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Civil suits
1. Remedy: seeking damages or injunction
2. Procedural objectives of law suits:
a. remove ambiguities in the law (we rely on private lawsuits to do this because they reveal
ambiguities in the law and the US state is reliant on private vigilance through lawsuits
b. to articulate norms
3. Civil: fair preponderance of evidence
4. Suit: a series of burdens that P must satisfy in her quest for relief and a series of opportunities
that D has to argue that P has not met these burdens and that the suit should go away.
Stages of a suit
I. Rule 8: Pleadings stage: Pleadings include the P’s complaint (+ summons) and D’s answer
a. Rule 3: P files complaint (Cause of Action: elements of a claim that all have to be satisfied in
order to claim relief, elements are given presumption of truth)
b. Rule 4 Summons: the proper delivery of summons attaches jurisdiction of court on D such
that non-action could result in the deployment of the power of the court against D.
c. Rule 12: D has 21 days from service of process to file
i. Rule 12 motions:
1. 12(b)(1-5): legal insufficiency, e.g. jurisdiction, venue, process
2. 12b6: (waivable defenses) Motion to dismiss for failure to state a claim
(“SO WHAT?”) can be raised at pleading or during trial: one or more
elements of the burden that are not satisfied and thereby there is no CofA
ii. Answer (if motion to dismiss is denied.)
d. Heightened Pleading Standard: Twombly & Iqbal
i. Conley Standard (1957: black employee claims conspiracy between employer and
cop that was in the diner.) Reject complaint if “beyond doubt that P can prove no set of
facts in support of his claim”
ii. Twombly (2007): Conspiracy and parallel conduct charge against Baby Bells
1. Addition of plausibility to Conley standard : Are sufficient facts pled such
that the allegation is plausible?
2. Court draws distinction between fact allegations and conclusory
allegations:
a. Facts + conclusory allegations do not make allegations sufficiently
plausible in light of alternative available explanations provided by the
Court
b. Correct plea: a plea that, given the factual evidence alleged is
assumed true, it is plausible to infer the conclusory element is true
c. In anti trust policy: if there is no substantiated factual evidence of
parallel conduct, it will not survive summary judgment (balance
between fostering business and anti-trust policy.)
d. Disagreement between Justices Stevens and Souter around what
kind of allegations are okay at pleading stage. Souter says parallel
conduct does not equal conspiracy. The Court is essentially saying
that they can see a plausible, innocent explanation so they are not
going to let this case go to discovery
iii. Iqbal: an application of Twombly outside of anti-trust cases and its concern with
expansive discovery. New concern: Interfering w/government officials performing their
duty
1. CofA: D, as individuals, created a program that targeted individuals because
of race, ethnic, and religious discrimination (does not allege that they
ordered torture, only intentional discrimination) Court says P has burden of
proving D’s knowledge. (Vicarious liability does not apply to govt members)
Court says that discriminatory claim is a conclusory allegation not
supported by any factual allegations (even though Iqbal names specific
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actors, specific places, specific indown of time, seemingly satisfying all
infirmities of Twombly)
2. “Determining whether a complaint states a plausible claim for
relief…requires the reviewing court to draw on its judicial experience
and common sense.”
a. Tremendous discretion given to judges to gatekeep the
discovery process.
b. the court’s common sense said that it was not plausible the policy
was one based in discrimination but rather an innocent policy
driven towards national security that resulted in discrimination.
3. Constitutional concerns? REA?
Rule 11 Sanctions: defines attorney’s obligation and defines policing mechanisms of court
and of opposing parties for written submissions only. Opponent has 21 days to respond to a
charge of filing an offending document and this gives the party a chance to edit or withdraw
it.
i. 11b1: vigorous advocacy in bad taste is generally not sanctionable. However, they
are when processes of court are used to harass opposing party. (Cinque & Cinque)
ii. 11b3 lack of evidentiary support: most commonly pursued sanction and is usually
granted in cases where a hearing reveals that submitting party knew or had good
reason to know (reasonableness standard) that their document was false.
1. An argument that the opposing party lacks evidentiary support (even while
knowing that the allegations do in fact have evidentiary support) can in and
of itself be a violation of Rule 11 (which regulates all written submissions
that are not supported by fact or submitted for a wrongful
purpose.)Protects against denial of factual contentions (when D denies even
though he knows that it is true.)
iii. 11c4: Non-monetary sanctions: Judge can order sanctions that include dismissal of
the complaint.
iv. Rule 11b obligations:
1. Duty to investigate
a. Garr v. US Healthcare: duty to investigate is not delegable. To the
extent that reliance is upon specialized expert that a lawyer would
not otherwise reasonably have, reliance is acceptable. In Garr
there was an expectation of future joint representation among the
attorneys (thereby making them believe that reliance was okay),
but Court does not accept this.
2. Duty to legal arguments placed before court
3. Duty to factual assertions placed before court (11b3, 11b4)
4. Good faith standard
a. 11b2: arguments made in bad faith or misrepresent the law to
the court or use legal process to harass an opponent. (purpose is
not to discourage creative legal representation and are not
applicable to novel arguments that are against precedent)
v. Rule 11 sanctions (a reasonableness standard) are not commonly used and do
burden the process with increased transaction costs and litigation.
vi. History of Rule 11 Sanctions: Search for right level of deterrence vs. overuse
1. Pre-1983: Subjective bad faith standard meant R11 was rarely invoked
2. 1983 changes
a. Objective standard
b. Allegations must be ‘well grounded in fact’
c. Sanctions delivered to opponent  R11 motions very common
3. 1993 changes
a. Shift from punishment to deterrence. Now R11 used much less
frequently. Three major changes:
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Lower evidentiary standard: ‘Well grounded in fact’
becomes ‘likely to have evidentiary support’
III.
Safe harbor provision – 21 days to withdraw or amend
filing before motion for sanction goes to the judge
IV.
Sanctions paid to court, no longer other party purpose is
deterrence, not punishment
f. Rule 15: Amending complaint: P has 21 days after initial complaint is filed or 21 days after
answer is filed or 21 days after service of Rule 12 motion.
i. P has this as amendment right once, and then afterwards has to ask the court’s
permission, which is usually freely given.
II. Discovery Phase: learning information and shaping factual record (PP: P’s access to discovery vs. D’s
burden of discovery (cost + shakedown))
a. Purpose:
i. Learn facts you might not otherwise know
ii. Shape the factual record
iii. Close off opportunity opponent might have to shape record (opponent cannot bring new
info into trial)
b. P’s burden is to develop evidence in support of her allegations that is sufficient to raise
general issue of material fact. D’s burden:
c. Timeline:
i. After D files an answer, court sets date for 1st scheduling conference (creation of
scheduling order.) Rule 16: either 120 days after any D has been served OR 90
days after any D has made an appearance (whichever is earlier.)
ii. Rule 26(f) Discovery plan : at least 21 days before 1st conference; sets roadmap
for discovery;
1. Rule 26b scope:
a. 26(a): disclosure
II.
(1) Initial disclosure: Names of persons “likely ot have
discoverable information” & copies of documents likely
to be relevant to disclosing party’s claims or defenses;
Within 14 days after R26(f) discovery conference
III.
(2) expert disclosure: Report on experts’ credentials &
planned testimony; at least 90 days before trial or
otherwise directed
b. 26(b): i, ii, and iii (particularly iii) empowers court to make
discretionary choices as to what the scope of discovery based on
what is necessary and practical. This expressly invites court to
consider what is at stake and also how much resources are at each
party’s disposal.
II.
26bi: affirmative scope of discovery: what
constitutes discoverable materials
III.
26bii: limitations on available discovery
IV.
26biii: burdensome costs of discovery: Court can
reject extraordinarily burdensome costs (In
Twombly/Iqbal, the issue of masking conclusory
allegations unsubstantiated by fact allegations
qualified under 26biii
iii. Rule 20: Initial disclosures within 14 days after Discovery Conference
d. Tools of discovery: judges have very powerful discretionary tools during discovery
i. Depositions: Witness must answer to the best of his recollection and knowledge
(not obligated to prepare for a deposition)
1. Answers are not absolutely binding
2. Rule 30 restrictions: Opportunity to interrogate: each party is defaulted
10 depositions at their discretion. Default time for deposition is 1 days, 7
II.
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hours max. for each. If they wish to have a longer deposition, party has to
justify it to the court
3. When an objection arises in a deposition (excluding questions of privilege),
the objections are noted and preserved for the record. However, after the
objection is made, the witness still has to answer the question (this is very
different from objections in interrogatories.) Counsel waives the right to
object to the answer of the question at trial if he fails to object to the
question during deposition. Exception: work protected by privilege
objections (no need to answer)
4. If an objectionable question produces information, that info is still good.
5. Objections are governed by the rules of evidence (counsel has to establish
evidentiary fact prior to asking specifics or else the latter becomes
objectionable questions.)
6. The key strategy is to follow up the line of inquiry with deponant, closing off
his opportunities to change his answer at trial (foreclosing his ability to
step away from his answer later on.)
ii. Interrogatories: parties have duty to investigate
1. Asks parties to draw upon all information available to them (as opposed to
depositions where witnesses are only asked to answer to the best of his
knowledge and recollection. “I don’t know” is rarely acceptable and only
where there has been a good faith effort.)
2. Answers are binding (deposition answers are not binding.)
3. Often used as “contention interrogatories” where parties are trying to use
interrogatories to try and determine their opponent’s legal theories of the
case (ex: “state all the facts of the accident that you claim constitutes
negligence.”)
4. Each party is allowed 25 interrogatories, including subparts (subpart =
each embedded question)
iii. Rule 34: Production of documents
1. Form in which documents are produced: at production, they have to be in
same form and order in which they are stored originally (the manner in
which the file is kept can be illuminating; ex: a file kept under Deal X can
reveal what info the party thinks is related to Deal X.)
2. Reviewing document requests: Options
a. Bad choices (choices that rely on people to have good faith,
objective effort in light of their motivations potentially
overtrusting)
II.
Send document request or memo concerning it to
custodians of the documents and have them decide
what to send and how to send it
III.
Send people from in-house counsel to pull out
documents
3. Good choices
a. Hiring outside lawyers to pull out documents (gold standard)
b. Open files to requesting party (if there are no trade secrets and
proprietary information issues.) Companies are rarely willing to do
this (especially with their business files.)
iv. Rule 35: compelling mental/physical exams: the only discovery device that puts
limitations on when the device can be used
1. Prerequisites
a. Mental/physical state is relevant AND
b. The examination is necessary to determine this state
2. Contempt and imprisonment are not applicable options for refusal to
consent to these tests (though party does risk other conseq., for example,
losing the case.)
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v. Rule 36: request for admission: Limited purpose interrogatory: “PLEASE ADMIT
TO THE FOLLOWING” (Used for issues to take them off the table)
1. Admitting substantive issues: the admission is only binding and applicable
to the present case (cannot be used as evidence in another lawsuit.) If an
adverse fact determination is made, it can be used against you in another
suit. However, if you admit to it under Rule 36, it cannot (allows party to
pick and choose their battles.)
2. If a party makes a request for admission and the proposition is nothing you
can deny in good faith, you must not lie (policing device.)You can be
sanctioned for not admitting that a document is genuine (especially if
opposing party goes through expensive maneuvers to prove that it is in fact
genuine.) However, your cannot be sanctioned for not answering
conclusory statements or issues at stake (“admit that the toys are toxic.” D
will not be sanctioned if the verdict returns saying that the toys are in fact
toxic.) Cannot force opponent to stipulate to what they do not want to.
vi. Rule 26c (shield) and Rule 37 (sword)
1. 26c: protects subject of search (protective order against burdensome
searches)
2. 37: request to compel
3. Applicable to both
a. good faith
b. If court finds party is inappropriately using either, opponent can be
forced to pay for the costs of obtaining the order. However, court
should not provide relief if there was substantial and legitimate
reasons for disagreement (to do so would be unjust.)
c. These proceedings reveal each party’s actions to the court (and
could turn the court against a particular party behaving badly.)
vii. Privilege
1. Applies to communication, not the substance/material covered by the
communication. When invoking privilege, one invokes right not to reveal
particular circumstances of the actual communication, but is not asserting
the right to have the acts of which the communication addresses to be
banned from introduction to trial if the info can be discovered in other ways
2. Purpose of Privilege: exists to protect certain relationships, but they have
cost associated Communications protected not because there is a fear that
they are not reliable, but rather because the relationship protected is worth
shielding and that obtaining this info would trample upon a socially retile
relationship.
3. Types of relationship privileges protected
a. Attorney-client
b. Spousal (right to intimacy)
c. Priest-Penitent (recognized value in candor and confession)
d. Doctor-Patient
4. Rule 26b3: Work product privilege: Deals with the relationship between
the lawyer and the legal process.
a. Exception to Erie concerns: Rule 26b3 applies to both in-state
and federal works despite the jurisdiction
5. Invoking the privilege:
a. Privilege needs to be asserted immediate and aggressively. In a
deposition, if a claim of privilege is posed, the client has basis to not
answer the question (only objection that serves as basis to not
answer a question in a deposition)
6. Rule 26b5: Trial-preparation documents
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a.
e.
Counsel has to make the claim expressly and describe the offending
document so that opposing party has right to determine if privilege
applies.
b. Does not apply to communications in which counsel is just involved
(ex counsel is on distribution list for business office memos)
c. Hickman v. Taylor: D is tugboat J.M. Taylor on which D was a
crewmember that died when the Taylor sunk. Fortenbaugh is
counsel to D and took some interviews of reps of deceased crew
members, in preparation for litigation. P’s counsel tries to get these
documents to help him prepare for his own depositions (“so he
doesn’t miss anything.”) D refuses and is charged with contempt. D
appeals and charge is reversed.
II.
There was no discovery process before FRCP and
Work-Product privilege didn’t exist at the time.
Parties hashed out issues with a battle of pleadings
and trial was the first chance to see witnesses and
dispute facts. For actions at law, there were basically
o pre-trial discovery tools.
III.
Fortenbaugh’s contempt charge: contempt is a final
judgment and allows F to appeal the privilege issue.
IV.
Justice Jackson warns about the corrupting potential
of making lawyers into factual witnesses when they
are forced to reveal their impressions
d. Waiving Work Product: often one has no control over how broad
the court will interpret this waiver. (Party can not selectively
choose which materials to waive relating to one topic in order to
maintain an advantage.) Often, the court will err on the side of
giving a broad interpretation.
II.
If Attorney-Client privileged communication is
embodied in a document protected under Work
Product, the waiver of the WPP does not waive the
ACP unless there was an intent to waive ACP as well.
(privileges do not cancel each other out.)
Rule 56: Motion for summary judgment (“YOU’VE GOT NOTHING”)
i. D’s burden: only has to show that one element of P’s CofA is not satisfied
ii. P’s burden: has to show evidence that raises a genuine issue of material fact such
that a reasonable person could only conclude in P’s favor
iii. Celotex Corp. v. Catrett (US 317, 1986, p655) D filed motion for SJ, saying P had no
evidence to support the elements of her cause of action (no direct evidence to show
that the asbestos causing her husband’s death were from D’s products.) PH awards
SJ to D, appeals court reverses. Final H is that D has right to ask for SJ.
1. First motion for SJ: D claims that P did not respond to 2nd interrogatory and
P counter-argues that she was never properly served. P comes with
evidence (transcript off husband’s deposition, letter from insurance
company, and letter from one official from D’s company) but D claims that
they are hearsay and inadmissible. Trial court grants motion.
2. Central issue: Burden of production vs. Burden of Persuasion. Appeals court
reverses. Says D needed to bring evidence to negate petitioner’s claim in
order to file a motion for SJ. (points to Adickes, where SJ was improperly
entered in favor of the D restaurant owner when he claimed that just
because a cop was in his restaurant and then later followed P, a black
woman, out to arrest did not meet P’s claim of conspiracy)
iv. Supreme Court: Appeals court misread Adickes: D does not have to come forward
with “smoking gun evidence” D does not have burden of persuasion to have his
motion for SJ heard before the court
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v. Rule 56 Revised
1. Rule 56e: burden of production: formalized spirit of Celotex (court was
suspicious of denying addressing a motion because moving party had not
met burden of persuasion.)
vi. Rule 56c2: Hearsay objection: this applies to rules of evidence and is not considered
in a motion for SJ. (Party merely has to show that this evidence will be able to satisfy
the rules of evidence during trial, but not necessarily during discovery.
1. For ex, affidavits can be used during motions for SJ, but are considered
hearsay at trial.
2. Evidence is taken into consideration of whether or not to grant the motion,
but no appropriate in deciding whether or not the motion gets heard at all.
vii. Scott v. Harris (Supreme Court, 2007, Supp) Cop chse. SCOTUS grants SJ to P,
saying that the evidence on record (a videotape) could not lead fact finder to find
out any other way but for the P.
1. Qualified immunity: federal officers acting under duty are protected under
common law immunity. They are immune unless accused of violating a
constitutional right. D claims that P violated his 4th amendment right
against unreasonable searches and seizures.
2. 4th Amendment concern
3. Was P reasonable in his actions? Court implies that the evidence (video)
suggests that jury could not find other than that he was reasonable in his
actions. P posed serious risks to others on the road and stopping the chase
was not an option (sets bad precedent and also, no way for cops to signal to
P that the chase was over and thus he may continue to speed and pose a
substantial risk to others.)
III. Trial Phase
a. FRCP are less explicit as to how proceedings should occur (judges have more discretion)
2-3% of civil suits are resolved through trial
b. P has burden of persuasion (fair preponderance of evidence) that each element of her claim
is satisfied
i. Presentation of evidence to the fact finder (judge or jury)
ii. Preponderance of evidence standard
c. Rule38: Right to a Jury Trial & Rule 39: Trial by Jury or Court—accounts for 1.8% of civil
trials
d. Rule 47: Selecting Jury
i. Summon jury candidates (need 6-12 jurors, Rule 48)
ii. Voir dire to pick jury—questioning to determine fitness to serve. Potential jurors can
be dismissed for
1. Medical reasons
2. For cause (potential bias)
3. Peremptory challenge (each side is given a few that allow them to dismiss
potential jurors without giving reason.) Federal rules allow for 3
a. Batson v. Kentucky: impermissible Non-discriminatory mechanisms
(cannot strike based on race, sex, etc.) against constitutional
protections.
4. Verdicts must be unanimous unless otherwise stipulated
e. Policing Juries
i. Rule 51: Jury Instructions
1. Rule 51a1: party may file written requests for jury instructions at or before
the close of evidence or at an earlier reasonable time that court directs.
2. Objections to jury instructions before the instructions and arguments are
delivered to the jury.
3. Instructions are usually delivered to the jury orally (written copy to be
furnished on judge’s discretion)
ii. 7th Amendment (strictly applies to federal courts only)
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1. right to jury trial
2. no fact tied by jury will be re-examined
iii. Rule 50: Summary Judgment/JMOL; New trial; Conditional ruling Rule 50:
(“SOUND & FURY SIGNIFYING NOTHING”)
iv. D claims P has not presented evidence such that a reasonable jury could find that
she has a fair preponderance of evidence (has not met the burden of proof) (p.10)
v. Jury policing mechanism: police legally insufficient cases where fact finder (jury)
may be inclined to find for P anyway
vi. Not an opportunity for judge to substitute her ruling for jury’s, but merely asking
judge to decide that there is no competent evidence of a claim/element of claim so
that jury trial is unnecessary
1. 50a must be made before case went to jury in order for 50b to be
raised after verdict. Usually made after opposing party has put on all of its
evidence but before the case has been submitted to jury. (D can motion for
JMOL w/o presenting any evidence)
2. JMOL after the verdict: party cannot motion for JMOL under Rule 50b
within 10 days after entry of judgment unless they made a motion under
Rule 50a before the case went to jury. Judge rules on 50a after the
verdict. This allows the case to go to jury, and for the judge to fix the
problem if the jury gets it wrong. Also provides a verdict should the case go
up to appeal.
3. Rule 50c: Conditions for granting motion for JMOL during bench trial
(D can make motion at the close of P’s case.)
4. Dixon v. Wal-Mart (Tx., 2003, 695) P trips on magazine plastic ties that were
in Wal-Mart, sustaining severe injuries. Says D was N in maintaining safe
facilities. Court says it’s inplausaible to think that the ties had been there all
day. Majority is overriding credibility determinations (not within scope of
Rule 50.) It buys D’s version while rejecting P’s, without solid evidence on
either side.
a. Related to Twombly: Courts drawing the line: Twombly was decided
as a matter of antitrust law court makes the call about needing
more than parallel conduct. In Dixon., Court also determines what
inferences can be drawn from certain facts under Texas law. (Is it
the “judicial common sense” from Iqbal? This does not seem so
convincing in light that the knowledge concerned is about shopping
at Wal-Mart.)
5. JMOl vs. SJ
a. JMOL allows judge to preserve the right to jury trial
b. Admissible evidence is seen at trial while during discovery (and for
SJ), non-admissible evidence is considered. This non-admissible
evidence is weeded out during trial so a motion for JMOL can be
granted even if a motion for SJ was not.
c. Rule 50 motions are subject to Rule 11 sanctions (stops parties
from haphazardly filing them) Also, motion filing is expensive in
general.
Opening Statements
Presentation of Evidence
Verdicts
i. Rule 48: Number of Jurors; Verdict: Jury has 6-12 jurors; unless parties agree
otherwise, federal verdict shall be unanimous and no verdict shall be taken from a
jury reduced to fewer than 6 people (otherwise, mistrial)
ii. Rule 52: Findings and Conclusions in a non-jury proceeding: judge decides the
law and the facts. (Rule 52a)—judge must indicate the factual basis for the
ultimate conclusion.
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1.
Rule 52a6: Protects judge’s ruling on factual findings from reversal on
appeal “unless clearly erroneous” Pullman-Standard v. Swint.
iii. Rule 49: Special Verdict; General Verdict; and Questions
1. General verdict: jury determines who wins and amount of damages if any
2. Special verdict: itemized verdict
a. Rule 49a: jury is required to answer in writing their finding upon
each issue of fact
b. Rule 49b: general verdict with answers to written questions:
General verdict is approved if the answers match up, otherwise,
court will enter in a judgment consistent with the answers.
i. Rule 58: Entry of judgment (starts clock for appeal and post-trail relief
i. Rule 50b: Within 10 days after entry of judgment, party can renew Rule 50a motion
for JMOL
ii. Winning party may petition for award of costs under Rule 54d
j. Losing party’s tools
i. Rule 59: New Trial; Amending a Judgment: nullifies jury verdict and must be
served within 10 days after entry of judgment
1. motions for Rule 50 (JMOL) and Rule 59 (new trial) can be made at same
time. When Court makes a decision on 50(b) motion, it should also rule a
conditional ruling on Rule 59 in case her ruling is overturned on appeal
(that way the ruling is available if needed.)
