Agenda for 31st Class
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Name plates out
Review of Erie
Introduction to Joinder
Choice of Law Problems
Next Class (Joinder)
– FRCP 13, 14, 18, 20, 21
– Yeazell 793-97, 812-19
– Questions to think about
• Pp. 816 Q5
• Pp. 818ff. Qs 1-2
– Glannon Chapters 13-14 (Joinder)
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Last Class - Erie
• Erie. Federal court in diversity cases applies state common law
• Hanna. Federal court in diversity (and other) cases applies FRCP
– Applies judicial interpretations of FRCP too
– Exception if rule of FRCP beyond rulemaking power granted by Rules
Enabling Act
• E.g. rule which changed doctrine of consideration or comparative
negligence
• Guaranty Trust & Hanna. If federal procedural practice not in FRCP conflicts
with state procedural practice, apply state practice if outcome determinative
and/or federal rule would cause forum shopping
– E.g. statute of limitation
– Most plausible interpretation of outcome determinative is that it means
would affect forum shopping
• E.g. would affect liability or damages evaluated at the time plaintiff’s
lawyer takes the case
• Any rule can be outcome determinative if evaluated too late
– E.g. paper size rule is outcome determinative if evaluated 1
2
minute before expiration of statute of limitations
Joinder
• Rules start from assumption that suits may involve a single plaintiff suing a
single defendant on a single claim
– Multiple parties and claims are allowed ONLY if explicitly permitted by a
rule
• Proper joinder does NOT mean case properly in court, still need:
– Personal jurisdiction
– Subject matter jurisdiction
– Venue
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Joinder of Claims
Claim 1
Plaintiff
Defendant
Claim 2
• Joinder of claims always allowed. FRCP 18(a)
– But judge can, in discretion, always sever.
• Joinder is compulsory, if arises out of same transaction of occurrence
– Not in FRCP, but part of res judicata
– If related claim is brought in later action, defendant can have the case
dismissed by raising the defense of res judicata
Counterclaims (FRCP 13(a) &(b))
Original Claim
Original
plaintiff
Original
defendant
Counterclaim
• Counterclaims are always allowed. FRCP 13(a) and (b)
• Counterclaims are “compulsory” if they arise out of the same “transaction or
occurrence” as the original claim. FRCP 13(a)
– If compulsory counterclaim is not asserted, cannot be asserted in
separate suit
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Joinder of Parties
Defendant 1
Plaintiff 1
Claim 1
Plaintiff
Claim 1
Defendant
Claim 2
Claim 2
Defendant 2
Plaintiff 2
• Joinder of parties allowed, if claims arise out of the
same transaction or occurrence AND there is a
question of law or fact in common. FRCP 20
• FRCP19 addresses compulsory joinder of
“necessary parties,” but not part of this course
Crossclaims
Original claim 1
Original
plaintiff
Defendant 1
Crossclaim
Original claim 2
Defendant 2
• Crossclaims are allowed only if they arise out of
the same transaction or occurrence as the original
action. FRCP 13(g)
• Crossclaimant can join unrelated claim(s). FRCP
18(a)
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Original
plaintiff
Party Claims
Original claim
Original Defendant
3rd party plaintiff
3rd party claim
3rd party defendant
• 3rd party claims allowed only if 3rd party plaintiff claims that 3rd party
defendant is liable to 3rd party plaintiff for some or all of liability that original
defendant may owe to original plaintiff. FRCP 14(a)(1)
– Indemnity – Contract in which one party (e.g. parts supplier) agrees to
reimburse another party (e.g. final manufacturer) for liaiblity (e.g. liability
final manufacturer may incur to consumer)
– Contribution – Part of tort law which allows jointly liable defendants to
sue one another to apportion liability
• Different from cross-claim, because 3rd party defendant wasn’t sued by
original plaintiff
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Original
plaintiff
Party Claims (cont.)
Original claim
Original Defendant
3rd party plaintiff
3rd party claim
3rd party defendant
• 3rd party plaintiff may join any claims it has against the 3rd party defendant.
FRCP 18(a)
• Plaintiff may assert claims against 3rd party defendant that arise out of the
same transaction or occurrence
– Then 3rd party defendant may then file counterclaims or cross-claims.
FRCP 14(a)(3)
Choice of Law I
• If state law applies, which state’s laws?
– Same issue in federal and state court
– Federal court applies choice of law rules of state in which sitting
• E.g. CD of Cal applies California choice of law rules
– Each state has its own rules
• But many have adopted Restatement (Second)
• Cal applies “comparative impairment” test.
– Similar to Restatement 2nd, but different (and more complicated)
• Traditional rules still applied by a few states
• Traditional rules
– Restatement (First) of Conflict of Laws
– Tort. Lex loci commissi or lex loci delictus. Generally place of accident
– Contract
• Formation issues. place of contracting
• Performance/breach issues. place of performance
– Other rules for other subject matters (e.g. family law, property…)
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– Choice of law clauses. Not generally enforced
Choice of Law II
• Restatement (Second). “Most significant relationship”
– Tort. Consider place of injury, place of conduct that caused injury,
domicile/residence of parties…
– Contract. Consider place of contracting, place of contracting, place of
performance, location of subject matter, domicile/residence of parties….
– Choice of law clauses usually enforced, unless
• Legal issue is not one that could be altered by contract (e.g.
employment discrimination or antitrust) AND
• chosen state has no relationship to the dispute or no other good
reason to choose that state’s laws OR
• law would be contrary to “fundamental policy” of state whose laws
would otherwise be applied.
