Federal Questions and Federal Cases Notes from Glannon Chapter 4: ● State courts are courts of general subject matter jurisdiction ● Federal courts are of limited subject matter jurisdiction as defined in Article III section 2 of the constitution. ● Federal courts hear cases between states, between citizens of different states, between citizens and aliens, cases involving foreign ministers and consuls, admiralty and maritime cases, cases arising under the federal constitution and federal law. ● The trick is in the phrase, ‘arising under’ federal law. Although the phrase is in Article III and the 1331 rule, but it is interpreted differently by the federal courts. ● ‘Arising under’ in constitution is broad enough that could be applied to any case with substation issues of federal law is raised by either party of the case (Osborn case) ● Rule 1331 only applies if the plaintiff claim requires proof of federal law. The rational here is that court has no idea if the defendant will rise a case of federal law later and it needs to be able to decide whether there is a jurisdiction or not prior to accept the case. ● Holmes’s test: The cause of action of plaintiff claim should fall under federal law. ● Holmes test is good in defining what is under the jurisdiction of rule 1331 but not what is out of jurisdiction because there are exceptions. ● There will be cases where the federal question is embedded within the state law at question. In those cases, if the federal issue is substantial, it might be considered under the 1331 rule. Notes from class (8/26): Amount in controversy: ● Judicial gloss (an interpretation that the court does to a statue or a federal law) Aggregation: ● Individual can aggregate all claims ● Two parties cannot aggregate claims even if there are transactionally relatable ● Joint and several liability - are not aggregable Federal Question Statue (1331): ● What does it mean to arise under the laws of the united states. ● Well-pleaded rule (look only what is the complaint to decide whether the issue ● The mootlys case is important to show that one cannot waive the subject matter jurisdiction. (SUA SPONTE)- the court raised the issue on its own to show that the issue is important. ● Holmes – a case arises under the law that creates the cause of action. ● Four-part test in the next Class notes – 8/30: - - If it is not discussed in class, it is not in the exam. Example: o Coercive suite: An insured person sued and insurance company for a breach of contract o But if insurance company went to court to resolve if they have liability for that contract and they want the judgement fact to avoid cost issues. o Declaratory judgement act – to give potential defendants the right to suite first. o Example – Mottley v L&LRR. In this case, if L&LRR raises a case first under the declaratory judgement act with the claims regarding the federal questions. Their claims are valid under the well-pleaded law. Why do we have federal subject matter jurisdictions? o Expertise o Uniformity o Independence Class notes - 9/1 - The rules of decision Act. ● What does ‘The laws of the several States’? ● If law does not come from the courts and if courts only interpret the law then where does the law come from? The answer is ‘Natural law’. Or at least this is how they were thinking in the mid 1900s. ● Natural law is what contract, commercial, transaction and tort law is and those are created by GOD. The sate law is merely an interpretation of that law- this is how the court at Swift v tyson thought. ● This gave power to the federal law because of the supremacy clause. ● This gave birth to forum shopping. The federal court did bind state courts, and states differed among themselves. This chaos brings us to Erie RR v Tompkins ● The distinction between what was a common law and federal law was very hard to interpret. Federal court did not know whether they should use state law or federal common law to guide them. ● Because the interpretation of the Decision Act lasted for 96 years, the court was hisitant to overrule but for the unconstitutionality of it. ● After Erie, the federal courts are not authorized to create non preemptive common law in diversity cases that binds state courts. ● Federal admiralty jurisdiction is to have uniform costal shipping across the states. ● In interpreting the constitution, the powers are sometimes clearly expressed and sometimes the powers are not expressly stated. The power to create federal power law in admitily cases is emplied. Similarly is the power in state vs state cases. However, Brandiese in Erie implied that a federal common law to rule in diversity cases is not preimpetive because there must be a uniform law in such cases. ● Erie holds that the Diversity clause in the constitution was put to have a neutral forum and not a natural law. ● Erie marks a change from natural law int positive law and legal realists. This means that law are made by people and not natural. It means that law is based by people and dependent on people perception ● Era after Eries - how to go about a case in a state vs state cases: i. Which State Law? The answe is a 2-step process which states that we have to use the court conflict law to tell us which state law to use, and then we go and use the state law to rule. ii. What