2. Court may order new sua sponte within 28 days of entry of judgment
a. If verdict is against weight of evidence
b. If judge believes jury was subjected to improper evidence or
information (jury is potentially improperly influenced)
c. Improper behavior seeking to coerce jury to make an improper
decisions (playing on jury’s emotions) or to make decision
unsupported by evidence.
3. Rule 59e motion to alter judgment must be served within 10 days after
entry of judgment
ii. Remittitur: the court denies the motion of new trial on the condition that P accepts
a specified smaller award. If accepted, P cannot appeal the trial court’s conditional
ruling.
iii. Rule 60: Motion for Reconsideration” courts are authorized to “relieve a party”
from an adverse judgment or ruling “upon such terms as are just.” (mistake,
inadvertence, surprise, or excusable neglect, newly discovered evidence, fraud or
misrepresentation, any other justifying relief.)
1. Party has one year to seek relief under 60b and applies to all final
decisions
b. Appeals within 30 days of entry of judgment(or 60 days in a case involving the federal
government.) Very stringent jurisdictional time limits.
i. When appeal is granted, district court is divested of all jurisdiction, so this motion
must be filed after all post trial motions are filed
1. Bowles v. Russell: P appeals judgment of civil court on ruling of federal
habeous corpus application. P fails to file motion to appeal within 30 days,
but judge grants motion to extend, mistakenly giving P 17 days instead of
14. P relies on this and Ct.ofApp, saying they do not have “jurisdiction” to
hear it (expired time.)
a. Time limit is a jurisdictional matter (not alterable.) Rule 82: The
federal rules cannot be used to extend/expand the jurisdiction of
the federal court (question of Congressional intent)
ii. Who May Appeal?
1. Party to original action (though amicus parties are also allowed—nonparty
that intervenes in the lower action after judgment or by obtaining
permission)
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2.
iii.
iv.
v.
vi.
vii.
Parties that have been aggrieved by the courts decision (losing parties)
a. “cross appeal”: if both parties appeal different aspects of the
decision
Types of Appeals: dealing with the Final Judgment Prerequisite/ When to appeal
1. Final judgment appeals
a. Immediate appeals: useful because they may save money and
litigation. Problem: USC 1291: Courts of appeals have jurisdiction of
appeals from all final decisions of the district courts (see T.J.
Hooper)
b. Helps avoid disruption of trial court proceedings
c. Preserves appellate court resources at expense of considerable
effort by trial court (all objections presented in one single appeal.)
2. Interlocutory appeals: USC 1292(a)-(b) (nonfinal judgments
a. 1292a: appeals as of right from grants or denials of injunction
b. Rationale: injunctions have real, immediate, and possible
irreparable consequences on the parties.
c. “Injunction” must seek some of the relief sought in the complaint
(temporary injunctions, requests for motions for procedural
orders—ex to stay the proceedings or to compel discovery—do not
qualify)
3. 1292b: discretionary appeals approved by both the district court and
court of appeals
Extraordinary Writs: requiring or prohibit certain exercises of judicial authority to
preserve the ability of the appellate court’s authority if some action by the trial
court would affect a party’s rights in a manner that could not be repaired by appeal
upon final judgment. Limited to exceptional, “jurisdictional” errors by the trial
court. Cheny v. US District Court test:
a. Appellant has no other adequate means to attain the desired relief
b. Appellant’s right to issuance of the writ is “clear and indisputable”
AND
c. The appellate court “must be satisfied that the writ is appropriate
under the circumstances.”
2. Writ of prohibition: prevents trial court from acting beyond its jurisdiction
3. Writ of mandamus: compels trial court to exercise jurisdiction
Partial judgments
1. Rule 54b: Judgments upon multiple claims or parties: Judge may direct an
entry of a final judgment for some but not all of the issues or parties involved.
This gives court flexibility to weigh a variety of factors in determining
whether to direct the entry of a final judgment as to specific claims and
allow the losing party to proceed with a partial appeal.
2. Curtiss-Wright Corp. v. General Electric (1980, p1043) Release clause in
contract which made P’s entitlement to final payment contingent on a
release of all claims that P had against GE.
a. District court verdict for P (entitled to payments notwithstanding
the release clause) and directed a Rule 54b partial judgment to
enable P to seek immediate payment of the fee. (Ct said delay
would cost P in fluctuating interest prices, and etc.)
b. S.C. reversed court of appeals, saying that discretion of trial court
was to be exercised “in the interest of sound judicial
administration” so district court had right to make the call.
Perfecting the Appeal: complying with the requirements to bringing an appeal
1. Preserving Issues for Appeal: appellate raised the issue at the time the
ruling was made or sought (formal exceptions to rulings are not required.)
Notice of Appeal: filed within 30 days of entry of judgment
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d.
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viii. The Appellate Record: all papers and exhibits filed in the district court, a transcript
of the proceedings, and a copy of the docket entries. (conditioned to approval, party
may also submit in lieu a “statement of case showing how the issues presented by
the appeal arose and were decided in the district courts.”)
Briefing and Oral Argument:
i. Appellant must file brief within 40 days after the record is filed and the opposing
party then has 30 days to respond. Reply brief of appellant may be filed 14 days
after that.
ii. Argument can be dispensed by Court if:
1. Appeal is frivolous
2. The law is clear
3. The decisional process would not be significantly aided by oral argument
Disposition: Court has discretion over form of their resolution (written opinion, or strict
reversal/affirmance without opinion)
Rehearing and rehearing En Banc
i. Rehearing on ground that the court “overlooked or misunderstood” a point of fact or
law must be filed within 14 days after entry of the appellate judgment.
ii. En banc hearing: argued to all of the active judges in the circuit (not merely the 3
judge panel in an appellate court) reserved for exceptional cases.
Rule 52: Standards of Review
i. Clearly Erroneous standard: Questions of fact (“the light was green”; “D said he
would pay “) Applies to facts found by district judges, not juries. Review of jury
findings are treated with the utmost deference
1. Exception: questions of comparative assessments that resemble legal or
policy determinations more than traditional fact determinations (ex:
amount of punitive damagessee BMW v. Gore
2. defers to the lower court unless the appeals court has a “definite and firm
conviction that a mistake has been committed”  favors the respondent
who is defending the judgment.
3. Appeal under clearly erroneous standard applies to facts that have affect
the “substantial rights” of parties (not any fact that might be erroneous)
4. Pullman-Standard v. Swint: (SCOTUS, 1982) black employees claim
discrimination in violation of Civil Rights Act.
a. Did 5th circuit fail to comply with Rule 52a (findings of fact not to
be set aside unless clearly erroneous. This does not apply to legal
conclusions)
b. H: 5th C erred by finding that fact issues were wrong it made an
independent examination of the record and arrived at its own
conclusion contrary to the D.C. 5th circuit did not give sufficient
deference to D.C.’s findings (though Majority does not ever say that
the D.C.’s findings were not erroneous)
ii. De novo standard (Plenary) : Questions of law (ex: the statute requires proof of
intent)
1. No deferential weight to trial court’s decision
2. Appellate decisions are binding to parties and everyone else in district
(opposed to district court decisions that do not bind and are not precedent.)
iii. “abuse of discretion” standard: used to review legal rulings of the trial judge that
involve a balancing of factors where the assessment is said to be left to the
discretion of the judge.
1. Appellate review will only set aside decision if they find that judge
understood rule of law incorrectly (ex: ordered a new trial because of
personal distaste for P)
2. Includes admissibility of evidence, forum non conveniens, and permissive
interventions
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[ROSE v. GIAMATTI] (OH Fed, 1989) (p49); Rose contends that he is being denied the right to a fair hearing
on the gambling allegations by an unbiased decisionmaker. Rose seeks to move from federal court back to
state court
a. Removal is instant, but D can file a motion to remand and fed court gets to decide for itself whether or not
it has jurisdiction fed court acts as gatekeeper. (See Fradulent Joinder)
b. Diversity jurisdiction is considered as a mater of SMJ
i. Personal jurisdiction: where you can bring a case to court. Must be proved in state and federal
court. (In federal court, SMJ questions can be posed at the same time)
1. It follows that PJ questions are always posed by D
2. Have to brought up at beginning of case
3. Waiveable right (NYT waives rights to personal jurisdiction objections by their
additional motions that destroyed their “special appearance” status in Alabama court.
ii. SMJ: where that case is heard (state or federal district court)
1. Complete diversity: each party on one side has to be from a different state from each
party on the opposing side (not an issue for parties on same side being from the same
state.)
2. This right is NOT waiveable and can SMJ objections can be made at any time (a reflection
of its Constitutional Source and the Federal Rules)
c. Temporary restraining order: freeze activities, giving court enough time to consider both sides
d. Fraudulent Joinders: Nominal parties (no real interest in outcome of the case.)
i. Their inclusion (Reds and MLB) may have been only to destroy diversity jurisdiction
ii. This is a judge-made law, created to prevent P’s from taking advantage of system
iii. Avoids letting states be the gatekeepers to whether it can or cannot be removed
1. For example, without the Fradulent Joinder rule, Reds and MLB would have to have state
court grant motion to dismiss in order for D to remove to federal court. The state of OH
would be the gatekeeper to federal court.
iv. MLB is a non-juridical entity and cannot be used to destroy diversity
1. Rose himself, in his complaint, says he has nothing specific against MLB (only charges
Commissioner, not MLB with infraction of rules
2. Procedural rules do not impose contractual liability on MLB. They have no duty to act
unless they find that Rose has been guilty of violating rules (until then they are neutral),
and thus have no legal interest in the outcome of the case
v. Reds would destroy diversity (is citizen of OH) if they were not fraudulently joined
1. Reds cannot interfere with Commissioner’s right to hold disciplinary hearings.
2. Rose is claiming an “anticipatory breach” (that they “owe him the contractual duty to see
that the procedural rules are not violated and that if Giamatti violates these rules by
holding an unfair hearing, and, as a result, sanctions Rose, the Reds will have failed in
its duty and will have breached contract”) Court says there is no breach.
3. Reds have no legal interest in the outcome of the case.
vi. Details of MLB rules (that they have no say in Commissioner’s method of hearings), relationship
between Commissioner and Reds are all fast-paced and intensely factual details that must be
made quickly system cost of fraudulent joinders
vii. P’s are allowed to be strategic in which D’s to name: fraudulent joinder principle is not saying
that Rose cannot name Reds and MLB because they are strategic choices to destroy diversity, but
rather saying that they are not proper defendants.
[NY TIMES v. SULLIVAN] (p12)
-Could NY Times have used a fraudulent joinder principle? No because each D had a discrete interest in the
outcome of the case.
-Does damages sought affect merit of fraudulent joinder? (ex: If Rose had sued MLB for $1, they would have a
discrete interest in the outcome of the case.) The answer should be no.
I.
Process: serves to notify and place service under court’s personal jurisdiction
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Robust relationship between what happens inside a state and the latter’s extent of personal
jurisdiction
i. Historically, the idea was that state only had sovereignty of personal jurisdiction
when the person was physically in the state (still true today, though not necessary)
Motion to quash service (p19)
i. Theory: if you do enough business in the state, it is justified to treat you as a citizen
of that state for jurisdictional reasons
ii. Many state courts employ the procedure allowing D to challenge jurisdiction under
“special appearance” (where D appears in court only to file, and not make a general
appearance, which would be a concession to court’s jurisdiction)
1. During the time of [Sullivan], any additional motions filed constituted
waivers of jurisdiction in Alabama (federal courts don’t have this.) The fact
that NY Times filed additional motions was seen as concession of their
jurisdiction in Alabama state court (and evidence of successful service)
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Notice and the Mechanics of Service of Process
I.
Jurisdiction requires
Notice and Service of Process (RULE 4) : serve the ∆ a summons and
power/contacts and notice.
the complaint; delivered in certain way
i. Summons: official document issued by the court saying actions has
been filed and served upon ∆; doc by which you attach service; has
operable, executionable force – you MUST appear; can provide notice
of pending litigation as well as basis for PJ if process served w/in
borders of state where filed. Notice: served as long as ∆ has notice or
complaint forwarded to them. [Later tied to Personal Jur is physical
idea of handing out summons]
1. Power Theory of jurisdiction – constitutes exercise of
sovereign authority by which court attaches power to ∆ (Pennoyer ; // old
theory of sheriff attaching)
ii. Due Process Clause: what procedures are due before state can take away liberty or
property.
iii. Balance of values that come into play in talking about procedural due process- means the
set of adjudicatory mechanisms under which crt conducts adjudicatory proceedings.:
1. accuracy of proceedings/realibility concerns
a. Impartiality of Tribunal
b. Equal opportunity to dispute factual record
2. individual participation – ability to speak and be heard yourself, to articulate
own interests  ontological value of being heard
3. Balance between increased cost & marginal utility
iv. RULE 4 SERVICE OF PROCESS: (1) NOTICE and (2) Authority of State to attach power to
∆; strict procedural DP analysis shown here.
1. RULE 3 – initiates lawsuit by filing complaint then serve the summons
2. Service – Delivery to Party
3. Process - Thing served: paper giving party info about suit commenced
a. Summons – document informing party of name and location of court in
which suit being brought and general nature of action; and requiring
party to appear in court on specified day or serve response w/i specified
time period.
b. Requirements vary by JD
i. Complaint – more detailed recitation of claims being brought,
parties, basis of JD; In many JDs, service also has to include
v. DETAILS of RULE 4 - Uniform federal form of summons
vi. WHAT??
1. 4(a) FORM
a. Summons should be signed by clerk of court
b. names of parties and court, name/add of π attny; time w/in
which ∆ must respond; statement that failure to respond will
result in default
2. 4(b) ISSUANCE
a. Complaint must 1st be filed w/ the court
i. Filing “commences the action (FRCP 3)
ii. After filing complaint, π may present a summons to clerk
for signature or seal  clerk shall sign, seal and issue to
π for service on ∆.
iii. Summons for each ∆
vii. BY WHOM?
1. 4(c) SERVICE WITH COMPLAINT; BY WHOM MADE
a. May be effected by any person who is not a party and who is >
18.
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i. At request of π, court can direct service to be effected by
US marshal (used to only be this way.
viii. UPON WHOM?
1. (4)(e) SERVICE ON INDIVIDUALS IN US
a. Service on individual ∆
b. Can follow rules of Ps forum state or D’s forum state
c. To individual or leaving with person of suitable age and
discretion
2. (4)(h) SERVICE ON CORPORATIONS OR ASSOCIATIONS
a. If entity, then service is on “officer, managing or general agent”
(person whom one could reasonably expect to alert the bosses)
b. If agent authorized, must also mail copy to ∆
i. Q of what constitutes agent often litigated
ii. Court generally consider either
1. Degree of control and discretion exercised by
putative agent in association or, more
practically, position in association
3. 4(k)(1): territorial
a. (a) fed cts. borrow long arm statutes of the courts of states in which
they sit.
b. (b) 100 mile radius of courthouse, even if out of state
c. (c) service outside of the state pursuant to certain federal statutes
ix. HOW? – MECHANISMS
1. 4(e)(1) -service can be effected both in conformance w/ law of state in
which court sits and also w/ law of state in which service effected
(broadened)
a. Ex: State law says you can mail summons/ complaint, cannot do
that in federal system. WHY NOT?
i. Desire in fed crts to say that service has been effectuated
ii. PERFECTING SERVICE – relies on ability to say that
service is complete; if in MAIL, ability to do that is
limited; FRCP has preference for methods of service by
which you can say service perfected BUT (4)(e)(1)
allows borrowing of state law.
2. 4(e)(2) Federal Methods of Service service on individuals, except infants/
incompetents –
a. can be served personally or
b. by leaving copies w/ person “of suitable age and discretion” at his
“dwelling house or usual place of abode”; If individual has appted
agent, service on that agent. (NY “nail and mail”)
x. WHEN?
1. 4(m) Time Limit for service
a. Service must be made within 120 days of filing of complaint
i. Court can extend time for service beyond 120 days, even
in absence of good cause for delay, and direct that it be
effected w/in specified period. Flexibility on extensions.
c. Judges can avoid severe effects of strict app of deadline; like if
statute of lim barred refilling of a claim
d. Rule 12(a)(1)(a) – obligation of ∆ to respond is 20 days
2. 4(d) Waiver of Service – lets you expand 20 days to answer
a. Substitute mechanism for service by mail  you mail
summon/s complaint to ∆ and, along w/ it, a request that ∆ fill
out a form agreeing to waive requirement of service then you, as
π, can file the waiver of service.
b. WHY?
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i. Mechanism of mailing that allows you to effect service
ii. Also there to help spare π expense of properly
effectuating service; opp to say – let’s save ourselves
inconvenience and expense
iii. ∆’s interest – if you cooperate in waiver of service, you
get 60 days from sending of waiver to respond
1. Get 60 days minus however long it took you to
receive waiver to answer of file motion to
dismiss.
xi. Special Cases
1. (4)(f)) Foreign Service
2. (4)(g) – Service of Infants/Incompetents
3. (4)(i) – Service on US (personally to US Attorney or designee for district in
which action is brought or registered/certified mail addressed to civil
process clerk at US Attorney’s office.
a. Diff rules for agent, official, in off capacity or not
4. NOTE – waiver of service not avail against individuals or against US.
II.
Mullane v. Central Hanover Bank (SC1950, 246) “reasonable under the circumstances”
a. Facts Court appointed guardian to protect interests of all beneficiaries of a trust
during the accounting process. Notice of this accounting process (adjudication
judgment that extinguishes possibility of future suits), was according to NY Bank
Law: published in paper for 4wks w/o names.
b. H: Reversed. Published notice is sufficient for unknown beneficiaries, but not
sufficient for known beneficiaries (and the bank had the names and addresses of
many, because sent mail at time the trust was created.)
i. Notice by publication (minimal adequacy defined)
1. Present known beneficiariesnotice by 1st class mail required
2. unknown present beneficiaries publication is constitutionally
sufficient (too burdensome to determine and locate unknown
beneficiaries)
3. future/contingent beneficiaries publication is enough (interests
are remote and not immediate and those who are so motivated
will do their own research. Too burdensome otherwise)
ii. “Mere gesture is not due process. The means employed must be such as one
desirous of actually informing the absentee might reasonably adopt to
accomplish service.” (249)
iii. Court had jurisdiction to settle the account even though many beneficiaries
were non-residents who were not personally served.
iv. Turns out like specialized class action proceeding.
v. Factors for adequate notice: a) Burden on the bank of better notice (burden
on the state’s interest) vs. b) benefits to investors of better notice.
vi. Consequence of Mullane standard: requirement is to take reasonable steps to
notify—make sure it’s likely that everyone gets notice. (don’t have to
make sure everyone got it, no mistakes made
1. NOT an absolute standard
2. Flexible, context-specific standard
3. takes into acct knowledge or knowability of where ∆ is
vii. RULE: criteria for notice = “reasonably calculated under all the
circumstances” to notify the parties and to give them opportunity to
present objections at trial.
a. “means such as one who is actually desirous of notifying opponent
would use”(implied good faith requirement) (p. 264)
c. Other factors for adequacy of notice: mere fact that alt exists does not make it const. nec.
i. What interest is at stake. (more important interest, more sufficient notice is
necessary)
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1. ex: if your home is at stake (being evicted) more notice is necessary than a
car.
2. ex w/ prisoner not getting notice b/c mail is commonly mixed up/stolen, so
prisoners regularly don’t get their mail. Holding: mail was sufficient, don’t
need “heroic” efforts (Dusenbury v. US SCOTUS 2002) .
3. circumstances of the case—effect what’s reasonable for that case (looks at
idiosyncrasies of actual ppl you wish to reach)
4. Greene v. Lindsey (SCOTUS 1982) notice by posting eviction notice on door
of apartment not sufficient b/c was known that kids often removed
postings from doors; KNOWLEDGE that kids rip it of imposes concomitant
duty to use other method
5. Situation where became known to πs that ∆s not receiving mailed
ii. MAIN POINT: Objective good faith standard is highly responsive to context and
idiosyncracies; also sensitive to interest at stake; does not require Herculean
efforts or confirmation that notice is given if Reasonable efforts undertaken
d. motion to Quash service of process:
i. 12(b)(4) insufficiency of process: π didn’t include summons and complaint
ii. 12(b)(5) insufficiency of service of process: it wasn’t delivered properly.
Local Actions & Formal Venue Rules; Forum Non Conveniens : statutory regulation (USC 1391)
Traditionally distinguished from jurisdiction (“power of adjudication”) as the “place of trial.” Becomes less
important in recent history.
I. Formal State and Federal Venue Statutes
a. Venue Rules in State Courts: intra-jurisdictional. Variety of criteria to determine which
district within the state should house the suit.
b. Venue Rules in Federal Courts: general default venue state and specialized venue provisions:
Restricts range of fora to those that have J over D AND those that provide a proper venue.
i. Residence of D: Any district where D resides IF all D’s live in same state “where a
substantial part of the events or omissions giving rise to the claim occurred.”
ii. Venue of last resort: where venues cannot be maintained where venue is proper
1. Where SMJ is based on diversity of citizenship, the fall-back is any district
“in which any D is subject to PJ at the time the action is commenced.”
2. “may be found” = requires actual presence as opposed to mere
amendability to J
iii. Tag jurisdiction: D is subject to J if enters into the state. Still have to meet (i) and (ii)
(venue rules does extra work.)
iv. For multi-D where only 1 is an individual, (i) OR (ii) will have to be met.
v. Corporations: (for venue purposes only): deemed a resident of any state it is subject
to PJ. (rules of venue do no extra work.) Non-corporate associations: treated like
corporate entities.
c. Federal Forum Non Conveniens: Common law doctrine, attempts to direct litigation to a
convenient (not most convenient) forum. Can be brought sua sponte
i. Common law doctrine giving DC judge right to dismiss case to be filed somewhere
else because of excessive inconvenience
ii. Requires alternative forum be available.
iii. Balancing private interests test: Gulf Oil Corp. v. Gilbert: D pleaded forum non
conveniens to a case in NY when all the impleaded D’s were in VA. Ct. used private
and public interests to justify dismissal of action. Dissent argued that federal district
courts could not decline J without legislative order.
iv. Option to recraft a suit so it’s not amendable to Fed SMJ is always avail. (a
negotiation-based decision.)
v. Piper Aircraft Co. v. Reyno (1981, 270): “possibility of an unfavorable change in
law should not, by itself, bar dismissal under FNC”
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1.
