American Civil Litigation
and Dispute Resolution
University of Insubria, Como, Italy
Jeffrey W. Stempel
William S. Boyd School of Law
University of Nevada, Las Vegas
Segment 1
The U.S. Court System
Overview of a Lawsuit
Jurisdiction and Venue
Three Branches of Government
• The Courts (state and federal)
• The Legislature (state and federal—Congress)
• The Executive (The President and
Administrative Agencies; in states – the
Governors and Administrative Agencies)
The United States’ Federal Court of
Appeals
AMY E. SLOAN, BASIC LEGAL RESEARCH: TOOLS AND STRATEGIES 7 (4th ed. 2009).
AMY E. SLOAN, BASIC LEGAL RESEARCH: TOOLS AND STRATEGIES 7 (4th ed. 2009).
AMY E. SLOAN, BASIC LEGAL RESEARCH:
TOOLS AND STRATEGIES 201 (4th ed. 2009).
Lexis-Nexis Congressional Universe,
How Does a Bill Become Law?
The Sources of U.S. Law
• Common Law System
– Federal and state Case Precedent
• But Many State and National Statutes
– Common law vs. Code law?
– Statutes vs. Codification
• Substantive Law
– Affects rights and duties
• Procedure
– Governs manner of enforcing rights/duties
American Federalism and Its Impact
on Civil Litigation
• State law dominates in spite of growth of federal
(national) government during 20th Century
• State courts have “general” jurisdiction
• Federal courts have “limited” jurisdiction
– Need Specific Authority to sue in federal court
• Federal Courts must have “subject matter” jurisdiction
over the topic of the dispute
• All courts must have “personal” jurisdiction over the
parties to the lawsuit
• Usual focus is on the defendant; Plaintiff has consented
to personal jurisdiction by filing suit in the forum state
American Federalism and Its Impact
on Civil Litigation -- II
• Concurrent Jurisdiction
• Independence of the federal and state judicial
systems
• “Federalism” or “state’s rights” has created
some cases where federal courts “abstain”
from deciding a case (even when they have
the power) to let state courts have first chance
at the matter
American Federalism and its Impact
on Civil Litigation -- III
Image: Four Corners National Monument / flickr.com
http://www.flickr.com/photos/jakesmome/2064516469/
• Unless lawsuit involves federal
law, state law governs
• Where disputes involve
different states or persons
from different states, there
may be need for trial court to
conduct “choice of law”
analysis to decide which state
law applies
Factors for Choosing Applicable State
Law Include:
• Citizenship of Parties; Residency of Plaintiff
and Defendant
• Location of accident, contract, or events
• Location of evidence, information, documents
• Place where injury or impact is felt
• Relative interest of state governments
• Whether law of one state is “better,” clearer,
or more developed than others
American Federalism and Its Impact
on Civil Litigation -- IV
• Even though state law controls in cases in federal
court because of diversity jurisdiction
– Federal procedure rules apply
– Federal Rules of Civil Procedure (1938) as a code of
procedure
– Federal Rules of Evidence and Appellate Procedure as
well
• States have procedure similar to federal system
but with significant state-to-state difference
Importance of Procedure
• Due Process – Constitutional Guarantee –
“Fairness” “Opportunity to Be Heard”
• Jury Trials
• Role of Judge (determines applicable law)
• Role of Jury (finds facts and applies law)
• Motions to Dismiss; Summary Judgment
• Requirements for Complaints and other pleadings
• Governs the amount of information (“discovery”)
that must be exchanged
The Path of a Lawsuit
The Path of a Lawsuit
• Don’t Forget the Preliminaries
– Client Engagement, Interview, Retainer
– Investigation
– Legal Research
– Attorney or plaintiff may be punished for bringing
unfounded claim
– Fed. R. Civ. P. 11 (must do some research to have a
basis to think a claim is valid)
– Forum Selection/Forum Shopping
The Path of a Lawsuit -- II
• Complaint
• Service of the Complaint (a/k/a service of
process)
• Defendant Response(s)
– Answer
– Motion to Dismiss (Fed. R. Civ. P. 12)
– Counterclaim (Compulsory or Permissive)
– Cross-claim
The Path of a Lawsuit -- III
• If Motion to Dismiss is not granted, case
proceeds
• Mandatory Disclosure
– Exchange of Basic Facts with other parties
• Discovery
– Efforts to ferret-out facts from opponents or
others
– Extensive set of Civil Procedure Rules on Discovery
(more detail later)
The Path of a Lawsuit -- IV
• Discovery Generally
– Broad Scope
– But Subject to Privilege
• Privileges exist when social need to foster
relationship and confidentiality outweigh
social need for the information
• Privileges developed according to common
law
– Unless a specific statute on point
The Path of a Lawsuit -- V
• After adequate opportunity for discovery . . .
