he claims an interest relating to the property or
transaction that is the subject of the action, and (2) he is so situated that the disposition of the action may as a
practical matter impair or impede his ability to protect that interest, unless (3) his interest is adequately
represented by 3rd parties
The Ct. Says Chabad meets all the requirements – they own the menorah, all property owners have an interest
in the disposition of their property, they would be impaired or impeded from protecting their interest in the
menorah, and are not being adequately protected by any party
Earth Island Institute v. Baker National Fisheries
- Earth Island brings a case to enforce a Fed. Statute restricting how you catch shrimp
o They’re the environmental group – and they want the law enforced
- NFI makes motion to intervene –
- Fed. Law involving importation of shrimp… - the CA agencies aren’t complying
- NFI is a trade association whose members are affected by the implementation of the statute at issue
- Again, intervention need be: (1) timely (2) asserted interest in the property or action (3) so situated that
without intervention the disposition may impair or impede its ability to protect that interest and (4)
applicant’s interest is not adequately represented by existing parties
- The court doesn’t decide FRCP 24(a), but goes to 24(b)(2), which is satisfied
- P argues NFI not entitled to intervene b/c it does not have a legally protected interest,
- Ct. finds that intervention is appropriate
- Ct. says must be independent ground for jurisdiction, timely and (3) question of law and fact in common – all
3 met in this case
- Also intervention is at the court’s discretion – can’t unduly delay litigation either
- Ct. says NFI has knowledge of the industry and a strong economic stake, grants the motion
Interpleader
- joinder device available in limited circumstance when P or D may be exposed to multiple liability
- Good way for stakeholder to resolve competing claims in the same action, there including multiple claims to a
single fund and th e total claims exceed the value of the fund.
- See: 28 U.S.C. § 1335
o Authorizes interpleader actions in diversity cases which authorizes jurisdiction in cases with less
than complete diversity and only $500 in dispute as the amount in controversy.
o Not necessary to rely on interpleader if jurisdictional requirements are otherwise satisfied
Sotheby’s Inc. v. Sandra Garcia & The Republic of the Philippines – S.D.N.Y. 1992
- Sotheby’s commenced the interpleader against Philippines and Garcia as a neutral stakeholder
- Garcia moved to dismiss the case or ot stay the interpleader pending resolution of an action filed in E.D. VA
- Garcia lent $1m to Imelda Marcos (queen of Philippines) and was given artwork as collateral
- Garcia delivered the art to Sotheby’s
- Philipines claimed to be the owner of the art
- Garcia showed up at Sotheby’s, demanded paintings return
- Philipines sent another letter stating they believed the art was the property of the Philippines because it was
purchased illegally through bribery, extortion, etc. – so don’t give the paintings to Garcia
- Garcia argues Sotheby’s converted the paintings and filed the VA action
- Sotheby’s moved to stay the action pending resolution of the VA action or to transfer venue to NY
- Garcia argued Philippines should’ve been joined by Sotheby’s, and court denied Sotheby’s motion
- Garcia urged dismissal for lack of subject matter jurisdiction over the interpleader due to Foreign Sovereign
Immunites Act of 1976
- Sotheby’s and Phillipines argue for injunction of the Virginia action b/c it would interfere with their litigation
and lead to possible multiple liability
- Rule:
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o
o
o
o
Availability of interpleader is not dependent on the merits of the claims asserted against the
stakeholder. The mere thread of future litigation is a sufficient basis for interpleader
Parties are not required to evaluate the merits of conflicting claims – they need only have a good faith
concern about duplicitous litigation and multiple liability if it responds to the requests of certain
claimaints and not to others
1st case filed generally has priority
But in this case, the later filed suit gets priority
Class Actions – Rule 23
- Rule 23(a) designates four distinct criteria:
o (1) numerosity
o (2) common questions of law or fact;
o (3) typicality of claims or defenses
o (4) a finding that representative parties will fairly and adequately protect the interests of the class
- 23(b) divides the classes
o B(1) most infrequently – proper if actions by or against individual members of the class would result
in inconsistent or incompatible standards of conduct for the party opposing the class, OR
o Separate actions would be dispositive of the interests of other members not parties to the
adjudications (such as when a defendant has limited funds to satisfy the claims of many claimants)
o B(2) are appropriate when party opposing a class has acted or refuses to act in the same manner to a
definable group and the class seeks declaratory or injunction relief
o B(3) is when questions of law or fact shared by group members predominate over the issues
- C – requires certification by the judge of a class action to determine whether it can go forward or not
- E – requires a hearing for objecting class members
- G sets the standards for appointing counsel
Romberio v. Unumprovident –6th Cir.
