Wood 7 (2009)

Judge Wood – Spring 09

CIV PRO II OUTLINE:

PART ONE: PERSONAL JURISDICTION AND MY IMPENDING SUICIDE

HISTORICAL BACKGROUND:

1) TYPES OF PERSONAL JURISDICTION a.

In Personam Jurisdiction  Permits a court to enter judgment that is personally binding on the defendant either ordering equitable remedies or allowing plaintiff to collect damages from D. b.

In Rem Jurisdiction  Permits a court to adjudicate the rights of all possible claimants

to a specific piece of property, as in a condemnation proceeding. c.

Quasi in Rem Jurisdiction  TWO TYPES: i.

Individual disputes related to property under the court’s control  actions for specific performance of a contract to purchase land. ii.

Personal disputes where the court could not assert personal jurisdiction over the D, but where court had jurisdiction over property belonging to the D.  that property could be seized by P and used to satisfy claim if P prevailed!

2) Pennoyer v. Neff: a.

Court found that for the state to exercise power over individuals or property, there must be: i.

Valid service of process on individual (in in personam cases) ii.

OR iii.

Attachment of property in the state (in rem actions). b.

Court made it clear that due process would apply the same limitations on exercise of jurisdiction in future cases. c.

TERRITORIAL LIMITS ON PROCESS: i.

State cannot serve an individual domiciled in another state with process and summon that person to respond to lawsuit against him. ii.

WEAKENED BY MODERN SHIFT TO MINIMUM CONTACTS ANALYSIS! d.

METHODS TO OBTAIN JURISDICTION: i.

Service within the state  if D in state, P can serve him. ii.

Seizure of D’s property  Prejudgment seizure was sufficient to permit a state to dispose of that property to satisfy claims not related to the property.

1.

D is expected to know what is up with his property, and therefore this is sufficient to bring D under jurisdiction of the state.

3) SHIFT TO MINIMUM CONTACTS: a.

International Shoe Co. v. Washington i.

Court shifted away from Pennoyer’s insistence on service within the state to support in personam jurisdiction. ii.

Held that to subject a defendant to a judgment in personam, due process requires only that he have “certain minimum contacts with the forum such that the maintenance of the suit does not offend ‘traditional notions of fair

play and substantial justice.’ iii.

SO WHAT THE FUCK DOES THAT MEAN?

1.

SYSTEMATIC AND CONTINUOUS ACTIVITY: a.

Court upholds in personam jurisdiction over nonresident D based on systematic and contihuous contacts with the state.

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Judge Wood – Spring 09 i.

International Shoe  D was Delaware corporation employing 11-13 salesmen in Washington. Court upheld Washington’s jurisdiction given the volume and systematic and continuous nature of contacts.

2.

SINGLE CONTACT: a.

McGee v. International Life Insurance



Sending a K to

California from Texas allowd California court to get jurisdiction over D. b.

EXTENDS STATE JURISDICTION!

3.

LIMITATION: PURPOSEFUL AVAILMENT LIMITATION: a.

Hanson v. Deckla



Court said that there must be some act by which the D PURPOSEFULLY AVAILS itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.

CONTEMPORARY GROUNDS FOR STATE COURT JURISDICTION!

BASIS:

1) Territory

2) Consent

3) Citizenship

[NOTE TO SELF: GO DOWN THE LIST FROM 1-4 ON EXAM]

How to bring an out-of-state party under your jurisdiction…

1) THERE MUST BE STATE STATUE ALLOWING FOR LONG-ARM JURISDICTION a.

SHE WANTS US TO KNOW THE GODDAMN STATE STATUTES, SO IF AN EXAM

QUESTION DEALS WITH STATE – READ STATUTE!

2) TERRITORY - THERE MUST BE MINIMUM CONTACTS WITH FORUM  as per International

Shoe! a.

Purposeful Availment – Established by Hanson v. Deckla. i.

Meaning?

1.

Voluntary action by D establishing a relationship with the forum.

2.

D usually gets a benefit! ii.

WHY?

1.

Burger King Corp. v. Rudzewicz – This requirement gives defendants

“fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign.”

2.

Instills a degree of predictability to the legal system that allows potential Ds to structure primary conduct with minimum assurance as to where conduct will and will not render them liable. iii.

ELEMENTS: What is a minimum contact?

1.

INSUFFICIENT - UNILATERAL ACTS BY P:

1.

World-Wide Volkswagen Corp. v. Woodson  “The defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.”

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2.

Unilateral act by Plaintiff of driving a car from New York to

Oklahoma, where they were in an accident, did not establish contact between NY retailer and Oklahoma!

2.

LONG-TERM RELATIONSHIP WITH FORUM RESIDENT:

1.

Burger King Corp. v. Rudzewicz



Burger King (Florida Corp) entered into 20-year franchsie agreement with Michigan defendant. Jurisdiction valid because D “ reached out beyond

Michigan and negotiated with a Florida corporation for purchase of a long-term franchise and manifold benefits that would derive from that affiliation.”

3.

SEEKING TO SERVE:

1.

World-Wide Volkswagen v. Woodson



Court notes that iof the retailer was seeking to serve the Oklahoma market, that would allow Oklahoma jurisdiction. i.

McGee v. International Life Insurace  Even ONE

ATTEMPT to seek to serve forum market has been held sufficient to support jurisdiction in action asserting claim growing out of that act.

2.

Keeton v. Hustler



Publishers of Hustler able to be sued in

New Hampshire because they targeted magazine sales to that state. EVEN THOUGH P HAD NO CONNECTION TO STATE!

4.

STREAM OF COMMERCE:

1.

Forum state may assert in personam jurisdiction over corporations that deliver its products into the stream of commerce with expectation they will be purchased by consumers in that state.

2.

RETAIL SELLERS: i.

World-Wide Volkswagen – Stream of commerce ends with RETAIL SALE OF PRODUCT, even if foreseeable that purchaser will take it to another state. (NOTE  If sells a lot to other state, might be liable under “seek to serve” standard)

3.

MANUFACTURERS/COMPONENT SUPPLIERS – 2 VIEWS! i.

Gray v. Radiator & Standard Sanitary Corp.  Upheld jurisdiction over component supplier whose product was sent into forum state as part of product manufactured by customer.

1.

GRAY STANDARD  Wherever stream of commerce ends…. ii.

HOWEVER, NARROWED! iii.

Asahi Metal Industry Co. v. Superior Court  PLURALITY

– O’Conner says that placing a product in the stream of commerce is not sufficient!

1.

P MUST SHOW

2.

Additional conduct by which the defendant indicates an intent or purpose to serve the forum state!

5.

TARGETING OR INTENDING EFFECTS IN FORUM:

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1.

For intentional torts, jurisdiction can be obtained over a nonresident D if D intended that his actions could an effect in that forum. i.

LIMITED TO WRONGFUL OR COMMERCIAL ACTIVITY!

1.

Kulko v. Superior Court – Effects test was

“intended to reach wrongful activity outside of the State causing injury within the State or commercial activity affecting State residents.” a.

Husband derived no BENEFIT from his actions in buying plane ticket to

California nor was his action wrongful!

2.

Helicopteros v. Hall



Purchases of equipment and training of personnel may be insufficient to confer personal jurisdiction. b.

CONTACT MUST ALSO BE REASONABLE: i.

“Fair play and substantial justice” from International Shoe.

1.

The State must be reasonably exercising jurisdiction!

2.

Burger King  “Where a D who purposefully has directed his activities at forum residents seeks to defeat jurisdiction, he must present a compelling case that the presence of some other considerations would render jurisdiction unreasonable.”

3.

BALANCING FACTORS TO CONSIDER:

1.

Burden of the defendant to defend litigation in forum. i.

Asahi Metal Industry  Supreme Court recognized that there are “unique burdens placed upon one who must defend oneself in a foreign legal system.”

2.

Forum state’s interest in adjudicating the dispute.

3.

Plaintiff’s interest in obtaining convenient and effective relief.

4.

Interstate judicial system’s interest in obtaining the most efficient resolution of the dispute.

5.

Shared interest of the several states in furthering fundamental c.

SPECIAL APPLICATIONS: substantive social policies. i.

INTERNET

1.

SAME MINIMUM CONTACTS STANDARD THAT IS USED FOR OTHER

SUITS!

1.

Contracts  Entering into a contract via internet communications usually will suffice to support jurisdiction at the forum for either party.

2.

Causing effects in Forum  Might allow for jurisdiction!

2.

SPECIAL ISSUES UNDER ASAHI “SOMETHING MORE” REQUIREMENT:

1.

Ability of Forum Residents to Access Internet Site Not Sufficient: i.

Pebble Beach Co. v. Caddy  Did not find the fact that a

California resident could access the website

2.

Level of Interaction and Nature of Web Page Relevant: i.

Pebble Beach Co. v. Caddy



Website was “passive”

(merely providing information). ii.

Zippo Manufacturing Co. v. Dippo Dot Com, Inc. 

Judge Wood – Spring 09 iii.

Active websites (sites that business use to carry out transactions with residents of a forum state) almost always provide for an exercise of personal jurisdiction. ii.

PROPERTY IN FORUM STATE:

1.

JUST BECAUSE PROPERTY MAY BE IN STATE DOES NOT AUTOMATICALLY

CONFER JURISDICTION!

1.

Shaffer v. Heitner  Presence of property in a State may bear on the existence of jurisdiction by providing contacts among the forum State, defendant and litigation, BUT: i.

MUST SATISFY MINIMUM CONTACTS TEST UNDER

INTERNATIONAL SHOE!!

3) OR (Instead of 1 + 2)

4) CONSENT: a.

EXPRESS CONSENT: i.

Can be made either before or after suit is filed, and suffices to support jurisdiction without reference to other contacts with the forum. b.

IMPLIED CONSENT: i.

By filing suit, the P is deemed to have consented to the jurisdiction of the forum for the purpose of a counterclaim by the defendant.

1.

EXCEPTION  This does not extent to counterclaim unrelated to the subject matter of P’s claims against D. c.

THROUGH CONTRACT: i.

M/S Bremen v. Zapata Off-Shore  Upholds forum selection clause for adjudication in London because “we cannot have trade and commerce in world markets and international waters exclusively on our terms, governed by our laws, and resolved in our courts.” ii.

Carnival Cruise Lines, Inc. v. Shute  Forum-selection clause expanded for policy reasons.

1.

Cruise line has special interest in limiting the for a in which it potentially could be subject to suit (many passengers from different countries, many different potential jurisdictional suits).

2.

Ex ante forum decision has salutary effect of dispelling confusion about where shuits must be brought and defended.

3.

Passengers enjoy the economic benefits that stem from such a clause

(lower ticket prices because of less litigation costs). d.

APPEARANCE IN THE ACTION: i.

A party’s voluntary appearance (when D appears to defend his litigation on the merits) in an action is sufficient by itself to support jurisdiction. ii.

STATE COURTS:

1.

LIMITATION  A defendant who wishes to preserve objections to person jurisdiction must often make a special appearance raising only jurisdictional issues.

1.

Raising any other matters subjects the defendant to the risk of having made a general appearance and thereby consenting to jurisdiction. iii.

FEDERAL COURTS:

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1.