• Parties may make “dispositive” motion that
would determine the case
• Summary judgment is the primary and usual
motion after discovery is completed
• If Summary judgment is denied, case moves
forward
• Pretrial conferences, witness lists, documents
lists, settlement conferences
The Path of a Lawsuit -- VI
•
•
•
•
•
•
•
If no settlement, case proceeds to trial
Jury Selection
Opening Statement(s)
Plaintiff’s “case-in-chief”
Direct examination of witnesses
Introduction of documents
Introduction of “real” evidence
(e.g., gun, jewelry)
• Cross-examination by opposing parties
The Path of a Lawsuit -- VII
• Expert Witnesses
• Plaintiff rests
• Then comes Defendant’s motion for
“judgment as a matter of law”
• If denied, Defendant must present its case-inchief
• Defendant presents witnesses and documents
• Defense rests
The Path of a Lawsuit -- VIII
• Motion for Judgment as a Matter of Law at
the conclusion of all evidence
• Usually made by both plaintiff and defendant
• If denied, case to be submitted to the jury
• Closing Arguments
• Jury instructions
• Jury Deliberation
• Verdict
The Path of a Lawsuit -- IX
• After verdict, loser may attack verdict
• Motion for judgment as a matter of law
(again)
• Grounds for JAML (and Summary Judgment)
• Movant argues that material facts not in
dispute and law applied to those facts favors
movant even if jury rendered verdict to
opponent.
The Path of a Lawsuit -- X
• Motion for a New Trial (as alternative to JAML)
• Will not reverse the adverse verdict but will
give movant another chance with new jury
• Granted where
– Verdict against the weight of the evidence
– Verdict too high or too low
– Erroneous jury instructions
– Trial misconduct by lawyers, jurors
– Really bad evidence rulings by judge
The Path of a Lawsuit -- XI
• If no grant of new trial or JAML, loser must
appeal within 30 days
• “Briefs” by counsel argue the issue
• Then “oral argument” before panel of 3 judges,
sometimes entire court
• Usually 18-24 months until a decision
• During that time, parties often negotiate, settle
claim
• But appeals succeed only 40 percent of the time;
the trial verdict winner has the advantage
Appellate Review
• Did lower court err in law?
• May not revisit the facts unless the lower
court is the fact finder and the fact finding is
clearly erroneous
• Will not usually overturn the jury’s fact finding
but may find that the judge’s jury instructions
were erroneous - case may be tried again
Standards of Review for Appellate
Courts
• Questions of law -- look at the issue “de novo”
• Questions of fact -- overturn a court’s finding
of facts only if “clearly erroneous”
• Appellate courts do not take testimony – fact
finders had opportunity to see the witnesses
testify – more qualified to decide the facts
The Path of a Lawsuit -- XII
• After trial or when appeals process has run its
course, winning party may recover some costs of
litigation
• In USA, loser and winner each pay their own
attorney fees (the “American Rule”). In Britain,
the winning party is often awarded attorney fees
(the “English Rule”)
• Some exceptions to the American Rule in the USA
by statute, contractual agreement, or as a
punishment for bad faith by a party or counsel
The Path of a Lawsuit -- XIII
• After “judgment” is final and entered, the
loser (or its insurance company) typically pays
• But if no voluntary payment, the winner is a
“judgment creditor” who may use “creditor’s
remedies” to satisfy the judgment. Examples:
– Garnish loser’s wages to pay claim
– Take funds from loser’s bank account, etc.