- District court certified the case as a class action
- Fifteen individual claimants filed seven class actions in six federal district courts located in six different
circuits. Plaintiffs asserted breach of fiduciary duty under ERISA (Employee REitrement Security Act)
- Ct. says that because some of the plaintiffs have doubtless been denied properly, the claims were handled by
different agents, and resulted from
- And the only way to determine who’s who would be to engage in individualized fact-finding, so therefore
there is no connection between the merits of each individual claim and the conduct affecting the class
- The court says the plaintiffs have failed to demonstrate typicality - I: should it have been certified?
- H: No, it shouldn’t have. The App. Ct. reverses
Leading up to Amchem, we’ve discussed why class actions exist and focusing on what makes class actions different
from non-class actions
- Most obvious difference is that class actions require certifications
- Class actions have parties that did not choose to be a part of the litigation
- Amchem is different b/c it’s a settlement case, but it’s not about the procedure to settle, but rather the
propriety of the settlement
Amchem Products v. George Windsor et Al. – Sup. Ct. 1997
- a whole bunch of asbestos companies were sued in a myriad of different districts
- Congress had no legislation in place to deal with the wide variety of claims
- So a bunch of judges took it upon themselves to create a panel on multi-district litigation consolidate the
actions in the Eastern District of Pennsylvania
- The judge said they’d have to form steering committees and they’d have to settle
- They did just this, and then put together a proposed settlement
o The problem, says CRW is that there’s a settlement, but > 1 case to settle
o The defendants wanted to make sure future claimants would be bound, so there would have to be a
court order
o Breathtaking in its ingenuity, but a bit troublesome
- So, they re-filed a class action suit to get the judgment they want
o To go ahead, you need persona, subject matter juris., forum, and a case or controversy
o
- Are there common questions of law or fact?
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-
-
o Well, not really because some people know they have mesothelioma and some have yet to develop it
So how do you plead your class action?
o See: the Falcone case – what you do is create subsets within the class
o So, you’d have a subset of those who have the disease and other subsets
o The Problem is that you can’t have a subset of those people who don’t have the condition yet
 Unknown plaintiffs aren’t real people –
o If this were the only issue, the certifying judge would only allow people who knew about their claims
to proceed
 Underscores the ability of the judge to mold the class in the certification process
o What would the problem with removing the subset of those who don’t have symptoms?
 It wouldn’t bar the plaintiffs’ future claims – the defendants wouldn’t have settled
Other problems:
o The dollar cap for plaintiffs individually that doesn’t change over time for inflation
 Sort of a foolish notion given that we set minimum amount in controversy to fixed amount
 Court says our system depends on people who have a stake in the case
o The States give different remedies so members of the class will get different treatment
o Also hard for people to opt out because they might not have symptoms yet, also applies to family
members and you might not yet have a family
This settlement allowed only certain #’s of objectors to bring suits in a given year, and also capped
compensation, save for “extraordinary claims”, which were still dollar amount limited and also precluded
punitive damages
Many could also not make claims “fear of getting cancer”
“Exposure only” and “pleural” claims were also barred
So there were a bunch of objectors from the class who said the class action suit shouldn’t have been certified
The Ct. of Appeals Agree, Supreme Ct. granted cert.
I: should this suit have been certified?