A defendant need not make a special appearance; all grounds of defense, including lack of personal jurisdiction, can be asserted in a motion or answer.

1.

WAIVER  FRCP 12(h)(1) – If D fails to raise personal jurisdiction in her initial motion, that objection is waived.

2.

CONSENT TO JURISDICTION TO DECIDE JURISDICTION  By moving to dismiss for lack of personal jurisdiction, D consents to the power of the court to decide that question, including the power to order discovery pertinent to the jurisdictional question.

5) OR

6) SIMPLY BEING IN THE STATE. a.

Under Pennoyer, service of process within the jurisdiction was presumptively sufficient to support jurisdiction! b.

Burnham v. Superior Court  Supreme Court upheld in a plurality decision the constitutionality of “transient jurisdiction,” obtained by service on a nonresident temporarily within the state, even though the suit was unrelated to D’s activities in the state. i.

CAUTION – This ground for jurisdiction may not suffice, according to some

Justices’ opinions, if D’s presence in the state was not INTENTIONAL or

VOLUNTARY.

7) JURISDICTIONAL REACH OF FEDERAL COURTS: a.

FRCP 4(k)(1)(A): i.

Federal court may “piggy-back” on the long-arm statute of the state in which it sits. ii.

Minimum contacts necessary! b.

FRCP 4(k)(1)(B): i.

Allows parties joined under Rules 14 and 19 to service process “100 miles from where the summons was issued.” c.

FRCP 4(k)(1)(C): i.

Establishes personal jurisdiction authorized by a federal statute. d.

FRCP 4(k)(2): i.

Limited federal long-arm provision that establishes personal jurisdiction “for a claim that arises under federal law” if the D is not subject to jurisdiction in any one of the fifty states and jurisdiction is “consistent with the US Constitution and laws.” ii.

If defendant does not want this, burden is on him to show another state where the claim could proceed.

8) CHALLENGING A COURT’S EXERCISE OF JURISDICTION: a.

RAISING JURISDICTIONAL ISSUE DIRECTLY: i.

At common law, can make special appearance!

1.

This has mostly been discarded, but making a special appearance gives you immunity from being served with any other process while you’re in the jurisdiction. ii.

WAIVER  Remember, according to Rule 12, you MUST raise this issue in your first written motion. b.

COLLATERAL ATTACKS ON PERSONAL JURISDICTION:

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Judge Wood – Spring 09 i.

If you make a special appearance but your jurisdictional challenge is denied, then you lose all rights to bring attack against jurisdiction, even if you don’t plead anything else and thereby lose by default judgment (Baldwin v. Iowa State

Traveling Men’s Association) ii.

REMEMBER  if you don’t appear AT ALL, then you can still challenge jurisdiction! c.

LIMITED APPEARANCE APPROACH: i.

Allows a D in an action commenced on a quasi-in-rem basis to appear for the limited purpose of defending his interest in the attached property without submitting to full in personam jurisdiction.

PART TWO: FEDERAL SUBJECT MATTER JURISDICTION

1) DIVERSITY JURISDICTION – 28 USC §1332: a.

Constitutional Basis: i.

Article III, Section 2 of the Constitution provides that the judicial power ot the

US may extend to controversies between 2 or more states, between a state and a citizen of another state, between citizens of different states, or between a state and foreign states, citizens or subjects. b.

ELEMENTS: YOU NEED BOTH DIVERSITY OF CITIZEN AND A MINIMUM AMOUNT IN

CONTROVERSY c.

DIVERSITY OF CITIZENSHIP: i.

Complete Diversity Requirement:

1.

In 1806, SC interpreted diversity statute to require that there be no defendant having the same citizenship as any plaintiff. (Strawbridge v.

Curtiss).

2.

Statutory Exceptions to Complete Diversity: a.

Interpleader  The federal interpleader act permits a federal court to exercise jurisdiction in interpleader actions whenever any two or more adverse parties are of diverse citizenship. b.

Class Action Fairness Act (28 USC §1332(d)(2))  Provides federal district courts with original jurisdiction over certain class actions in which there is minimal diversity between the class members and the named defendants. c.

Multiparty, Multiforum Jurisdiction – 28 USC §1369  This act confers jurisdiction on the federal district courts for actions arising from accidents that involve the deaths of at least 75 people so long as there is minimal diversity between adverse parties. ii.

Alienage Diversity Jurisdiction:

1.

1332(a)(2) confers federal subject matter jurisdiction over cases involving a citizen of the US and a citizen of a freign country, and (a)(3) confers federal SM jurisdiction over cases involving completely diverse citizens of American states in which aliens are additional parties. iii.

How is citizenship determined?

1.

Burden of pleading diverse citizenship is upon the party invoking federal jurisdiction.

2.

NATURAL PERSONS:

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Judge Wood – Spring 09 a.

For US Nationals, “citizenship” has the same meaning as

DOMICILE (and not mere residence): i.

Mas v. Perry  “For diversity purposes, citizenship means domicile; mere residence in the State is not sufficient.” ii.

DOMICLE =” true, fixed and permanent home and principal establishment, and to which he has the intention of returning whenever he is absent therefrom.” b.

ELEMENTS OF ESTABLISHING DOMICILE: i.

Physical presence in the state. ii.

AND iii.

Intention to remain there. iv.

Until you positively establish a new domicile, you remain a domiciliary of your previous domicile.

3.

ALIENS: a.

Alein admitted to the US for permanent residence shall be deemed a citizen of the State in which such alien is domiciled. b.

HOWEVER – There may not be minimal diversity between two aliens. i.

Saadeh v. Farouki  Held that 1332(a) should not be interpreted to authorize a suit between aliens even if one were domiciled in an American state.

4.

CORPORATIONS: a.

ELEMENTS: A corporation is deemed to be a citizen of EVERY state in which it is incorporated and of the state in which it has its principal place of business. i.

“Principal Place of Business”

1.

Where executive office and its other activities are in the same stat,e the concept causes no trouble.

2.

TESTS: a.

Nerve-center Test:  Some courts consider the executive offices as the

NERVE CENTER of the corporation and thus principal place of business. b.

Operating Assets Test  Other courts hold that the MAIN PHYSICAL PLANT is the principal place of business. c.

Total Activity Test  Hybrid of both, testing them both to consider the circumstances to discover its principal place of business. iv.

Time For Determination

1.

GENERAL RULE: Diversity need only exist at the commencement of the action.

2.

Change before filing  IT is immaterial that the parties had the same citizenship when the claim arose, and a party may even more to another

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Judge Wood – Spring 09 state to create diversity as long as there is a genuine change of citizenship.

3.

Change after filing  A change in either party’s citizenship after filing does not deprive court of jurisdiction.

4.

PARTIAL EXCEPTION – removal a.

When an action is removed to federal court from state court on grounds of diversity, diversity must exist at the time of filing of the suit AND on the date of filing of the notice of removal. v.

Parties’ Efforts to Create or Defeat Diversity:

1.

CREATE: a.

GENERAL RULE = 28 USC 1359 provides that there shall be no jurisdiction when a paerson has collusively or improperly been made a party or joined in order to invoke federal jurisdiction. b.

A GENUINE change of citizenship can create diversity!

2.

DEFEAT: a.

Joinder of Nondiverse Defendants: i.

A P can bring a single action against a number of defendants, as long as the claims against the defendans arise out of the same series of occurrences or transactions and there is a question of law or fact common to parties. ii.

Often, P may add claims against nondiverse defendants and thereby defeat diversity. iii.

LIMITATIONS:

1.

Valid Claims/Parties in Interest  P must have valid claim against nondiverse D or presence of

D will be disregarded in making diversity determination. a.

Rose v. Giamatti  Because real parties in interest were diverse, addition of non-diverse additional defendants did not defeat diversity. d.

MINIMUM AMOUNT IN CONTROVERSY: i.

GENERAL RULE: Limits federal diversity jurisdiction to cases involving MORE

THAN $75’0000!

1.

Not greater than or equal too! Must be at least $75,000.01. ii.

Time for Computing:

1.

Date of commencement of the action. iii.

Legal Certainty Test:

1.

RULE ARTICULATED: “The rule is that the sum claimed by the P controls if the claim is apparently made in good faith. It must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify dismissal.” (St. Paul Mercury Indemnity Co. v. Red. Cab Co.) a.

If there is SOME legal possibility that the damages could be more than minimum jurisdictional amount, then it is OK!

2.

No need for plaintiff to itemize how she arrived at the amount of damages claimed in complaint.

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REMEMBER – early in most cases, Federal Rules require that certain disclosures be made, including a computation of damages.

3.

LIMITATION – Good Faith: a.

This only goes for damages claims made in good faith; where there need be only some legal possibility of recovering that minimum amount. b.

AFA Tours, Inc. v. Whitchurch  “The court must afford the plaintiff the ‘appropriate and reasonable opportunity to show good faith in believing that a recovery in excess of the jurisdictional amount is reasonably possible.” iv.

Aggregation of Claims to Satisfy Requirement:

1.

Single Plaintiff/Single Defendant: a.

All claims of the P against the D, whether or not related, can be aggregated.

2.

Single Plaintiff/Several Defendants: a.

Only claims for which all defendants are JOINTLY LIABLE to the P may be combined.

3.

Several Plaintiffs/One Defendant: a.

Aggregated only if they have a common undivided ownership interest in the claims.

2) FEDERAL QUESTION JURISDICTION: a.

Constitutional Grant: i.

Constitutional Provisions  Article II, Section 2 provides that federal judicial power shall extend to:

1.

Cases in law and equity arising under the Constitution, the laws of the

US, and treaties;

2.

Cases affecting ambassadors, consuls, etc.

3.

Cases involving admiralty and maritime jurisdiction

4.

Cases to which the US is a party. ii.

Broad View of Federal Question Power:

1.

Osborn v. Bank of the United States



Supreme Court upheld statute that it read to grant federal courts jurisdiction over any case to which the Bank of the United States was a party. a.

WHY? Even if the suit were about a state law debt, the bank was a FEDERAL CREATION, and in every case there would be a question about whether it could legally sue – a federal question. i.

Federal court had jurisdiction merely because a federal issue was an “ingredient” in the case! b.

CRITICISM –Some have criticized this broad view as including too many cases in which the background federal question would not really be a viable issue in the case AT ALL. iii.

Claim based on Federal Substantive Law:

1.

Congress may be able to assign to the federal courts jurisdiction over claims it creates only by promulgating or providing for a body of federal substantive law to govern the claims or delegating authority to create such substantive law to the courts.

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Judge Wood – Spring 09 b.

THE ABOVE CONSTITUTIONAL GRANT WAS NARROWED SIGNIFICANTLY THROUGH 28

USC §1331, because the Constitution does not confer subject matter jurisdiction on the LOWER FEDERAL COURTS, that was done via this statute! c.

Federal Question Statute – 28 USC §1331 ( i.

Statute – “ The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United

States.” ii.

QUESTIONS YOU MUST ASK:

1.

Is this case one which constitutionally may be granted to the federal courts because the power for them to hear it is granted in Article III, s. 2 of the Constitution?

2.

IF SO, has Congress actually conveyed jurisdiction over this type of case in a federal statute? iii.