– Place lien on loser real estate; if sold, judgment
paid from sale proceeds; foreclosure a possibility
The Rare Possibility of Supreme Court
Review
• After appeals process exhausted, losing party
may petition for review (grant of a “writ of
certiorari”) by the U.S. Supreme Court
• Only about one (1) percent of petitions for review
granted
• Supreme Court will not take case just because it
suspects error by lower courts
• Case must present constitutional issue or involve
important area of national law where lower
courts are divided
Judicial Power and Subject Matter
Jurisdiction
• U.S. Constitution (1787) (and various
amendments since)
• Article I – Legislative (establishes Congress –
House and Senate)
• Article II – Executive (the Presidency, etc.)
• Article III – Judicial (Supreme Court and basic
grant of federal judicial power for federal
questions and related things, “diversity”
jurisdiction)
Federal Question Subject Matter
Jurisdiction
• Established in Article III of the Constitution
• Codified in 28 U.S.C. § 1331
• States that federal courts have subject matter
jurisdiction that “arises” under federal law
(statute, treaty)
• No federal question jurisdiction unless federal
law is involved in the claim
• A defense based on federal law does not
create federal subject matter jurisdiction
Tests for Federal Question Jurisdiction
• Does federal law “create” the cause of action?
– Or
• Does federal law comprise an “essential”
ingredient of the cause of action?
• Because federal courts are courts of “limited”
jurisdiction that should not supplant state
courts, federal question jurisdiction is
construed narrowly
Federal “Diversity” Subject Matter
Jurisdiction
• Established in Article III
• Codified in 28 U.S.C. § 1332
• Federal courts have subject matter jurisdiction
when all plaintiffs and all defendants are
citizens of different states (the rule of
“complete” diversity)
• If the matter in controversy exceeds $75,000
in value
Diversity Jurisdiction (con’t)
•
•
•
•
Citizenship means “domicile”
Domicile means one’s home
People are born with a domicile
Can change it by relocating with
intent to change domicile (summer
camp and university not enough –
if you plan to return home after)
Diversity Jurisdiction (con’t)
• Dual Domicile/Citizenship of Corporation
• Place of incorporation (e.g., Delaware)
(corporations are charted in a particular state
in the U.S. – no national chartering system)
• And
• Principal Place of Business
• Almost Always Means Company Headquarters
• Clarified in Hertz v. Friend (2010)
Another Federalism Wrinkle:
Removal
• After a lawsuit is filed in state court, the
defendant may be able to “remove” it to the
nearest federal court if
– It could have been brought in federal court
– On the basis of either federal question or subject
matter jurisdiction
– Must act within 30 days
– All defendants must join in multi-defendant case
– If a diversity case, only a defendant who is not a
resident of the forum state can remove
Personal Jurisdiction
• Subject Matter Jurisdiction is judicial
power over the subject matter of the
lawsuit (e.g., violation of federal law;
plaintiff and defendant from
different states)
• Personal jurisdiction is judicial power
over the parties – particularly the
defendant
• Exercise of personal jurisdiction must
satisfy “Due Process”
Due Process
• Guaranteed against the federal government
by Fifth Amendment to Constitution
• Guaranteed against state governments by the
Fourteenth Amendment
• Defined as
– Reasonable and fair notice of the claim
– Opportunity to be fairly heard
– Before a neutral adjudicator
– In a fair forum
Personal Jurisdiction and Due Process
• Court exercise of personal jurisdiction in an
unfair forum violates due process
• Forum considered unfair if defendant lacks
sufficient contact
• Where the claim is connected to forumrelated activity of the defendant, there must
be sufficient “minimum contacts” so that
court jurisdiction does not offend sense of
fairness and justice
Personal Jurisdiction and Due Process
• Where the claim does not
relate to defendant’s activity in
the forum state, there may still
be “general” personal
jurisdiction over the defendant
because it has pervasive
presence in the state