H: no, it should not have –
The court talks about an amendment to the Class Action Rule, which would allow certifications of class
actions for settlement, but says this would abridge plaintiffs’ substantive rights
They also say it would make class actions a non-adversarial endeavor because counsel could not use the
threat of trial to obtain a better offer
Also, the class members were exposed for different amounts of time, in different ways over different periods
and suffer from different maladies and have different medical expense
There are also differences in state law
Commentary:
o You get the sense that everyone is sad with the result - enormous problem, there’s a settlement, and
then it gets tossed out
o CRW says it simply wasn’t fair
o For a real solution, the parties need to go back to Congress
NO class next week
Multi-district litigation rule that’s not part of FRCP:
- Gives fed. Ct.’s the power to consolidate cases across districts for pre-trial processing
- Joint discovery
- Happens in big tort cases
CAFA 2005
- makes complete diversity inapplicable to class actions
- Elminiates principle that claims of class members cannot be aggregated to meet the amount-in-controversy
- Provides for federal jurisdiction when the total amount in controversy in a class action exceeds $5 million
- The idea is that it will remove “frivolous” actions from becoming class actions
- And allows certification to federal court
- This is a bit odd because it lets federal courts hear more class action cases and we wanted better judicial
economy before
o The thinking of Congress was if you broadened the right to remove because they’d either be: (1)
dismissed or (2) there’d be smaller damages
- How has settlement changed under the new law?
o You have to notify the appropriate state or federal officials
o If the lawyer is going to be paid out of a class benefit, the court has to make a finding that the
monetary loss to the parties is justified by the relief
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-
Jurisdictional changes
o Authorizes “mass actions” if > 100 plaintiffs
o P. 386 – 388 – check it out – now we’ve got assloads of new jurisdictional requirements
o Aggregate sum of $5 million
 How constitutional? Diversity is not defined in the constitution to say complete diversity
o There are exceptions and limitations to this rule under 1332(d)
Exceptions
o If the class members and defendants are mostly citizens of the forum state
 If at least 2/3rds of the plaintiffs are from the forum state, that disqualifies it from being a
federal court

o No derivative or shareholder suits
o Removal provisions
 If you file in the defendant’s home state it can be removed
 Normal cases you can’t remove it if any of the defendants are from the state where the case
is filed
 Not applied to class actions under CAFA
o Make sure you know 1332(d), CRW says
Impact of CAFA
- More diversity actions are being filed in federal courts
- 72 percent increase in the district courts
- # of class actions have tripled
- Increase in consumer protection, torts-property damage
Claim Preclusion
- Res judicata prerequisite:
o (1) final judgment; (2) judgment on the merits; (3) claims must be the same in the first and second
suits; (4) the parties in the second action must be the same as the first
o And they use the same “transaction or occurrence test” for figuring out what constitutes a claim
o Even if you didn’t assert a claim, it’s still barred if final judgment
- Reaching the merits
o The court actually has to decide the issue
o If your case is dismissed for failure to state a claim, it should bar a second action
 12(b)(6)
o So on the merits means that you had the opportunity to argue the claim
Sopha v. Owens-Corning
- Sopha exposed to insulation products regularly diagnosed w/ non-pleural thickening
- He and his wife sue, and D’s move to dismiss on statute of limitations, plaintiffs moved to voluntarily dismiss,
the action was dismissed “on the merits w/ prejuce” but with no findings of fact
- Sopha then died
- I: when did SOL begin to toll?
- In this case, it’s when the injury (mesothelioma) was found, not when he was diagnosed w/ pleural
thickening
- R: it’ s a tough disease to diagnose; the rules are meant as a bar against people who sleep on their claim;
- They say the “cause of action” requirement (i.e. same claim isn’t met)
- Fairness is paramount in res judicata
Searle Bros. v. Searle
- Collateral estoppel bars parties or those in privity w/ parties from bringing claims again
- In this case, it’s heirs who are in privity and are suing as a separate action after theier dad’s divroce went
wrong
- The sons in this case had a 50% property share, and so had their own separate claims against he ex-wife
apparently
- I: collaterally estopped?
- No
Federated Dept. Stores v. Moitie
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Ct. App. 9th Cir. Created exception for res judicata where other plaintiffs whose matters decided adversely but
other similarly situated plaintiffs have prevailed, can bring another claim
Dist. Ct. dismissed class action claims (Fed.) claims were again brought in State Ct. and remanded
I: does res judicata preclude these actions
H: yes.
R: Other plaintiffs had brought claims, but had appealed, not filed another action, so they were not precluded.
Basically, Plaintiffs had their day in court, and can’t bring the same action
Issue Preclusion
- Issue must have been the same, Issue must have been litigated, issue must have actually been decided, must
have been necessary to court’s decision,
o If the court finds for the plaintiff but you can’t infer which ground, then no CE
Mary Anna Rivet v. Regions Bank of LA
- I: can cases be removed (and dismissed) based on the fact that a federal court has disposed of the issue?