Standards for Determining Whether a Federal Questions is Raised:

1.

Federal Law Creates Claim: a.

Justice Holmes – “A suit arises under the law that creates the cause of action.” b.

If federal law creates the claim sued upon, there is generally no problem in finding that the federal courts have subject matter jurisdiction. c.

Test Underinclusive: i.

The Court has since recognized that this description is

“more useful for describing the vast majority of cases that come within the district courts’ original jurisdiction” than for distinguishing among cases in which jurisdiction is doubtful. d.

Implied Claims  Federal claims include claims implied by the courts in addition to private rights of action explicitly created by

Congress.

2.

Nonfederal Claim That Turns On Construction of Federal Law: a.

If the claim being sued upon is not one created by federal law but resolution of the suit turns on construction of federal law, application of the federal question statute is more difficult. b.

The Supreme Court has confirmed that federal question jurisdiction can be proper “where the vindication of a right under state law necessarily turned on some construction of federal law.” – Merrell Dow Pharmaceuticals, Inc. v. Thompson. c.

HOWEVER, if it looks like Congress would not want this to be a

Federally adjudicable issue, then no go! d.

ELEMENTS: e.

Substantial bearing on Outcome i.

Where federal law is an element of a state law claim, it suffices to support federal question jurisdiction only where it is important to the outcome of the case. ii.

Gully v. First National Bank  “The right or immunity must be such that it will be supported if the

Constitution or laws of the US are given one

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Judge Wood – Spring 09 construction or effect, and defeated if they receive another.” f.

Nature of the Federal Interest: i.

In Merrell Dow, the Court suggested that it would be helpful to focus on the nature of the federal issues at stake and that this approach could reconcile the inconsistent results in earlier cases.

1.

Smith  Jurisdiction was proper because the validity of an act of Congress was directly drawn into question, and there was substantial federal interest in the question.

2.

Moore



Federal issue related to the employer’s compliance at one place and time with one federal safety standard, and there was little federal interest in such an isolated incident. ii.

Grable & Sons  A federal right of action is not necessary for federal question jurisdiction over a state law claim under Merrell Dow. The federal interest may have the nature and importance required by that decision in other ways. g.

BUT - Absence of Implied Federal Claim? i.

Merrell Dow  Court held there was no federal question jurisdiction over a state court claim, even though the claim relied on D’s violation of federal act, because the Court found that it would “flout” the will of congress to allow federal jurisdiction over a state law claim.

1.

HOWEVER – Grable & Sons Metal Products Inc. v. Darue Engineering & Manufacturing Co. 

Cautions that Merrell Dow should be read as treating the absence of a federal private right of action as evidence relevant to, but not dispositive of, the determination whether there is federal question jurisdiction. iv.

Well-Pleaded Complaint Rule:

1.

RULE: A federal court will not have federal question subject matter jurisdiction unless the federal question appears in the plaintiff’s “wellpleaded complaint.”

2.

ELEMENTS: a.

The federal issue must be an b.

Element of the state-law claim c.

That is required to be included in the complaint to state a claim.

3.

Anticipation of defense insufficient basis for federal question jurisdiction: a.

Under well-pleaded complaint rule, allegations going to an anticipated defense are NOT REQUIRED to be in a complaint.

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Louisville & Nashville RR v. Mottley  Mottley’s complaint raised the federal issue as a response to a possible defense on the RR’s part (that they were only following federal statute), while their action was solely state CL breach of contract claims…therefore, no federal subject matter jurisdiction.

4.

Federal Counterclaim insufficient  Like a federal defense to a state law claim, a counterclaim based on federal law, even if compulsory, does NOT create a federal question jurisdiction under §1331.

5.

Removed Cases  A case cannot be removed on the basis of federal question jurisdiction unless the federal question appears on the face of the PLAINTIFF’s well-pleaded complaint. a.

That a D has raised a federal defense is irrelevant. b.

To prevent a D from removing a case, a P might “Artfully plead” her case to avoid a federal question. v.

Plausible assertion of federal right sufficient:

1.

A federal claim or question is sufficient to vest the court with jurisdiction unless it “clearly appears to be immaterial or made solely for the purpose of obtaining jurisdiction, or where the claim is wholly insubstantial and frivolous.”

2.

P need not show that he will prevail on the merits of the claim; it need only be arguable.

3) SUPPLEMENTAL JURISDICTION: a.

GOAL: Promote judicial economy and consistency of decision by removing obstacles to having all related controversies decided in one proceeding. i.

United Mine Workers v. Gibbs



“Under the FRCP, the impulse is toward entering the broadest possible scope of action consistent with fairness to the parties.” b.

TYPES: i.

Pendant  Plaintiff has both federal and non-federal claims in the same complaint. ii.

Ancillary  Assertion of a claim by a party other than the plaintiff that was related to the claim made by the plaintiff. c.

Supplemental Jurisdiction Statute – 28 U.S.C. §1367 i.

Grants federal courts that have original jurisdiction over a claim supplemental jurisdiction over all other claims that form part of the same case or controversy under Article II. ii.

QUESTION IS: Do the claims sought to be added to those within federal jurisdiction make up one constitutional case? iii.

THREE PART TEST (FROM GIBBS):

1.

Substantial Federal Claim: a.

The federal claim must be sufficiently substantital to support federal question jurisdiction.

2.

Common Nucleus of Operative Fact: a.

The federal and nonfederal claim must derive from a common nucleus of operative fact.

3.

One Judicial Proceeding:

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The federal and nonfederal claims must be such that the P

“would ordinarily be expected to try them in one judicial proceeding.”

4.

(This test may apply to determine the outer constitutional limits of diversity jurisdiction) iv.

Pendent Party Jurisdiction  1367(a) explicitly grants supplemental jurisdiction over claims that involve the joinder or intervention of additional parties. v.

TIME OF DECISION  At the pleadings! vi.

Mandatory Exercise  It has been held that federal courts should exercise supplementary jurisdiction unless a ground for declining jurisdiction exists under

1367(c). d.

Exception for Diversity Cases: i.

When federal subject matter jurisdiction is founded solely on diversity of citizenship, supplemental jurisdiction is limited. ii.

Claims by Plaintiffs:

1.

In diversity-only cases, there is no supplemental jurisdiction over claims by plaintiffs against persons made parties under: a.

Rule 14 (interpleader), b.

Rule 19 (necessary party joinder), c.

Rule 20 (Permissive party joinder), or d.

Rule 24 (intervention). iii.

Claims by Parties Joined as Plaintiffs Under Rule 19 or 24:

1.

There is no supplemental jurisdiction over claims by persons proposed to be joined pursuant to Rule 19 or 24. iv.

Rule 20 Joinder of Plaintiffs:

1.

Exxon Mobil Corp. v. Allapattah Services Inc.



SC upholds supplemental jurisdiction in suit by injured trial who claimed more thatn

$75,000, over related claims of family members who were diverse from

D but did not meet amount requirement. a.

RULE: Claims by completely diverse plaintiffs in a diversity case when one plaintiff has a claim satisfying the amount requirement, but others with related claims do not, come within supplemental jurisdiction. b.

Incomplete diversity would still destroy jurisdiction as to all claims.

2.

DISTINGUISH – Rule 20 Joinder of Defendants: a.

1367(b) explicitly excludes supplemental jurisdiction over claims against Ds joined under Rule 20. b.

Ps can solve this problem and may seek to consolidate these separate suits for combined treatment in FRCP 42(a). e.

Discretionary Decline of Jurisdiction: i.

Grounds to Decline: Executive Software North America v. District Court – A federal court may decline to exercise supplemental jurisdiction ONLY on the basis of one of the four following grounds:

1.

Novel Or Complex Issue of State Law a.

If the law to be applied to the nonfederal claim is uncertain, the district court may decline to entertain that claim so that the

Page 14 of 43

Judge Wood – Spring 09 parties can get a “surer-footed reading of applicable law” from state court.

2.

Nonfederal Claim Substantially Predominates a.

If the DC concludes that the nonfederal claim is the real body of the case. b.

The court should not “tolerate a litigant’s effort to impose upon it what is in effect only a state law case.” Gibbs.

3.

All Original Jurisdiction Claims Dismissed a.

If all claims over which the federal court had original jurisdiction are dismissed, the court may dismiss the nonfederal claims. b.

In deciding whether to do so, court should consider amount of time invested in the case by the court.

4.

Extraordinary Circumstances: a.

Situations in which the DC finds that exceptional circumstances exist in the case and that these provide compelling reasons for decline of jurisdiction.

4) REMOVAL: a.

WHAT? Allows D to shift a case from state court to federal court when P has chosen to sue in state court. b.

RATIONALE: i.

Serves as a necessary device to ensure that Ps alone do not decide which cases federal courts should hear. ii.

Critique – Allows a D the right to elect a forum of its own choosing. c.

GROUNDS FOR REMOVAL: i.

In General  When plaintiff files an action in state court but could originally have filed in federal court. ii.

COUNTERCLAIM BY DEFENDANT, CAN P REMOVE?

1.

NO.

2.

Shamrock Oil & Gas Corp. v. Sheets: a.

RULE: The plaintiff, having originally submitted himself to the jurisdiction of state court jurisdiction was not entitled to avail himself of a right of removal conferred only on a defendant who has not submitted himself for jurisdiction. iii.

FEDERAL QUESTION:

1.

The well-pleaded complaint rule works here, so D can not base removal on a federal defense that he has raised.

2.

No basis when D has interposed a counterclaim asserting a federal claim.

3.

If P chooses not to assert a possible federal claim  no removal. a.

If P originally files in state court and amends with federal claim, then D can remove. i.

If P does not amend, res judicata may bar assertion of that federal claim later. b.

EXCEPTION – If federal law completely preempts state law on the matter and converts P’s claim to federal law, that satisfies well-pleaded complaint rule and makes case removable.

4.

Effect of supplemental jurisdiction  allows for a case to be removed even if it includes D against whom only state law claims are asserted so

Page 15 of 43

Judge Wood – Spring 09 long as the claims against those Ds forms part of the same constitutional “case.” iv.

DIVERSITY OF CITIZENSHIP – 28 USC §1441(b):

1.

GENERAL: If P could have filed in federal court using diversity of citizenship, D may remove the case to federal court. a.

COMPLETE DIVERSITY REQUIREMENT!

2.

IMPORTANT - NOT ALLOWED if any D is a citizen of the state in which the action is brought. a.

RATIONALE: Since diversity is designed to protect defendants against local prejudice, there is no need to invoke it on behalf of a local party. b.

EXCEPTION – Class Action Fairness act- §1453(b)  in class actions, D who is a citizen of a state in which action is filed may remove it.

3.

Fraudulent Joinder: If p joins a D from the state in order to defeat diversity removal and there is really no basis for the claim against that nondiverse party, then that presence will not defeat removal.

4.

Jurisdictional amount requirement remains! v.

SEPARATE AND INDEPENDENT FEDERAL CLAIM - §1441(C)

1.

A D sued on a “separate and independent claim or cause of action” within federal question jurisdiction may remove, even if P has joined nonremovable claims. a.

EXAMPLE: D sued for breach of contract and an unrelated violation of federal antidiscrimination laws can remove the case to federal court. b.