does state law require? iii. Federal substative common law? iv. Procedural vs substantive law? ● Takeaway for exams: i. Substance law is the state law and not federal law ii. The law that applies is the law dictated by the choice of law dictated by the the state where the federal court sits. iii. There is no authority in the constitution to allow federal courts to exercise power to create law in diversity cases. iv. Not on exam but know that, there is federal substantive common law (ex. Admiral law, dispute between two states, etc.). The obligations of the United States government on things like checks, commercial transactions, government contracts, etc.) v. The difference between substantive and procedural: it is very hard to draw a line between the two laws. Class Notes 9/7 (Notice): ● The constitutional issue arises under the due process clause of the 5th and 14th amendment. ● There are two aspects to the due process clause: ○ Procedural (the right to have a hearing, be notified when there is a suite against you, the right to cross examine the witness, etc.) ○ Substantive of due process clause. There is a certain doctrine that says that a due process clause prohibits the state from regulating privacy. ● This could come up in the exam if you are applying a state rule and the state rule does something that is questionable (if you see a service that is not by direct mail - then you need to analyze in accordance with the due process applying the reasonably calculated under the circumstances to deprive the defendant .. ) ● ● ● ● Class Notes 9/8 (Service of Process): All you need to know is that you have to get a summons from the district court. The rules allow different services for individuals and corporations. Waiver - 4d (it means I do not need and actual service). In the exam, just check for a waiver if it exists. ● 4 e (1) - if you are getting an exam question and there are state rules given then you want to talk about those. Always state that there are two possibilities under 4 e (1) service under forum state and under state of service. Check the book. IMPORTANT. ● 4 e (2) - 3 ways to service a defendant (check the book: person, dwelling, agent) Disjunctive: you may choose anyone. ● service to individuals must be by someone who is at least 18 and not party in the case. Also lawyers should generally not service because then they could be witnesses and not be able to represent either party. ● We do not interpret rules in a way that leads to bad policy consequences especially when the rule is silent. ● Substitute service: a. Dwelling b. Person ■ Suitable age ■ Discretion c. Then residing there (do not have another place that you will return to) ● 4(h) corporation: a. You check for waivers first b. You start with 4(e) 1 c. Service on officer - agent authorised by appointment or statute - etc. ■ Officer is president, VP, CEO, CTO, etc. ■ agent is someone who was appointed to allow receiving services process ● Develop your attack sheet for those 2 only (individual and corporations). Classnotes (Personal Jurisdiction 9/9): ● Personal jurisdiction is the power of court to render a binding ruling over an individual. ○ In persona ○ In rem - based on the case over a property ○ Quasi in rem - where the defendant had a property, but it is not related to the case ○ Capias ad respondendum - where the defendant will be in jail unless they guarantee that they will pay the amount due if they lose to the plaintiff. ● Full faith and credit act - unless the defendant is, 1,2,3,4, then there is no personal jurisdiction, 1. Service in defendant forum (grey area, do you have a social contract with the state or just being in the state is enough to have you serviced there) 2. Seizure of defendant's property in forum 3. Citizenship in forum 4. Consent Those are not a proxy for convenience. This is not about procedural fairness. This is related to social contract. Unless you establish a social contract with the state, the state cannot exercise jurisdiction over you (john lock). This is not procedural due process but a substantive due process. If you do not establish a relationship with the state, the state cannot exercise its power on you. Mitchell v Neff - 1865 (state court) (this case has nothing to do with notice! - it is about a jurisdictional principle) Neff v Pennoyer - 1874 — a suite to quiet title (federal court) ● Justice Field said that it is not a matter of full faith and credit, it is a matter of due process. Why? We do not know - an ipse dixit. Class Notes 9/13: Neff v Pennoyer test: (Walk through all steps in an exam) 1. There has to be a Jurisdictional Statute (state statute or a federal jurisdictional rule or a statute typically the long-arm statute) 2. Due Process (disjunction test - any would satisfy personal jurisdiction) a. Traditional Bases (general jurisdiction - all purpose) i. Service on defendant in forum ii. Seizure of defendant property in forum- this has to be at the beginning of the litigation to be effective so that we know we have established personal jurisdiction, iii. Citizenship inforum - if it is about corporate then say I will diferr this discussion to general jurisdiction because most courts today address citizenship and that rubric. iv. Consent b. General jurisdiction (Continuous and Systematic