- H: no it cannot.
Issue Preclusion – Has to be at least 1 similar party involved in both cases
- When an issue of fact or law is litigated, and determined by a valid and final judgment, and the determination
is essential to the judgment, the determination is conclusive in a subsequent action between the parties,
whether on the same or a different claim
- Exceptions
o Party against whom judgment was sought couldn’t have obtained review
o Claims are substantially unrelated, or intervening change is needed to take account of changing legal
context
o Jurisdictional issues or differences in quality or extensiveness of procedures followed
o Heavier burden on the person against whom preclusion is sought
o Clear and convincing needs for new determination because of potential adverse impact on public
interests or persons not parties or (b) not sufficiently foreseeable action would arise in the context of
a subsequent action or (c) because the party sought to be precluded did not have an adequate
opportunity or incentive to obtain a full and fair adjudication
Lumpkin v. Jordan
- Lumpkin is the appellant., Jordan demurred in trial ct.
- Same claim has been litigated in a prior federal action w/ same parties, so he was collaterally estopped
- Lumpkin was removed form a commission for anti-Gary remarks
- He brought suit for his firing under federal FEHA
- Judgement entered in federal court, does it collaterally estop P from asserting identical state law claims?
- H: yes
- See above for the defintions of collateral estoppel
- Even though he brought suit for federal issues and then state issues, they’re analogous enough, so there’s
collateral estopel
Hoult v. Hoult
- Dad sexually molested his daughter, got a judgment and $500k
- Dad sued b/c she was saying he had “raped” her, and this he denied
- I: Collateral estoppel?
- H: yes
- R: the court did not explicitly find rape; and the standard is “more likely than not” (“an estoppel must ‘be
certain to every intent.’”
- BUT: the rape charges were the centerpiece of her fist case
- A finding is “necessary” if it was central to the route that led the factfinder to the judgment reached
Mutuality of Preclusion
- Generally you can’t relitigate w/ other people
- It used to be that you had be a party or a person in privity
- In claim preclusion, you’re talking about mutuality
o If you litigated a claim against an adversary, you can’t subsequently relitigate against the same party,
nor can you bring another claim
- Non-mutual preclusion only comes up in the context of issue preclusion, not claim preclusion
- Also consider:
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(!) if treating the issue as conclusively determined would be incompatible w/ applicable scheme of
administering the remedies in the actions involved;
o (2) procedural opportunities might give the second party a different outcome
o (3) If the person seeking to invoke favorable preclusion or to avoid unfavorable preclusion could
have effected joinder in the first action
Claim preclusion requires mutuality
o Bars claims which have been or could have been litigated
Issue preclusion doesn’t require mutuality
o Just requires the same issue in fact was litigated and well-litigated
o Can only use when you can demonstrate the specific issue you want to preclude was actually litigated
o
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Non-mutual collateral estoppel – judge Traynor
- Allows a new party to estop a party who litigated and lost in a previous case
- Must avoid: (all of this comes out of Bernhard)
o Wait and see approach
o Issue must have been litigated aggressively
o If procedural rules prevented a party from litigating as effectively as it could
o If one or more inconsistent judgments suggest it’s unfair to use CE
- Wrote the Bernhard decision – quoted in all kinds of cases, Blonder-Tongue specifically
Bernhard v. Bank of America – dfensive issue preclusion
- D’s took care of old lady, drew out $$ from her bank account, but then transferred all her money into a joint
account between his wife and himself.
- Her will names Mr. Cook as executor
- In the inventory of the estate, he omits any reference to the bank account to the probate court
- The benefactors objected in probate court, but weren’t parties in the action
- The benefactors then filed a separate suit to get the $$ from the account from the bank
- But the probate court had already ruled the $$ was a gift to Cook
- The estate says there’s no mutuality here – and then we abolish mutuality!!
- I: mutual preclusion && res judicata bars plaintiff from recovering?
- H: yes.
- R: Π contends that res judicata does not apply because the Δ was not a party to the previous action nor in
privity with a party to the action.