RATIONALE: Such removal protects D’s right of removal of a federal claim so that plaintiff cannot prevent removal by joining a wholly unrelated claim.

2.

ENTIRE ACTION REMOVED: a.

Where separate and independent claim requirement is satisfied, the federal corut may : i.

Retain jurisdiction over otherwise nonremovable claims ii.

Or iii.

Remand them to state court.

3.

LIMITATION: a.

Prior to 1990, section 1441(c) allowed removal of separate and independent claims in diversity cases as well as in federal question cases. b.

In 1990, Congress amended this statute to limit removal of cases with separate and independent claims to those involving federal question.

1.

Borough of West Mifflin v. Lancaster 

Discretion to remand under §1441(c) applies only to claims based on state law.

2.

When the same event is relied on for all counts of the complaint, the federal claim is not

“separate and independent” under 1441(c) and

Page 16 of 43

Judge Wood – Spring 09 the district court has no authority to remand the case under that section. d.

REMOVAL PROCEDURE: i.

Only Defendant can remove. ii.

All defendants must join  All who have been served with process must joni in the notice of removal.

1.

EXCEPTION – When ground for removal is a separate and independent claim, only the defendant against whom this claim is asserted need seek the removal. iii.

TIMING:

1.

Must be filed within 30 days after the time the case becomes removable

(begins running from the time process is served on D). a.

LIMITED EXCEPTION – Some cases have found that the time for removal does not start running until D learns more about the claim so as to be able to determine that it is removable. e.

ERRONEOUS REMOVAL? i.

USC 1447  IF a case is removed erroneously, a federal court must remand it to the state court.

5) CHALLENGES: a.

A lack of subject-matter jurisdiction may be asserted at any time by any interested party, either in the answer or in the form of a suggestion to the court prior to final judgment, or on appeal. b.

May also be raised by the court sua sponte. c.

What if D did not bring up SM jurisdiction? Can he use it as a defense in subsequent proceeding by P to enforce the earlier court’s decree? i.

Such attack allowed in Kalb v. Feuerstein.

VENUE:

1) WHAT? A statutory limitation on where a suit may be brought. It may prevent a P from brinigng suit in a particular court even though the court has jurisdiction. Venue rules as designed to prevent P from suing where it would be burdensome for the D to appear and defend.

2) FEDERAL VENUE LIMITATIONS  WHERE VENUE IS PROPER! a.

Defendant’s Residence: Proper in judicial district where any D resides. i.

Residence of natural person  Analogous to citizenship, so it refers to where D has his natural domicile. ii.

Corporation?  Resident of ANY judicial district in which it is subject to personal jurisdiction.

1.

Incorporation state.

2.

Main place of business (remember, nerve center or center of production rule). b.

Location of Substantial Part of Events or Omissions or of Property – 1391(a)(2) and

(b)(2): i.

Where a substantial portion of the event sgiving rise to the claim occurred, or substantial part of the property that is subject of the action is situated. ii.

“Giving Rise”  Not clear whether Congress intended that the pertinent events be only those on which liability is predicated under the relevant substantive law

(for example, where a product was SOLD in a products liability suit).

Page 17 of 43


“Substantial Part”  Not clear how many events (or omissions) suffice as a

“substantial part.” iv.

“Property present”

1.

Property must be the subject of the action for the venue provision to apply.

2.

DISTINGUISH – Local actions. a.

In some actions, the local action rule may apply instead of the provisions of section 1391. c.

Where defendant is doing business. d.

Where defendant has an office or place of business, or an agent, or representative, or where an agent or officer of D resides. e.

Where P resides. f.

Where P is doing business. g.

Where D may be found. i.

This is probably a historical hangover, from old laws. ii.

Only for Federal Question, not allowed when subject matter jurisdiction is based solely on diversity of citizenship. h.

Where D may be summoned or served. i.

Removed Cases: i.

Assigned to the federal district encompassing the state court in which the action was pending, regardless of the residence of the parties. j.

Local Actions: i.

RULE: Cases involving title to property where venue is regarded as proper

ONLY in the district where the property is located. ii.

This is an unwritten limitation on the federal venue statutes, treating them as applicable to “transitory” actions only. iii.

MAJORITY RULE FORMULATED IN Livingston v. Jefferson – Plaintiff charged former president Jefferson with trespass to plaintiff’s land in Lousiana. The court refused to proceed with the case because it was a “local action” that could be brought only in Louisiana (where personal jurisdiction could not be obtained over Jefferson). iv.

Reasons for justifying this rule rule (alone with a case’s reasons for rejecting it):

1.

Courts are not in a position to pass upon the title to land outside their jurisdiction. a.

Reasor-Hill Corp v. Harrison Rejection of Rule  IF State can determine law of other state well enough to apply it to transitory actions, they can apply it as well to local actions.

2.

Since tort must take place where land is situated, P must pursue his remedy before D leaves jurisdiction! a.

Reasor-Hill Corp v. Harrison Rejection of Rule  Merit for nations since a nation can stop a party from leaving the country, but State’s cannot restrict the travel of parties between them.

3.

State is reluctant to subject their own citizens to suits by residents of other states. a.

Reasor-Hill Corp v. Harrison Rejection of Rule  Why should we let the state court protect one of their citizens who had destroyed property in another state and then sought refuge in ours?

Page 18 of 43


3) FEDERAL TRANSFER PROVISIONS: a.

Venue or jurisdiction Improper in Original Court - §1406(a) i.

RULE: Where venue or jurisdiction is improper in the court selected by the plaintiff and the D properly objects, the court may transfer the case to a proper court rather than dismiss it.

1.

HOWEVER – A court may dismiss instead of transferring.

2.

Lower courts have upheld transfer from a district where venue is proper but there is no personal jurisdiction. b.

Transfer for Convenience - §1404(a) i.

GENERAL RULE: Where venue and jurisdiction are proper in the court selected by the plaintiffs, the court can transfer the action “for the convenience of the parties and witnesses, in the interests of justice.” ii.

LIMITATION – Hoffman v. Blaski  Statute authorizes transfer only to a district in which the action “might have been brought.”

1.

Transferee district must : a.

Be proper venue. b.

Have valid personal jurisdiction. c.

(moving party’s willingness to waive objections to venue or

personal jurisdiction does not satisfy this requirement). iii.

PROCEDURE:

1.

Either P or D can move to transfer.

2.

P’s initial choice of forum should be respected, and transfer is proper only when the balance of conveniences strongly favors transfer. a.

Factor in: b.

Identity and location of witnesses. c.

Access to items of real evidence. d.

Any other factor that would make trial in transferee forum more convenient. e.

Stewart Organization v. Ricoh Corp.  Supreme Court has found a forum selection clause should be a “significant factor” in determining whether to transfer the case to the forum designated. c.

Multidistrict Litigation - §1407 i.

RULE: When cases pending in different districts raise a common question of law or fact, they can be transferred to one district.

FORUM NON CONVENIENS:

1) Background: Even when jurisdiction and venue are proper, courts may decline to exercise jurisdiction on the ground that the location the plaintiff selected for the case is GROSSLY

INCONVENIENT.

2) PRESENT USE: a.

Federal Courts – When the invoncenience problem can be solved by transfer to another federal district, the court may not dismiss; but if the proper forum is in another country, the federal court can dismiss. Piper Aircraft Co. v. Reyno. i.

RATIONALE:

1.

Court should not participate in lengthy and complex exercises in comparative law!

Page 19 of 43


2.

Also, flood of litigation from foreign plaintiffs who think American courts are very attractive! a.

CAVEAT: This factor is not ALWAYS bad, so if the alternative forum is SO MUCH WORSE, it may be weighted by the courts!

 Here, Scotland is not that much worse!

3.

Courts are not required to make their jurisdiction available to parties who engage in unfair forum shopping and thereby impose substantial inconvenience on other parties and expense and burden on the courts of the forum selected by P. b.

PROCEDURE: i.

D MUST make a motion to dismiss on grounds of inconvenience. ii.

SHOWING REQUIRED  D must show that P has selected a grossly inconvenient location for the suit. iii.

FACTORS  Court is to consider a number of private and public factors in amaking a decision whether to dismiss on forum non conveniencs grounds:

1.

PRIVATE FACTORS: a.

Relative ease of access to sources of proof (significantly easier in another forum?) b.

Availability of compulsory process (will there be compulsory process to compel unwilling witnesses to attend trial in the other forum?) c.

Cost of obtaining attendance of willing witnesses. d.

Need to view premises (will having the jury view the premises involved in the litigation be important at trial?

2.

PUBLIC FACTORS: a.

Local interest in having localized controversies decided at home. b.

Interest in having trial in forum familiar with the law to be applied. c.

Avoiding unnecessary problems with conflict of laws. d.

Unfairness of burening citizens of an unrelated forum with jury duty. iv.

Usually, substantial weight is given to P’s choice to sue in a forum where venue and jurisdiction requirements are satisfied.

1.

Piper Aircraft  When P is foreign, however, that deference is not warranted. v.

The fact that law in the more convenient forum is less favorable to plaintiffs usually has no significant weight (Piper Aircraft). vi.

ADEQUATE ALTERNATIVE FORUM AVAILABLE  the court CANNOT dismiss

unless an adequate alternative forum is available.

1.

Must offer adequate remedy (no possibility of foreign relief may let

American court conclude that forum is inadwquate).

2.

HOWEVER – lesser or different remedy is not a bar to dismissal.

3.

Court can stipulate D to submit to foreign jurisdiction. vii.

CONDITIONS ON DISMISSAL:

1.

Court can condition dismissal to protect against unfairness.

2.

EXAMPLE  stipulation by D that the statute of limitations will be deemed tolled as of the time suit was filed in the inconvenient foru so P

Page 20 of 43


Page 21 of 43 does not risk limitations defense based on delay of filing in the new forum. c.

Remember, forum-selection clauses may be honored by the courts!


JOINDER OF CLAIMS AND PARTIES:

1) PERMISSIVE JOINDER OF CLAIMS: a.

RULE: FRCP 18(a) abolishes all restrictions on the joinder of claims and provides that a party asserting a claim for relief may join as many claims as she has against an opposing party. (MK v. Tenet) i.

LIMITATION – There must be subject matter jurisdiction. ii.

LIMITATION – Multi-party cases  The rules on joinder of parties impose limitations where there are several co-Ps or co-Ds.

1.

When there are multiple parties, AT LEAST ONE of the claims by or against each party must arise out of the “same transaction, occurrence or series of transactions and aoccurrences and must involved “a common question of law or fact” affecting each of the parties joined

(FRCP 20(a))

2.

Thus limits the joinder of claims in multi-party cases to those among which there is a subject matter relationship. iii.

Separate Trials:

1.

FRCP 20(b) and 42(b)  Trial court may remedy any possible inconvenience or prejudice caused by the joinder of claims by ordering separate trials.

2) COUNTERCLAIMS: a.

Permissive Counterclaims: i.

If D’s claims against P are UNRELATED to the claims set forth in the complaint, it is optional for the D to assert them by way of counterclaims. ii.

Alternatively, D could assert the claims in an independent action. iii.

There must be independent subject matter jurisdiction over the permissive counterclaim! b.