presence - this is the successor of how corporation are serviced in the forum point (i) above) c. Specific jurisdiction (the list below is conjunctive) in general this is the minimum contact. i. Claim arises out of/related to defendant contact with the forum state ii. The defendant has Purposeful/beneficial contact with the forum state (sometimes this is referred to as minimum contact) iii. Procedurally fair (fairness) 1. Burden on the defendant 2. Sate Interests 3. Plaintiff interest in forum 4. Litigation convenient 5. Impact on substantive policies - super rare like COCO case Is it required for the social contract theory that a defendant has intent to be in the forum state or passively receipt of known benefit from the forum state. ● Pawloski v. Hess ○ It gets to the supreme court - let's check the test: i. ● ● ● ● ● 1 - there is a jurisdictional statute that allows the court to exercise power over the defendant ii. But for the due process, ● He was not serviced in the forum ● He did not have a property in the forum state ● He was not a citizen of the forum ● He did not consent - but here the court is saying that he did consent because it was stated in the statute. Here the court stretched the category to its breaking point but it does it to avoid overriding old precedents. ○ All arguments really in this case are about the fairness of state authority to protect its streets from danger. ( it was really specific jurisdiction and not consent) ○ After this case there were many changes to how the court looked at the personal jurisdiction cases. ○ Before international shoe, the test to rule (i) under the traditional bases for corporations is if the corporation is doing business in the forum state. ○ After international shoe, the traditional bases test was extended to include 2 more tests - Big G general jurisdiction and specific jurisdiction. Check the list above. Mcgee v International Life ○ U.S. - The defendant chose to keep the contractual relationship with the plaintiff. It does not matter that it is only one instance so long it satisfy specific jurisdictional requirements. Hasnsen v. Denckla ○ U.S. - The purposeful/beneficial contact with the forum was not established in this case. The bank did not have contact with this state and no benefit with the state and the fact that the state only has an interest is not enough. Gray v America. Radiator ○ Illinois S.C. - the fact that the valve manufacturer has sold the valves to American radiator establish that you sought benefit from the state of illinoi (stream of commerce) - this case established that it is enough that the defendant got a known even if passive benefit from the forum state - the issue whether it is sufficient to be beneficial and not also purposeful is still unresolved among the U.S. WWV vs. Woodson ○ Woodson is the trial judge ○ They want to avoid going to federal court. ○ Oklahoma S.C. Interpreted the state statute very liberally to accommodate the case where in reality it seems that this case does not fall within the boundaries of the statute. ○ Mere foreseeability is not enough. ○ Stream of commerce Burger kings ○ Look at 4K for item 1 of the test. 4K has 2 different relevant part: i. 1 © - sovereign is the federal government ii. 1 (A) - no federal long-arm statute. A federal court will have the same jurisdiction as a state court in the state of which it is located. ○ In a contract case there are 4 key things that can tell us whether we have minimum contact (purposeful contact section): i. Prior negotiations - where and ii. Language of the contract - choice of law clause establishes significant purposeful engagement iii. Expected future consequences iv. Actual course of the dealing - how do the parties relate to each other (The defendant knew that the disputes had to be in Florida) ○ In an exam you cite a case if it is a U.S. Case or if the case sets a relevant test to use. ● Asahi ○ Zurcher sues (Honda, Dealer, ChengShin) but Chengshin then sues Asahi while Zurcher and the other settled. ○ All justice agreed that Cal does not have the power to exercise personal jurisdiction over Asahi but the question is why? i. The court splitted on the minimum contact issue but agreed on the fairness. ii. Because it is procedurally unfair although there is a sufficient minimum contact ● Yes it is not fair because there is a ● big burden on the defendant. ● There is no state interest because CAL citizens are out of the picture. ● Plaintiff is from Taiwan so they do not have interest in litigating in CAL. ● It is not systematically convenient iii. But if Zurcher was still in the picture the balance changes, ● The burden on defendant remains the same ● There is now BIG states interest ● There is now BIG plaintiff interest ○ O’Conner opinion - Dicta: (judicially activist) is that beneficial out of (purposeful/beneficial) is not enough. There has to be additional intent and action by the defendant such as marketing, customer service specific design. ● J. McIntry Machinery ○ Seriously injured his hand (not saying that he cut three of his fingers) ○ Plaintiff attorneys should have asked: i. The contract between the MFR and the distributor, did it have specific terms abiding to NJ laws? Confirming any future deals? ii. Was there any research done specifically targeting