F: plane manufactured by Piper in PA and Hartzell in Ohio, crashed in
Scotland, killing all of the passengers, all were Scottish. All of the evidence
of the crash is in Scotland. Piper is a U.S. manufacturer, operating in
Pennsylvania. The propeller manufacturer, Hartzell, was located in Ohio.
Reyno was appointed as the administratix of the estates of the five Scottish
passengers, and she brought suit in the CA state court for negligence and
strict liability against Piper and Hartzell and Scottish P’s brought suit
against the airline and etc in Scotland(better statutory grounds for bringing
this suit.) Piper removed to the federal district court in CA, and then
transferred to federal court in PA. Piper then moved for dismissal on the
grounds of FNC. (both were willing to submit to J of Scottish courts.)
2. H: District court had discretion to dismiss case for FNC (“possibility of an
unfavorable change in law should not, but itself, bar dismissal.”)
a. Gilbert implicitly suggests this by holding that the central focus of
FNC is convenience. DC correctly weighed interests
i. There is sufficient connections with Scotland (even if not
“overwhelming.”)
ii. To demand that D’s name witnesses needed would
fundamentally defeat the purpose of FNC.
iii. Difficulty of impleading potential 3rd party D’s supports
holding trial in Scotland (easier to resolve in 1 trial)
iv. Public interest argument accepted, even though Ct. of App
was correct in saying that American law would apply to D’s
(no need to familiarize itself with Scottish law.) P’s claim
that this is important deterrence opportunity for the US is
rejected (probably negligible result anyway.)
b. To give change of law considerations this much power would be to
negate use of FNC (making it too difficult to use.) Puts too much
responsibility on courts to interpret laws of foreign jurisdictions.
c. Practical problem: would open up the US to cases where there are
no American P’s or D’s, but rather only a tenuous connection with
US. Exception is when alternative provides severely inequitable
chance of remedy (not the case here.)
d. The proper standard for FNC is the balancing test of Gulf Oil v.
Gilbert.
i. protection was less favorable for non-US citizens hoping to
take advantage of generous US tort laws
ii. overwhelming connection w/Scotland (easier with
witnesses and experts in Scottish topography), and more
efficient to combine suit with Scottish suit—less chance of
inconsistent verdicts
iii. Public Interest argument: burdensome on jury who and
forum which has little connection with controversy and
Scotland has substantial interest in outcome
iv. Unfair if D cannot implead 3rd party Scottish D’s (separate
suit in Scotland pending)
vi. Iragorri v. United Technologies Corp (2001, 280): a desire to obtain a forum that is
close to home and convenient is valid reason for a domestic P to file in the US, but a
bare desire to take advantage of favorable US laws is not valid reason for a
foreign P to file in the US.
vii. Conditioned dismissal: to ensure availability of alternative forum as a prerequisite
for granting dismissal (ex, D would have to waive statute of limitations objections)
viii. Balance of public/private factors – Part of analysis
1. public factors:
a. where is the public concern for this event?
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b.
c.
where should burden of jurors hearing the case fall?
Will FNC protect courts from having to engage in complex choice of
law analysis? (therefore, no reason to deny because change will
result in substantial loss of P’s ability to bring a case unless she
loses the chance to sue at all.)
d. where are people most affected by the outcome?
i. Any particular interest on part of US un expending
resources on investigation?
ii. Affirmative public interest in location in having it heard
there?
1. EX –In Re Gas Plant Disaster at Bhopal (2d Cir
1987) industrial accident in India  India gov
brings suit against Union Carbide DC dismisses
on FNC grounds. INTEREST in India in hearing
case where accident affected many
e. will litigation be messy and complicated?
f. will US application of non-US law be confused/messy?
i. Means crt will have to rely on experts  intensively
resource consuming nad places strain on US system
g. burden on US crts
2. private factors:
a. How possible will it be to have an effective lawsuit in the JD chosen
by the π in light of:
i. Resources of parties
ii. Where are the witnesses located?
iii. Availability of physical evidence and documentary
evidence (ex: plane in Piper)
3. Public and private factors usually point in somewhat opposite directions 
Q ultimately is whether non-US forum proves to be substantially better in
the calculus.
d. Section 1404 & 1406 Transfer or Dismissal
i. 1406: applies when venue in the original forum is improper (gives DC option of
either dismissing or transferring the case to a proper forum.) Some courts see this
to allow transfer where there was lack of PJ, but had proper venue.
ii. 1407: actions pending in different districts can be transferred to a single istrict for
“coordinated or consolidated pretrial purposes.
1. Creates Judicial Panel on Multidistrict Litigation (makes the determination
as to when multi-districting is appropriate.)
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Personal Jurisdiction
I. Types: Specific and General
II. Statutory Authority
a. Jurisdiction must comport with (1) Constitution; (2) [affirmative] source of state authority
b. Constitutional basis for PJ
i. Full Faith & Credit Clause (Art. IV, §1) – One state’s judgment is valid in another
state as long as jurisdictional requirements are met. Exception: when the court did
not have PJ and/or SMJ and where the jurisdictional objection was not (and could
not be) raised in the initial action (see Pennoyer’s default action)
ii. Due Process Clause of 14th Am. – Due process prohibits excessive assertions of
jurisdiction
iii. Constitutionally, federal courts could probably ignore the long-arm statute. But as a
matter of policy, Rule 4(k)(1)(A) decides to limit jurisdiction to state’s longarm statute.
III. Notes on Personal Jurisdiction
a. PJ concerns two policy issues: (1) Issues of bias (forum + choice of law); (2) Financial costs
b. Goal is not to define the one place where you can get jurisdiction.
c. Three situations in which Personal Jurisdiction question arises:
i. Waivable issue –Court cannot raise sua sponte Waivable by general appearance
(NY Times v. Sullivan)
ii. Presence – geography – based on physical presence in state (residence or passing
through ‘tag’ jurisdiction) For corporations, constructed presence is used.
iii. Quid pro quo – fairness concept; availment of benefits of a state’s laws. fairness quid
pro quo: if you engage in harmful activity within the state, you should be held
responsible there
IV. Raising Jurisdictional Objections
a. PJ is a waivable objection: if you don’t raise it, you waive right to bring it up later. Defects in
PJ can also be waived by the parties
b. Federal court allows you to bring PJ claim and defend on the merits (preserve PJ for appeal)
i. Some states: PJ + defense on merits, few states: require PJ special appearance. Some
states: interlocutory appeals on PJ
c. Default & Collateral attack strategy: Do not appear in first suit, and raise collateral suit
against default judgment (Pennoyer)
d. Domicile and Consent
i. Domicile: PJ is attached to state of residence and is not defeated because D is absent
from state (Milikin v. Meyer)
ii. Consent:
1. General appearance
2. Previous submission to court’s J
3. “choice of forum” clause: parties to a transaction agree to forum
4. “confession of judgment” or “cognovits note clauses”: loan agreement
includes a provision permitting the creditor, in event of a default, to be
granted default judgment in a forum w/o service of process or notice
5. Appt. of local agent to receive service (though courts have no J over persons
engaged in in-state business partnerships w/o personal service business
does not mean consent.)
6. See Hess v. Pawloski
V. Previous Standard: Power Theory
a. Power theory of Jurisdiction: Pennoyer v. Neff (1877) State has J over people & property w/in
its border, but not outside its border. Significance: Links J to due process (via Full Faith &
Credit, Constitutional Restraint)
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i. Historical Context: authority of sovereign states with backdrop of Civil War; Legal
proceedings
1. Mitchell v. Neff (OR state court): unpaid legal fees owed by Neff (<$300)
Mitchell used substitute process according to OR code via the local
community Christian Reporter.
2. Enforcement proceedings: execution of judgment. If D has property in OR
the enforcement proceeding can be used to find and attach that property,
using it to settle the debts via sheriff sale (total proceeds of the sale is held
by the state and P is paid from the fund.) Mutchell happens to be the only
bidder at the sale and pays $350 for land, receiving $300 rebate
3. Mitchell v. Pennoyer: Ejectment action (federal diversity case):
a. Defective affidavit (who at the newspaper is qualified to certify that
notice was published correctly)
b. Mitchell failed to take necessary steps to locate Neff and try to
serve him (did not comply with notice requirements, which says
service by publication is a last resort.)
c. Collateral attack: Neff tries to file a brand enw case attacking the
judgment of Mitchell v. Neff rather than appealing the issue within
the original case. The distinction is drawn between challenging
collaterally on grounds of jurisdiction or service of process versus
collateral judgment on merits of P’s claim.
ii. Two inquiries: (1) Was there proper service?; (2) Do you have “power” for
jurisdiction?
1. Publication of process is not valid unless land is directly involved
(assumption that seizure is sufficient way to notify owners.)
2. Mitchell’s first judgment invalid because no power over Neff in CA; he could
have done it in rem up to value of Neff’s CA land (quasi in rem where
property stands in for Neff), but he never attached the land. Land was only
attached after the judgment was made (thus original claim of J was invalid.)
iii. Principles of law:
1. Every state has exclusive J over people/property w/in its territory
2. No state can exercise direct J over people/property not w/in its territory
3. Full faith and credit clause as long as enforcement does not encroach on PJ
iv. Categories of Adjudicatory Jurisdiction
1. In personam (J over person—can impose a personal liability or obligation
on D); proceedings in which land might be attached at the outset
2. In rem (J over things—declare the rights of all persons to a thing)
a. Pure: determine comprehensively ownership in land (should
happen in state where land is located)
b. Quasi in rem (J affecting the interests of particular persons in a
thing) 2 types:
i. Determines rights relating to property as between parties
ii. Claims that seek to obtain a person judgment on a claim
unrelated to rights and interest in the property on which J
is based recovery is limited to value of prop that can be
found and attached within the state boundary. Purchase of
land id implicit submission to rules and regulations of the
state (presence via ownership.)
Hess v. Pawloski (1927) MA has J over PA resident who gets in accident in MA w/ MA
resident. MA statute states that the act of driving means driver consents to having the state
registrar serve as agent in order to receive service should lit. arise from driving. (solves the
requirement of Pennoyer via an agent.) P claims 14th amendment violation. H affirms that
statute is applicable.
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c.
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i. Relies on legal fiction of implied consent: State can preclude (1) corporations
from entering the state, & (2) drivers from entering its highways (not the entire
state). This greater power implies the lesser power to require implied consent.
ii. Problem with legal fiction: plays out differently for corporations: states had
moderate success applying with this corps, but difficulties with partnerships and
individual businesses (issue with the basis of the power of the legal fiction, which
flows from the power of a state to exclude.)
Jurisdiction over Out-of-State Corporations (difficult for lack of manifestation of
presence)
i. Appointing an in-state agent to accept service (by choice or compulsion of state)
ii. If no agent, J is asserted under two theories:
1. If corp had extensive activities within the state (up to when lawsuit
commenced) = “presence” and is subject to general J (can be sued on any
claim)
2. If corp had less activity in the state but the claim arose from that particular
activity = “implied consent” to suits arising out of that activity, subject to
specific J (J on related claims only)
iii. If corp is not “present” or “impliedly consented” then no J (Due Process Clause limits
how far states can extend their J)
Zero sum account of sovereign states vis-à-vis each other: states’ power is necessarily
followed by the limitation of this power beyond their sovereign territory
i. This type of authority is the same as the limited authority of law enforcement
(crossing state lines, Dukes of Hazard)
ii. Threshold determinations of J: important in deciding who has to find whom?
1. FRCP12b allows for hearing to see whether J can likely be applied
iii. Pennoyer seems to imply unfair burden on P to hunt down D (impractical admin)
Expansions of Personal Jurisdiction: Specific and General : General (quantity not quality)
VI. General Jurisdiction: D has substantial contact with the state (no need for CofA to arise out of
these contacts.)
a. Helicopteros v. Hall (1984)– No General J over Helico in Texas over Peru crash– Contacts
are not “systematic and continuous” enough to merit GJ. (should be Sp JD here based on pilot
training  odd case for GJ issue to come up in)
i. Facts -Helico = Columbian Corp.  provided helicopter services in Columbia. Suit
brought in Texas for wrongful death of pilot flying Helicol’s helicopter. No business
in TX, no service in TX, no contracts signed in TX. But: Negotiations for contract,
parts purchased, and training of pilots done in TX.
ii. Issue – Can Helico be sued in TX when claims have nothing to do w/ what was done
in forum?
iii. Reasoning1. Stage 1 analysis: “sky’s the limit” statute so Tx Supreme ct says yes
2. Stage 2 analysis: Jurisdiction would violate the due process clause.
3. What would π have to argue to show that TX should have JD?
iv. Holding: No general jurisdiction in TX. Buying supplies, negotiating, and training
pilots is NOT sufficient for minimum contacts. The contacts in Texas were not
“systematic and continuous”. Reinforces rigidity of “quantum levels” approach – SJ
and GJ dichotomy
v. Dissent, Brennan - Can establish Specific Jurisdiction.
b. In only other S.Ct. general J case, court found that a temporary HQ sufficient for GJ. Perkins v.
Benguet
c. Extensive marketing, sales activities online establishing “virtual store in California” can lead
to general jurisdiction. Gator.com v. LL Bean. Indicates no strict line on general/specific/no
jurisdiction.
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M. Cheng
Personal J: SJ: Minimum Contacts/”Arises out of” contacts
(quality, not
Minimum Contacts Theory 
quantity)
replaces power theory of JD, looks
I. Specific Jurisdiction: CofA arose from minimal and even single acts
at:
within the state. (“specific act statutes”: states’ reaction to International
I. Reasonableness
Shoe, an effort to expand state jurisdictional reach)
II. Enjoyment of privileges
a. Minimum Contacts: International Shoe v. Washington (1945): no
(manifests obligatins)
presence necessary anymore (Pennoyer). Contacts must be “systematic
III.
Quality and Nature of
and continuous”
Activity of ∆ in light of
i. Rule: for in personam jurisdiction: if not present, D must have
“fair and orderly”
minimum contact w/ forum state such that the suit does not
administration of laws
offend “traditional notions of fair play and substantial
and D’s enjoyment of
justice.” (quote is from Milliken) – p. 85
privileges
ii. Facts – Int’l Shoe is DE corporation that sells shoes. Principle
a. Encompasses 1 and
place of business is MO. Has no office in WA, but has 11-13
2 – to what extent
salesmen that live there and exhibit samples of the shoe (ea
do Q/N appear to
salesman has 2 shoe, not allowed to form contracts
make it reasonable
themselves, juts give out order form). Contracts for the shoes
in business/ legal
are made in MO and shoes are shipped from MO. WA has
sense
statute requiring all employers to contribute to
IV.
Fair
and
Orderly
unemployment compensation fund (tax), and sues Intern.
Administration
of laws
Shoe in WA for not paying these contributions. (Taxing –
V.
Justification
for
minimum
central feature of sovereign authority) 4 MAIN ELEMENTS
contacts
requirement:
1. Employees are independent contractors (work on
a. Quid Pro Quo
commission only, no salary)
fairness
2. Do not have stock (1 shoe)
b.
Burden on
3. Cannot form contracts
defendant –
4. FOB (free on board) – In shoe says that it brings
c.
Federalism –
shoes to shipping locate and once shipped, property
Prevent states from
is that of seller (if damage, not their responsibility)
exercising excessive
iii. Holding: YES WA has jurisdiction.
jurisdiction
1. extending “presence” metaphor, Times v. Sullivan.
d. applies to
2. Extending Pennoyer—replacing “presence” with
individuals as well
minimum contacts; quantified with
as corporate Kulko
“reasonable/fair play” test
iv. reasoning: “systematic and continuous” activities of Int.
Shoe in WA throughout the years in question—this satisfies
minimum contacts.
1. COURT says that yes to some extent they are present but really they WIDEN
what presence means.
2. Int. Shoe co benefits from laws of WA.
3. DRAMATIC shift from Pennoyer – what concerned us in
Specific Contacts:
Pennoyer now no longer applies (idea that JD is like a
-Single contacts can establish
seizure – p. 85 “capias ad respondendum has given way
jurisdiction (aggressive
to personal service of summons”)
enforcement of SJ from one
st
a. Relies on Milliken to back up pt – 1 time that
contact.)
court articulated that WITHOUT creating legal
Minimum Contacts:
fiction court can order summons. Court drives
-Minimum contacts with a
home what Milliken hinted at.
state to establish jurisdiction
b. SOVEREIGNTY concern is gone.
(Stream of Commerce cases,
v. Long arm statutes: authorize courts to exercise J over D based
purposeful availment)
on specific types of contact (for states that have not given courts
blanket authority to exercise PJ to limits of due proc.; must be
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M. Cheng
consistent with the Constitution of state and US) ex: CA “specific act st.” authorizes J
robustly in response to a particular act (in the case of McGee, insurance)
Specific Contacts: McGee v. Int’l Life (1957) TX company’s single insurance contract in CA, plus
receiving payments by mail from CA, sufficient to establish specific jurisdiction; “single
contacts” case. [aggressive enforcement of SJ from one contact]
i. Facts - π mother sued in CA where she was resident to collect on son’s insurance
payment from insurance co in AZ CA issues default judgment for π (know this bc
JD objection NOT brought up until enforcement proceedingcollateral attack); then
π goes to TX to collect. Int. Life Insurance Co. was a TX company, this was their only
contact w/ CA at all. Q comes up in enforcement proceeding as to whether CA had JD
in the 1st place.
ii. Analysis: 1) State authority by statute? YES CA ‘s specific issue statute for
issuance. had a statute allowing residents to sue out of state insurance companies in
CA. 2) Constitutional authority? YES does not violate due process b/c claim
“arises out of” the single contact w/ CA
iii. Holding: YES CA had jurisdiction. The claim arose from the specific contact that the
company had in CA, which is sufficient for minimum contacts
1. Reasoning: “arises out of” contact is satisfied for specific jurisdiction, and
the nature of the single contact is enough—it’s a contract for business with
CA resident.
2. CA had a “single act” statute that allowed their residents to sue insurance
cos.
iv. PP: CA has particular interest to provide a local forum for potential small claims
Stream of Commerce Cases:
i. Gray v. American Radiator & Standard Sanitary Corp (Ill. 1961, p100) (YES SJ)
1. Facts: π was injured by an exploding water heater in Illinois. The water
heater was assembled in Penn. by ∆, and the valve that exploded was
manufactured in Ohio by Titan. The water heater was sold in Illinois. Titan
had no contacts or agents in the state of Illinois except that its valves were
used on water heaters sold to customers there.
2. Issues:
a. Whether a tortious act was committed in Illinois within the
meaning of the Illinois jurisdictional (long-arm) statute
i. Yes. While only the consq. occurred in Ill, Restatement
confirms that the place of wrong is where the last event
takes place (the bursting of water heater.)
ii. Alleged N in manufacturing the valve is inseparable from
resulting injury.
iii. Also, since the statute of limitations is measured from the
time of the injury, then it makes sense to fix the place of
the tortious act in the place of the injury.
b. Whether the statute, if so constructed, was consistent with due
process.
i. Yes. Ct. broadly interprets “minimum contacts” in light of
development of business models to say that it is sufficient
if act had substantial connection with the state. Even
without records, it is evident that D derived indirect
benefit from state laws (ex. Laws marketing hot water
heaters containing its valves)
3. Holding: Yes reasonable inference that business would go to Ill.
(indirect beneficiary of Ill. market); Titan has agency in shipping valve to PA
to be sold all over
ii. World-wide Volkswagen Corp. v. Woodson (S.Ct., 1980, p111) NO J; Min contacts +
“Fair” π’s purchased an Audi in New York from a local retailer. π’s were badly
injured when the car exploded upon being hit from being rear-ended during a trip
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through Oklahoma. The local retailer and his distributor do no business in OK. Only
connection was that they sold the car to the plaintiffs who had an accident there.
π’s brought a products liability action against all members of the manufacture and
distribution chain of the car under an OK Long Arm statute which provides for in
personam jurisdiction over a non-resident if they cause tortious injury in the state
“by act or omission outside this state” and if he “derives substantial revenue from
goods used or consumed” in the state. π’s argument was that it was foreseeable
that the car would be driven in Oklahoma (because it is mobile), and that the
defendant derived substantial revenue from cars driven in Oklahoma.
1. Issue: is subjection of D to in personam J in OK consistent with due process?
a. No minimum contacts
i. Purpose of minimum contacts, requires reasonable test
1. prevents unfair burdening of the defendant
2. ensures that the states do not reach out beyond
their authority (beyond status as co-equal
sovereigns)
ii. “foreseeability” that a auto would be taken into OK is not
sufficient (Hanson v. Denckla) “the D’s conduct and
connection with the forum State are such that he should
reasonably anticipate being haled into ct. there.”
iii. marginal revenues gained from collateral relationship is
not sufficient (no contact arising from const. cognizable
contact)
iv. Mere foreseeability of injury in the forum state is
insufficient because that would in effect make every seller
amenable to suit wherever the chattel traveled, by
unilateral activity, resulting in extreme unpredictability
b. Exception: a manufacturer who delivers products into the stream
of commerce with the expectation that they will be consumed in
the forum state. But there was no reason to believe that the
defendants sought to receive any protection under the Oklahoma
laws, or any revenue from sales of cars used in Oklahoma.
2. Due Process Clause: “gives a degree of predictability to the legal system that
allows D structure their primary conduct with some min. assurance as to
where that conduct will and will not render them liable to suit.”
a. Unfair burden to D to bring trial in OK
3. Holding: No agency is in consumer who drives car to OK. No
foreseeability and no purposeful availment. Consumer exerts unilateral
activity on product.
4. Dissent: [Brennan]
a. There was connection with OK (car was driven there. D should not
be allowed to use constitutional shield even if they tried to limit
sale to certain area.)
b. Too much focus on D’s right to veto based on undue burden of
travel
iii. Asahi Metal Indus. Co. v. Superior Ct. of CA (S.Ct., 1987, p123) Stream of Commerce
(“purposeful availment”) + Reasonableness Test to establish PJ
1. Facts: A motorcyclist was injured when his back tire exploded. The
motorcyclist sued the Taiwanese manufacturer of the tire, who filed cross
complaint, seeking indemnification from the Japanese manufacturer of the
valve stem. All D’s settled except Asahi, who objected to personal
jurisdiction, having no other contacts with California other than that the
Taiwanese tire manufacturer had sold many tires which included their
valve stem in California. The California state supreme court upheld
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d.