Compulsory Counterclaims: i.

If D’s claim against P arises out of the same transaction as claim set forth in complaint, then counterclaim is compulsory (13(a)). ii.

ELEMENTS:

1.

Counterclaim is “compulsory” if:

2.

It arises out of the transaction or occurrence that is the subject matter of P’s claims. a.

Scope of “transaction or occurrence” – 2 VIEWS! i.

Broad View –US v. Heyward-Robinson Co.:

1.

Jurisdiction in first Action: When question is whether the counterclaim is within the court’s supplemental jurisdiction, a broad definition of

“transaction “ is used – the object being to permit the counterclaim and thereby avoid multiplicity of suits. ii.

NAROWER VIEW: Scope of preclusion in later action:

1.

If the question is whether a D who failed to interpose a counterclaim is barred from later suing on it, a narrower definition may be used if it would be inequitable to bar the later suit.

3.

AND

Page 22 of 43


4.

It does not require the presence of third parties over whom the court has no jurisdiction. a.

Invokes requirements of Rule 19. iii.

Usually, falls under supplemental jurisdiction and court does not need independent subject matter jurisdiction over the counterclaim. iv.

Statute of Limitations Problem  Is a counterclaim barred by the statute of limitations if it is filed after the statute has run but the action was filed before the statute ran?

1.

MAJORITY VIEW  If counterclaim arises from “same transaction,” it will not be barred if the plaintiff’s complaint was filed before the running of the statute.

2.

MINORITY VIEW  Allows ANY counterclaim (same transaction or not) to be used defensively even though the statute has run.

3) CROSS-CLAIMS: a.

GENERAL: In federal court actions, the D may set forth in the answer any claims that she has against a co-defendant that relate to the “transaction or occurrence” or to any property that is the subject of plaintiff’s complaint. i.

13(g)  NEVER COMPULSORY! b.

JURISDICTION:  LASA per L’Industria del MArmo Societa v. Alexander



Since crossclaim MUST relate to the transaction in the existing action, the better view is that it is within the supplemental jurisdiction of the court, and no independent ground for federal jurisdiction is required. c.

PLEADING: i.

Form  Cross-claim should be set forth as part of the defendant’s answer rather than as an independent pleading. ii.

Responsive Pleading  The co-defendant whom the claim is asserted must file an ANSWER TO THE CROSS-CLAIM – FRCP 7(a)(4). d.

PARTIES: Must be against a co-defendant, however the cross-claimant may ADD NEW parties against whom it has claims growing out of the same transaction. FRCP 13(h). e.

CAN ALSO BE DONE IN A CASE WHERE THERE ARE SEVERAL PLAINTIFFS!

JOINDER OF PARTIES:

1) PERMISSIVE JOINDER: a.

EARLY APPROACH: Parties could only be joined if they each had “an interest” in both the subject of the action and the relief sought. Rules vocerning joinder of causes of action required that causes joined “Affect” all parties joined. These rules prevented joinder in many cases where need was obvious. i.

Ryder v. Jefferson Hotel Co.



Wife, injured by D’s negligence, sues for her injuries. Husband attempts to join his claim for loss of her services. Joinder was not proper under early approach because Husband had no “interest” in the relief sought by Wife and vice versa. b.

ELEMENTS – FRCP 20(a): i.

Parties may join or be joined in one action if: ii.

A right to relief is asserted by (or against) them jointly, severally, or in the alternative

1.

Separate or joint  Each P is not required to have an interest in every cause of action or in all the relief prayed for. If there are several

Page 23 of 43

Judge Wood – Spring 09 plaintiffs, they have the option to seek SEPARATE RELIEF OR JOINT

RELIEF. Likewise, if several defendants are joined, relief may be sought against each separately or against them jointly.

2.

“in the alternative” – P is “in doubt” a.

If a P is in doubt as to which of several Ds is liable for his injuries, it is proper for P to set forth a claim against each D in the alternative, so that their respective liabilities can be determined. iii.

AND iv.

The right to relief arises out of the same transaction or series of transactions.

1.

Construed broadly; some causal relationship or interrelation among the

D’s conduct, or I the interest being asserted by multiple Ps, is sufficient. v.

AND vi.

There is at least one question of law or fact common to all parties sought to be joined.

1.

It is sufficient if there is a single question of law or fact common to all parties joined. However, it is NOT necessary that the “common question” be in dispute.

2.

MK v. Tenet



Common legal right was being violated by the CIA’s actions, namely the right to privacy. vii.

There must be subject matter jurisdiction in regards to all parties. c.

ADDITIONAL CLAIMS: i.

So long as the requirements for joinder of parties are met, each of the parties may assert as many claims as she has against the opposing party. d.

20(b)  The power ot he court to order separate trials: i.

To curb expense or delay or to avoid prejudice that might result from the joinder of numerous parties asserting numerous separate claims against one another, the court may order separate trials for various claims joined, or otherwise regulate the proceedings to minimize the difficulties involved. e.

Attacking Improper Jinder  A misjoined claim may be DISMISSED ON A MOTION of the party against whom it is asserted.

2) COMPULSORY JOINDER: a.

RULE (FRCP 19): Joinder is required for any person who has a material interest in the case and whose absence would result in substantial prejudice to the absentee or to other parties before the court. b.

TRADITIONAL APPROACH – “necessary” v. “indispensable” parties: i.

Necessary Parties:

1.

Those who OUGHT to be joined if possible.

2.

However, if their interests were “severable” and if one or more were not joined (eg, could not be located), the court could still determine the rights and liabilities of the parties before the court. ii.

Indispensable Parties:

1.

Those whose interests were so unavoidably involved (ie, nonseverable) that the court could not proceed without them. Failure to join such parties meant that the action had to be dismissed. c.

MODERN APPROACH – practical considerations: i.

PERSONS TO BE JOINED IF FEASIBLE - ELEMENT:

Page 24 of 43


1.

19(a) provides that any person with an interest in the subject matter of a pending action shall be joined as a party if: a.

In his absence, complete relief cannot be accorded those already parties. b.

OR c.

His interest is such that to proceed without him would be substantially prejudicial as a practical matter because it would: i.

Impair his ability to protect his interest in later proceedings. ii.

OR iii.

Expose the parties already before the court to the risk of double liability or inconsistent obligations. ii.

EFFECT OF NONJOINDER – POSSIBLE DISMISSAL:

1.

If a person to be joined cannot be made a party, the court must determine whether “in equity and in good conscience” the action can proceed without him or whether it should be dismissed.

2.

PRACTIAL CONSIDERATIONS (Provident Tradesmens Bank & Trust Co. v.

Patterson): a.

Extent to which any judgment rendered in the action would be prejudicial to the interest of the absent party/parties before the court. b.

Extent to which prejudicie could be lessened or avoided by appropriate court actions. c.

Whether relief rendered without the absent party would be adequate. d.

Whether P has any other adequate remedy if action is dismissed for nonjoinder of absent party. e.

Interests of the court; efficiency. iii.

SITUATIONS WHERE THIS OFTEN ARISES:

1.

Parties to Contract: a.

Joint promisors under K should be joined as Ds wherever possible. b.

Court can still proceed if not though.

2.

Tortfeasors: a.

A joint tortfeasor is NOT CONSIDERED A NECESSARY PARTY!

3.

Joint obligees  where persons are jointly owed a duty under a K, the courts have usually held that they are not only necessary but also indispensable parties and have dismissed for nonjoinder.

4.

Partial assignees or subrogees  should be joined if possible.

5.

Co-owners of property  necessary parties in situations where the interests of all should be decided on a consistent basis. iv.

PROCEDURE FOR COMPELLING JOINDER:

1.

Must name all necessary parties who have not been joined in the complaint. a.

Failure to name all necessary parties may result in the D raising the matter in a motion to dismiss under Rule 12.

2.

Joinder of Necessary Parties Ordered if Feasible

Page 25 of 43


If P has failed to join necessary parties, the court will order that they be joined unless it is impossible to do so. b.

If too numerous, case might become a class action. c.

Venue considerations: i.

If addition of party would make venue improper, the added party must be dismissed if she objects to venue.

Then the court must decide whether to dismiss.

3.

Dismissal if joinder not feasible. a.

If it is not feasible to join necessary parties, then court must decide whether to dismiss or not.

3) IMPLEADER: a.

GENERALLY: Procedure that permits D to bring into the lawsuit a third person who is or may be liable for all or part of the P’s claim against D. FRCP 14. i.

TWO FEATURES GUARD AGAINST PREJUDICE: ii.

Third party may plead ANY defense that the D might have against the plaintiff’s claim and may participate fully in defending against the claim. iii.

The court may grant a separate trial on any separate issues of the third-party claim if needed to prevent undue confusion or prejudice. b.

LIMITED TO CLAIMS FOR INDEMNIFICATION: i.

Confined to situations where D has right to indemnity against (in whole or in part) the impleaded 3 rd party. ii.

HOW RIGHT DETERMINED? Based on individual state laws in regards to indemnity, generally.

1.

No right to indemnification under state law  not available. a.

Kohls



No indemnification allowed because the third-parties would not be allowed to be indemnified under NY State law.

2.

If State law allows for indemnity from a third party after D pays judgment  federal impleader may accelerate that state right into the current trial. a.

Jeub v. B/G Foods  This happens. Separate indemnity state action is joined into the current action.

3.

Contribution among tortfeasors  D in a personal injury action cANNOT implead other tortfeasors to seek contribution, because their liability arises only after the P obtains judgment against all of them. c.

POTENTIAL LIABILITY SUFFICIENT: i.

Rule 14 authorizes impleader of any person who is or MAY BE liable for any part of P’s claim. Thus, it is proper before any loss actually has been paid by D.

1.

Jeub v. B/G Foods  Allowed to adjudicate both indemnity along with the claims on the merits. d.

DISTINGUISH – alternative liability to P. i.

It is NOT sufficient for impleader that the 3 rd -party defendant may be liable to the plaintiff for the plaintiff’s injuries; only when the law gives the present D a right to relif in the form of indemnity from the 3’rd party D is impleader permitted. e.

PLEADINGS AND PROCEDURES: i.

Leave of court is not required for impleader if the D files a third-party complaint of impleader within 10 days after he serves his original answer. Thereafter,

Page 26 of 43

Judge Wood – Spring 09 leave of court is required, and grant of the motion is at the discretion of the court. (FRCP 14). ii.

ANSWER  Impleaded party must file an answer to the third-party complaing and the answer may raise whatever defenses could be asserted to the ORIGINAL cause of action. iii.

Counterclaim or cross-claim  Impleaded party may also file a counterclaim or cross-claim against existing parties. iv.

Trial court has discretion to order a separate trial of the impleaded claim to avoid undue trial confusion or prejudice (FRCP 42(b)). v.

Deemed ancillary to main claim and has no effect on jurisdictional and venue

4) INTERPLEADER: requirements. a.

GENERAL: Device that enables a party against whom conflicting claims with respect to the same debt or property are asserted to join all the adverse claimants in the same action and require them to litigate amongst themselves to determine which, if any,

has a valid claim to the debt or property involved. b.

TYPES OF FEDERAL INTERPLEADER ACTIONS: i.