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Choice of Law III
• Ideally, substantive law should be the same regardless of where case is
brought
– But since different states have different choice of law rules, differences
are inevitable
– Restatement (and other modern approaches) are so indeterminate that
courts often differ
• Scholars see bias towards law of forum
– Easier for judges to apply
– Favors plaintiffs, since plaintiffs choose forum
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Choice of Law Questions
• 1) Suppose Wes, a resident of West Dakota, gets into an
accident with East, a resident of East Dakota, on a highway in
West Dakota. Wes sues East in West Dakota state court
alleging per se negligence because East was driving 79 miles
per hour. No speed limit was posted. West Dakota law states
that, unless otherwise posted, the speed limit on a highway is
70 miles per hour. East Dakota law, however, states that,
unless otherwise posted, the speed limit on a highway is 80
miles per hour. Which state’s law applies to this dispute? Is
your answer different under the traditional lex loci commissi rule
than under the Restatement Second? If you answer is
different, which rule makes more sense?
• 2) Same as (1) except Wes sues in West Dakota federal district
court.
• 3) Same as (1) except Wes sues in East Dakota state court.
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Choice of Law Questions
• 4) Driver and Passenger are both domiciled in West Dakota. Driver drives
passenger to East Dakota. While in East Dakota, Driver talks on his cell
phone and causes an accident in which Passenger is injured. Passenger
sues Driver in West Dakota state court for negligence. According to East
Dakota law, passengers have no right to sue drivers for injuries caused by
negligence. According to West Dakota law, passengers can sue drivers for
negligence. Which state’s law applies to this dispute? Is your answer
different under the traditional lex loci commissi rule than under the
Restatement Second? If you answer is different, which rule makes more
sense?
• 5) Same as (4), except Passenger sues in West Dakota federal court.
• 6) Same as (4) except Passenger sues in East Dakota state court.
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Choice of Law Questions
• 7) Spend, a Nevada domiciliary, is completely irresponsible with money.
Fortunately, he recognizes this fact and has set up a spendthrift trust. Under
the terms of the trust, Spend cannot borrow money without the consent of
Trustee, a friend he trusts. Spend goes to California and borrows money
there from Sharkey to be repaid in one year at Sharkey’s place of business
in California. When Spend doesn’t repay the loan, Sharkey sues Spend in
Nevada. Under Nevada law, loans to someone who has set up a spendthrift
trust are void. California law does not allow people to set up spendthrift
trusts, so under California law, such loans are enforceable. The traditional
rule for contracts was the law of the place the contract was formed governs
disputes about contract validity. Under the traditional rule, what state’s law
would apply? Under the Restatement Second, which state’s law should
apply to the dispute? If the traditional rule and Restatement Second suggest
different answers, which makes more sense?
• 8) Same as (7), except Sharkey sues in California state court.
• 9) Same as (8), except Sharkey traveled to Nevada, loaned Spend the
money there, with repayment to be made to Sharkey when he returns to
Nevada a year later.
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Choice of Law Questions
• 9) Same as (7), except the loan contract includes the following clause: “This
contract shall be governed by California law.” The traditional rule was not to
enforce choice of law clauses. See also Restatement (Second) below
• § 187. Law Of The State Chosen By The Parties
• (1) The law of the state chosen by the parties to govern their contractual
rights and duties will be applied if the particular issue is one which the
parties could have resolved by an explicit provision in their agreement
directed to that issue.
• (2) The law of the state chosen by the parties to govern their contractual
rights and duties will be applied, even if the particular issue is one which the
parties could not have resolved by an explicit provision in their agreement
directed to that issue, unless either
– (a) the chosen state has no substantial relationship to the parties or the
transaction and there is no other reasonable basis for the parties' choice,
or
– (b) application of the law of the chosen state would be contrary to a
fundamental policy of a state which has a materially greater interest than
the chosen state in the determination of the particular issue and which,
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under the rule of § 188, would be the state of the applicable law in the
absence of an effective choice of law by the parties.
Choice of Law Questions
• Plaintiff in Phillips brought the case in federal district court in Montana. Why
is there a decision of the Supreme Court of Montana?
• In Phillips, the Montana Supreme Court observes that “applying the law of
the place of manufacture would be unfair because it would tend to leave
victims under compensated as states wishing to attract and hold
manufacturing companies would raise the threshold of liability and reduce
compensation…. [A state with a high concentration of manufacturing] could
enjoy all the benefits associated with liability laws which favored
manufacturers in order to attract and retain manufacturing firms and
encourage business within its borders while placing the costs of its
legislative decision, in the form of less tort compensation, on the shoulders
of nonresidents injured by its manufacturers’ products.” (p. 249).
– Suppose Montana has a relatively low concentration of manufacturing.
Would its citizens benefit by laws which raised the threshold of liability
and reduced compensation? Or would its citizens benefit by laws which
lowered the threshold of liability and increased compensation? If it
lowered the threshold of liability and increased compensation, who would
bear the increase in costs? What does this suggest about the fairness of
applying Montana law?
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Choice of Law Questions
• In Phillips, the Montana Supreme Court asserted that “we do not believe that
the purpose of any potentially applicable Michigan product liability law would
be to regulate the design and manufacture of products within its borders.
The purpose of product liability law is to regulate interstate sales or sales to
residents and to set the level of compensation when residents are injured. ”
(p. 249)
– If the plaintiffs in Phillips had filed the case in Michigan state court, do
you think Michigan state judges would have agreed that its laws are
inapplicable? What purpose might a Michigan judge ascribe to product
liability law to show that Michigan law should apply?
• If you were a judge on the Montana Supreme Court, would you have
retained the traditional lex loci commissi rule, or would you have voted (like
the actual Montana Supreme Court) to adopt the Restatement (Second)
most significant relationship approach? Why?
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