the NJ metal industry? iii. Who sent the machine to NJ? ○ There is no stream of commerce here because the upstream company in this case controls the downstream distributor. Nonetheless, NJ supreme court states that there is a stream of commerce here but we do not have to establish minimum contact!!! But wait, isn’t the stream of commerce theory based on minimum contract. When you have a stream of commerce case: ● Stream of Commerce: a product is MFR by a party, distributed by another party and get sold in a forum state to an ultimate consumer. If the products get moved from there this is not a stream of commerce anymore because the stream stops at the ultimate consumer. ● Start with the stricter test first (O’Conner). If yes, then you have specific jurisdiction. Then ask would we satisfy the weaker test (Briann)? What about the swing vote Stevens? Why do we want to choose a specific forum to sue? 1- Burden on plaintiff 2- Burden on Defendant 3- Choice of law/Substantive law/Removal (?) 4- Bias ● (Defendant/Plaintiff) bias ● Judges bias ● Political bias ● Racial/ethnic/religious bias ● Bias towards a specific bias ● Sexual orientation bias 5- Speed of Litigation 6- Number of plaintiffs Question on specific jursdiciton: A care dealer in Long island, a family from philadelphia and buys a car and drive back to pheli and then get into an accident in Pheli due to a problem in the car and then they sue in Pheli. Do I have to defend the case in phelid? - Did you know that they were going back to Pheli. - Warranty - Pennsylvania - Where do you advertise? Cabelas? Popular magazine If the answer is yes - then there is a purposeful contract of the defendant with the fourm - it is basically like shipping the car into PHeli. No Contact Massive Contact |——|—|———————————————————————————-|——| Helicoptros Goodyear Goodyear: Perkens V. Benguet ● N.C supreme court says there is G jurisdiction over Goodyear Turkey based on a stream of commerce (through Goodyear USA). But helloooo the stream of commerce theory has been used, although it is not even approved there, to prove specific jurisdiction not G jurisdiction. Daimler AG v. Bauman ● Could be easily decided by saying you cannot find jurisdiction over Daimler by linking it to MBUSA is by saying that the two companies are not the same perosn! ● General jurisdiction is after this case has become “at home” - either the principal place of business or where the corporation is incorporated. Contact for intentional torts: ● Liabile cases: Conor vs George ○ You need to know where the defendant were ○ Other stuff? Courts generally view internet as if people are reaching out to the website and not the opposite. The final flowchart: 1. Jurisdiction Statue (Long arm statute) - If it is a federal case, if it is a diversity case then apply rule 4 (k). Be careful with the language. If there is no state long arm statute, just mention that we need to do research and check whether it applies or not. 2. Due Process a. Traditional Basis b. General Jurisdiction (At home - Incorporation, PPB (here you can have more than one place and it is not clear what it means and there is ambiguity) c. Specific Jurisdiction i. Claim arises out of /Relates to Defendant contact with fourm ii. Minimum contacts-Purposeful/Beneficial - factual intensive ambiguity (stream of commercE) iii. Fairness Telemedicine vs Woundright ● This is not a product liability case, it is an international tort. So, here we would think that minimal contact is automatically established because there is an international assault against a resident of a forum state. But the court uses the Calder test in deciding this case which states that intention alone is not enough to establish minimal contact. This is just the court not really understanding what personal jurisdiction is all about. ● Some courts state that at minimum the defendant must know that the plaintiff is in the forum state. Other states state that there must be something else such as marketing - this does not make sense because marketing was needed in previous cases because those cases were product liability cases and they lacked intent. ● In intentional tort you directly establish minimal contact Going back to traditional basis: ● Consent is still good: it can be done in three ways ○ Consent in advance by a contract - less likely to be enforced against and individual ○ Consent by failing to assert properly ○ If you appear (file an answer) in a case you are consenting to the power of jurisdiction to ONLY determine whether there is personal jurisdiction ● Citizenship is still good. ● Seizure of defendant property ○ Harris vs pulk - property can travel with the creditor ○ Shava vs Hightner - shareholder derivative suite (corporation has a right of action against the directors for breach of their fiduciary duties). B/C the director will never sue themselves, the shareholder will step in the place of the corporation and sue the directors. Here it was decided that a share of a corporation in Delaware is in Delaware. The Supreme court stated that here there is no minimal contact (Quasi in rem). After that, the seizure of property was taken out of the traditional basis with some expectation - few survivors. Those survivors falls within the specific jurisdiction (Florida property case)