Statutory Interpleader – 28 USC 1335:

1.

Contains special provisions as to jurisdiction, venue and service of process if:

2.

2 or more claimants of diverse citizenship are making adverse claims to the same debt, instrument, or property owed or held by the P.

3.

AND

4.

The debt instrument or property has a value of at least $500. ii.

RULE 22 INTERPLEADER:

1.

Permits interpleader in any action that meets the normal jurisdictional requirements in federal court  sufficient amount in controversy and proper diversity or federal question. c.

DIFFERENCES BETWEEN STATUTORY AND RULE 22 INTERPLEADER:

RULE 22 INTERPLEADER STATUTORY INTERPLEADER

DIVERSITY

REQUIREMENTS

JURISDICTIONAL

AMOUNT

Complete diversity between plaintiff-stakeholder and all adverse plaintiffs.

Minimal Diversity - Only two claimants need be of diverse citizenship.

At least $500.

PROCESS

More than $75,000

Process is limited to the terrotiorial boundaries of the state in which the district court sits. Process is nationwide.

VENUE

In the district where a D resides, if all reside in the same state OR where a substantial part of the acts or omissions underlying the claim occurred OR in which a substantial part of the property involved is located. Where any claimant resides.

Page 27 of 43


"Stake?"

No requirement that stake be posted in court.

P must deposit (or give security for) the entire amount in his possession that is claimed by the claimants, and may not hold back amounts that he claims.

Requires the THREAT of multiple lawsuits before interpleader moition is made. Multiple Suits?

5) INTERVENTION: a.

Procedure whereby a nonparty, upon timely application, may become a party in a lawsuit in order to protect her interests in that action. b.

Based on balancing two conflicting policies: i.

That P should be allowed to be “master of his action” in the sense of joining such parties with him or against him as he wishes. ii.

That other interested parties and the court have an interest in avoiding multiplicity of litigation or inconsistency of result, which may require overriding

P’s choice of parties. c.

TYPES OF INTERVENTION UNDER FRCP 24: i.

Intervention of Right - Federal Statute:

1.

Intervention is granted as a matter of right where a federal statute confers an unconditional right to intervene. ii.

Intervention of Right – To Protect Intervenor’s Interest:

1.

Granted when applicant claims an interest relating to the property or transaction that is the subject of the action and is so situatied that the disposition of the action may, as a practical matter, impair or impede the applicant’s ability to protet that interest.

2.

ELEMENTS:

3.

NATURE OF INTEREST? a.

Only a “significantly protectable” interest suffices to support intervention of right. b.

A direct, substantial and legally protectable interest is used to satisfy this standard.

4.

OUTCOME OF LITIGATION MAY IMPAIR INTERVENOR’S INTERESTS? a.

Intervenor MUST show that the resolution of the litigation would impair her interest. b.

This is not limited to legally binding effects, such as res judicata, but also to the practical impact of resolution of the litigation on the intervernor’s interest.

5.

INTERVENOR NOT ADEQUATELY REPRESENTED BY PRESENT PARTIES:

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If intervenor claims the right kind of interest and shows a threat of practical impairment, intervention could be denied on the ground that the intervenor’s interest is adequately represented by present parties. b.

Minimal Burden  SC has said that the burden of demonstrating inadequacy of representation is “minimal” c.

FACTORS: i.

Amount at stake for intervenor and present parties. ii.

Ability and resources of present parties to litigate effectively. iii.

Existence of any conflicts of interest between present party and intervenors. d.

Smuck case  Former superintendent and board member not allowed because their interests served by the board of education, while parents are allowed to sue. iii.

PERMISSIVE INTERVENTION:

1.

ELEMENTS: a.

Court has discretion to permit a nonparty to intervene if: b.

A federal statute confers a conditional right to intervene c.

OR d.

A question of law or fact in common with the main action is part of applicant’s claim or defense. i.

Need not be a particular claim regarding this question of law and fact.

2.

The trial court has VERY broad discretion under FRCP 24(b) in granting or denying permissive joinder; and a reversal on appeal is almost impossible to obtain. a.

COURT may limit the intervenor’s claims to those directly involvied in the pending action. d.

EFFECT OF INTERVENTION IN FEDERAL CASES: i.

Subject Matter Jurisdiction:

1.

If action in federal court solely on diversity grounds, there is no supplemental jurisdiction over claims by intervenors or claims by the Ps against persons who intervene. a.

THEREFORE, there must be an independent basis for federal court jurisdiction to permit assertion of the claim.

2.

If not based SOLELY on diversity, supplemental jurisdiction often allowed! ii.

VENUE:

1.

Intervenor cannot question propriety of venue in the original action since act of intervening is a submission to the court in question.

CHOICE OF LAW: STATE LAW IN THE FEDERAL COURTS:

1) Rules of Decision Act: a.

The starting point for the applicability of state law in the federal courts. b.

“The laws of the several states, except where the Constitution or treaties of the United

States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply.”

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2) FORMER RULE – Swift v. Tyson: a.

WHAT? i.

Former rule was that the reference to state “laws” in the Act did not include state common law of a general, as opposed to local nature. ii.

Thus, the federal courts could and did follow their own view of what the

“general” common law was or should be. iii.

Federal Courts’ decisions on this “general” common law, however, were not binding precedent on the courts of the states; consequently different rules of substantive law could apply to the same transaction, depending on whether litigation took place in state or federal court.

1.

NOTE – Federal courts were bound by applicable state statutes and

“local” common law )state common law regarding rights in real property within the state). b.

DIFFICULTIES OF THIS REGIME: i.

Changing Attitudes toward law:

1.

Many legal authorities moved away from the view that there was a

“True” common law that could be “found” by the courts. Instead, they moved to an idea that each state could have its own internally authoritative common law, and variations among states on the same point did not mean that some had to be “wrong.” ii.

Failure to Achieve Uniformity  failed to develop a uniform common law due to disagreement of many state courts with the “general” common law established by federal courts. iii.

Practical Difficulties and unfairness  Swift led to forum shopping. Litigants could manipulate federal jurisdiction to gain favorable substantive law.

3) OVERRULING OF SWIFT by ERIE! a.

IN GENERAL: In the absence of an Act of Congress providing governing law, a federal court should follow applicable state common law principles rather than developing and applying its own “general” common law. b.

RATIONALE: i.

Statutory interpretation  Rules of Decision Act was Not meant to exclude all state “general” common laws and instead included state common law, general and loca, along with “positive” law like state constitutions and stattues. ii.

Lack of uniformity and resulting discrimination  forum shopping concerns. iii.

Swift was unconstitutional  Not really explained why though. c.

SO FEDERAL COURTS SHOULD USE FEDERAL PROCEDURAL LAW AND STATE

SUBSTANTIVE LAW!

4) DEVELOPMENT OF ERIE DOCTRINE THROUGH ENSUING CASES: a.

How do we determine what is federal procedural law and what is state substantive law? b.

Guaranty Trust Co. v. York: i.

Specific Holding  State “statute of limitations” is a substantive law that should be adhered to by Federal courts. ii.

“Outcome determination” Test:

1.

Will application of federal law instead of the state law significantly affect the outcome of the litigation?

2.

PROBLEMS WITH TEST:

Page 30 of 43


Applied broadly, almost any procedural rule could wualify as substantive simply because it could effect the outcome of a case. c.

Byrd v. Blue Ridge Electric Cooperative, Inc. i.

“Balancing” Approach  3 major factors that could bear on the choice between state and federal rules.

1.

Relation between state rule in question and underlying state right. a.

Was the state practice “bound up with” the underlying state law rights and obligations beinf enforced? b.

Aim is to determine whether the state procedural practice was an integral part of the state substantive right or if the state system followed it for some independent reason that might relate more to state court housekeeping and therefore have less call to be followed in federal court.

2.

Countervailing interests of the federal judicial system a.

Strength of federal policy  federal interests pertaiing to the courts’ interest in their own smooth functioning and uniformity and coherence of the decisional principles they have evolved to govern procedure.

3.

Likelihood of effect on outcome. a.

Here, the outcome determination test is only one factor. d.

Hanna v. Plumer: i.

Specific Holding  Held that FRCP 4(e)(2)(b) allowing “substituted” service of process on a D’s spouse at their home as valid and controlling even though the

“substituted” service would not have sufficed had the same state law action been brought in Mass. State court. ii.

TWO PART APPROACH:

1.

Scales back “outcome determination” test and suggests that it be applied in modified form in light of the policies of Erie to discourage forum shopping and avoidance of inequitable administration of the law.

2.

Holding with respect to Validity of Federal Rules: a.

Rules Enabling Act  Gives Supreme Court the power to adopt

Federal Rules regarding practice, procedure and evidence in federal courts so long as they do not abridge, enlarge or modify any substantive right. i.

Therefore, Federal Rules of Civil Procedure are to be applied in federal courts unless they violate the

Constitution or the terms of the Enabling Act itself. ii.

Constitutional Restrictions  Rules need to be

“arguably procedural”. iii.

Enabling Act Limitation:

1.

Practice and procedure requirement  The rule must “really regulate procedure – the judicial process for enforcing rights and dutires recognized by substantive law and for justly administering remedy and redress or infraction to them.”

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2.

Substantive Rights Limitation  Rule must not

“abridge, enlarge or modify any substantive right” and to be valid a rule must not transgress this proscription. iv.

Strong Presumption of Validity  When there is a conflict between a federal rule and a state law, there is a very strong presumption in favor of the validity of the

Fedeal Rule.

1.

Federal Rule is to be applied unless it appears that the Rules Advisory Committee, the

Supreme Court, and Acongress erred in their initial judgment that the rule did not transgress the Enabling Act or the Constitution.

5) MODERN APPROACH UNDER Erie and Hanna: a.

Conflict: i.

Federal Rules should be given their plain meaning, and if that reading leads to a direct collision with state law, Hanna analysis applies. ii.

Sometimes there is no direct conflict:

1.

Walker v. Armco Steel Corp.



Rule 3 (states that an action

“commences” upon filing of complaint) is limited to only govern the various timing requirements of the FRCP, but does not affect the state statute of limitations so there is no conflict. b.

FLOW CHART ELEMENTS:: i.

Is there a true conflict between a state and federal procedural rule?

1.

NO  No choice of law approach is needed.

2.

YES  Move on. ii.

Is the source of the potentially applicable federal rule the Constitution?

1.

YES  The Federal Rule governs because the Constitution is paramount.

2.

NO  Move on. iii.

Is the source of the potentially applicable federal rule an Act of Congress?

1.

YES  The Federal Rule governs if it is arguably procedural. a.

Rationale  Congress’ broad constitutional power over federal courts. If they pass a statute governing federal court procedure, that statute is valid and prevails over any contrary state law if it is “arguably procedural.”

2.

NO  Move on. iv.

Is the source of the potentially applicable federal rule a Federal Rule promulgated under the Rules Enabling Act?

1.

YES  The Federal Rule governs unless it violates the Rules Enabling

Act or constitution. a.

What violations? i.

“Incidental effects” that leave untouched the content of state substantive law, while providing a somewhat different manner or means to enforce it.

2.