M. Cheng
jurisdiction under the California long arm statute and due process. Asahi
appeals.
Issue: Whether the California state court may exercise personal jurisdiction
a. Stream of Commerce Minimum contacts (mere awareness is not
enough, need “purposeful availment”)
i. O’Conner (4): minimum contacts not sufficient by itself:
need more than mere placement of product into the
stream. Standard is relationship between D and forum (no
just dispute and forum.) Need evidence of effort to veer
business towards CA.
ii. Dissent: Brennan (4): no need for P to show that there was
additional conduct of D directed towards the forum state.
Stream refers to anticipated flow of goods for retail sale (D
benefits economically from putting goods into the stream)
Stream of Commerce theory should be preserved. P knew
that its regular sales of component parts would eventually
be sold in CA. Minimum contacts is est. Regular sales
network imputes knowledge that lawsuit is possible
(satisfies constituional notion of fairness)
iii. Dissent (3): accepts proposition that awareness may be
necessary but objects to O’Conner’s objective
determination of concrete sales as indicator of purpose.
The fact that sales volume is sufficiently high is enough to
draw a broader inference of purpose.
b. Reasonableness test for PJ (Ct. finds that PJ would be
unreasonable)
i. Burden on D
1. Burden is severe
ii. Interests of the forum State
1. P is not CA resident
2. Dispute is about indemnification, not safety
standards (does not fall under State’s interest to
protect consumers)
iii. P’s interest in obtaining relief
1. slight All that remains is Asahi’s claim for
indemnification (not apparent that CA is better
than Asia for this suit)
iv. Most efficient resolution of controversies and shared
interest of several States in furthering fund. substantive
social policies. (VW)
1. Great care should be used because it affects
foreign policy
Holding: No PJ because no purposeful availment
3.
Purposeful acts:
i. Hanson v. Denckla (p109) “unilateral activity” of 3rd party is not enough for
minimum contacts, D must “purposefully avail” himself to the state; choice of
law/PJ as analytically different.
1. Facts -Trust dispute—(1) trust made in PA, trust administrator is in DE. (2)
Mother moves to FL (relationship continues). Good sister goes to FL to help
mother (gets share of trust w/ inter vivos apptment.) Mother, from FL,
changes trust to give P half share in estate. When Mother dies the other
sisters sue trust administrator to get the whole share saying the trust was
invalid. Sisters initiate suit in FL, remaining sister brings suit in DE. Sisters
try to sue trust company in FL because mother moved to FL (unilateral act)
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M. Cheng
2.
e.
Holding: No jurisdiction for FL over the D (the DE trustee) not sufficient
minimum contacts. 2 main points –
a. FL decision not entitled to full faith and credit because FL could not
constitutionally assert J over the DE trustee (only unilateral activity)
b. Choice of law – merely establishing that choice of law could be FL
law constitutionally applied is not enough for PH.
c. No Purposeful Act – despite connection, not purposeful act by ∆ to
purposefully avail himself of privilege of conducting activities of
forum state (invoking benefit and protection of forum state’s laws)
i. “unilateral activity” of someone in relation w/ D can’t
satisfy requirement of minimum contacts. Here ∆’s
mother’s move to FL was unilateral. Connection to FL is
result of unilateral act of 3rd party.
ii. “Purposeful availment”
3. Compare with McGee – Trustee had no control over mother; did not reach
out do business w/her; in McGee, insurance co reaches out to state to
collect premium – evidence here of actual solicitations; in Hanson, trustee
happy to just keep doing business w/mother.
ii. Minimum contacts for individuals: Kulko v. Superior Court of CA:. Acquiescence in
desires of someone else does not count as purposefully reaching out to the forum.
1. Facts - Π, CA mother, brings suit against NY ex for modification of child
support; NY separation agreement – husband to pay $3000 for child
support; Wife moves to CA ;father buys daughter 1 way tick to move to CA,
son goes to live there w/ mom too; Wife brings suit in CA to increase child
support; hub moves for lack of P-jdiction;
2. Holding. CA does not have JD. Father’s acquiescence in daughter’s decision
not enough of purposeful relationship w/forum of CA.
3. Ramifications for 1. General JD Rules; 2. Family Law
“Effects Test”: Calder v. Jones Facts: Calder, editor of National Enquirer, based in Florida, writes
an article about Jones being an alcoholic in October 1979 issue. Jones brings suit for libel in CA
based on large circulation of the tabloid in CA (600,000.) Calder made no objection to PJ. Service
via mail in FL., Calder makes special appearance for lack of PJ. Trial court dismisses (no PJ, 1 st
Amend consideration), Ct of Appeals reverses. S.C. affirms.
i. Issues PJ from minimum contacts based on CA publication volume?
1. Trial court: special solicitude of “chilling effect” on 1st Amendment rights
trumps regular PJ assertions
2. Ct. of Appeals: PJ established because magazine intended to, and did, cause
tortuous injury to Jones in CA. The fact that the actions causing the effects
were performed outside the state does not prevent PJ. Also, 1st Amend
considerations cannot be used to trump PJ.
3. S.C.: agrees w/Ct. of Appeals: “CA is the focal point both of the story and of
the harm suffered. J is therefore proper based on the “effects” of D’s Florida
conduct in CA. Action was aimed at CA.
4. CA long arm statute allows for J to be asserted given no const. concerns
(otherwise, doubt counting)
ii. The Welder Analogy: Ct rejects. Though employer’s contacts do not necessarily
impute minimum contacts onto employee
iii. 1st Amendment concerns: S.C. agrees with Ct. of App: 1st amendment cannot be used
to weigh against jurisdiction (it’s already weighed in the constitutional limits on
substantive law governing these types of suits to consider it again is “double
counting”)
iv. Holding: Yes.
v. Compare with Keeton v. Hustler (1984, same year): P selects NH to sue Hustler
because of it’s longer statute of limitations (she is resident of NY, Hustler is
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d.
e.
M. Cheng
incorporated in OH with PPOB in CA.) J was granted because NH had interest in
redressing injury to reputation that occurs within its borders.
Calder & the Internet: Reputation on internet
i. APPROACH 1 – Zippo v. Zippo Dot Com (WD Pa 1997): trademark infringement case.
Court said that Internet activity is either:
1. Active – repeated transmission of comp files over Internet  Confer PJ
2. Passive –site only made info avail to those who want to access  Do not
confer PJ
3. Middle Ground – user exchanges info w/ host compute  PJ – courts
examine level of interactivity and commercial nature of info exchang
4. Later cases: active/passive line too hard to draw and makes little sense w/
tech developments of filtering
ii. APPROACH 2 -Toys R Us v. Step 2b: (DE corp, HQ in NJ brings suit against Spanish Co
that appropriated π’s trademarks in promoting own Spanish toys..
1. Court: bc text Spanish, goods priced in euros, ∆’s sites were not targeted to
ppl in NJ; site not set up for out of country consumers
2. Uses Calder language – not “deliberately aimed” at ppl in NJ
iii. APPROACH 3 - Griffis v. Luban (Minn 2002): Minn SC refused to enforce an AL state
court’s default judgment against a Minn ∆ who posted statements on online
discussion group allegedly defaming AL resident. (fact that issue was raised in MN
show it was D Judgment)
1. MN SC – does not fulfill Calder standard for expressly aimed
2. Found that Calder did not authorize J-diction whenever ∆ committed an
intentional tort w/ knowledge that π would feel effects in a particular
forum; evidence does not show that comments were “expressly aimed” at
State of AL, even if directed toward Luban (Professor), who lives there.
3. Rests upon a very fine distinction; Court might want to see her AL presence
in her field
iv. COMMON THEME – Very fine distinction btween:
1. KNOWING you are saying things that will potentially harm someone in state
2. EXTRA STEP TO DELIBERATELY AIM activities at place where individual is
located
K + established relationship = min contacts: Burger King Corp. v. Rudzewicz (U.S. 462,
1985, p148) rule about what is not sufficient but not what is. D, a Michigan citizen,
negotiated a franchise agreement with Burger King, a Florida corporation with its principle
place of business in Florida. The 20 yr contract provided that Rudy would pay certain fees,
and that Florida law would apply in construing the contract. Rudy got behind in his
payments and then defaulted on the contract. He refused to quit the premises and continued
operating the BK. Burger King brought a diversity action in Florida, and served Rudy in
Michigan for claims arising from breach of contract and tortuous trademark infringement.
i. H: Verdict for P, there is sufficient minimum contacts for personal J in FL. D
voluntarily entered into a 20 year contract with P. While the K itself may not
establish SJ, the relationship created does (prior negotiations + contemplated
future consequences.)
ii. Ct. applies WWW two part test (min. contacts + fair play)
1. To defeat this, D could show that clash of choice of law, burden of location,
or severe disadvantage, or that the K was fraudulent. D did not.
2. Ct. of Appeals misinterpreted importance of choice-of-law provisions: by
itself is insufficient, but added to the K for 20 year relationship, it becomes
purposeful availment. If the out-of-state party has agreed to a choice of law
clause in a contract surrendering to the laws of the forum state, then this
can be considered a factor in the minimum purposeful contacts test.
iii. Modern transportation and communications have made it much less burdensome
for a party sued to defend himself in a State where he engages economic activity.
iv. Dissent: -
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1.
2.
3.
4.
5.
M. Cheng
unfair to have a franchisee argue a case in the franchisors home state.
All of the defendants business was within MI. Absolutely nothing in the
stream of commerce.
He argues that the majority states the agreement in the boilerplate as
justification for arguing that he purposefully availed himself of the benefits
and protections of FL laws.
He would affirm the COA decision, which stated that defendants continued
relationship with the MI district office allowed him to reasonably think that
he would never be sued in FL.
Uneven bargaining power. Application of law may be used twice; once if you
put in a choice of law clause, and again if you choose the law.
Subject Matter Jurisdiction: (non-waivable)
I. Types
a. Federal Question J
b. Diversity J
II. Two step test
a. Finding congressional authority of J AND
b. Finding that such J is within the Article III grant of judicial power
III. Courts have right to address SMJ questions sua sponte;
IV. Justiciability: Article III requires a justiciable “case” or “controversy” to invoke federal judicial power
a. Rationale
i. Theory of enumerated powers: federal govt is entity whose powers and institutional
existence is dependant on those enumerated explicitly in constitution and its
implications. (separation of powers rationale)
ii. Judicial competence rationale (limits courts to questions capable of resolution
through adjudication.)
b. Standing to Sue: appropriate person invoking the legal right
i. Personal Stake in the Controversy: P must show that (1) he has a personal stake in
the controversy because he has suffered a direct injury as a result of D’s conduct and
(2) the relief sought is likely to redress the injury
ii. “Causation” and “Redressability”: The injury is “fairly traceable” to the challenged
conduct and likely to be redressed by a favorable decision.
iii. Prudential Barriers: additional limitations not explicit in Article III, but are in PP
interest (ex: general pressuption against allowing P’s to
assert rights of 3rd parties.)
SMJ & PJ:
iv. Role of Congressional Legislation: Congress can confer new
rights to sue
Often a 2 prong test:
V. Disputes Appropriate for Judicial Resolution
a. Advisory Opinions: cts barred from issuing advisory opinions
1. Is J affirmatively
concerning legality of proposed legislation or executive action
authorized by statute?
b. Political Questions: courts are sometimes not the appropriate inst to
construe underlying law
AND
c. Timing: sometimes a live controversy can cease to be so in the
2. Is the statutory
meantime
authorization
VI. Diversity Jurisdiction
constitutional?
a. Analysis
i. by Article III—interpreted to mean only minimal diversity
Difference: for PJ, 2 is more
required (any 2 adverse parties are non co-citizens) [MA,
important (b/c of long arm
MA, MA v. MA, MA, VT]
statutes.) For SMJ, 1 is harder
1. III (1) Judicial power in one Supreme Court and “in
threshold because federal statutes
such inferior Courts as the Congress may from time
are much less expansive.
to time ordain”
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a.
b.
c.
NOTE – do not actually need lower fed crts  no provision for
general fed Q JD until Civil War; used to just be state crts and
Supreme Court. Lower fed crts are subject to extensive regulation
by policies of Congress.
b. Congress creates “inferior courts’ by Act  SMJ has to be
affirmatively conferred by legislation; Congress can define it in any
way they want.
2. III (2) Enumerates ALL basis upon which federal courts can hear cases =
a. Diversity jurisdiction (codified in U.S.C. 1332)
i. “btw Citizens of different States”
b. Federal Question Jurisdiction (codified in U.S.C. 1331) –
i. “arising under the Constitution, the Laws of the US, and
Treaties Made…”
ii. by Statute 1332: interpreted to require complete diversity (Strawbridge)
1. Strawbridge v. Curtis (1806, 308): Complete diversity requirement (no two
adverse parties can be co-citizens)
2. State Farm v. Tashire (SCOTUS 1967) – 1st time (took 160 yrs!) that SCOTUS
made clear that Strawbridge’s complete diversity requirement was an
interpretation of the 1332 Statute and not the Article 3 diversity grant 
Art III just requires minimal diversity
Purposes of Diversity Jurisdiction:
i. Local Bias Concern – primary concern is that state crts will favor in-state parties.
Protect out-of-state parties. Federal courts offer:
1. Greater geographic pool of jurors
2. Diff method of selection for judges (elected or app’ted for fixed terms in
state crts v. app’ted for life in fed crts. Fed Judges feel they are part of nat’l
community.)
3. National Implication of litigation in fed crt (ex – Class Action Fairness Act)
ii. How responsive is JD? A very “blunt instrument.” Situations that are unresponsive
to concern about out-of staters:
1. In-state party can also remove (PA π  CA ∆, lawsuit in PA, PA π can bring
in Fed Forim in 1st instance)
2. PA π  CA ∆ in TX; both π and ∆ can bring or remove to Fed Forum
3. 1441(b) no removal if ∆ is in-state – one provision that seems directly
responsive to local bias concern (PA π  CA ∆ in CA state crt  CA ∆ cannot
remove)
Requirements:
i. 1332(a) complete diversity – ALL Ps are diverse from ALL Ds
ii. 1332(a) amt. in controversy—minimum of $75,000 [Not in AIII, created by Statute]
1. Aggregation rules –
a. Single P against single D  can aggregate multiple claims to meet
AIC
b. Single P against multiple Ds  cannot aggregate claims to meet AIC
i. establishing JD is “joint or several character of liability to
P” Single P claim against joint tortfeasors – often TF
liability is “joint and several” – any 1 is liable for full amt
offdamage  π does not really need aggregation if, for ex,
suing for 100,000 bc ea D liable for full amt of damage.
c. Multiple Ps  Cannot aggregate claims to meet AIC
d. Class Actions – every member of a proposed class action has to
meet AIC requirement (Zahn). But 1367(b)’s literal language
overturns and Allapatah says it’s ok.
2.
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iii. Timing - Citizenship determined when lawsuit is initiated (when P files complaint):
changing the circumstances of a party after does not work, but removing a party
completely may work
1. If resident switches citizenship since events occurred, foes not matter
2. If complete diversity was not satisfied, diversity problems are not cured by
subsequent changes
3. Exception: If infirmity to diversity JD arises bc a non-diverse party gets
booted out (revealed later that citizenship defeats diversity) there still may
be enough for crt to retain JD. Adding parties, though, won’t work.
Determining citizenship:
i. 28 USC 1359 - Congress authorized close scrutiny of P’s restructuring of lawsuit to
create DJ - DC does not have JD over parties “improperly or collusively made or
joined to invoked JD of such court” - (but C seems not to have said anything w/
respect to joinder decisions for purpose of defeating JD)
ii. Joinder Issues
1. Naturalized citizens: determined by state of domicile (actual presence.)
2. Corporations: citizen of state of incorporation: USC 1332(c)
a. Determined by “nerve center”: place of HQ
b. Corp’s residence for venue purposes (USC 1391) is determined by
where it is subject to PJ, while citizenship for SMJ purposes is states
in which corp is incorporated.
3. Insurance Companies: USC 1332(c): imputes insured citizenship to
insurance company (doesn’t work when insurance co is the P)
4. Unincorporated Assoc: entity statuses withheld for SMJ purposes.
Citizenship is determined by citizenship of each of the members(Carden)
a. NOTE – Carden would have you believe that there is a big
difference btw Corporations and all other entities – that only Corps
are defined statutes; but in reality, all entities have statutory
schemes by which they exist and have citizenship. [ Wolff – easy to
misread the ambit of Carden]
iii. Alienage: Art III and 13329(a)(2)-(4) also provide JD over aliens in federal crts:
1. There is jurisdiction over (diversity is not applicable)
a. U.S. citizen vs. alien (PA v. China) -1332(a)(2)
b. citizens of different states w/ additional foreign citizen (PA v. NY &
China) – 1332(a)(3)
c. citizens of different states w/ foreign citizens on both sides (PA &
China v. NY & Canada)
d. US citizen abroad
2. No jurisdiction over
a. Two foreign entities (Canada v. China)
b. Two foreign entities w/ an added U.S. citizen (PA & China v.
Canada) [does not matter which side US is present on]
c. Citizen v. Foreign Sovereign (PA. v. P
3. Up for debate
a. dual citizens—sometimes determined by “dominant” citizenship,
sometimes not
b. Alien corporations (place of incorporation test vs. PPOB test):
1309(c)(2): corp deemed to be a citizen of any State, and a citizen
or subject of any foreign state, in which it is incorporated or has its
PPOB
c. Citizens of states not recognized by the US
Exceptions
i. Domestic Relations: presumption of state special privilege (torts exception)
ii. Probate: don’t want to endeavor to dispose of property in a sovereign state (torts
exception)
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Complex Littigation
i. 28 USC 1369: Multiparty, Multiforum Trial Jurisdiction Act:
1. (a): original jurisdiction in federal courts over any civil action that arises
from an accident involving at least 75 deaths (given minimum diversity and
conditions:
a. D resides in a different state from the state where a substantial part
of the accident took place OR
b. Any two D’s reside in different states OR
c. Substantial parts of the accident took place in different states.
2. (b): abstention: although the court technically has J, the district is required
not to exercise such J under certain circumstances (district court abstains
from hearing if the substantial majority of P’s are citizens of same state as
the primary D)
ii. 28 USC 1332(d)(1)-(2): Class Action Fairness Act: authorizes federal district courts
to exercise J over class actions worth $5million+
1. (d)(3): authorized;
2. (d)(4): required to abstain given
a. 2/3 of P’s are from same state where action is org. filed OR
b. at least 1 D from whom significant relief is sought and who has
allegedly engaged in conduct that forms a significant basis for the
class claim is a citizen of the original forum state.
SMJ: 1) Federal Question Jurisdiction
I. Federal law appears as defense to a claim/proceeding based on state law. Federal law regins
supreme, but state courts can adjudicate federal offenses
a. State courts have concurrent J over claims based on federal law.
i. Decreases workload
ii. Checks growth of federal courts
iii. Promotes commitment to national law (fosters unitary legal culture.)
II. Sources
a. Article III - “arising under this Constitution, the Laws of the US, and Treaties made, or which
shall be made, under their Authority”
i. NOTE – (see above) strictly under AIII  SMJ is NOT conferred on the lower federal
crts; does not even create lower federal crts – just says Congress can do so.
b. USC 1331 :“The DCs shall have original JD of all civil actions arising under the Constitution,
laws, or treaties of the US.”
i. SCOTUS jurisdictional policy decision – 1331 grants JD in same language as AIII but
fed crts (in Mottley etc) have interpreted the reach of the statute much more
narrowly than the constitutional scope of “arising under” JD. They interpret the
grant of original JD in lower fed crts as much LESS expansive than what AIII would
authorize (v. in PJ context)
ii. Basically, it is interpreted to confer JD when the π’s claim requires proof of federal
law.
c. General Patterns/Easy Cases : most cases that actually come to fed crt under “arising
under” are very clear-cut:
i. Suing under federal statute or have federal cause of action (ex: suing under ATR
laws, Constitution.)
ii. Clear under 1332 or a more targeted statute that there is JD.
d. Judiciary Act of 1875  1st time Congress put in place general Federal SMJ statute. WHY at
this time?
i. 1875 –Limits on state power following Civil War and during Recon, many
constitutional limitations place on states (14 – 16 Am). State crts no longer so
hospitable when ppl suddenly have rights against states.
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ii. 1875 – 1877 – Congress’s expanded role in regulating commerce: becomes national
regulator of commercial transactions
iii. Expansion of general SMJ for federal “arising under” actions accounts for actions
coming from Congress’s new role; 1331 operate and unfolds against this
background.
e. Rationale for Fed Q JD:
i. Uniformity (in interpretation of fed law)
ii. Expertise (w/ interpretation of fed law)
iii. Protection of fed interests/policies
iv. Workload sharing
f. Inquiry for federal question jurisdiction:
i. Holmes: Does fed law create CofA?
ii. Does Fed issue appear on the face of a well-pleaded complaint? (Mottley)
iii. is the Fed issue a substantial issue? (is answer to fed. issue dispositive of the case?)
(Smith)
iv. Is the Federal Interest strong or weak? (Merrell)
v. Would allowing fed JD upset congressional intent as to balance of cases in state v.
fed crt? (Merrell, Grable)
vi. Is there jurisdiction?
III. [STEP 1 Analysis] Holmes in American West Works (SCOTUS 1916) –“a suit arises under the law that
creates the cause of action.” (suggests very narrow test for determining when well-pleaded complaint
rule is met), advocates:
i. In Mottley, source of π’s right to demand relief from crt was state K law  no fed JD
ii. If case meets Holmes test  does “arise under” fed law for purposes of 1331 (in its
most narrow construction)
1. VERY rare exception in Shoshone Mining where federal statute authorized
claimants to sue but did not est federal law which would govern claims and
SCOTUS found no fed Q JD
iii. [99% easy cases fall under this]
IV. [STEP 2 Analysis]
a. Louisville & Nat’l RR Co v. Mottley (SCOTUS 1908) Well-Pleaded Complaint Rule (federal issue
needs to arise from/in original complaint, not from anticipated defense.) Limitation on AIII
power but confirmation of Appellate Review power.
i. Facts: Mottley sued in DC for specific performance of a K for RR to keep giving them free
passes (K followed accident in which Mott injured by RR’s negligence but M’s agreed to
release claims in exchange for free passes). RR had stopped giving the passes b/c a
federal statute was passed prohibiting giving free passes on transportation (aimed at
making RR rates uniform).
ii. Issue:
1. Whether the part of the statute forbidding giving of free passes makes it
unlawful to perform this K and
2. If so, is this a violation of 5th Am, depriving Motts of property?
iii. Rule: threshold requirement that the federal question must appear on the “face of a
well-pleaded complaint” for there to be federal question jurisdiction, even if federal law
is likely to be determinative of the controversy,
1. If federal issue is in a defense or in anticipation of a defense, then no arising
under JD.