• Test is whether defendant’s
presence is “continuous” and
“systematic”
Venue
• “Venue” means the place of trial within the
jurisdiction/state
• Basic rule codified at 28 U.S. § 1391
• Venue generally proper
– Where all defendants reside
– Where a “substantial part of the events giving rise
to the claim” occurred
• Some differences and complexities not
addressed in this class
Venue -- II
• If venue is improper where lawsuit first filed,
defendant may move for dismissal
(28 U.S.C. § 1406)
• Or court may transfer case to a place of
proper venue
• Or defendant may seek change of venue to
more convenient venue (28 U.S.C. § 1404)
Venue -- III
• Preferable venue determined by
– Location of parties
– Location of real evidence
– Access to/Convenience of
• Witnesses
• Documents and other proof
– Burden on court relative to its connection to case
(e.g., fairness of imposing a New York-centered
trial on California jurors)
Segment 2
The Erie Doctrine
A Review of American
Federalism
• State law is the “baseline” governing law
• Although it can often be supplanted by
applicable federal law under the “Supremacy
Clause” of the Constitution
• If there is a sufficient link to interstate
commerce or something else that conveys
federal power
• In the absence of federal law, state law is the
default
Still More on Federalism
• The concept is captured in the Rules of Decision
Act, 28 U.S.C. § 1652
• The laws of the states should be the “rule of
decision” unless the case is governed by federal
law
• Despite this ethos in America, there was
established in the 1800s the practice of applying
“federal common law” to disputes between
citizens of different states in cases that were in
federal court because of diversity jurisdiction
A Little More Federalism
• This practice of using federal common law was
established in Swift v. Tyson (1842)
• The thought behind it was the application of
federal common law in commercial matters
would be efficient – but it proved not to make
much difference
• And it led to the divergent results and unequal
outcomes alluded to in Erie v. Tompkins
Just a Bit More Federalism
• The ramifications of Swift v. Tyson were exacerbated
because courts also did not treat state judicial
precedent as the “laws” of the states for purposes of
the Rules of Decision Act.
• Consequently, state law displaced federal common law
in diversity cases only where there was state legislation
– even if state court decisions established state law
counter to the federal common law
• In federal question cases, of course, federal law
governs – but even here there are some complexities
that we must skip over for this short course
Erie v. Tompkins Continues to
Be Good Law in the U.S.
• But in further application it can become complicated,
with more disagreement about the correct application
• First, some fine-tuning of Erie
• There still may be times when federal courts will use
federal common law
– When construing aspects of federal law not set forth in
statute
– When dealing with federal officials
– When dealing with federal property, lands, intergovernment disputes (e.g., City of Milwaukee [Wisconsin])
v. State of Illinois case over pollution problem)
Erie Made Easy?
• Although the Erie Doctrine can get horribly messy and
contentious at the edges, the premise is relatively
simple and reflects the prevailing U.S. view most see as
different than the European view
• Strong preference or presumption for applying state
substantive law absent other factors such as “purely”
or primarily procedural matter or clearly applicable
federal substantive law
– Example of the latter: Byrd v. Blue Ridge Electric (1958)
finds Const. Amendment VII to prevent application of a
South Carolina law (at issue in a diversity jurisdiction case)
mandating bench trials (trials by judge rather than jury)
Erie in Brief
• Apply state substantive law to proceedings in
federal court where only basis for subject matter
jurisdiction is diversity of plaintiff and defendant
• But apply federal procedural law to any case in
federal court – so long as the Federal Rule of Civil
Procedure at issue really regulates procedure
(rather than being a subterfuge for regulating
substance) and was properly promulgated.