- Note: this is defensive issue preclusion
- Privity: only parties to the former judgment or their privies may take advantage of or be bound by it – a party
is one who is directly interested in the subject matter and had a right to make defense, or to control the
proceeding, and to appeal from the judgment
- Mutual Estoppel: the estoppel is mutual if the one taking advantage of the earlier adjudication would have
been bound by it, had it gone against him.
- -many courts have abandoned the requirement of mutual estoppel and confined the requirement of privity to
the party against whom the plea of res judicata is asserted.
- In determining the validity of a plea of res judicata three questions are pertinent:
o (1) Was the issue decided in the prior adjudication identical with the one presented in the action in
question?
o (2) Was there a final judgment on the merits?
o (3) Was the party against whom the plea is asserted a party or in privity with a party to the prior
adjudication?
- The Δ in this case is not precluded by lack of privity or mutuality of estoppel from asserting the plea of res judicata
against the Π.
-The only determination that needs to be made is whether the Π in the present action was a party or in privity with a
party to the earlier proceeding.
- the Π as adminstratrix of the estate representes the very same persons and interests that were represented in
the earlier hearing on the executor’s account.
- Where a party though appearing in two suits in different capacities is in fact litigating the same right, the
judgment in one estops him in the other.
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What if it’s the other way around and Cook in the wrong and bank in the wrong, can Cook use issue
preclusion?
o Main rule of non-mutual issue preclusion is that you can’t use it against anyone but the party in the
first case – so she sues Cook, and then the bank, then the bank hasn’t had any opportunity to defend
itself
o So the bank can be bound by Cook’s win, but not Cook’s loss because the plaintiff has had the best
chance to litigate
This applies to defensive collateral estoppel which is the same as issue preclusion
Parklane Hosiery v. Shore – SCOTUS – 1979!!! Non-mutual
- At this point, Bernhard is the law of the land, but offensive preclusion is not
- Shore brought a stockholders action against parklane for issuing a materially false and misleading proxy
statement in connection with a merger. They were seeking damages, recession, and costs
- Before the action went to trial, the SEC alleged same facts, obtained injunctive relief after Dist. Ct. found proxy
statement materially false & misleading, affirmed by 2nd cir.
o Made by a judge and not a jury
- Shore moved for partial sum. J. to prevent parklane from relitigating
- - Dist. Ct. denied the motion b/c Collateral estoppel would deny Parklane’s claim to a jury trial under 7 th am.
- 2nd cir. Reversed
- I: can a litigant, not party to a prior judgment use it offensively to prevent a defendant from relitigating issues
in earlier proceeding
- H: yes.
- R: up until this point collateral estoppel limited by mutuality doctrine, stated that neither party could use a
prior judgment as an estoppel against the other unless both were bound by the judgment
o Also provided a party who had litigated and lost previously the opportunity to relitigate the identical
issues with new parties
o Blonder Tongue – involved defensive use of collateral estoppel – in this case, D won, wanted to stop
relitigation
o Arguments against: might adopt the wait and see attitude in hopes that an action by a different
plaintiff will result in favorable judgment,
 May also be unfair to D’s especially if judgment that’s the basis for estoppel is inconsistent
w/ 1 or more previous judgments
 By combining w/ SEC, both would be bound in 1 case – by waiting and seeing, he can assert
offensive issue preclusion, but Parklane can’t assert defensive issue preclusion
 Want people to join – not possible in this case, so OCE goes forward
o Preferable approach is not to bar use of offensive CE, but to grant trial courts broad discretion
o Rule: in cases where P could easily have joined in the earlier action or where, either for the reasons
discussed above or for other reasons, the application of OCE would be unfair to D, the trial judge
should not allow OCE
- None of those circumstances present here:
o Will not reward a P who could’ve joined (couldn’t have joined w/ SEC)
o Subsequent suits are foreseeable w/ SEC suits
o Judgment was not inconsistent w/ any previous decision
o No procedural advantages present that would cause a different result
- 7th Amendment Issue
o D argues that if the Ct. were to apply issue preclusion it would deprive him of right to jury trial b/c it
was a bench equitable determination
 Basic interpretation is that you’re entitled to a jury trial if you would’ve been in 1791
o The majority cites Galloway – says that a directed verdict can deprive you of a jury trial and was
available in 1791. I.e. there were always procedural devices where you don’t get a jury.