2. Determinative weight placed on fact that it does not appear in complaint; not
on fact it is/is not a federal law.
iv. Holding: No federal question jurisdiction b/c the issue of the federal statute is the
defense of the RR.
v. Justifications and Criticisms
1. Inefficiency critique: clear that this is a case that is “all about” federal law
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2.
b.
b.
Reasons for this rule (and for interpreting grant of AIII narrowly)
a. limits # of cases in Fed Ct.
b. creates stability in what fed. courts can hear –(this is a bright-line rule)
c. practical interest - figures out jurisdiction at the outset of the lawsuit
(by the complaint in 12b stage, w/o even waiting for ∆’s answer)  So
P cannot manipulate to get into fed crt
3. Consequence: State courts will hear more cases that turn on federal issues but
don’t “arise under” federal law.
4. Retaining Appellate Review Power – though crt limits its J authority here, it
confirms that its ability to hear appeals will sufficiently protect federal
interests.
vi. NOTE – State crt does have authority to hear this dispute  can bind parties; D refiles
and case ends up in SCOTUS on the issues. Preclusion Doctrine does not prevent them
from bringing again. SCOTUS can hear it here bc the appellate JD grant goes as far as
the Constitution but grant of original JD interpreted much more narrowly. !!!
vii. Well-Pleaded Complaint Rule and Pre-Emption:
1. Will be defended in first instance by state crt and will only get to higher crt on
appeal
2. Bright line nature of WPC rule  even w/very significant issue of pre-emption.
3. Twombly/WPC: Crt has not treated WPC as the absolute minimum you have to
show to fulfill Rule 8 (not about that). WPC does not map on to Rule 8 Pleading
standards  if we are looking for bare-bones Rule 8 pleading standard –
“because” may or may not be needed.
[STEP 3 Analysis] Smith v. Kansas City Title & Trust Co. (1920) – Federal Issue must be
“substantial and central” = decision depends on determination of issue.
i. Facts : D was investing in bonds issued by federal banks under Federal Law (Farm Loan
Bonds), P (representing shareholders of CO) sued in federal court to stop the company
from making these investments, said that investments exceed co’s corporate powers
and bonds were invalid because the fed statute that authorized them was
unconstitutional. Went up to SCOTUS, who sua sponte addressed fed Q JD.
ii. Issues: P’s cause of action was a breach of fiduciary duty claim , which is a MO law of
relation btwn shareholders and investors, but turned on the federal issue (this was the
only reason they were suing).
1. W.P. complaint would say – Trust has fiduciary duty. Trust violated fid duty by
attempting to make illegal investments. Investments illegal because Farm Loan
projects violate Constitution.
iii. Holding: YES there is federal question jurisdiction here.  Step 1 - fed issue appears on
face of well-pleaded complaint (“because”) &  Step 2 fed issue substantial, central,
decisive (strong fed. interest here: potential material impact of the program if MO banks
all stop investing as a result of a ruling that it breaches MO law of fiduciary duty.)
1. Fed Issue is embedded in state law claim and essential to its resolution  Ps
could not prove state law claim w/o establishing proposition of federal law
(that fed statute was unconstitutional.)
iv. Rule – Fed issue must be substantial, central, decisive.
1. Well Pleaded Complaint (from Mottley)
2. Substantial – fed issue resolves the issue and there is a fed interest to do so
v. Dissent Holmes: Everything that is claimed to give P a basis for relief is based on a state
law claim. “Federal law must create at least a part of the cause of action by its own
force”
“Balance of Cases” Test: Merrell-Dow v. Thompson: federal interest in hearing the case is
not substantial.
iii. Facts –Ps from Canada & Scotland sued OH-based pharmaceuticals company in OH
State court on 6 counts based on state laws. One of the C/A refers to OH state
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negligence law which declares violations of federal statutes (here, the FDCA)
negligence per se. D moves to get case into federal court (so that they can get a forum
non-conveniens dismissal. The first unsuccessfully claim alienage, but is denied.) D
claims that the claim arises out of a federal statute (FDCA.)
iv. Holding: No jurisdiction.
1. WPA prong satisfied, but lack of explicit federal CofA means there was No
congressional intent to create a federal private cause of action for FDCA
violations and thus no federal question jurisdiction.
2. Weak federal interest: Congress failed to act so there must not be great
interest. (No implied federal private right of action for violation of the
statute.) Hearing the case undermines congressional intentions.
3. The federal issue isn’t determinative nor substantial—merely another way
D could be found negligent under state law. A “mere presence” of F claim is
not enough
4. Increased litigation concern: if 1331 JD is allowed based only on the fact
that state law has integrated a federal standard for state liability, this would
open the floodgates.
v. Dissent – Brennan – Congress’ concerns are implicated here (they gave federal
exclusive jurisdictions for granting remedies and actions under FDCA. Also, federal
courts should not relinquish federal standards for state courts to decide. The
absence of a private remedy only strengthens the argument that federal jurisdiction
should apply (prevents states from potentially arbitrarily determining federal law.)
vi. Potential flaw in Stevens’ opinion: bringing up pre-emption, which is still a defense
and would still be brought up in state court. (If Congress cared so much about seeing
statute’s provisions vindicated, would have created federal private CofA)
Grable & Sons Metal v. Darue (2005): Congressional intent as to the balance between
federal and state court
i. Facts (Pennoyer-like situation) - IRS seized Grable’s property b/c he was delinquent
in paying taxes, gave notice by certified mail, he didn’t pay and govt. took the land
and sells it to Darue, says cannot be redeemed for 180 days. Grable (in collateral
attack, quasi in rem I action) sues Darue in state court saying Darue’s title is bad b/c
original seizure of land violated federal statute in providing insufficient notice.
ii. Holding: Embedded federal issue is substantial enough to support J.
1. Strong fed interest and no upset balance (distinguished from Merrell-Dow
because of practical implications)
a. On substantive claim, crt says there was a small infringement but it
was not constitutionally infirm
2. Grable says lack of a federal private right of action is not necessary for
federal question jurisdiction, merely relevant.
a. Merrell Dow seemed to suggest that 1331 J required private right of
action. Majority rejects this and Smith is preserved (stress on
“contextual inquiry.”)
b. Merrell ≠ the Holmes Test (that federal law creates the CofA)
3. New prong in test: the federal forum hearing it disturb the balance of fed
and state responsibilities?
iii. Reasoning:
1. Well-pleaded complaint? Yes (MI state law requires complaint to not only
say his title is no good but to say it is no good because of fed issue of
insufficient notice. The fed issue might not be in the complaint otherwise.)
2. Is fed issue substantial and central? Yes Is federal interest strong? Yes:
want stability in enforcing tax scheme as well as a fed forum for federal tax
litigation.
3. Fed interest in notice provision?
a. The federal interest in notice provision implicates fed interest in
tax matters. Unlike in Merrell, interpretation of this fed issue is not
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M. Cheng
just important abstractly. (There is large governmental
scheme/agency that would be imperiled by misinterpretation of
statute. ) Ability of fed govt to collect on delinquent taxes would be
undermined if there was no federal forum
Congressional intent as to balance of cases disturbed? No, it will not bring a
flood of cases into federal court.
a. Seems contradictory with the idea of strong federal interest (not too
many cases but big impact/federal interest)
SMJ: Supplemental Jurisdiction: (pendant and ancillary jurisdiction)
Whether limited SMJ precludes authority over additional claims that, standing alone, could not be asserted.
Federal SMJ must be accounted for in all the claims and parties of a suit. The question of whether there is
jurisdiction is entirely different/separate from the question of whether jointer of parties/claims is possible.
I.
Traditionally:
a. Pendent JD (Gibbs-type case) – P’s joinder of related state claim w/ claim base on fed Q
b. Ancillary JD – referred to everything else
c. Supplemental J now absorbs all
II. Grants federal court power to hear a lawsuit when it appears there’s subject matter jurisdiction over
part but not the whole thing;
a. Situations where Rules authorize joinder of claims over which there is no individual basis of
SMJ, subject to 1367 exceptions.
b. Whether an anchor claim, over which there is an independent basis of J, can impute
jurisdiction over other claims that don’t have jurisdiction under the doctrine of SuppJ.
III. Questions of analysis:
a. Can the state claim be joined as constitutional matter under Article III?
1. Gibbs – common nucleus of operative fact
2. Moore v. NY Cotton Exchange – logical relationship
3. Becomes 1367(a)
b. What statutory authorization or bar exists to prevent J (even given A.III authority): 1367
1. Kroger – no fed JD over a party that destroys diversity (violates 1332 on diversity)
2. Finley – can’t bring in initial parties that don’t have federal claims
3. Does it fall into exceptions under 1367(b) or (c)?
IV. 2 basic approaches to defining when elements are part of the same “case”:
a. United Mine Workers v. Gibbs (SCOTUS 1966): Test of factual overlap between claims: Do
claims arise out of “common nucleus of operative fact”
1. Facts : TNC (Grundy) mining company fires UMW union workers, Grundy hires Gibbs as
superintendant for a new mine. Grundy hires rival union workers to run new mine,
UMW workers riot and shut down the mine, Gibbs loses job and future contracts. Gibbs
sues UMW in federal court and names 2 causes of action: 1) federal claim: violation of
federal secondary boycott statute (Rule303), and 2) state law clam: unlawful
conspiracy. At trial, P wins on both, but then federal CofA is dismissed on appeal
(primary dispute was between union and Grundy so Gibbs’ CofA is not cognizable under
303.)
2. Issue: Should the state claim have been heard in federal court?
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b.
M. Cheng
Holding – Yes, though he eventually loses on the merits on the federal claim, a federal
labor violation claim and state law claim both arise out of fact of closing of mine by
UMW’s actions.
4. Rule: Federal court can hear state claim when the P joins a factually related state claim to
a claim based on a federal question and there is a “Common (overlapping facts) Nucleus
(facts of central importance to litigation) of Operative Fact (facts actually make a
difference in viability of claim.)
a) Test for SuppJ: (1) is there independent basis of subject matter
jurisdiction? If so, (2) do the state claims arise out of the same event?
a. If yes, federal court has power to hear those
Over additional claims:
cases if it decides to by its discretion (later
Gibbs Rule: Federal court can
codified in 1367(c))
hear state claim when the P joins
b) Also speaks to whether the claims are such that
a factually related state claim to a
would be expected to be heard together. (takes into
claim based on a federal question
account judicial economy, convenience and fairness
and there is a “Common
to litigants, likelihood of jury confusion)
(overlapping facts) Nucleus (facts
c) If federal anchor claim is dismissed prior to trial, state
of central importance to litigation)
law claims will be dismissed for lack of federal
of Operative Fact (facts actually
jurisdiction.
make a difference in viability of
d) Application of SuppJ is still at discretion of the court.
claim.)
5. Reasoning: Article III grants power of all “cases” and
“controversies” arising under fed. law—if fed. and state claims
Moore Rule: If there are 2 claims
are from same event they fall under same “case”
in a suit (ex: couterclaim) and the
a) Expansion from Hurn v. Ousler, SCOTUS 1933. Prior
resolution of one necessarily
to Gibbs, there was a suggestion that overlap had to
hinges on the resolution of the
be so close that claims were almost identical (only
other (a logical relationship),
supp JD if claims for “separate but parallel” ground
these claims are logically part of
for relief).
the same case to warrant federal
a. Hurn: if one CofA with 2 distinct grounds
court’s power to hear both under
(one state and one federal), then J is
Article III.
granted. If 2 separate CofA’s, then J is only
granted to federal CofA. Court says this is
Over additional parties:
unnecessarily stingy.
Kroger Rule: No federal
“Logical Relationship”: Moore v. NY Cotton Exchange (SCOTUS
jurisdiction over a party that
1926): “logical relationship” between counterclaim and claim based
destroys diversity.
on fed. question  jurisdiction over anchor claim can impute
jurisdiction onto counterclaim
Finley Rule: No JD over additional
1. Facts: Odd-Lot Cotton exchange sued NY cotton exchange for
parties that don’t have federal
violation of Federal anti-trust laws (claimed monopoly over the
claims. Overruled by 1367.
distribution of cotton price quotations) NYCE counterclaimed for
state-law theft claim and for injunction against Odd-Lot
-------------------------------------------Exchange’s practice of using NY’s price quotations. Court
dismisses P’s claim on merits (not on jurisdictional issues), but
Distilled Rule: Jurisdiction
grants D’s counterclaim for injunction.
requires
2. Holding: YES jurisdiction over state claim.
1. Constitutional
3. Rule = if there are 2 claims in a suit and the resolution of one
authorization (Art. III,
necessarily hinges on the resolution of the other (injunction is
Gibbs, Moore)
necessary to enforce dismissal of P’s claim), these claims are
logically part of the same case to warrant fed. cts’ power to hear
AND
both under Article III.
a) Can be asserted as claim, counterclaim, or 3rd party
2. Statutory authorization
claim
(does the statute that
b) Fed. claim can be based on diversity or fed. question
confers jurisdiction over
jurisdiction
the federal claim negate
the exercise of
jurisdiction over the
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c) may not be much of a factual overlap (Gibbs) between anti-trust claim of
Moore and theft claim of NYCE (counter-claimer) but there is a tight logical
relationship, which is enough
c. Owen Equipment & Erection Co v. Kroger (SCOTUS 1978): no fed. jurisdiction over a party
that destroys diversity. [Brennan]
1. Facts –First Time: P, widow of decedent, (Iowa) sues OPPD (Nebraska corp) in wrongful
death action for negligent construction of electric power line. OPPD (becoming a 3 rd
party P) impleads Owen (Rule 14(a) impleader) so joins Owen (“Nebraska”) as 3rd party
D. Court grants summary judgment for OPPD (Rule 56) Second Time: P then amends her
complaint to go directly against Owen in identical suit  case continues with P against
Owen. Then it’s discovered Owen is really citizen of Iowa, so there’s no complete
diversity under 1332 anymore. Owen moves to dismiss and court reserved decision. Jury
grants verdict for Kroger and Owen’s motion to dismiss is denied.
2. Holding Case can not stay in federal court because this circumvents complete diversity
requirement of 1332. Allowing case to stay would let P do indirectly what 1332 does not
let it do directly  would license P to sue multiple non-diverse parties.
3. Reasoning: After OPPD drops out, there is no longer an original anchor claim to
authorize jurisdiction and lack of diversity means no jurisdiction.
a) Main issue is conflict with policy regarding diversity JD, as articulated in
1332(a)(1). Do not want to undermine this.
b) Even though there is a potential common nucleus (Art III), explicit statutory
limitations (1331) overrules.
4. Rule: Requires constitutional authorization AND statutory authorization (Even if Article
III confers fed. jurisdiction over added parties, fed. jurisdiction is not allowed if a federal
statute negates this exercise of jurisdiction.)
a) Is Fed. jurisdiction is authorized by Article III (“common nucleus test,)?
b) If so, does the statute that confers jurisdiction over the fed. claim negate the
exercise of jurisdiction over the particular nonfederal claim?
5. Impleading and diversity: 3rd parties: impleading a third party D that is from the same
state as D is proper exerciseof SuppJ. D can still implead a non-diverse 3rd party D, but P
can’t amend complaint to sue that new D directly in federal court if no jurisdiction.
6. Dissent: P did not chose to implead Owen so she should not be punished for it. (that it
could potentially have been foreseen is not enough to dismiss ancillary jurisdiction)
d. Finley v. US (SCOTUS 1989): can’t bring in additional parties that don’t have federal claims.
No JD over non-federal claims against non-federal Ds. Prompted enactment of 1367, which
overruled.
1. Facts: Plane crash and, Finley (family of victims) sues U.S. government (FAA) under
FCTA and additional parties (city of San Diego etc) under state-based tort claims. Claims
against U.S. have exclusive federal jurisdiction via statute (all claims against FAA), but
claims against other Ds don’t have independent fed issues.
2. Holding: No jurisdiction over non-federal claims against non-federal defendants.
a) Looks like best possible circs for exercise of ancillary JD: P couldn’t have
brought whole case in state court because of exclusive federal J over FAA
claims and the two claims are tightly factually related. Court rejects,
maintaining bright line rule and saying legislation has invitation to change
in order to accommodate cases like this.
3. Rule: No JD over additional parties: caused confusion because courts have always been
exercising SuppJ for impleading 3rd party defendants.
a) Does not disturb Moore or Gibbs – when you already have parties and issue
is whether you can exercise SuppJ over additional claims but not okay for
additional parties.
V. 28 U.S.C. Section 1367: Congress gave explicit authority to exercise supplemental jurisdiction. Provides
the statutory authority that Kroger and Finley said was needed in addition. Purpose: preserving
jurisdictional policies bound up in the diversity statute (applies Owen holding)
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a.
b.
c.
d.
e.
M. Cheng
Section (a): Explicit affirmative statutory authorization for supplemental jurisdiction up to
limits of Article III (including joinders and additional claims) so long as there is an anchor
claim over which there would be original jurisdiction.
1. Expressly authorizes over additional claims AND parties (overrules Finley)
2. Authorizes claims as far as Article III allows (Gibbs and Moore tests)
a) Except those listed in b) and c)
b) Except for what’s expressly provided by statute
Section (b): An attempt to codify and extend Kroger ) Result: if joined parties have no
independent basis for their claims to be heard in fed court, then claims will be thrown out. If
they do have complete diversity AND meet amount in controversy, claim can stay. (1332)
Required exceptions for diversity cases where extending JD would contradict 1332 (when
anchor claim has jurisdiction only because of a diversity claim. If there is separate basis
for J under federal question J, then 1367 does not kick in) Supplemental JD does not
extend to:
1. Claims by P against D’s joined under rules 14, 19, 20, and 24
a) Ex: (PA) P v. (NY) D for $100k. (NY) D impleads 3rd party: (PA) D(2) under
Rule 14. If P makes a direct claim against D(2) for $20k, there is not
jurisdiction because there is no basis for original J for this second claim
(since the $75k minimum amount is not met and there is no diversity, the
only jurisdiction here would have been supplemental jurisdiction imputed
from anchor claim. However, 1367b excludes Rule 14 joinders in diversity
cases.)
b) Ex: (PA) P v. (NY) D for $100k. (NY) D impleads 3rd party: (NY) D(2) under
Rule 14. If P makes a direct claim against D(2) for $10k, there is not
jurisdiction because minimum amount is not met under 1332(a)
c) Ex: (PA) P v. (NY) D for $100k. (NY) D impleads 3rd party: (NY) D(2) under
Rule 14. If P makes a direct claim against D(2) for $80k, there is jurisdiction
because diversity is preserved and minimum amount is met.
d) Ex: (PA) P v. (NY) D for $100k. (NY) D impleads 3rd party: (PA) D(2). P
never makes direct claim against NY D(2). There is no problem.
e) Aggregation rules: P is not allowed to aggregate her separate claims against
multiple D’s, but is allowed to aggregate all her separate claims against one
D in order to meet the amount in controversy.
2. Claims made by Ps joined under Rule 19 and 24 (when joined party is asserting a
couterclaim.)
a) Ex: (PA) P v. (NY) D for $100k. (PA) P impleads 3rd P party under Rule 19 or
Rule 24: (NY) P(2) for $10k. There is not jurisdiction because diversity is
spoiled or P(2) does not meet amount in controversy.
b) Aggregation rules: Multiple P’s are not allowed to aggregate their claims
against a single D. (Potential exception: when P is suing against several D’s
under joint and several liability and brings in another separate D into that
single claim, aggregation is not an issue.)
Section (c) Discretionary dismissals. (Codifies Gibbs on discretion.) Applicable whatever
anchor claim is, even if anchor claim is a federal question claim. Invites fed courts to not
to exercise supplemental jurisdiction in the following situations:
1. Novel or complex state law issue
2. Supplemental state law claim “substantially predominates” lawsuit
3. “Anchor” claims are dismissed
4. Exceptional circumstances/compelling reasons
Section (d): Allows for tolling of statute of limitations – 30 days to file claim in state court if
district court declines to hear it.
1367 Glitches: Rule 20 & 23 P’s:
1. Rule 20 P’s: Excludes D’s joined under Rule 20, but not P’s joined under Rule 20.
1. Multiple Ps can sue 1 D and fed court can have jurisdiction over all parties even if
not all Ps meet the amt in controversy requirement.
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2.
Ex: (PA) P v. (NY) D for $100k. (PA) D impleads 3 rd party: (NY) P(2) under Rule 20
for a claim of $10K. There is jurisdiction (even if this does not meet 1332)
a. Compare with (PA) P v. (NY) D for $100k. (NY) D impleads 3rd party:
(PA) D(2) under Rule 14. If P makes a direct claim against D(2) for
$20k, there is not jurisdiction.
ii. Rule 23 Class Action P’s: class action Ps can now benefit from supplemental jurisdiction
as long as anchor claim satisfies amount in controversy
1. Ex: (PA) P and many unnamed P’s, none from NY v. (NY) D for $100k. There is
jurisdiction. (unnamed P’s are anchored to named P’s $100k claim.)
2. Zahn (1970) – though drafters said they intended to preserve decision saying that
every proposed class member must satisfy AIC requirement, literal reading says that
Rule 23 Ps joined in class action do not have to satisfy amt in controversy. (Perhaps a
pure congressional oversight)
3. Court draws a distinction between geographic diversity issue and amount in
controversy issue: presence of non-diverse party contaminates complete diversity
for everyone. However, when the problem is an inadequate amount in controversy,
the glitch solves overlooks the inadequate amount problem (Court holds that glitch
only solves amount in controversy problems, not diversity problems—Ortega)
iii. Contamination theory: deficiency of amt. in controversy of one claim doesn’t
“contaminate “the whole case (but lack of complete diversity does)
iv. Only Rule 20 plaintiffs get to benefit from the amt-in-controversy glitch.
1. There is J with multiple P’s who don’t all have the required amount in controversy,
but no J when there’s one P and multiple D’s and P doesn’t have the amount in
controversy against each D.)
2. Plaintiff can bring in a party as a rule 20 P, but D can’t bring in a necessary extra
party under rule 19, and also a third party can’t intervene under Rule 24.