Segment 3
The Discovery and Trial Process
Disclosure and Discovery
• Prior to 1938, only available in select courts
for select cases
• A dramatic change in the practice of law
• No more “trial by ambush” or guessing at the
other side’s proof
• Counsel now has the means to become
informed about the other side’s facts and
evidence
• “Fishing expeditions” allowed
Disclosure and Discovery
• Rule 26 is the fulcrum of U.S. federal court
discovery
• Similar rule in almost every state
• Disclosure rules came in 1993
• But they were intended to simply advance
production of information everyone had been
getting since 1938
Disclosure and Discovery
• Rule 26 sets forth the scope of discovery
• Any matter that is “not privileged” which relates
to the “claims” or “defenses” of the parties
• For “good cause” shown, a litigant may have
discovery of anything relevant to the “subject
matter” of the case
• Even if material sought is not admissible in
evidence, discovery is permitted as long as
discovery is “reasonably calculated” to lead to
admissible evidence
Discovery -- Privilege
• Attorney-Client most important
• But courts also recognize other privileges
–
–
–
–
–
Clergy (Priest-Penitent)
Doctor-Patient
Trade Secrets
National Security
Marital Communications (but not absolute ban on
discovery/evidence from spouse). Wife can testify
that she saw husband sell drugs but cannot say that
husband told her he sold drugs.
Attorney-Client Privilege
• Elements of the Privilege
–
–
–
–
–
Attorney-Client Relationship
Communication between lawyer and client
Made in confidence
For the purpose of facilitating legal advice
Kept in confidence (e.g., not waived through disclosure)
• An “absolute” privilege – no exceptions if it is
applicable
• But privilege may be destroyed by conduct such as
waiver or fail to apply. Most common example of this
is the “crime-fraud” exception – communications are
not privileged if lawyer’s services used to effect a
crime or fraud
Trial Preparation or “Work Product”
Privilege (Rule 26(b)(3))
• Things prepared by lawyer (and staff, such as paralegals or
investigators) “in anticipation of litigation” need not be produced to
opponent
– But the underlying facts are not privileged
– Example: Lawyer interviews witness; lawyer notes privileged but
opponent can interview witness or take deposition of witness
• A “qualified” privilege rather than an absolute privilege
– If the opponent can show inability to get “substantial equivalent” of
the materials without “undue burden” the materials may be ordered
produced
– But attorney mental impressions still protected. For example, parts of
a witness interview reflecting counsel’s thinking may be redacted. If
that is impossible, the material may be protected even if there is
hardship to the opponent (e.g., witness dies after interview)
Discovery Devices
•
•
•
•
•
Interrogatories (Rule 33)
Document Production Requests (Rule 34)
Depositions (Rule 30)
Medical Examinations or Inspections (Rule 35)
Requests for Admission (Rule 36)
Interrogatories
• Governed by Rule 33
• Allows each side to ask questions of the other
• Presumptive limit of 25 per party
– More available if showing of good cause or need
• Must make reasonable effort to answer
– Important for organizational or entity parties (e.g.,
corporations, governments). Businesses can not
“forget” as easily as a natural person
Document Production Requests
• Allows for the exchange of written information
• No limit on production
• Allows parties to see if their respective
contentions are supported in the record
• Hard for opponent to hide behind what it
previously stated
– Example: “smoking gun” letter or emails (e.g., “We
know the product is unsafe but it is so profitable we
have to keep selling it. A warning would reduce
sales.”)
Depositions
• Governed by Federal Rule 30 (for oral
depositions)
– Rule 31 governs written question depositions, which
are far less common
• Can be videotaped, is always recorded or
transcribed
• Presumptive limit of 10 depositions per side
– But court can order more for good cause
• Presumptive limit on length of deposition to one
business day of seven (7) hours but can be
changed
Depositions
• Counsel examines person (or a person
representing an entity such as a corporation
or government) under oath
• Like questioning a witness at trial but different
• At trial, you call your witnesses and prepare
them to give streamlined, relevant, efficient
testimony. Although you might call an
“adverse” witness to put information into the
trial record, this is comparatively rare
Medical Exams, Etc
• Federal Rule 35
• Common in bodily injury claims (e.g., auto
accident) – Defendant will want someone
other than plaintiff’s own doctor to assess the
extent of plaintiff’s injury
• Can also permit inspections of land, taking of
water samples, etc.