NO  If source of the potentially applicable federal rule is purely decisional law of a procedural nature, the federal rule governs unless

Page 32 of 43

Judge Wood – Spring 09 that would counter the twin aims of discouraging forum shopping and avoiding inequitable administration of the laws. (Hanna) a.

SO – If applying the federal judge-made rule would COUNTER the aims of discouraging forum shopping and avoiding inequitable administration of the laws, the federal court should follow state law. b.

REMEMBER – These aims might cut agaist applicability of state law in federal court, if state courts have a rule governing purely internal housekeeping matters – such as judicial attire or length of paper for court filings – and federal courts have nothing that amounts to a rule but do have practices different from that. c.

LAWS OF EVIDENCE  Trend appears toward the federal standard because the question goes to whether judge or jury should evaluate the sufficiency of the evidence, not to the elements of the claim or the definition of the persuasion burden. i.

Standard for reviewing jury awards  State supplies the governing standard because it reflects state policy on how much of a check to place on excessive damages. d.

THIS IS WHERE YOU DO THE BYRD BALANCING ACT APPROACH!

6) WHICH STATE LAW APPLIES? a.

Since Diversity cases – and most state law cases in federal courts ARE diversity cases – by definition involve parties from different states, federal courts must often decide

WHICH state’s law is to govern. b.

GENERAL RULE: The Federal court will apply the law of the state in which it sits.

(Klaxon Co. v. Stentor Manufacturing Co.) i.

Includes state’s choice of law rules (the rules the state courts use to determine what law to apply to cases such as those involving a nonresident party or events that occurred out of state)  Thus, if state’s chocice of law rules require application of another state’s law, the federal court is to do the same.

1.

EXAMPLE: CA guy while driving through LA hits a man from NY. He brings suit in NY. Court will use NY law, but if that law states that the

Court would apply law of the state where the accident occurred, then court would be obliged to apply LA law. ii.

EXCEPTION – Sometimes federal legislation may provide a FEDERAL choice of law rule.

7) DETERMINING APPLICABLE STATE LAW: a.

Erie refers to the law of a state as declared by the states’ “highest court.” Often because oa state statute or supreme court decision is on point, state substantive law to be followed by a federal court will be clear. b.

HOWEVER – Sometimes, the state court system may never have faced a question, or only lower state courts may have ruled, or it may seem likely that the state supreme court would overrule an old precedent if given the opportunity. c.

General Guideline – “proper regard” to state court rulings: i.

“Proper regard” must be given to state court precedents. ii.

In some cases ,a federal court will not be bound by the ruling of a state intermediate appellate court on a point of state law.

Page 33 of 43


HOWEVER – Salve Regina College v. Russell  Federal appellate courts are NOT to defer to the interpretation of state law by federal trial judges, but must review district courts’ state law determinations de novo. d.

SHOULD CONSIDER DUAL ERIE AIMS! i.

Discourage forum-shopping:

1.

You don’t want to adopt a simplistic or rigid test that could encourage forum shopping by making available in the federal system law that would not ultimately govern in the state system (by adopting intermediate appellate court holdings). ii.

Avoid inequitable administration of the laws in mind! iii.

Many lower federal courts look to ALL relevant sources, giving due regard to the varying weights of different authorities within the state system, in an attempt to discern how the state supreme court would decide the case.

1.

Mason v. Emery Wheel Works Arguments: a.

MacPherson changed the very nature of product liability law, and it would now be unwarranted to assume that the Supreme

Court of MI would hold the same as it did in Ford Motor Co. when they bear in mind the readiness of other courts, to overrule their earlier holdings and to bring their jurisprudence into accord with what is now the overwhelming weight of authority. b.

Also, a decision may be overruled implicitly through an overload of illogical exceptions that erode the original decision so that it may lose its persuasive or binding force even in the inferior courts of the jurisdiction. e.

CERTIFICATION: i.

Many states authorize their highest courts to answer questions of state law certified by federal courts before which cases are pending. ii.

Where this procedure is available, a federal court may seek an authoritative answer to uncertain questions about state law rather than speculating on them.

8) FEDERAL COMMON LAW: a.

GENERAL RULE: The federal courts DO have the authority to create common law in particular areas of federal authority or interest, subject to overruling by Congress. b.

EXAMPLES OF FEDERAL COMMON LAW AREAS: i.

Borrowed State Law:

1.

In some cases, federal statutes might be silent as to particular issues arising under them.

2.

In such cases, federal courts often fill the interstices in federal law by borrowing the law of the federal state as long as that law does not undermine the purposes of the underlying federal law. ii.

Authorization by Congress:

1.

In some areas, the Supreme Court has interpreted congressional legislation as intending that the federal courts develop substantive law to further national uniformity. iii.

Sufficient Federal Interest:

Page 34 of 43


1.

Sometimes, the court regards the federal government as having a strong enough interest in a transaction that it should be coverened by uniform federal common law to further that interest. a.

Clearfield Trust Co. v. United States



federal common law governed on issue of delay in notification of forgery of federal government check.

2.

HOWEVER – there must be a SIGNIFICANT federal interest. a.

Bank of America v. Parnell  State law governed in suit between private parties on issue of good faith of holder of previously stolen government bonds; that federal government issued the paper involved in suit DOES NOT by itself suffice to require creation of uniform federal common law. iv.

Interstate disputes

1.

In interstate disputes involving governments of, or in, different states, it may be inappropriate for the law of one of the interested states to govern.

2.

The federal courts consequently may develop federal common law when no congressional legislation deals with area. v.

US Foreign Relations

1.

When questions of American foreign relations are involved, the need for uniform federal common law may be especially clear.

THE AWFUL POWER OF JUDGMENTS:

1) CLAIM PRECLUSION: a.

GENERAL ELEMENTS: i.

Before any judgment can have claim preclusive effect, it must be: ii.

Final

1.

Whether a judgment on appeal is final for purposes of res judicate is determined by the law of the jurisdiction in which judgment was rendered. a.

FEDERAL PRACTICE  A judgment is valid,e ven when being appealed, until reversed or modified by an appellate court. iii.

AND iv.

“On the merits”

1.

GENERAL RULE: Judgment is on the merits if the claim has been tried and determined (if the court has ruled that P has or has not established his claim). a.

Includes a determination by summary judgment, judgment on the pleadings, nonsuit and directed verdict as well as a determination after the trial and verdict.

2.

Other issues: a.

Dismissals  if 12(b)(6) dismissal can be amended to state a valid claim earlier cases held that judgment was not on the merits. i.

Some courts view as a bar since P had a fair opportunity to get to the merits by amending his pleading, appealing, etc.)

Page 35 of 43


Default and Consent Judgments  They terminate the cause of action and hence have claim preclusion effect. i.

CONSENT JUDGMENTS  Seen as contracts, so for a claim to be reserved, it must be clear that BOTH parties have agreed to reserve an issue or claim AND it must be precisely stated what issues or claims are being

reserved. (Hanover Logansport Inc. v. Robert C.

Anderson) ii.

MAY BE LESS EFECTIVE ON ISSUE PRECLUSION! c.

Punitive Dismissals  They have claim preclusion effect, but no issue preclusion since that regards issues going to the merits. v.

AND vi.

Valid.

1.

A judgment is Valid UNLESS: a.

The court lacked subject matter jurisdiction of the case. b.

The notice given to the D failed to conform to due process requirements, or substantially departed from the requirements of statute or court rule concerning the form of notice. c.

The court lacked personal jurisdiction over D.

2.

If question of validity was litigated in original action, that determination is itself res judicata! b.

POLICY BASIS: i.

Litigants should be compelled to litigate their entire claim on the first occasion they bring it before the courts. ii.

Judicial efficiency  resolving all claims in single lawsuit avoids waste of judicial resources on repeated litigation. iii.

Avoids vexation of defendants  Allowing Ps to sue Ds repeatedly on the same claim by changing legal theories would be oppressive to Ds. iv.

Consistency  Promotes public appearance of consistency. c.

MEANING of Claim – breadth of preclusion: i.

MAJORITY RULE – Transactional test. (from Restatement 2 nd of Judgments §24)

1.

The critical issue is whether the two actions under consideration are

based on the same nucleus of operative facts.”

2.

Claim preclusion applies to “all or any part of the transaction, or series of connected transactions, out of which the action arose.” a.

Rush v. City of Maple Heights  Whether or not injuries to both person and property resulting from the same wrongful act are to be treated as injuries to separate rights or as separate items of damage, a plaintiff may maintain only one lawsuit to enforce his rights existing at the time such action is commenced. b.

To be determined pragmatically, giving weight to such considerations as: i.

whether the facts are related in time, space, origin, or motivation, ii.

whether they form a convenient trial unit,

Page 36 of 43

Judge Wood – Spring 09 iii.

whether their treatment as a unit conforms to the parties’ expectations or business understanding or usage. c.

Jones v. Morris Plan Bank of Portsmouth  If a transaction is represented by a single and indivisible contract and the breach gives rise to a single cause of action, it cannot be split into distinct parts and separate actions. i.

EVIDENCE OF THIS  If a claim would require the exact same evidence to adjudicate as the other possible claims. ii.

MINORITY RULE – “Rights Invaded” Test

1.

In California!

2.

Vasu Rule  Injuries to property and person as a result of one wrongful act are infringements of different rights and therefore can be litigated separately. iii.

MINORITY RULE - If you need to use the same type of evidence to prove both claims, then it is the same claim.

1.

Line-drawing problems  what constitutes as different pieces of evidence? d.

Claims by or against different parties usually not foreclosed: i.

Ordinarily a claim by one plaintiff is considered a different claim for preclusion purposes from that of another plaintiff, and so is a claim against a different defendant. ii.

EXCEPTION - Mathews v. NY Racing Association, Inc.

1.

The doctrine of res judicata operates as a bar to subsequent suits involving the same parties, or those in privity with them, based on a claim which has once reached a judgment on the merits. iii.

Exception – Where second plaintiff is successor in interest.

2) DEFENSE PRECLUSION: a.

A D may not split his cause of action against a plaintiff using part of it as a defense to the first action and saving the remiainder for a separate affirmative suit! i.

Mitchell  Guy defends on a claim of fraud, and then tries to, in a separate action SUE THAT SAME PARTY THAT HE ALLEGED FRAUD AS A DEFENSE! Not allowed by court. b.

EFFECT OF CUMPULSORY COUNTERCLAIM RULES: i.

Compulsory counterclaim rule requires that D set up any counterclaim she has against the P arising out of the same transaction as P’s claim. FRCP 13(a). ii.

If she fails to do so, she is barred from thereafter asserting the counterclaim, either as a defense or as the basis for addirmative relief in independent action. iii.

Judgment in the former action is preclusive as to claims that were or should

have been asserted as compulsory counterclaims in that action. c.

Where no compulsory counterclaim rule involved: i.

Claim preclusion does NOT prevent the D from asserting the same matter first as a defense to the P’s action and later as a basis for independent relief

against former plaintiff.

Page 37 of 43

Judge Wood – Spring 09 ii.

EXCEPTION – Where D seeks relief based on a claim that could have been asserted as a counterclaim, and that relief would nullify judgment of earlier suit, the later action nis barred even if there was no applicable compulsory counterclaim rule in earlier action.