Removal (exclusive right of D given there was original jurisdiction in fed. ct.) USC 1441:
I. Removal: Mechanism by which D can remove any case over which district courts would have original
jurisdiction (1331 or 1332) to district court.
a. Test for original subject matter jurisdiction:
i. Can take into account supplemental jurisdiction (ex: SuppJ was used because of
jurisdiction over anchor claim.)
ii. If basis for jurisdiction in federal court was diversity, removal is not available to the instate defendant. (no need for protection under potential bias.) 1441(b)
b. Exclusive right of D’s: P cannot remove, even if D counterclaims.
c. Voluntary/Involuntary Rule: prevents D from removing when state court dismisses claims against
non-diverse defendants on the merits, unless P has taken voluntary action that makes the case
removable. (if D has taken steps to make the case removable—ie dismissal of non-diverse
claims—no removal.)
II. Removal Procedures (1446, 1447, 1449)
a. D has 30 days to remove (otherwise, right is waived.) 1446(b)
i. If subsequent actions render a formerly non-removable claim removable (ex: P increases
claim to exceed $75k), then the clock starts on the 30 days. Exception: where
jurisdiction is based on diversity, absolute maximum time is 1 year after filing. After a
year, D cannot remove, even if the case just became removable because of adjustments
(ex: non-diverse parties dismissed from complaint)
b. D files notice of removal in the federal court in the division and state where original claim was
filed.
c. D gives copy of notice to be filed in state court (state court proceeding stops). Case then brought
into district court and they adjudicate whether removal was proper.
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e.
f.
g.
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Once in fed court—P has 30 days to file motion to remand back to state court (otherwise this is
waived.)
i. 2 arguments for P to resist removal
ii. SMJ infirmity (no diversity or federal question J): non waivable right that can be made at
any point in proceedings
iii. Removal improper on some other basis (ex: D is forum shopping, didn’t file in the
correct federal court, etc.)
Conundrum of 1441(c) - Mechanism for permitting Ds to remove Fed Q claims into fed court
even if P attempts to join a state law claim that may otherwise defeat removal.
i. Defeats scheme of possible P’s trying to deny federal forum to Ds by joining on state law
claim; Congress did not want Ps to keep fed Qs out of fed court by attaching unrelated
state law claim
ii. Basically, it’s a housekeeping measure. D can remove the claim then federal court will
remand the state law part of it back to state court.
iii. Ex: P brings (1) Federal claim; (2) Totally unrelated state law claim  D can remove
Class Action Fairness Act: 1453 makes removal easier (consent of all D’s not required, one
year time limit on removal for diversity cases not applicable;) and interlocutory appeals of
remand back to state court is permitted if application is made within 7 days after order.
SMJ does not have to be established first in complex matters (ie forum non conveniens
motion; desire to promote judicial economy.)
Erie and the Applicable Law in Federal Diversity Actions
Question of where lawsuit is held is distinct from which law applies.
I.
Historical analysis: huge shift between 1934-38
a. Pre-1934: question of which law governs in federal court was determined by:
i. Swift v. Tyson: Substantive Law: federal courts made their own interpretations and
produced their own common law determinates that sometimes contradicted state
common laws (produced variations in results depending on whether a case was
heard in state or federal court.)
1. When federal case was heard in a federal court in diversity, the rules of
underlying substantive law was not necessarily determined by state
common law (which was seen as meaning only state statutes and inherently
local state specific customs.) State common law (ex: the interpretation of a
contract) is not tied into the general common law so, obligation to apply
state law (statutes and local decisions) did not include common law
decisions.
ii. The Conformity Act: Procedural rules: Because there was no federal procedural
code, for common law disputes, federal courts applied the procedural rules of the
state in which the court sat.
1. Created a dichotomy in which substantive laws were subject to free federal
interpretation, but procedural laws were bound to state court.
b. 1934-38: Complete reversal
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i. 1934: Rules Enabling Act (28 USC 2072): authorized creation of federal rules of
procedure, thus creating authority for federal courts to have their own rules.
ii. 1938:
1. 1st set of FRCP took effect. Federal district courts had uniform body of transsubstantive procedural rules.
2. Erie decided: federal diversity courts became bound to decisions of state
common law decisions for substantive law issues.
iii. Following Erie, the question remained: when exactly does Eerie decision require
federal diversity courts to follow state common law?
1. Erie itself was a tort/liability case, but appears to have broader
implications: what are the boundaries of the ruling? What is the line
between substance and procedure (they often blend together)?
II. Swift and Erie: Differences in approaching the definition of “law”
a. Rules of Decision Act (28 USC 1652): “The laws of the several states, except where the
constitution or treatises of the United States or Acts of Congress otherwise require or provide,
shall be regarded as Rules of Decision in the courts of the United States in cases where they
apply.”
b. Presumptive rules of decision for federal question case is federal law. But outside of this
(federal court expressly provides a different rule of decision or requires a different rule of
decision) it gets ambiguous. Appears to mean that state law applies except when federal law
is expressly stated or required.
c. Swift stressed a fundamental distinction between state statutes and decisions of common
law courts. This goes into fundamental view of what judges do. Under Swift, common law
decisions are adding to, interpreting, and articulating principles that arose out of natural
rules and all judges are equally competent to do this.
d. Erie replaces this view with legal positivism. Under Erie, whenever a state government
exercises decisions, they are articulations of sovereignty and carry power to compel their
citizens to follow these rules.
III. Application (Test): Is it a substantive law or a procedural rule?
a. If substantive, Erie says state rules apply.
b. Is procedural rule judge-made or a federal statute/federal rule of civil procedure?
i. If judge-made: (Erie track)
1. Does way of doing things implicate the twin aims of Erie? (Apply Modified
Outcome Det Test, Guaranty) Does it have a substantial impact on the
outcome of litigation as clarified by the 2 aims of Erie?
a. If No, apply federal law
b. If yes, and even if difference totally outcome determinative, does
the particular rule in question go to the heart of federal procedure
such that fed. interest is strong (countervailing fed interests,
essential characteristics of fed court)? (Byrd) [federal interest test]
i. If YES  Federal Law (Byrd)
ii. If NO  State law (it’s outcome determinative/implicates
Erie aims, get here)
iii. Gasperini – Can you separate out both federal and state
interests? Can you properly view scenario as having
distinct components where you can apply some aspects of
state system and some aspects of fed system?
ii. If it’s federal statute or Federal Rule of Civil Procedure no Erie analysis needed
1. Is there an applicable federal rule?
2. Might have to ask follow-up/ THRESHOLD question – Does federal rule that
appears to govern really govern the situation you are called on to analyze?
(Stewart, Burlington, Walker)
a. No  Is there a judge-made standard (Stewart implies there could
be one)  Erie analysis
b. Yes Fed Rule applies UNLESS exceptions and ask:
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i. Is Rule constitutionally and statutorily valid?
1. Federal statute—if it’s procedural than it’s valid 
Fed law
2. Federal Rule—it’s valid unless it’s application
abridges, enlarges, or modifies substantive rights
(REA )
II. Theories at play
a. FEDERALISM
i. 10th Amendment: “the powers not delegated to the US, nor prohibited by States are
reserved to the States or to the people”
ii. Enumerated powers of fed government
b. SEPARATION OF POWERS – division of authority btw Congress and Judiciary
i. Relationship btw Federal Leg and fed courts is diff from relationship btw State Legs
and State courts. State Courts get MORE power than Fed Courts do (as compared to
respective Legislatures
1. State courts of plenary authority: can hear any claim it wants to  in Rules
of Decision context, means that state courts =common law courts  The job
of state courts is to undertake incremental articulation of torts, Ks, property
law etc
2. Fed courts (post-Erie decision): DO NOT have same role of making common
law.
III. Swift v Tyson (SCOTUS 1842): “laws” of several states = state legislative statutes (not common law.)
Federal Common Law governs otherwise; not bound by state common law. Hoped that this
would lead to uniformity in federal common law principles (and thus to state court conformity.
Didn’t really happen.)
a. Facts: Swift brings federal diversity suit to collect on bill of exchange. Commercial dispute
over mortgage in which Swift is attempting to collect a mortgage. The mortgage is not good
bc underlying property backing it up is no good. Q of whether you can collect as purchaser
depends on what you were collecting mortgage for. NY laws answered Q in 1 way; fed courts
had to decide how to answer
b. Holding – Federal courts are NOT bound by what state courts have said; they have authority
to decide for themselves the proper meaning of a bona fide purchaser.
c. RULE - When there’s a state statute that applies, federal courts are bound by this.
i. Otherwise, federal courts can come up with their own rules in regard to general
common-law principles. Fed courts free to offer their best view of how general
commercial disputes ought to be decided.
d. Reasoning- View of law -- state courts did not set policies or make law for the state, just
interpreted general principles, so state common-law holdings don’t count as “laws of several
states.”
i. When state Legislature promulgates a “positive enactment” (by passing statute), it
embodies in an authoritative statement of sovereign policy what the law of the state
is  THEN, fed courts are bound by RDA bc it’s “a law” BUT in absence of soverign
legal policy, courts are looking to a body of common law decisions received by states
in reception statutes and here, court is simply applying general legal principles to
legal questions.
e. Problematic consequences of Swift:
i. By time of Erie  PROBLEM of 2 sets of courts (federal and state) whereby almost
all disputes are governed by 2 separate systems of law.
1. Fed courts, despite Story’s acknowledgement that some disputes are really
only about state law questions and that it is only on questions “having to do
w/ all civilization” that fed courts need not follow, start to exercise power
over ANY state law Q.
2. Story’s hope that state courts would follow fed court’s lead and that there
would be consistency does not happen.
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ii. Unfairness of vertical forum shopping  gave non-citizens (usu. corps whose cship at time determined just by where incorporated) an edge in choosing what law
would apply—could sue a defendant in that D’s home state, then D could not remove
to fed. court under diversity, so out-of-state Ps had total control over whether to
choose state or federal forum, thereby choosing rules of decision that would apply
to their lawsuit. Black and White Taxicab: P can’t pull monopolistic maneuver
under KY law so they incorporated in Tenn. Posterchild for VHS. Federal law could
enforce what state law couldn’t.
1. Still under Pennoyer PJ, so opportunity for horizontal forum shopping btw
state courts were fewer. However, w/ elimination of VFS post-Erie, this
escalates
iii. Arbitrariness seemingly arbitrary quality of having rule of decision that applies
depend on the accident of whether or not a party is diverse. –why should a different
rule apply and get a different outcome just b/c a party happens to be out of state?
iv. Federalism took power away from the states
v. Separation of powers problem federal courts were deciding without any guidance
from legislature where Congress hadn’t enacted a law.
f. Post-Swift, its problems start to show and legal positivism comes to the fore  any time a
government (thru any 3 branches) acts in an authoritative fashion – sets and applies rules –
must be recognized that the gov is making law and defining policy. Necessary for courts to
identify what authority is relied on to make those laws  NO SUCH THING as “general tort
law…
IV. Erie v. Tompkins (SCOTUS 1938) [Brandeis] Overruled Swift v Tyson—said state courts do set policy
as matter of state law, just like legislature. No general federal common law. Rather than create
“general common law,” fed court’s job is to apply state common law. Fed courts must follow state
decisions w/ respect to liability and regulatory rules. However, Federal courts still allowed to
develop individual court system and respective rules and procedures. They just have no business
articulating tort/contract/property laws. But, they have the power to articulate how these claims
are handled in federal court.
a. Facts : Tompkins (PA) injured by passing freight train of Erie RR (NY) while walking on right
of way, brings negligence claim against RR. Sues in Fed DC of NY. Erie denies liability – says
duty to Tompkins was that of trespasser – duty should be determined according to PA state
law. Tompkins relies on Swift – says bc no statute on subject, RR duty and liability to be
determined in fed court as matter of general law. Issue – Should PA law apply or, under Swift,
is fed court free to ignore PA common law?
b. Holding Court says PA law should apply. Addresses practical prob that state law should
apply in commercial lawsuits and rejects proposition (a la Holmes’ dissent) that Fed court
can juts apply rules w/o knowing/articulating sov authority behind it.
i. Effect 1 and 2: More in consistency w/ Federalism and Separation of Powers
Values(above)
ii. Effect 3: Federal courts do NOT have same role in our federal system as general
expositors of common law provisions as state courts do in state system. Ends period
of fed courts as general expositors of common law principles.
1. had been a very politically charged role that courts played prior to this,
making whole body of law  had started to seem inconsistent w/
federalism oruncioles
ii. Effect 4: Change on conception of what law is and what courts doing when they
decide cases  Triumph of legal positivism
iii. Erie memorializes shift in understanding of what state courts are doing when they
render decisions not based on statute but based on common law  They are
actually making law!!!
b. Reasoning: Brandeis also notes that Swift has constitutional problem = powers of fed gov are
enumerated/limited but in Swift era, fed courts were using AIII JD to rule on questions over
which Congress may have no power to make laws about.
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i. Ex: Congress could not exercise authority to say: here is what a duty and a breach is
in a negligence claim but now fed courts are saying they can articulate a negligence
principle.
ii. IN Erie, Combination of
1. Upholding Federalism values;
2. Sep of Powers
3. Federal courts role in deciding commercial disputes
4. What is law;
iii. Erie as interpretation of Section 34 of Judiciary Act of 1789, as codified in Rules of
Decision Act
iv. NOTE – Erie applicability today in debate over int’l law  based on Erie, int’l law
values should be viewed skeptically bc lack authority behind them.
c. Procedure v. Substantive Law: Questions after Erie (clear that fed courts supposed to
follow states on liability/regulatory issues but not clear on procedure).WOLFF - Follows a
very twisty path as court tries to articulate the distinction.
d. Why does procedural/substantive distinction exist at all?
i. State procedures might not fit into “rules of decision” language.
1. “Rules of decision” identifies rules of law that define obligations, whereas
practice/procedure is about HOW lawsuits are administered; state
procedures do not concern rights/obligations and are not meant to apply to
all suits.
ii. Federal trials may not be “cases where [state judicial procedures] apply”
1. State court would ask – do we CARE if this rule applies elsewhere? Usually
would not have much interest.
e. General Rule – Today , Fed courts use uniform federal rules of procedure (FRCP) for most
procedural situations (but took a while to get to this pt). Guaranty and Byrd look at the very
rare fuzzy situations where FRCP does not govern.
Outcome determination test for the fuzzy cases: Guaranty Trust v. York (SCOTUS 1945) Fed courts apply
state procedural laws only if those laws are outcome-determinative.
a. Facts P sued bank for breach of fiduciary duty, if he had sued in state ct., statute of limitations
would have run out, so he sued in federal court that allowed this under judge-made equitable
“doctrine of Laches” (which would allow claim unless D unfairly prejudiced by P’s delay in
bringing suit.)
b. Issue = should federal court apply its own rule of Doctrine of Laches or the state rule of statute of
limitations?
c. Holding – State statute of limitations is binding on federal proceeding; if state court dismissed
case, then fed court could not hear it. State SOL pertains to substantive rights; not just “of
remedial character.” Decision on which law to apply would be outcome determinative; would
violate twin aims:
d. Reasoningi. NOTE - Equity proceeding matters here because at time fed courts not required to
follow state procedures in equity. RDA at time applied only to “cases at common law.”
To extend Erie doctrine driven by statute, statute did not apply here at all.
ii. J-dictional policies help define when federal court should bow to state courts:
articulated in Erie and re-affirmed here = uniformity in outcomes
e. Rule = “Outcome determination test”: if the outcome of litigation will be determined by which
procedure gets applied, then the federal courts must apply state procedural laws. If substantially
affects outcome, then violates twin aims of Erie.
i. if it won’t substantially affect the outcome, feds can apply the federal rules of procedure
ii. NOTE – importance of timing  Q of outcome determination fundamentally has to be
about the moment you are making a decision about where to file a lawsuit (if you
applied test to any moment of lawsuit then would always go with state law because this
would always be outcome determinative)
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f.
c.
d.
e.
“The Twin Aims of Erie” (titled in Hanna) : inadequacies/evils that flow from misalignment in
state/federal application. Guaranty says these apply in all diversity cases  if either one violated
by use of fed procedure, state procedure applies.
i. Inequitable Administration of the Laws (Arbitrary Unfairness)  idea that you will
have diff treatment based on accident of diversity. P who gets to move into fed court
because of diversity wins out!
1. P. 481 “accident of suit…should not lead to substantially diff result”
ii. Vertical Forum Shopping
1. P encouraged to forum shop for court that would not bar claim
Following Guaranty, it is clear that federal law exists, but there is no general federl common law. There
were three decisions in 1949 saying that fed courts must adhere to state policies under “outcome
determination” : Woods, Cohen, Regan statute of limitation cases where state laws apply
Federal Interest Test: Byrd v. Blue Ridge Electric Cooperative (SCOTUS 1958) Federal interest test:
Despite whether difference in state/fed proc is outcome determinative, if procedure is so much at heart
of federal policy that fed interest outweighs, then fed court applies fed procedure. (Guaranty guides a
very narrow set of cases where way of doing things in fed court is matter of traditional federal practice
rather than specifically mandated by federal law.)
a. Facts – Byrd injured while installing BR power-line and sues BR in fed DC. BR argues that P’s
action against it is barred by South Carolina Workmen’s Comp Act and that Byrd is a statutory
employee for purposes of WCA.
b. Issue - Whether judge or jury should decide if contractor is “statutory employee” under Workers’
Compensation Act. S. Carolina would have judge decide, federal court would have jury decide.
c. Holding – Fed procedure (having jury decide) should apply. Federal interest here strong enough
to conflict with state interest.
i. Balancing Federal interest with state rule: If the state way of doing things bound up with
the states’ substantive right? (if yes, state law.) Here, no because it’s a particularity of
custom, not statute. When the character and function and independnce of federal court
is disrupted, there is a strong federal interest.
1. 7th Am sets out diff judge/jury roles in fed courts. FN10 – court does not say
that the 7th Am means the jury must decide here (were that the case, no Erie
anal needed; under RDA and force of 7th Am, fed law or Constitution is
dispositive); However the federal interest is strong (essential issue of federal
independence)
ii. South Carolina’s policy of judge determination is not rooted in a statutory rule, but
rather just custom.
iii. Difference in procedure, in this case, probably won’t lead to drastically different
outcome. (though Brennan starts off the opinion by saying that, assuming that outcome
determination was sole concern, there may be an issue of forum shopping; may suggest
that he is going out of his way to produce good law.)
d. Rule: even when Guaranty “Outcome determination” test indicates that state rules of procedure
should apply, it remains available to argue that this particular procedure is so much at the heart
of fed. policy that the federal interest outweighs the Guaranty Trust factors and justify
application of fed way of doing things. (Federal interest that exists independently of “twin aims
of Erie”)
i. Byrd test: Balancing the fed. and state interests: is there a strong enough
“countervailing federal interest” that conflicts with the state’s interest? Does this rule
“go to the heart” of federal procedure? if so, state procedural rule is not binding
e. NOTE : weight of decision?? The 2 examples we have of the Byrd “fed interest” test – of this idea
that state proceedings might be barred bc they disturb such essential attributes of the federal
system are both about 7th Am (Byrd itself and Gasperini)  remains to be seen if these are really
just 7th Am cases and SCOTUS just using this “penumbra of policy” explanation.
Hanna v. Plumer (SCOTUS 1965) [Warren]: Fed. rule of civil procedure trumps as long as it doesn’t affect
substantive rights (exceeds constitutional power of legislature) If FRCP exists, no need for Erie analysis.
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Restatement/Clarification of RDA and REA. Fundamental between judge made common law versus
congressionally enacted federal statute.
a. Facts – P (OH) sues D(MA) for personal injuries from auto accident dispute. P services process by
leaving summons at home “w/ person of suitable age or discretion.” Fed. Rule of Civil Procedure
(4 (e)(2) says service can be made on someone “of suitable age and discretion”, but MA state
rule says service must be made in person on the defendant if he is executor /administrator of an
estate. D says service not proper bc should be governed by state rule  Under Byrd, state rule
here is outcome determinative (Reason for MA rule – Actual Notice – 1. Concern about allowing
proceeds of estates to be handed out expeditiously; 2. Issues of liability for executor.)
b. Holding: FRCP 4(e)(2) trumps, overrules MA state rule.
c. Rule: Normally, should use modified outcome det test, but where a FRCP is at issue, don’t even
need to do Erie analysis :
i. Federal Rules trump state rules of procedure (by REA (USC 2072) and Article I and III
of Constitution)
1. Exception 1 - 28 USC 2072(a) – must be a “general rule of practice and
procedure”
2. Exception 2 - 2072(b) if federal rule of procedure “abridges, enlarges, or
modifies any substantive right”—i.e. if it goes beyond procedure, then the
state rules apply (Erie rule);
a. NOTE – REA authority is LIMITED, delegated authority. Cannot go
beyond prax and procedure.
b. NOTE – DEBATE on what this means and if (a) and (b) differ
3. Exception 3 Constitution (don’t worry about this)– must not be
Unconstitutional - Rule falls into the broad grant of power that Congress has
been given to “prescribe housekeeping rules for federal courts” under AIII and
the “Necessary and Proper Clause”
a. Reason for mentioning Constitution is that all these cases have had
loose constitutional talk.
d. Reasoning – Why Warren rejects lower court reasoning:
i. (p. 501) Hanna Test for judge-made rule of procedure: “Modified Outcome
Determination Test” of Twin Aims of Erie  Look how those aims really affected [how
to resolve unguided choice when no fed rule or statute covers]
1. Must (1) totally determine outcome and (2) bear on “twin aims of Erie” – (a)
encourage forum shopping; (b) lead to inequitable administration of laws.
2. Rejects the Strict Outcome test bc under that test, ALL procedural variations
are outcome determinative.
a. even if we agree that state policy is important here, the lower court is
vastly overreaching here: 1. deciding this a diff way in fed court will
not realistically inspire forum shopping AND 2. Equal admin of laws
claim is histrionic  really not that big a difference produced by diff
methods.
i. In prax, diff in application of laws comes down to 1-2 more
days of due diligence on part of executor to get notice.
ii. SOURCE of Fed Procedure  If FRCP  Erie is not the right test of validity. FEDERAL
RULES ARE DIFFERENT.[how to resolve choice where RULE exists]
1. Warren: “more fundamental flaw” of lower court is not paying attention to
source of fed procedure in this lawsuit
2. FRCP ≠ judge-made rule (as in Guar and Byrd)
3. Foundation of decision is the importance of what federal rules are, where they
come form, and why this matters
4. **** Since (see below) FRCP takes on quality of statute  under REA and
Supremacy Clause, federal law trumps
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e.