Requests to Admit
Federal Rule 36
• Party sends requests to admit
• Receiving party must admit, deny, or explain
why it cannot respond
• Sounds wonderful in practice but not very
effective for gaining admissions on contested
issue
• But can be an effective way of avoiding using
trial time to prove clearly objectively
established facts or non-controversial facts
More on Discovery
• Special Rules for Experts (in Rule 26)
– Fear of a party or counsel being ambushed by a
slick expert that may be persuasive to layperson
jurors but is actually full of hot air
– The idea is to allow each side to test the bona
fides of the other’s expert and to better prepare
for trial
• Report by the expert is required – then usually
a deposition
Enforcement of Discovery Rights
• Federal Rule 37
• Where the opposing party is not providing required
disclosure or adequate responses to discovery, the
requesting party may seek help from the court
• An order “compelling” the requested discovery
• If opposing party fails to comply with the order, the
court may punish the opposing party
• If the opposing party’s claim not “substantially
justified” (even if not persuasive), the court may award
attorney fees to the moving party. Governed by
Federal Rule 30
Enforcing Discovery Rights
• If an order compelling discovery is not
obeyed, the court may
– Levy a fine against the disobeying party
– May require payment of attorney fees
– May declare certain facts established for purpose
of trial
– May enter a default judgment against the party
– May even use incarceration as a punishment for
contempt
• All this is pretty rare. Most American lawyers
think courts are not aggressive enough in
enforcing discovery rights
Class 4
The Right to Jury Trial
Jury Trial
• Historically, an English judicial institution
– Although existing in limited or modified form in many
societies
– But for the world at large (including European
countries for most lawsuits), the norm is trial before a
professionally trained judge
• The U.S. adopted the jury trial because it
inherited the English legal system
– Despite the American Revolution, the new nation kept
much of the English judicial system
“Preserving” the Right to Jury Trial
• When U.S. was being formed, a big concern
was excessive power in the new national
government
• General belief that juries would be a
safeguard because jurors are not part of the
government like judges
• Resulted in Amendment VII to the U.S.
Constitution
The Seventh Amendment
• “In Suits at common law, where the value in
controversy shall exceed twenty dollars, the right
of trial by jury shall be preserved, and no fact
tried by a jury, shall be otherwise re-examined in
any Court of the United States, [other] than
according to the rules of the common law.”
• Applies only in federal court
– States are free to go without juries
– But nearly all have similar language in state
constitutions (but often not as broad or mandatory)
Breaking Down the Seventh
Amendment
• Twenty Dollars? Would be $ 253.06 today
– (Tompkins $30,000 verdict would be almost $467,000
today)
• “Suits at common law” means actions for legal
relief as they existed in the U.S. and England at
the time the Amendment was enacted (1791)
• Generally means an action seeking monetary
damages rather than “equitable” relief such as an
injunction
More Seventh Amendment
• The jury trial right must be “preserved” –
generally taken to mean that jury trials must not
be curtailed from what they were but there is no
requirement to expand the jury
• When new rights are created by statute, Congress
need not make a jury trial available
• Jury trial rights, like most Constitutional rights (or
most legal rights) can be waived by a party
• Federal Rule 38 makes it a waiver if the party
does not make a prompt demand for a jury trial
at the early stage of litigation
More Seventh Amendment
• The “preservation” language of the Amendment
has made courts use a “historical” test for
determining whether a jury is required in a
particular action.
