Agenda for 28th Class
• Admin
– Name plates
– Handouts
• Slides
– No class on Friday
• Review of Erie
• Choice of Law
• Introduction to Personal Jurisdiction
1
Assignment
– Personal Jurisdiction: International Shoe & early cases
• FRCP 4(k), especially 4(k)(1)(A)
• Yeazell, 79-91
• Briefly summarize International Shoe
• If the Supreme Court had not decided to change the rules in International
Shoe, would jurisdiction have been proper under the prior rules? If your
answer is “yes,” why do you think the Supreme Court changed the rules?
If you answer is “no,” why was the outcome under the new rules better?
• Yeazell pp. 86ff. Qs 1b, 3
– Optional:
• Glannon Chapters 1 & 2
2
Review of Erie
• Apply state substantive law in federal court in diversity cases
• Apply federal procedure in federal court in diversity cases
• Line between substance and procedure is not clear
– Apply FRCP and interpretations of it
• As long as rule is “arguably procedural”
• E.g. as long as rule is legitimate, which means always
– Apply federal practices when doing so is consistent with
purposes of Erie
• Discourage forum shopping
• Avoid inequitable administration of law
• Modern trend is to apply federal practices
• Federal practice is something procedural (like standards
of review) that is not in the FRCP
3
Choice of Law
• Which state’s law applies?
• Relevant in state court
• Relevant in federal court in diversity cases
• Old rules (1st Restatement)
• Torts: Lex loci delictus (law of place of accident)
– If Contracts
– Place of formation, if issue was whether contract properly entered
into
– Place of performance, if issue was whether contract breached
• Choice of law clauses not generally enforced
– New Rules (2nd Restatement)
• Apply law of state with “most significant contacts”
• Complex rule for choice of law clauses
– Federal courts apply choice of law rules of state where located (Klaxon)
4
Choice of Law Questions I
• 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 your 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
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court.
Choice of Law Questions II
• 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 your
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 III
• 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 IV
• 10) 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 V
• 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 VI
• 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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Introduction to Personal Jurisdiction
• Personal jurisdiction is about which court can hear a case
– If case is in state court, personal jurisdiction answers question “which
state court?”
• California state court? Massachusetts state court?
– If case is in federal court, personal jurisdiction answer question “federal
court in which state?”
• Federal court in California? Federal court in Massachusetts?
– Contrasts
• Subject matter jurisdiction. Federal or state court?
• Venue. Which court within a state
– Los Angeles superior court or San Francisco superior court
– C.D. of California (federal court in LA) or N.D. California (federal
court in San Francisco)
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Long-Arm Statutes
•
Court must have statutory or rule authority AND statute or rule must be
constitutional
– Structure is similar to
• Service of Process. Need statutory/rule authority AND statute/rule must
be constitutional
• Subject matter jurisdiction. Need statutory authority AND statute must be
constitutional
– State statutes are generally called “Long Arm Statutes”
• Enumerated Act statutes
– E.g. statute says, State court has jurisdiction over defendant if it is a
citizen of the state, if it committed a tort in the state, if it was a party
to a contract to be performed in the state…
• To the Limit of the Constitution statutes (CA)
– Federal rule is FRCP 4(k)(1)(A)
• Federal courts generally apply state long-arm statute applicable to court
of “general jurisdiction
– “Court of general jurisdiction” means non-specialized court with
power to hear big cases (e.g. superior court), not family court, small
claims court or other specialized court
– Course will focus on constitutional limitations
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• Due Process clause
Rules before International Shoe (1945)
• Pennoyer v Neff (1877)
• 3 bases for personal jurisdiction
– In personam. If defendant is citizen or resident of state, or present in
state, or consented to jurisdiction
• For individuals, extreme case was service of process in airplane over
Arkansas. Grace v. MacArthur (1959)
• Corporations are citizens in state where incorporated (e.g. Delaware)
• Difficult to determine where corporation is “present”
– Where headquartered. Clearly yes
– Where has plant or office and lots of employees. Clearly yes
– What if only has a few employees? Not clear
– Where does business? Unclear what means to “do business”
– In rem. In dispute about property, personal jurisdiction is proper where
property is located
– Quasi in rem. If suit is NOT about property, but defendant has property
in state, plaintiff can sue in that state for whatever cause of action, but
recovery is limited to value of property in state
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2 Ways to Challenge Jurisdiction
• In court where sued
– Make 12(b)(2) motion or state equivalent
– “Special appearance” means defendant appears in court solely to
challenge jurisdiction
• Otherwise, appearance in court could be construed as consent to
jurisdiction
• Collateral attack
– Only possible where defendant does not have assets in forum
• So plaintiff would have to enforce judgment in state where defendant
has assets
• Enforcing judgment in another state requires separate suit in that
state
– But Full Faith & Credit Clause of US Constitution requires state to
respect judgment of another state, IF THE STATE WHICH
RENDERED THE JUDGMENT HAD JURISDICTION
– Defendant does not appear in court where sued
– Default judgment is entered against defendant
– When plaintiff goes to enforce judgment in state where defendant has
assets, defendant raises lack of personal jurisdiction as defense
– Very risky, because if enforcing court decides the original court had 14
jurisdiction, defendant cannot then challenge judgment on merits