Concurrence (Harlan) – PRIMARY BEHAVIOR TEST on whether to apply state or federal rule :
would choice of rule substantially affect those primary decisions respecting human conduct
which our constitutional system leaves to state regulation?  if so, then should be state law.
(concurs w/ decision bc such rules would most likely abridge, enlarge or modify substantial
rights)
f. “Unguided Erie analysis” – Up until Hanna, more nuanced account of how to deal w/ federal jdictional policies only looks at SMALL class of cases governed by relatively unguided Erie analysis.
Hanna shows why Byrd and Guaranty Trust were such a small class of cases.
g. NOTE –Despite articulation of exceptions to when federal rule will apply, SCOTUS has never
found that an FRCP is barred. Difficult to figure out what exceptions really mean.
i. Sibbach (1941) – Court considered whether Rule 35 on medical examination in discovery
violated REA  answer is NO. Offers another formulation for test:
1. “really regulate procedure” test
ii. ACADEMIC DEBATE on what exceptions really mean:
1. BURBANK (and Wolff) view – 2072(b) just modifies 2072(a) : use Sibbach test
and Harlan test – shows distinction
2. JH ELY view – (b) is different: if a particular application of a procedural rule
would modify substantive rights  separate reason why fed court should use
state rule. Sibbach is WRONG – here, there was a strong state policy against
invasion of a person’s privacy  (b) provides independent basis for why fed
rule should not apply.
3. (still unsettled)
h. NOTE (Wolff): Sign of “mythic proportion” of Erie doctrine that it took so long for court to get to
this pt. of saying FRCP are different
f. SOURCE of Federal Rules of civil Procedure come from (hence why Hanna says they are different)
a. authority = Rules Enabling Act: 28 U.S.C. 2072
i. section a) Congress says: Supreme court/Judiciary has the power to promulgate rules
for federal court.
ii. Section b) such rules shall not abridge, enlarge or modify any “substantive right”
b. 5 step process for review (lowest to highest)
i. Rule Advisory Committees –judges, practitioners, academics
1. hear suggestions and propose new/amended rules
ii. Standing Committees of Judicial Conference – all judges (Chief Justice, = # of DC and
Circ Court judges)
iii. Judicial Conference
iv. Supreme Court –mysterious review process  basically, the final say
v. Congress—gets rules from Supreme Court, then has period of time to pass a statute
against the rule, otherwise the rule becomes effective.
1. IMPORTANT layer of review to show Congressional approval
2. Fed Rules of Evidence – 1 time Cong rejected proposed ruls
c. where rules take effect: are authoritative in the federal courts –have effect of federal statutes
(under Supercession Clause)
i. the rule trumps if it conflicts with an existing statute
d. Hanna recognizes the significance of this fact  since just like a statute, it trumps state law.
g. THRESHOLD QUESTION on BROADNESS of Federal Rule – When is FRCP broad enough to be
applicable? - Is practice or procedure we are called upon to analyze apparently governed by a rule or
procedure or by judge-made law? (many different formulations – is it “broad enough;” are they “coextensive”?
a. C of A under 12(b)(6) does NOT contain independent standard for cause of action  NOT
broad enough to overtake state rule. I todes not specify the substantive content of the CofA
and thus cannot be used to change state law.].
b. Not broad enough: Walker v. Armco Steel (SCOTUS 1980) – FRCP 3 not broad enough to
displace state rule. Co-extensive and no direct collision (upholds Regan and Walker:
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c.
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Rule 3 is not open ended enough to affect state tolling). Test applied: can both be
possible? (here, yes) Stands for principle: Federal Rule does not significantly alter the
way the SOL works and state law should apply. Walker strains to avoid “direct collision”
[crt feels bound by Ragan on stare decisis].
Broad enough: “field of operation” that federal rule occupies: Burlington Northern RR
v. Woods (SCOTUS 1987) – FRAP 38 is broad enough to displace state rule. Direct
collision. Both can be POSSIBLE but Fed Rule can still be more applicable.
i. Issue – P attempts to recover 10 % damages for D’s unsuccessful appeal from fed crt
judgment (i.e. gets full reward plus this punitive measure)
1. Federal answer (Fed Rule App Procedure 38) – Costs (1 or 2x) for frivolous
appeals + interest on payment allowed by law.
2. State (AL) answer: 10 % damages mandated by AL statute for any
unsuccessful appeal where original judgment stayed on appeal. (means that
P gets ADDITIONAL 10 %, basically the D is being PUNISHED for bringing
an unsuccessful appeal
ii. Holding – Fed rule displaces state rule. Purposes are sufficiently co-extensive.
iii. Reasoning – Way to ask Q – are they simply so much in conflict that you simply can’t
do 1 w/o the other? This stands for proposition that BOTH can be POSSIBLE but Fed
Rule can still be most applicable (here, C of Appeal could have awarded 10 %
damages AND added costs and Rule 38 says is case for friv appeals. Here, it looks
like they can serve diff purposes: Fed rule meant to deter friv appeals and AL
provision provides additional damages to compensate appellees.)
1. BUT instead crt says the 2 methods are answering same procedural Q –
When and to what extent can an appeal be penalized? Fed – only dissuade if
frivolous; AL – penalize any time unsuccessful
2. Counter-arg: There is state POLICY interest here – substantively
iv. Alternative Reading – Byrd federal interest - Even if you go w/ counter and
conclude that this is too broad reading of fed rule  could argue that federal view
should stil trump under Byrd – Q of fed way of adjudicating that goes to the heart of
how accurate decisions will be (essential function of fed crts); deterring friv appeals
= essential adjudicative function. Byrd suggests there is a strong enough fed interest
outside of stricture of rule itself that justifies use of fed rule here.
Stewart Organization, Inc v. Ricoh (SCOTUS 1988) - Statute over state law. 1404 on
venue transfer broad enough to cover AL state law. “Same field of operation” Forum
selection clause is not irrelevant OR dispositive [Marshall]
i. Facts - P (AL corp) markets products of D (nationwide manufacturer NJ)- dealership
agreement contains forum selection clause saying that any K dispute could be
brought only in NY crt. P brings complaint in US DC for northern district of AL. D,
based on FSC, moves to transfer case to SDNY under 1404 (transfer though it could
be in AL) and 1406 (can’t be in AL).
ii. Issue -Conflict btw Federal Statute 1404(a) [D wants enforced] and state law [P
wants enforced]. AL state law does not allow FSCs (nullity), but §1404(a) allows
transfer between DCs based on forum selection clauses. How to deal w/ a FSC when
it is a nullity under state law?
1. Erie’s beguiling nature makes us ask Q in 1st place of whether 1404/06
governs here.
iii. Procedure:
1. District Crt (Extreme toward state) AL law governs bc FSC presents kind
of question that 1404 does not speak to. State crt would not have given
effect to FSC, and neither will we.
2. 11th Circuit (Extreme toward fed) – Fed law completely displaces state
treatment.
iv. SCOTUS HOLDING: 1404 governs, not AL law. Rejects DC and 11th C. Guide for
analysis FSC is neither irrelevant (DC) nor dispositive (11th C) in analysis. (fuzzy)
v. Reasoning
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1.
e.
Generally, fed policy is to give effect to FSCs if not manifestly unfair
(Carnival Cruise, Brennan v. Zapata – FSC is definitive). Where there is FSC
and no conflict w/ state law  it governs.
vi. Scalia Dissent: Apoplectic! 1404 does not govern validity of FSCs. Fed court cannot
give FSC enforceability to a state-law K that specifically does not enforce FSC’s.
Unacceptable consequence that FSC will become dispositive (protect AL interest).
1. Goes to Erie analysis bc statute d/n govern:
a. Forum Shopping – 11th C rule encourages forum shopping
b. Inequitable Admin of laws – unfair discrim btw non cits and cits of
forum state.
vii. On Remand (what Scalia fears happens!)//shows confusing nature of SCOTUS
decision
1. DC – told to give some weight to FSC but otherwise no other reason for
transfer to NY  hold on to suit in AL
2. 11th C – writ of mandamus: you must transfer to NY. Dispositive weight to
clause.
3. CONSEQUENCE of SCOTUS decision is that they authorize transfer on the
sole ground of the FSC.
viii. NOTE – no REA limitations here bc it’s a STATUTE. Statutes operate on own force.
Severing rules: Gasperini v. Center for Humanities Inc (SCOTUS 1996) –“federal courts
sitting in diversity apply state substantive law and federal procedural law.” if Judge-made fed
rule meets twin aims of Erie test and there are affirmative countervailing fed interests in
applying fed rule, court should apply substantive aspects of state rule while still
following federal procedures. [ADDITIONAL TEST/prong to Erie – can you separate and
apply some aspects of state/some aspects of fed law?]
i. Facts – Journalist P’s slides lost by Center. Damages awarded at trial $450,000 based
on calculation of future earnings. (P offers evidence assuming every photo will be
highly desired, commercially viable). Center brings Rule 59 motion for new trial –
excessive award. NY law specifically authorizes de novo review of jury award by state
appellate courts. This offends federal court system and potential 7 th amendment
conflict. 5501 authorizes 1) a standard and 2)procedural authorization.
ii. 2 Fundamental Conflicts in State and Fed Law
1. Review Standard – Std for determining what constitutes excessive jury VD
a. NY Law – Both district court and court of appeals uses “deviates
materially” std to review jury awards” (closer review, less
deferential)
b. Federal Law – Based on 7th Am Re-Ex clause, App Crt limited to
“abuse of discretion” review (using “shocks the conscience
standard”)
2. Allocation of App & review Functions
a. NY – under tort reform law – APP CRT can apply “materially
deviates” de novo
b. Federal –
i. Any remittitur challenge has to be raised in 1st instance in
motion for new trial Rule 59 in trial crt below.
ii. If C/A entertains remitter, has to use abuse of discretion
std.
3. 7th Am ISSUE - governs why Rule 50 JMOL and Rule 59 motion all have to
happen at trial stage –BEFORE jury decides; same logic as to why app crt is
thus limited Substantial Federal Interest in upholding that standard.
iii. Issue – in case where NY law governs tort claims for relief, does NY law also supply
test for fed crt review of size of verdict? PROBLEM – Conflict btw judge-made fed
rule (“shocks the C” std and NY std of review “deviates materially”) to be considered
at both levels
iv. PH
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1.
v.
vi.
vii.
viii.
DC – rejects D’s Rule 59 motion without justification (NOTE – denying w/
no explanation = bad practice)
2. 2nd Cir C/A - Remittitur - conditionally said they would grant new trial
unless P said he’d agree to reduced reward. (common practice for crts by
which they reduce amt of excessive award and say you can keep verdict if
you accept.)
a. Apply NY state law in using “material deviates” standard”
(conducts de novo review of Q of jury award) which potentially
conflict w/ 7th Am and common law practice
Holding : when there is a combo of a state procedural and substantive law,
court can sever the rules ot give power to the substantive ones and leave
procedural federal rules intact.
1. NY’s law on controlling comp awards can be given effect in fed crt w/o
detriment to 7th Am if “materially deviates”
2. standard of review (substantive) is applied by federal trial court and fed
app crt is limited to “abuse of discretion review.” (procedural).
Reasoning – SCOTUS splits the Q –
1. State rule : Review Standard is substantive (like stat damages cap) so
apply State Law.
2. Federal Rule: Allocation is procedural  even if under a twin aims
analysis, litigants may be encouraged to forum shop (Ps will like being in
fed crt –better chance to keep earnings), still approp to adhere to fed way of
doing things bc under Byrd, there is a countervailing fed interest. (7th Am)
Also at Issue – is it even correct to say this is judge-made law?
1. Scalia Dissent - Rule 59 – reads as imposing the std here. Rule 59 says you
can get a new trial “for any reasons heretofore recognized in courts of the
US” – he says the “shocks the conscience” std is a category under 59 that has
been recognized BUT his argument is not totally convincing bc w/in that
“shocks the conscience” std, state std of review can still apply.
a. this is contradictory to Byrd, in that judge/jury dichotomy has
opposite result (this DOES disrupt a federal interest). Further, this
is PROCEDURAL, not at all substantive. Last, Rule 59 is broad
enough to encompass this
2. Ginsberg FN22 rejects – 59 provides a mechanism for challenging a
complaint but does not impose a std. (she is cavalier here; 59 does say
something about basis for challenging a VD). 59 just permits you to do a
remitter; does not tell you HOW to measure excessiveness, which can only
be done by sustentative state law. Reading 59 that broadly would violate
REA. NOTE (Wolff) – Ginsberg does not conduct erie analysis in way we’re
used to – jut jumps into analysis
a. Says this is different from Byrd in that state and federal interests
are NOT mutually exclusive; 2) Do not need an either/or analysis of
whether to apply state or federal law here. Where state law is
substantive but has procedural aspects, that is okay as long as they
conform with federal procedures, and don’t upset balance of
federal court.
Direct Collision from Hanna
1. how does Court determine whether federal rules or statutes are “broad
enough” to cover the question at hand?
2. Walker- FRCP 3 does not cover state law. Question of whether SOL tolls
when claim filed (federal rule) or served (state rule). Court says FRCP 3
only speaks to timelines concerning AFTER litigation begins, so not broad
enough to encompass POLICY PURPOSE of the state rule. Reaffirms Ragan.
Interestingly, in later case, West v. Conrail, court found SOL DOES toll under
Rule 3.
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3.
f.
Burlington Northern Railroad v. Woods: seemed to relax direct collision
standard in Hanna and Walker. State rule says give 10% of damages for
UNSUCCESSFUL appeal to winning party. FRCP 37 and 38 say frivolous
appeals can be penalized at the judges discretion. So, which apply in
diversity court? Court says PURPOSES (like Walker) are coextensive, and
conflict, so FRCP is sufficiently broad here. So long as Constitutional and
does not violate Enabling Act, apply FRCP.
Shady Grove Orthopedic Assoc v. Allstate (2009):
i. Facts: D fails to pay P’s medical fees for an insuree on time (30 days). P sues for fee +
interest in a class action suit (all people D owes interest payments to), saying D
broke NY law for failing to pay interest. NY code 901(b) bars class action suits for
recovering penalties. FRCP Rule 23 allows all types of class action suits. FRCP says
class action “may be maintained” under certain circumstances and 901(b) says class
action “may not be maintained” in other cirucumstances. SCOTUS takes this to mean
direct conflict (Wolff disagrees). The majority not only imposes the mechanism for
class action but also makes substantive effects on regulatory policy which goes
beyond REA. Has capacity to overthrow both federal and state substantive rules.
ii. Procedure: District court dismissed the case on the grounds that New York law
prevented a class action lawsuit in this context (the law substantively affected
plaintiffs’ rights to bring lawsuits in New York courts)and the Second Circuit
affirmed.
iii. Issue:
1. Whether a state legislature may prohibit federal courts from using the class
action device for state law claims (Whether New York class action law
applies in federal court and whether it conflicts with Rule 23.) No
a. P argues that Rule 23 is the comprehensive class action rule for
federal courts, and that New York law cannot undermine federal
court procedure
b. Allstate claims that state law applies because plaintiffs would have
different rights in state and federal court.
2. Can a state legislature dictate civil procedure in federal courts? No
iv. Holding: Reversed and Remanded.
v. Analysis:
1. Is CPLR § 901(b) a Substantive or Procedural Rule? Parts I and II-A
(majority), the Court stated that if Rule 23 answers the question in dispute,
it governs, unless it exceeds its statutory authorization or Congress'
rulemaking power. Here, the Court reasoned that Rule 23 answers the
question in dispute – whether Shady Grove's suit may proceed as a class
action – and is therefore controlling.
a. The substantive nature of the state law does not matter as
much as the substantive nature of the federal rule. If the
federal rule is substantive, it will rule.
2. Does § 901(b) Abridge, Enlarge, or Modify Substantive Rights as Prohibited by
the Rules Enabling Act? Parts II-B and II-D (plurality), he stated that the
REA, not Erie controls the validity of a federal rule of civil procedure, even if
that results in opening the federal courts to class actions that cannot
proceed in state court.
3. Erie Test
a. Forum Shopping:
i. D says this would allow P’s to bring cases in federal court
that they can’t in state court.
ii. P says while there would be different laws, Congress
approved of increased federal class action lawsuits
through the passage of the Class Action Fairness Act
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(which reflects Congresses interest in allowing these kinds
of cases.)
b. Fairness:
i. D argues that the difference in available remedies ($500 in
state court and $5m in federal court) would produce
inequitudes
ii. P argues that rights of both the class members and the
defendants are the same in federal and state court, and
that therefore the court does not need to apply CPLR
901(b).
c. Federalism and Judicial Economy
i. D argues that application of state law would be economical
for courts and that Rule 23 is construed too broadly
otherwise (floodgates)
ii. P argues that to apply state law would break federal
uniformity and undermine federal courts, not to mention
require them to be versed in state class action law.
4. Part II-C (distinct plurality), he concluded that the concurrence's analysis
conflicted with the Court's precedent in Sibbach – (that the federal rules
"really regulate procedure.")
vi. Why create statutory damages available at all?
1. Provide private enforcement opportunity/incentives/mechanisms
2. If combined with aggregating rule of class action, however, it grows
exponentially and there is PP interest in not making it too difficult for
industries and corporations
3. 901(b) can be seen as a check on over-enforcement and part of regulatory
policy of NY.
vii. Stevens concurrence. He agreed that Rule 23 applies in this case, but also recognized
that in some cases federal courts should apply state procedural rules in diversity
cases because they function as part of the state's definition of substantive rights and
remedies.
viii. Dissent: Ginsburg, Kennedy, Breyer, and Alito. She criticized the majority opinion for
using Rule 23 to override New York's statutory restriction on the availability of
damages and consequently turning a $500 case into a $5,000,000 one. She cautioned
that it is important to interpret the federal rules with sensitivity to state regulatory
policies.
h. Determining the Content of State Law
a. Salve Regina - de novo review is required for appellate court’s determination of
applicable state law
i. de novo rev of law best serves doctrinal coherence & judicial economy – district &
appellate cts are structurally suited for diff things  differences should be held up
when sitting in diversity
1. appellate deference is inconsistent w/Erie: would not discourage forum
shopping & would not avoid inequal admin of laws – invites divergent
development of state law w/in dist courts of a state
2. whole thrust of Erie (p. 553) – state law can be communicated by parties to
fed judge  can also be communicated to an app crt judge
i. FEDERAL COMMON LAW
a. Basic Erie – NO general fed common law, if substantive  state law
b. BUT there are still partic instances in which fed common law is applied and whereby, via the
Supremacy Clause, fed law displaces state law.
i. EX: admiralty laws, treasury laws, civil rights laws
c. WHY is there ever general fed common law?
i. Constitution – area of laws committed to fed gov BY constitution itself (admiralty
laws)
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ii. Federal Interests (like in Fed Q cases) so clearly implicated that wld not be
acceptable to have diff stds apply  would lead to inconsistency and volation of
federal interest.
1. “Filling in Gaps” of statute function or interpreting open-endedness
2. Boyle example
CONSEQUENCES/EFFECT of Fed Common Law (i.e. why we are so concerned when fed crts
promulgate it  why we even get to the Q in Boyle)
i. State Common Law –
1. EFFECT - promulgation supersedes nothing
2. NEED -state courts have to be engaged in gen project of articulating state
police powers (must be done somewhere  not such a democratic
problem)
ii. Fed Common Law –
1. EFFECT - supersedes EVERYTHING. Presents more of a demoncratic
problem
2. NEED – No need for fed crt to do this. Would be no void w/o promulgation.
PRECLUSION: an affirmative defense
What impact a judgment in F1 has on the ability of parties to raise and litigate in subsequent proceedings
Called doctrine of res judicata –“the thing decided” only applies to Final Judgments
DISTINCTION From Appeal – can still, within the appeals process, appeal the decision. Preclusion refers to
separate litigation.
a. 3 PS (variety of analytically distinct)
a. Preclusion – Very specifically related to impact of judgment on the parties bound by that
judgment
i. EFFECT = ON PARTIES (those subject to authority of crt)
ii. Very expansive consequences for those parties, which is why we are so strict about
limits of who is bound
b. Precedent – Crt produces an opinion that may have precedential effect on laws if crt has
authority to speak on law (for ex, Appellate Crts) then the opinion changes the law.
i. EFFECT = Change in law and binds WHOLE COMMUNITY OF PPL (SCOTUS – whole
US)
c. Persuasive Authority (least weighty category) – statements of law judge might to in
resolving legal dispute but is not bound by (ex: Fed DC decisions)
Full Faith and Credit Clause operated as mechanism by which decisions have preclusive effect across
jurisdictions.
b. TYPES OF PRECLUSION
a. Claims Preclusion (“res judicata”) – only between same parties
i. Claim = CofA
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ii. Ex: negligence claim for D,B, C, and D
iii. Expansive consequence = Potential to lose on “could have/should have been
brought. Effectively, it is a mandatory joinder provision.
b. Issue Preclusion (“collateral estoppel”) can be invoked by a different P but only against a D
that was in org. claim
i. Issue = distinct factual or legal component (or element) of claim
ii. (v. claim preclusion), only bars claims that were actually brought in 1st proceeding
iii. Even assuming you are not barred from bringing the entire claim, does resolution of
certain issues in F1 preclude you from bringing in F2?
iv. Ex: Multiple ISSUES in Form 9 negligence claim – what constitutes negligence, what
caused injuries
v. Expansive Consequence: Non-mutuality (when you decide on issue in suit , must
not only be concerned w/ effects on partic parties to lawsuit but also on effect to all
other parties  You can invoke issue preclusion against parties even if you were not
a party to the action.)
c. Relation to Supp J/D
a. Both supp j/d and preclusion – advance efficiency and final dispute resolution BUT for supp
JD, Q is whether multiple claims may be entertained and in preclusion, Q is whether claims
must be asserted together. Supp j/d much broader.
d. WHY PRECLUSION?  values that permit BROADENING of preclusion
a. Repose for parties/Finality (MOST important)
i. Preclusion is important so you can know that your rights and obligations are w/
respect to what’s being litigated. If you were to start articulating exceptions, they
would swallow the rule.
ii. FINALITY trumps ERROR  goes so far that we respect finality of erroneous
judgments (Moitie, Vidallia)
1. Fed Dept Stores v. Moitie : no exception to preclusion from unappealed
judgment where other psi in similar actions prevailed on appeal.
a. ATR action against fed dept stores brought in several parallel civil
actions. Brown/Moitie do not appeal judgments while other 5 Ps in
civil suits do. Instead of appealing, B/M re-file actions in state crt
and appeal this judgment. Pending appeal, crt decides in favor of
other 5 Ps  saying that retail purchasers can sue under Clayton
Act but bc Brown/Moitie did not originally bring claim, they are
barred by RJ.
iii. Rule 60(B) = exception to FJ Rule – when you can go back to orig ct and say I’d like
relief from that judgment (very limited)
b. Integrity of Judgments (Herendeen): Different judgment in 2nd action should not impair or
destroy rights or interests established by the judgment entered in the 1 st action.
e. WHY PRECLUSION?  Values that moderate preclusion
a. Do not know what has been fairly litigated until end of preceding
i. Complaint (even post Twombly) does not really show you what is at issue
b. Due Process Value (always serves as moderating influence) = Full and Fair Opportunity
to Litigate
i. For all the benefits we achieve from finality, do not want those benefits to come at
the expense of litigants’ opportunity to have their day in crt or have crt consider
their perspective on claims
ii. In F2 proceeding, this can always come up as a defensive response to preclusion: I
did not have a fair opportunity in 1st suit to resolve this claim (i.e. the judge said I
could not bring it)
iii. Comes up in issues: did not have opp to contest the issue insofar as issue sought to
be used against you in subsequent proceedings (ex: in subsequent proceeding, you
are sued for much more money)
c. Litigation Efficiency
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i. How expansive preclusion is will have immediate consequences on what the TC
litigates in the 1st place  so the desire to have finality and proper and complete
resolution is also moderated by a desire to have make TCs deal w/ “kitchen sink”
lawsuits where EVERYTHING is thrown in
ii. Harrington v. Vidalia Butler School District – So far in favor of finality that it
diminishes efficiency. 6th Circ penalizes her for not bringing the whole
“kitchen sink” Wolff: wrong decision.