• This approach asks whether the claim currently
before the court is like the type of claim for which
a jury was required in 1791
• Conversely, if the claim is not like a “suit at
common law” or an “action at law” from that
time, the Amendment presumably does not apply
More Seventh Amendment
• In addition to the “historical” test, courts use a
“remedy” test to assess whether a claim is
subject to the Seventh Amendment and
requires a jury trial
• The remedy test asks whether the lawsuit is
seeking a “legal” remedy (usually payment of
money). If so, a jury trial right probably
applies – but it can get complicated
The Ramifications of the Jury: A
Major American Difference
• American Exceptionalism perhaps a chronic
problem
• But the jury trial is something hard-wired into the
U.S. judicial system
– Not like foreign policy, which may vary from George
W. Bush to Barack Obama, etc.
• Because Constitution is difficult to amend and
jury trial is popular, the Seventh Amendment will
probably never change
• But judicial interpretation may be broad or
narrow
The State of the Jury
• England – which inspired the U.S. – now hardly
uses the jury in civil matters
– A major exception is use of the jury in defamation
cases (which is probably a disaster, particularly
because England does not have a robust First
Amendment guaranteeing freedom of speech and of
the press)
• Juries not part of Europe and systems derived
from European colonial days (unless England the
colonizer)
– But some interest in juries in Third World or former
Iron Curtain countries
Impact of the Jury
• Trial must be condensed into a relatively small window
of time
• Cannot ask jurors to hear evidence, go back to work for
weeks, hear more evidence, go back to work, and so on
for weeks, months or years
• By contrast, judge is a full time employee of the
judiciary and may hear evidence in bits and pieces
• Judge also has the benefit of the transcript, notes, law
clerk
• These are usually denied to jurors (e.g., cannot take
transcript into jury room)
Impact of the Jury
• Also more concern about whether the jury
deliberation process can cause problems
– Jury tampering a concern (e.g, bribery, threats, informal
coercion by society)
– Jury may be “sequestered” in hotel to prevent
unwanted social pressure or worse
– May even have “secret” jurors to avoid intimidation or
worse
• Even “garden variety” cases poses concern (e.g.,
judges will not give the jury a case at 16:00 on a
Friday – too much temptation to rush to decision
to start the weekend)
Impact of the Jury
• But the biggest impact is the way in which the U.S.
courts treat the receipt of information at trial
– In systems without a jury, the rules of admitting
information into the record are relatively relaxed.
– Theory is that professional judges will give apt weight to
material and avoid being influenced by inflammatory
matters or information that may seem informative to the
unskilled but actually is misleading or irrelevant
• By contrast, in the U.S., an extensive code of evidence
has developed (The Federal Rules), much of which is
designed to control what information reaches jurors
and under what condition
Segment 5
Class Actions
Punitive Damages
Final Examination
Class Actions
Image: digitalart / FreeDigitalPhotos.net
Class Actions
• Controlled by Fed. R. Civil Procedure 23 (and
similar state court rules)
• Sets Minimum qualities necessary for class action
• 1. Numerosity
– too many litigants to join individually
• 2. Commonality of claims of class members
• 3. Typicality of named plaintiff’s claim and those
of class as a whole
• 4. Adequacy of the named plaintiff and counsel to
represent the class
Types of Class Actions
• Declaratory – Establish Status or Rights (Rule
23(b)(1))
– (A) When risk of inconsistent judgments affecting class
members that would establish “incompatible
standards of conduct
– (B) When individual judgments would affect class
members’ interests and “substantially impair or
impede” their ability to protect those interests.”
• Injunctive – Order Defendant(s) to do something
or refrain from doing something (Rule 23(b)(2))
– Party opposing class has acted or refused to act on
grounds that apply generally to the class
Types of Class Actions (con’t)
• Damages (Rule 23(b)(3))
– Requires reasonable notice to class members that
they may “opt out” of the class
– Plaintiffs with potentially large individual claims
tend to opt out and sue individually
– Plaintiffs with small claims tend to remain in the
class
Tort Class Actions
• Historically, class action device thought to be rarely
appropriate for tort claims
– Commentary to this effect by Rule 23 drafter in notes to
1966 Amendments to Rule 23, citing article by thenProfessor Jack Weinstein, now a federal judge in N.Y.
• But then came the “mass torts” of the 1970s to the
present
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–
–
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Agent Orange (1980s)(presided over by Judge Weinstein)
Asbestos (first wave in 1980s; second wave in 2000s)
Pollution (1970s forward)
Drug Product Liability (1970s forward)
Punitive Damages
• Origins Unclear
• But Reasonably Well Established in the USA by
the mid-1800s (e.g., Seymour v. McCormick)
(U.S. Sup. Ct. 1850)(dealing with lower court
opinion imposing punitive damages)
• Permits a Verdict Winner to Recover
Additional “Exemplary” or “Punitive” damages
in addition to compensatory damages
Purposes and Rationale of Punitive
Damages
• To Punish the Defendant/Tortfeasor for bad conduct
beyond mere negligence
• To Deter the Defendant/Tortfeasor from similar bad
conduct in the future
• To Deter Others from similar bad conduct in the
future
• (Implicitly) to allow victim to be made more “whole”
than would otherwise be the case because of special
circumstances
– Sub-silentio Recovery of Counsel Fees/Expense?