o Beacon Theatres – if an issue common to both legal & equitable claims was first determined by a
judge, relitigation of the issue before a jury might be foreclosed by res judicata or collateral estoppel
 A litigant who has lost b/c of adverse factual findings in equity is deprived of jury trial
whether he is estopped from relitigating the factual issues against the same or a new party
o The law of CE forecloses the petitioners from relitigating the factual issues against them in the SEC
action, nothing in the 7th am. Dictates otherwise, even though b/c of lack of mutuality there would’ve
been no CE
- Dissent: non-mutuality came quite a bit later,
State Farm v. Century Home components
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2 cases returned for plaintiff, 1 for defendant,
Plaintiffs allege negligence, first case resulted in judgment for the defendant, next 2 for the plaintiff
48 other cases, tried to use OCE
I: can you use OCE w/ these results?
H: no you can’t
R: inconsistent results bar OCE
Also, when you have something overturned on appeal (as happened w/ one of the cases) there’s the specter
of inconsistent results, so bar OCE.
Also, the plaintiffs could have joined under
We value economy more than
Interjurisdictional Preclusion
Semtek v. Lockheed Martin
- P filed suit in CA, was removed to CA Dist. Ct. who dismissed for SOL violation
- P filed in state ct., then tried to remove to Fed. Ct. b/c of Federal question juris. But was remanded back to the
state ct. b/c it was a federal defense
o Bottom line is that MD had a longer SOL
- D’s tried to argue claim preclusion, because the judgment had been decided “on the merits”
- I: precluded?
- H: no.
- R: On the merits means the opposite of “dismissed without prejudice” –
- Would also violate Erie v. Tompkins
- And would lastly violate the Rules Enabling Act, b/c it would abridge the right of a person to file in MD
- Notes:
o 2 cases in which we’ve had the same posture re: taking advantage of statute of limitations
o Keaton v. Hustler & Farens?
o Remember that removal falls under subject matter jurisdiction!!!
o Personal jurisdiction is about fairness;
o Subject matter jurisdiction is the power of the court ot hear the case
o Can federal question arise from a defense ? No.
- Why is the appropriateness of removal to the MD federal court being challenged given that it’s a tort case?
o Normally tort cases are state issues, not fed.
o The federal issue is preclusion – is that a basis for removal?
o You can only remove to federal court if it could properly be brought in federal court in the first place
o And the federal court says whether something is precluded doesn’t give the court the power to
accept the case on removal because it’s a defense.
o Also note that the plaintiff had attempted to modify the language of the judgment but the court
wouldn’t do it.
- Scalia says 41(b) is irrelevant to the case. Why is that?
- Comity – courts would honor other courts’ decisions if they felt the rationale was sound
o Given the values of preclusion: certainty, efficiency, economy, CRW doesn’t know why it’s not
brought up
o Maybe it’s a recent phenomenon that the court is so taken with judicial economy
- In diversity cases like this, who has the power to determine if something is precluded or not ?
o SCOTUS and [what law are they applying?] [no idea what this means]
o The determination of whether preclusion applies in this instance is based on federal common law
o Justice Holmes said no Fed. Common law, but he was talking about natural law
 We know preclusion is a federal common law determination
 It’s Erie sneaking in here
- What a wicked hypothetical it would be to bring this case
Venue
- § 1391(a) – venue in diversity cases
o (1) venue authorized in any district where D resides if all reside in same state
o (2) a judicial dist. In which a substantial part of the events or omissions giving rise to the claim
occurred, or a substantial part of property that is the subject of the action is situated or
o (3) a judicial dist. In which any defendant is subject to personal jurisdiction at the time the action is
commenced, if there is no dist. In which the action may otherwise be brought
- § 1391(b) – civil action w/ jurisdiction not based solely on diversity
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(1) “”
(2) “”
(3) a judicial district in which any defendant may be found, if there is no district in which the action
may otherwise be brought
Note the focus is on districts, not on states
The weight of authority equates an individual’s “residence” with domicile
Considered the privilege of the defendant, so it can be waived
§ 1391(c) – venue of corporate defendants
o Anywhere the corporation is subject to personal jurisdiction
o This means place of incorporation, principal places of business
o
o
o
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