1. P brings suit under Title VII of CRA for employment discrimination, does
not bring under not bring under 28 USC 1983 bc municipalities not subj to
liability under statute at the time. While appeal pending, law changes and
subjects municipalities; when she tries to bring suit under statute, it is
barred under RJ.
2. Diff from Moitie bc she could not have appealed – seems less fair here
3. Implication: Litigant has to throw whole kitchen sink into first claim and
say, for ex, this is foreclosed but I am going to bring it up anyway so I can
bring it on appeal.
4. Bad decision in terms of efficiency.
CLAIM PRECLUSION - Operates to preclude litigants who were parties in 1st action from bringing claims that
were or should have been brought in first (issues of law, fact, and mixed fact/law issues.)
f.
g.
h.
Collateral attack on judgment for PJ (a la Pennoyer)  put yourself OUTSIDE preclusion
a. Only successful in PJ claims
b. If you have PJ objection and you allow default judgment, then when you enforce it, you can
ONLY contest personal JD issue bc all other parts of claim precluded.
Liberalization of Pleading (Liberal JOINDER Rules)  Broadening of Preclusion
a. OLD pleading: “Prior to Roman conquest” writ pleading: strict form that requires you to
bring claims totally separately
b. NEW: Rule 18 says you can join whatever claims you want against given D - leads to
concomitant broadening of preclusion.
c. OPPORTUNITY Ps have to liberally join becomes a REQUIREMENT.
CONSEQUENCES of Broadening of Preclusion
a. RULE 1: claims that were brought or should have been brought are barred.
b. RULE 2 : Suit that arises out of same transaction or series of transactions will be
subject to claim preclusion.
i. Res Judgment Section 24 provides guidelines on what is same T-action or series of
T-actions:
1. Factual and evidentiary overlap
2. Litigation expectations of parties
a. Are claims the type that both legally and as a business matter, you
would be expected to be resolved together.
3. Issues of trial convenience
a. The more it can be said to contribute to judicial efficiency to have
claims in 1 transaction the more likely subsequent claims will be
precluded.
ii. Series of transactions test: Herendeen v. Champion Int’l (1975) – different
evidence but likely seen as 1 claim for Res Judicata
1. 2nd complaint of former employee of Nationwide to obtain payments D
owed him under Pension plan is not barred by 1st claim that said he could
not enforce an “agreement to agree” as a binding new employment K that
would let him continue to receive employment benefits .
2. 3 Part Test for looking at same transaction or series:
a. Whether diff judgment in 2nd action would impair or destroy rights
or interests established by judgment in 1st action
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b. Same evidence
c. Essential facts and issues in 2nd were present in 1st, “arising out of”
c. Explanation: Formalistic Distinction btw forms of recovery ends (i.e. Rush – PI and
property).
i. Legal Theories -P cannot “split c/a” to attempt 1 legal theory in F1 and another in
F2
ii. Diff Types of Relief – must all be brought in one claim (ex – K claim and tort claim).
d. NOTE: PRAGMATIC approach – Q of what constitutes same c/a is treated pragmatically, not
formalistically
e. APPLICATIONS
i. Cannot re-litigate claim already brought
ii. Cannot re-litigate claim that should have been brought (NOTE – this is diff in Issue
Preclusion where issues have to actually have been litigated)
Rush v. City of Maple Heights (OH 1958) – merger – same act, evidence. P must join property
and personal injury claims of single tort. Signals end to Formalistic distinction between kinds
of recovery.
a. P sued city for personal injuries from m-cycle accident, had already prevailed in claim
against city for damages to m-cycle. Crt holds that 2nd claim is barred.
b. Procedural History: Plaintiff’s husband is injured in a motorcycle accident, in which there is
also damage to her motorcycle. Plaintiff sues the city for liability regarding a pothole that
caused the accident and wins $100 (property suit). Judgment is affirmed by court of appeals
and Supreme Court. Plaintiff then sues again for injuries and gets $12,000. Court of appeals
affirms. Now case is in the hands of the Supreme Court.
c. Issue: Whether two issues resulting from one wrongful act can result in two causes of action
d. Holding: No, a plaintiff cannot sue twice for the same wrongful act.
e. Reasoning: Different injuries are just different pieces of a cause of action, not different
causes of action altogether. This rule is necessary to prevent vexatious litigation,
burdensome expense and multiplicity of suits. Plaintiff wants to exploit issue preclusion in
second suit, since the issue of negligence and causation has already been decided and all that
is left to determine is damages.
i. The city wants to use claim preclusion as a defensive strategy because she has
already sued them. Court says a single wrong can only lead to a single cause of
action.
Judgment on the Merits – For a judgment to have claim preclusive effects (or issue preclusive) it
must be “on the merits” (i.e. “with prejudice”)
a. Ex: Dismissals w/o Prejudice: dismissal of case for lack of SMJ or lack of PJ, lack of venue,
inadequate service of process  NOT dismissals on the merits.
i. Therefore, do not have effect on ability of litigants to try again.
ii. This is true even if jurisdictional litigation comes up at the end of litigation (like
when it comes up sua sponte in Fed Arising Under cases like Mottley)
b. Costello v. US (SCOTUS 1961) – appropriate to treat dismissal for failure to file affidavit of
good cause in naturalization proceeding was not adjudication “on the merits” bc D has not
yet been req’d to generate a defense. Under 41(b) dismissal for failure to file affidavit is
treated as jurisdictional. Traditionally, the exception to preclusion applies to jurisdictional
verdicts (“without prejudice”) under FRCP 41(b)
i. Facts – 1st lawsuit: denaturalization claim was dismissed bc Gov failed to file
affidavit of good cause (Note – to bring original claim, gov would have higher
burden than usual of showing allegations AND evidence bc special type of
proceeding where more is req’d) 2nd lawsuit (25 yrs later) Gov brings action
against Costello (bootlegger) under Immig and Nationality Act to take away
citizenship bc he willfully misrepresented his occupation. 1st Lawsuit
ii. Holding – Government not precluded from subsequent action against Costello dismissal for failure of gov to file affidavit of good cause in a denaturalization
proceeding fits in 41b’s lack of jurisdictional exception … This is NOT an
adjudication on the merits so it is not precluded.
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iii. Rule – std applied for “on the merits” Defficient pleading does not lead to RJ – D
had to prepare to meet the merits. Looks not at specific case but asks: Generally, in
this class of cases, has D been put to the burden and inconvenience that
preclusion is meant to prevent?
iv. Reasoning –
1. dismissals which act as bars generally involve situations where D had to
prepare to meet merits. Failure to submit an affidavit of good cause is (w/
respect to how it affects D):
a. (1)identifiable at the outset of litigation;
b. (2) something D can identify before he submits his answer;
c. (3) Thus, as practical consideration, dismissal is w/o prejudice.
[Crt’s reasoning does not fully explain as shown by contrast w/
12(b)(6).
2. CONTRAST to 12(b)(6)  Why does 12(b)(6) operate as “on the merits”
and w/prejudice while this does not? [NOTE: this takes on new significance
post-Twombly bc getting a 12(b)(6) motion passed is much easier w/
heightened pleadings requirements for complaints]
a. 12(b)(6) - In response, P has one chance to amend “as of right.
Rule 15 has to be asserted before 12(b)(6) is granted and
judgment is entered. Only available for final judgments.
b. Main Difference: question of whether you are undermining prior
judgment  if 12(b)(6) granted and you go back to ask again, there
is a sense in which you are undermining the 1st decision of the
issue. But in failure to file affidavit of good cause, do-over does not
really undermine integrity of judgment, just lets you have another
try.
3. 41(b) – sets default in federal crt for when involuntary dismissal will be
treated as w/ prejudice on the merits or w/o prejudice on the merits.
Default = dismissal w/ prejudice UNLESS (1) court in its order for
dismissal specifies w/o prejudice OR (2) dismissal for lack of j/d, improper
venue, or failure to join claim under Rule 19
a. Crt bases logic on 41(b)  says that dismissal for failure to file
affidavit of good cause fits into 41(b) exceptions to default rule bc
it’s a “jurisdictional defect”
i. Bases reasoning on a wide interpretation of concept of
“jurisdictional” (not in sense of PJ or SMJ) to describe any
issues defined at threshold of lawsuit. but like in Bowles v.
Russell – where “j-dicitonal” used to refer to time limits
ii. Wolff: this is a torturing of “jurisdictional’ but it’s
consistent torturing.
b. PROBLEM that Crt runs into here  Does interpreting 41(b) this
way violate the Rules Enabling Act – Does it “enlarge, abridge, or
modify a substantial right” (ex: state decides that all dismissals
based on SOLims are w/ prejudice but fed crt says 41(b) would say
that this is w/o prejudice. Does Rule then violate the REA?)
SOLUTION = Semtek
v. Semtek (2001) – Solve problem by narrowly construing federal rules to avoid run-in
w/ REA.
1. 41(b) does not really purport to designate the preclusive effects of
dismissals. Just says that if ONE crt says w/ or w/o prejudice then
designation affects whether you can come back to that crt but does not
affect preclusive effects in general.
2. RULE - While a dismissal “w/ prejudice” under 41(b) may contribute to a
subsequent finding that the claims in the 1st lawsuit are barred by same crt,
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the Rule d/n require that of its own force. Dismissal w/ prejudice is a
necessary condition for a claim preclusive effect but it is not sufficient.
3. Wolff commentary: this is an unnecessarily confusing way of interpreting
Rule 41 in order to say that it d/n violate theREA.
Privity –Parties Bound and Advantaged:
a. Parties not named in suit can be bound by outcome of suit if “in privity” w/ those in suit
(generally governed by judge-made law):
i. Agency: you designate someone as agent to represent you n suit (ex – minors
designate parents; Class actions – lead P can bind all absentees; you hire someone)
ii. Actual Control or Participation: if you exercise actual control over person who
shows up (puppet), you are bound by decision (ex: parents and subsidiary
corporations, business relationships where there is de facto control) (often linked to
(i) bc in agency relationships, you will not have control
ISSUE PRECLUSION
If C1 is reversed on appeal, subsequent cases affected by preclusion are allowed to go back to court.
Counterclaims (and failure to raise counterclaims, Rule 13 compulsory counterclaims) could potentially
raise preclusion.
Issue preclusion is available between states and is a waivable defense.
RULES for Issue Preclusion (Res 27 of Judgments)
1. Issue must have been “actually litigated” and determined in 1st proceeding (Little) : actually
adversely litigated or necessarily decided by final judgments. Stipulations, admission under Rule 35
do not court because they are available in part for judicial economy so are used on the assumption of
limited consequences. Necessarily: haw a claim is decided necessarily assumes a decision was made
on a certain issue (could not have reached the judgment without deciding the issue.)
2. Issue was essential to the judgment: peripheral issues don’t count: final judment must have turned
upon the issue. Otherwise, there is doubt that the parties serioiusly and fully litigated the issue (they
did not have notice of its importance.)
3. The same issue in both cases: for contested factual questions, it is usually fairly straightforward (are
the same set of facts being contested?) For issues of law, it may be inappropriate when moving
between states.
4. Full and Fair opportunity to litigate: only available when the party against it had full faith and fair
opportunity to litigated. Catch-all qualification. Party against whom preclusion is sought has to have
the had this. Ex: issue in C1 was developed by limited discovery (ex in small claims court) may not
qualify for preclusion.
Exceptions: Exceptional case: to be applied with caution. Circumstances in which one claims a party should
be bound by previous decision require clear bound interests and notice (out of fairness concerns.)
1. Statutory policies: bankruptcy and class actions requiring binding various parties
2. Ones rights are purely derivative of 1st claim’s determination (ex: land determinations)
3. One participated or exercised some sort of control in 1 st claim (privity relationships: Taylor v.
Sturgell
Little v. Blue Goose Motor Coach Co - : Scope of Issue importance. Where issue defined as “who is at
fault” and not as whether Dr. was negligent, issue is precluded
a. Facts – Little was driving, collided w/ bus.
i. L1 - Bus Co sues Little for property damages. Judgment for P, bus co.
ii. L2 - Little, or his estate, (P) brings 1. Negligence claim (wld be barred by
contributory negligence) 2. Recklessness claim (wld not be barred by contributory
negligence)
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iii. NOTE – normally, L2 would be barred here bc of claim preclusion: D should have
brought L2 on CC but unique state law saying it’s not claim precluded. .
b. Holding –L2 is precluded. The “issue” is who is at fault, NOT whether Dr. L was negligent.
Had L1 held Litting was not N, there wouldn’t be a problem. Little cannot bring issue in C2
that is FACTUALLY contradictory to judgment in C1.
c. Reasoning: 2 ways to define “issue” from L1 (1) Who is at fault? (2) Was Dr. Little negligent?
L1 decided that Dr. L was negligent. Bc of contributory negligence of D, P wins completely
i. In L2, Dr. L wants to say: if contributory negligence = an affirmative defense that D
has to raise then the issue has only been “actually litigated” if Dr. Little brought it up
as a defense in 1st proceeding. Though negligence claim has already been litigated,
recklessness claim has not bc issue of Bus Co’s negligence has not been dealt with,
however, to prove willful N, there must be proof of N which has already been
defeated by finding Little N.
d. MAIN POINT: Shows importance of HOW you characterize the issue. In preclusion
cases, often have to look back at record/pleadings to see what was actually litigated.
Not always the case that finding of negligence about 1 person necessarily means other
is not at fault.
e. NOTE – EXCEPTION Res §27: where judgment of trial ct is based on determination of 2
issues, either of which would individually support result, judgment isn’t concluded w/
regard to either issue – such determination in alternative may not have been rigorously
considered.
NON-MUTUAL Issue Preclusion
a. Allows new party to invoke preclusion against a party who litigated and lost on an issue in a
prior action –
i. RULE TO REMEMBER: To invoke preclusion against someone, action that you
invoke must have been one in which adversary was a party or was in privity w/ a
party (note – might help D in class action situations where multiple Ps can be found
to be in privity)
b. OLD RULE – Mutuality – only parties who could invoke preclusion where those who were
involved in suit in which issue initially decided.
Defensive Non-Mutual Issue Preclusion
a. D can invoke preclusion against a P (defensively) when P already litigated and lost against
another D. “You already lost on this issue in the 1st lawsuit so you cannot bring it against me”
b. Approved by SCOTUS in Blonder v. Tongue decision
c. Advantages
i. Def non mut encourages joinder of all potential Ds in a single action or at the very
least not to bring multiple lawsuits , b/c if P loses against first then claims against
others are precluded. 1 shot on issue = your 1 shot
ii. Otherwise:
1. P could take Ds one at a time and have multiple recoveries; and if P loses
once, can bring again
iii. BENEFITS:
1. Litigation efficiency
2. Fairness (should not get separate recovery, for ex, from 12 tortfeasors, just
bc you are “lucky enough” to be hurt by all of them
3. Jury/Judicial resources – not a productive use to allow P to keep bringing
suit.
d. Bernhard v. Bank of America Nat’l Trust and Savings Ass’n (CA1942) Traynor (p. 871) finding of probate crt precludes even when D asserting plea was not a party to the
previous action. Looks at incentive: encourages joinder of all potential Ds: 1 st JD to
acknowledge values of defensive preclusion and to allow it.
i. Facts – Dispute over settling an account for a will.
1. 1st action - Hearing on objections – crt settles act. Says that decedent
during lifetime made gift to Cook in amt of deposit in question. Bernhard
becomes administatix
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2.
7.
2nd action - Bernhard brings action against B of A to recover the deposit on
grnd than bank indebted to the estate for this amt bc Sather never
authorized its w/drawal. D says fact is res judicata bc of finding of probate
crt in proceeding to settle Cook’s acct.
ii. Holding –Issue is precluded. D can assert another party’s victory against P as a
defense even though there is lack of privity and non-mutuallty – as long as issue
identical, FJ on merits, and same party. P here presents this suit in same capacity as
last time.
Offensive Non-Mutual Issue Preclusion (Non-Mutual Collateral Estoppel) : cautiously
administered
a. Defensive non mutual issue preclusion(P tries to sue r D’s who are J/S liable. Sebsequent D’s
can preclude if P has already lost.)
b. Offensive non-mutual issue preclusion :P can preclude D from re-litigating issues which D
already litigated and lost against another P. P says: “ you already lost on this issue in the 1st
lawsuit so you can’t deny it now” “You are collaterally estopped by other decision against
you” (EX: Vioxx is sued on heart disease claim and 2nd P comes in and says this has already
been decided against you, I can use that to my advantage)
c. Disadvantages (why it’s less widely recognized)
i. Strategic Use of Free Riding: Can inspire a wait and see attitude in Ps – a P2 who was
not part of 1st proceeding but knew it was going on decides not to join  if P1in 1st
LOSES, then P2 is on his own but if P1 in 1st suit WINS, then P2 can come in and
preclude under more favorable circs
1. NOTE: This operates on assumption that you actually could have
participated in the1st suit, which is actually context-specific. In most
situations, you can request intervention.
ii. Existence of Inconsistency in findings
1. Fairness Concern : Strategic Use of Picking Best Suit: There have been 26
unsuccessful litigations against a D and finally one P1 wins then P2 sweeps
in says they will just invoke the successful one.
2. Uncertainty is endemic in lawsuits generally:
a. Increases “wait and see” strategy
b. One inconsistent verdict is no dispositive
3. Inconsistent Verdicts against another D? (Kaufman crt says that this
should work against use of NMIP) but crt rejects. 2 ways to view:
a. To the extent that NOMIP is about factual certainty, then
inconsistent verdicts against other Ds are relevant BUT
b. To the extent NOMIP about fairness to D, then inconsistent verdicts
are most likely not relevant.
d. Advantages
i. Generate efficiency on complicated issues (Kaufman = example of efficient use)
e. Primary Considerations Crts look to in deciding whether to permit Issue Preclusion:
(Res 28/29)
i. Fairness as to Procedures
1. Procedures available in L2 that were not available in L1 so wld be unfair to
bind based on decision in L1:
a. Appeal: Did party in L1 have opportunity to Appeal? (ex: D can’t
appeal bc he wins, and only losing party can appeal but the
judgment still says he’s negligent – in L2, unfair to bind him to that
finding of negligence –
b. Burden of Proof shifts btw lawsuits (ex: in L1, you had to est proof
beyond RD  has very little to say about whether you should be
bound when in L2 burden is just prep of evidence)
c. Different Incentive Structures (L1 – D sued for property damage
of $100 and in L2 D sued for personal injury dams of $1 mill – not
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fair to bind L2 when in L1 it was so low stakes and D did not have
fair opp to litigate).
i. BUT this does now always work – sometimes crts says that
you should have realized there was all this liability out
there and contested it all then
ii. Fairness Concerns relating to strategic behavior
1. Ex: Wait and see attitude of P
2. Inconsistent verdicts and P waits for most favorable one
iii. Public Policy Considerations
1. If issue = an issue of law, then issue preclusion may be less desirable as a
matter of public policy
a. Ex: if congress changes the law, then do not use issue to bind
b. Ex: if legal issue is a contested one then binding a litigant to initial
early resolution of a still evolving question works against public
policy
2. Where issue preclusion invoked in the shadow of some other regulatory
scheme
a. Ex: Specially designated administrative agency supposed to have
responsibility for issue – not fair for it to be precluded.
Modern Applications
a. Kaufman v. Eli Lilly and Co (1985) offensive non-mutual issue preclusion allowed:
foreseeability and reliability are important = closeness in claims and foreseeability
make it OK here. Inconsistent verdict against another D not accepted as reason for NO
ONMIP.
i. Facts – 1 of 15 similar actions to recover from pharma co for injuries sustained by P
daughters as result of mothers’ ingestion of DES. Complex litigation cases. Closeness
in claims
1. 1st action – Jury verdict against Lilly in Birchler – Young woman gets
cerv/vag cancer at 17, sues Lilly on theory that DES marketed w/o
adequate testing to determine safety. Submitted on concerted action theory.
Crt uses CA theory to find against D and answers interrogatories
2. 2nd action – Kaufman gets cervical cancer age 18, can’t have kids. Claims CA
theory of liability.
3. D wants to be able to re-litigate issues but crt says that all issues precluded
except. concert of action claim. P tries to preclude when issues have already
been decided against D by other Ps.
ii. Holding – Issue preclusion allowed as to all special verdict interrogatories
(DECIDED that DES causes cancer) against P except concert of action finding.
Kaufman is already covered by actions in Birchler except for on CA claim.
iii. NOTE: Eli Lilly tries to make argument that N-M IP should not work here bc there
was an inconsistent Verdict against another defendant but crt rejects.
NOTE: In reality, most claims settle out of crt and the existing level of knowledge/scientific findings
on the issue are determinative of whether P will be able to prevail (asbestos claims)
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