How Bad Must the Conduct Be?
• Controlled by State Law
– No Federal Law (except for Constitutional Limits)
• Standard Varies With Each State
• But all require more than mere negligence
• A few states permit if conduct is grossly
negligent
• Most require that conduct be intentionally in
disregard of victim’s rights.
– Reckless disregard may be sufficient
Policing Punitive Damages
• All states require proof of the required bad conduct by
“clear and convincing” evidence
– Beyond the norm of proof by a “preponderance” of the
evidence
– But not as demanding as “beyond a reasonable doubt”
standard used in criminal cases
• Punitive damages jury verdicts given special scrutiny by
trial judges
• Trial court punitive judgments subject to de novo
review on appeal
– Rather than deferential standard of affirming trial court
fact finding unless “clearly erroneous”
Additional Controls on Punitive
Damages
• Bifurcation of trial
– Trial first on liability, compensatory damages
before consideration of punitive damages
• Restricting discovery regarding defendant
wealth and certain information regarding
defendant conduct until/unless plaintiff
prevails on liability generally and obtains a
compensatory damage award
How Much is Too Much?
• Historically, punitive damages were assessed
according to whether the amount was reasonable
in light of
– The Wrongfulness of the Conduct
– The Amount of Compensatory Damage Done
• Common Law outside limit of 30-40 times compensatory
damages
– The Defendant’s Wealth
• Rationale was that a modest punitive award would not deter
a wealthy defendant
• What amount of $$$ award deters Bill Gates?
The U.S. Supreme Court Enters the
Punitive Damages Arena
• Until 1980s, Punitive Damages considered
issue of state law only
• U.S. Supreme Court, responding to business
defendant concerns, begins to examine
whether large punitive damages are:
– Excessive punishment in violation of Eighth
Amendment to Constitution;
– Violation of defendant’s right to Due Process of
law (guaranteed in Fourteenth Amendment)
The Court Takes Control (or Meddles)
With Punitive Damages
• 1990s – Court, after flirting with issue during
prior decade, decides in several cases that
unreasonably large awards violate due process.
• Crazy Cases Make Bad Law?
– BWM v. Gore (1996)
• Dr. Ira Gore, not the former V.P. and Nobel winner
• Automaker deceit about touched up paint job
• $4,000 compensatory damages; $4 million punitive
damages, reduced to $2 million on appeal
• Vacated and remanded by U.S. Supreme Court
21st Century Supreme Court Cases
• Campbell v. State Farm Insurance (2004)
– $145 million punitive award, $1 million compensatory
damages for insurer bad faith
– Court vacates award because jury was allowed to consider
bad insurer acts in other states, with other product lines
– Court states general rule: where compensatory award
significant, 9:1 is maximum punitive damages ratio
although “reprehensibility” of defendant conduct most
important factor overall
– On remand, Utah Supreme Court enters $9 million punitive
judgment; U.S. Supreme Court declines to review
21st Century Supreme Court Cases
• Exxon v. Baker (2008)
– Reduces $ 5 billion punitive judgment in case of $ 500
million compensatory damages to 1:1 ratio in action
related to infamous Exxon Valdez oil spill
– But decided on basis of maritime law (not Constitution)
• Williams v. Philip Morris (2007)
– Court initially vacates and remands $79.5 million punitive
judgment on $ 821,000 compensatory damages in tobacco
liability case
– Oregon Supreme Court reinstates award in 2008
– U.S. Supreme Court grants review in 2008 and then
changes its mind, dismisses certiorari as “improvidently
granted” in 2009