3) ISSUE PRECLUSION / Collateral Estoppel: a.

GENERAL RULE: If the second lawsuit involves a different claim, the first judgment may be invoked as to all matters: i.

Actually litigated

1.

Default Judgments  Split of authority: a.

Some view them as conclusive as to all issues that were necessarily involved in the first suit. b.

Others view them as not conclusive because “actually” litigated requires evidence present to, and a decision by, a trier of fact

(Restatement of Judgments) i.

RATIONALE: Why this is a better rule = A person defaulting to a complaint may not have foreseen that the admissions created thereby would remain to haunt him in a subsequent, unrelated lawsuit!

2.

Consent Judgment  There is a likewise split.

3.

Jury Trail v. Nonjury trial = Doesn’t matter! a.

Davis v. Rios  It is the judgment and not the jury verdict or conclusions of fact, filed by a trial court which constitutes the collateral estoppel, and a finding of fact by the jury or a court which does not become the basis or one of the grounds for the judgment rendered is not conclusive against either party to the suit. ii.

AND iii.

Determined in the first action. iv.

AND v.

Essential to the judgment.

1.

Applies to issues that were essential to the court’s determination

(essential to cause of action or defense established by judgment therein).

2.

TEST: An issue is “essential” to the court’s determination in the former action only if it appears that the judgment could not have been reached without determining the issue.

3.

“Identical issue”  The issue decided in the prior adjudication MUST BE identical to the one presented in the instant action. Mere similarity is not enough. a.

Cromwell v. County of Sac



Mere determination that another party was not the holder of the bonds was not dispositive of the issue of whether Smith had the bonds (or something). b.

Sunnen  Where two cases involve taxes in different taxable years, collateral estoppel will be confined to situations where the matter raised in the second suit is identical in all respects with that decided in the first proceeding and where the controlling facts and applicable legal rules remain unchanged.

Page 38 of 43


Tax issue in 1965. Same tax issue in 1966 is not issue precluded, because the issue is relegated ONLY to the

issue of the taxes in 1965. ii.

POLICY RATIONALE:

1.

UNFAIR to other taxpayers,

2.

causing inequalities in the administration of tazes,

3.

discriminatory distinctions in tax liability and

4.

a fertile basis for litigious confusion! b.

EXCEPTIONS: i.

When the 2 actions involve the same parties, the loser may be allowed to relitigate an action in a subsequent action if:

1.

As a matter of law, appellate review of the initial action was unavailable.

2.

Even if review was available, the nature of the proceedings in the court handling the first action was informal or expedited, as in a small-claims court.

3.

Stakes involved in the second suit are MUCH larger, as when the first acion was in small-claims court and second involves major personal injury claim.

4.

The issue is one of law and the claims in the two actions are substantially unrelated.

5.

The burden of proof is materially different or has shifted.

6.

There is a clear and convincing need for a new determination because the party who lost on the issue COULD NOT HAVE BEEN EXPECTED TO

FORESEE that the issue could arise in a later action. ii.

When the second action involves a different party, all these exceptions apply and, in addition, the loser may relitigate if there are other factors that justify allowing her to do so.

4) PERSONS PRECLUDED BY JUDGMENTS: a.

PARTIES AND PRIVIES: i.

Parties  A party to a judgment is bound by claim preclusion and issue preclusion. ii.

PRIVIES  A person in privity with a party is bound to the same extent as the party (privity meaning a legal conclusion indicating that the person in question has a relationship to the party such that she should be bound).

1.

Procedural Privity: a.

If the party acted in the first action as the REPRESENTATIVE of the nonparty, the judgment therein binds the nonparty.

2.

Substantive Privity: a.

Bailment  Action by bailee or bailor precludes an action by the other. b.

Successor in interest  Bound by judgment regarding the interest to which his predecessor was a party. c.

Beneficiary of Estate  Bound by an action litigated on behalf of the estate of the trustee. d.

Public official authorized by law to act on person’s behalf 

Person is bound by the official’s litigation on his behalf.

Page 39 of 43

Judge Wood – Spring 09 e.

“Virtual” Representation  In unusual circumstances, courts may say that even if there is no formal representatilnal role, an earlier litigant was the “virtual” representative of the later litigant and the later litigant is therefore bound. f.

JUST BECAUSE YOU ARE A FAMILY MEMBER DOES NOT MEAN

YOU HAVE PRIVITY! b.

NONPARTIES: i.

Nonparty not bound:

1.

A nonparty is generally not bound by judgment.

2.

Such a person has not had his day in court and, as a matter of due process, he cannot be denied a valuable interest (his right of action) without one! a.

Martin v. Wilks  Even though a party in interest could have intervened, that is permissive, and a failure to do so should not result in those nonparties being barred.

3.

EXCEPTION - For cases involving federal employment discrimination, binding effect is given to a litigated or consent judgment or order when the nonparty had adequate notice and opportunity to present objections, or when the nonparty’s specific interests had been adequately represented by another. ii.

Nonparty may benefit  a nonparty may benefit from the judgment in an action to which he was not a party.

1.

Claim preclusion: If 2 potential Ds have a relationship such tha tone is responsible for the conduct of the other, then a judgment exonerating either potential defendants precludes an action on the same claim against the other. a.

Not applicable to joint or concurrent liability. (only vicarious liability).

2.

Issue Preclusion: a.

BASIC RULE: A party who litigates an issue against one party and loses may not relitigate that issue with another party. b.

Defensive collateral estoppel: i.

Bernhard v. Bank of America



If a party has had a full and fair opportunity to litigate an issue in one action, there is no reason to waste the time of the court and other persons in relitigating that issue.

1.

Therefore: A party not bound by prior judgment can raise res judicata defense against someone who is bound. c.

Offensive Collateral Estoppel: i.

Supreme Court has found that issue preclusion can be used against a defendant to block defendant’s attempt to relitigate issues on which he had lost in an earlier trial.

1.

Parklane Hosiery Co v. Shore



SEC files suit against PArklane for false statements and judgment rendered against Parklance. In subsequent action, nonparties to original suit

Page 40 of 43

Judge Wood – Spring 09 seek damages as a result of the same proxy solicitation and it was found that judgment against Parklane in SEC action may be held to bar corporation from relitigating the issue of whether solicitation was false and misleading. d.

LIMITATIONS: i.

Issue would not be conclusive between parties:

1.

IF the issue would not be treated as conclusive between the parties to the first action, it cannot be conclusive in favor of a third person not a party to that first action. ii.

Unjust under circumstances  Factors to be considered:

1.

Could person seeking benefit of preclusion have joined in the prior action but instead decided to

“sit it out?”

2.

Was prior determination inconsistent with an earlier determination of the same issue?

3.

Are the consequences in the second action much more serious than those in first action?

4.

Does the party to be estopped have procedural opportunities in the second action that were not available in the earlier action? a.

Broader discovery. b.

Ability to compel live testimony of important witnesses.

5.

Was earlier finding a compromise verdict?

6.

Is this an issue of law whose reconsideration should not be foreclosed?

7.

Other compelling circumstances justigying relitigation?

5) INTERJURISDICTIONAL PRECLUSIVE EFFECTS OF JUDGMENTS: a.

PROBLEM: What happens when the second case is brought in a different court system? b.

BASIC RULE: The preclusion principles of the court system that rendered the judgment

should be used to determine its preclusive effect. i.

STATE COURT JUDGMENTS IN OTHER STATE COURTS:

1.

State court judgments are constitutionally entitled to effect in other state courts (Full Faith and Credit clause). ii.

STATE COURT JUDGMENTS IN FEDERAL AND STATE COURT:

1.

The Full Faith and Credit statute (USC §1738) directs that federal courts and courts of other states give effect to state court judgments, and also directs that the preclusion principles of the rendering jurisdiction be applied. iii.

FEDERAL COURT JUDGMENTS:

1.

IT is accepted generally that federal court judgments are entitled to preclusive effect and that effect is determined according to the federal common law of preclusion. c.

Prohibition against giving broader preclusive effect than required:

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Supreme Court has interpreted the Full Faith and Credit Statute to forbid a federal court to give more effect to a state court judgment than is called for bny the preclusion rules of that state. d.

Preclusion regarding claims within exclusive federal jurisdiction  WHEN a state court has heard something, and the guy tries to bring to federal court on a claim exclusively federal in jurisdiction. i.

Rule of Jurisdictional “competence” for claim preclusion:

1.

The law of most states is that claim preclusion is not availale with respect to a claim over which the court does not have subject matter jurisdiction.

2.

Therefore, if the court cannot entertain the claim, it should not be able by its judgment to extinguish the claim.

CLASS ACTIONS: A QUICK SPIN SO WE CAN KNOW WHAT JOINDER OF PARTIES LOOKS LIKE WHEN IT

GOES VIRAL:

1) Arose out of equity jurisdprudence

2) Almost ALWAYS settle  Therefore, the current rules are geared almost entirely towards the rules governing settlements.

3) CRITICISM!!! So let’s walk through the rules…

Plaintiff Class OR Defendant Class in theory! (D classes are VERY rare).

HYPO: SMITH NOT HIRED BY UOFC, BECAUSE SHE’S A WOMAN!

1) COMPLAINT: a.

Smith, on behalf of herself and all others similarly situated v. UofC i.

“Similarly situated”  words of limitation. ii.

Proposed class action…does not become b.

Plaintiff Class – what must be asserted? P MUST ASSERT: i.

All criteria of R. 23(a)

1.

Numerosity a.

Must be impractical for individual suits.

2.

Typicality a.

Is this person in the same position as someone who is currently working as instructer there, but is being paid less than male counterparts? (ARGUABLY NO)

3.

Common question of law or fact a.

“was there sex discrimination in hiring?”

4.

Adequacy of representation. a.

What’s difference between this and typicality? i.

How good a lawyer does the plaintiff have? Does she have resources to carry out the case? ii.

One subpart of R. 23(b):

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1.

Necessity – There is an absolute necessity that the claim be adjudicated

AS A CLASS! a.

23(b)(1)(A)  Conflicting adjudication if this does not happen. b.

23(b)(1)(B)  When limited fund to be given out!

2.

Injunctions a.

23(b)(2)  Often used for Civil Rights Actions!

3.

Money – 23(b)(3) a.

QUESTIONS: i.

Existing litigation regarding this issue? ii.

Desireability or undesirability of combining this class? iii.

Difficulties of litigating. iv.

Class members interest in controlling the act. b.

Small Class Class Action  Where aggregate of offense can = millions of dollars! Small claims for each member of class.

2) CERTIFICATION: a.

Plaintiff will present a motion for certification as a class which would go through each step in the previous section of my notes. b.

It is important to take this thing out…

3) NOTICE TO HELPLESS ABSENTEES: a.

23(c)(2)(B)  “Best notice under the circumstances to each member who can be identified through reasonable effort.” b.

“If you somehow get their information, then you HAVE to give them individual notice.” c.

Some classes  YOU ARE IN UNLESS YOU CHOOSE TO OPT OUT! i.

Is this right? Or just? ii.

E-mail? iii.

Seems standards change with advancing technology!

4) Appointment of “Class Counsel” a.

BLARGH.

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Wood 7 (2009)

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