Agenda for 15th Class
• Admin
– Name plates
– Handouts
• Slides
• Court Visit Information (A-E only)
• Polinsky
– Section F-J only
• Court visit canceled
• Trying to reschedule
– Perhaps for Monday afternoon 10/20, as originally scheduled
• Regular class on Monday, 2PM, unless I email otherwise
– Secction F-J only
• F 10/24. Class rescheduled 8-9:50 in Rm 103
• M 10/27. Class rescheduled to 1:45-3:35 in Rm 7
– Class canceled Friday Nov 7
• Rescheduled for Wednesday Nov 5, 6-8PM in Rm 3
• Supplemental Jurisdiction
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• Introduction to settlement and ADR
Assignment. Section A-E
• Monday – Court Visit
– See Court Visit handout for detailed information
– Skim documents at top of webpage
• Need not read very carefully
• Try to understand what each motion is about
• Try to understand what each document is
– Must be at court by 9:40AM
• Friday – Settlement and ADR
– Yeazell pp. 523-24,531-44, 548-50, 555-58
• You do not need to read these materials carefully
– Handout (Polinsky)
• If you are not quantitatively inclined, you will need to read this
carefully. Polinsky is extremely clear, but it will take time.
– Questions on last page of Polinsky handout
• This is writing assignment for Group 3
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Assignment. Section F-J
• Monday – Settlement and ADR
– Check email, in case court visit is rescheduled for Monday
– Yeazell pp. 523-24,531-44, 548-50, 555-58
• You do not need to read these materials carefully
– Handout (Polinsky)
• If you are not quantitatively inclined, you will need to read this
carefully. Polinsky is extremely clear, but it will take time.
– Questions on last page of Polinsky handout
• This is writing assignment for Writing Group 3
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Review of Subject Matter Jurisdiction
• Constitution, Article III, Section 2
– Federal courts may have jurisdiction over
• Cases that raise a federal question
• Cases between citizens of different [U.S.] states, even if not based on
federal law
• Cases between U.S. citizen and foreigner, even if not based on
federal law
– Does not mention, and therefore no jurisdiction over
• Cases between two foreigners, if not based on federal law
• Statute can and usually is narrower than constitution
– 1332. Amount in controversy requirement
– 1332. No jurisdiction in suit between US citizen and foreigner, if foreigner
is permanent resident domiciled in same US state as US citizen
• Judicial interpretation often is narrower than text of statute
– Fed Q J. -- well pleaded complaint rule
– Diversity J. -- complete diversity rule
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Review of Federal Question Jurisdiction
• “Well pleaded complaint rule”
– Does cause of action arise under federal statute or US
constitution?
– Would minimally adequate complaint invoke federal law
• E.g. plead facts that would satisfy elements required by federal
law
– Not sufficient that federal issue in answer or reply
– Cannot get around rule by pleading more than necessary
• Federal statute or constitutional provision does not need to be
mentioned in “short and plain statement of claim” FRCP 8(a)(2)
• Federal statute or constitutional provision does need to be in
jurisdictional statement. FRCP 8(a)(1)
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Review of Diversity Jurisdiction
• Problem if statute is broader than constitution
– Turkish citizen sues Egyptian citizen who is a permanent resident
domiciled in a US state
– Unconstitutional, because constitution does not authorize jurisdiction
over cases involving two foreigners, unless based on federal law
– So pre-2011 statute needed to be interpreted narrowly
• Textualist interpretation of pre-2011 statute also violated purpose of section
deeming permanent resident to be citizen of state where domiciled
– Purpose of that provision was to restrict jurisdiction
– Interpreting section to apply to hypothetical about would expand
jurisdiction
– So purposivist interpretation would also interpret pre-2011 statute not to
apply to above hypothetical
• Statute amended in 2011
– To avoid constitutional problem
– To bring text in line with purpose
– To bring text in line with way most courts interpreted it.
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• Court personnel
• Outlining advice
– Do your own
• But good to consult other outlines for
– Structure
– Completeness
– One page summary / list of topics
• Supplemental Jurisdiction
– Exception to general rule that need to show independent ground for
subject matter jurisdiction over each claim and each plaintiff-defendant
pair.
– Need to serve process on each defendant separately following FRCP 4
– Each defendant must serve an answer
– See problems on handout
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Intro to Settlement I
• Most cases settle
– Roughly 2/3rds of filed cases settle
• Some cases settle even before complaint filed
– Roughly 5% go to trial
– Roughly 20% dismissed (Rule 12) or terminated by summary judgment
– Roughly 10% other – default judgment, plaintiff failed to prosecute,
referred to arbitration, etc.
• Settlement is contract by which plaintiff dismisses case in return for
something valuable from the defendant
– Usually money
– Can be almost anything – job, house, letter of recommendation, apology
– Often non-monetary terms -- Confidentiality/secrecy, return of discovery
documents, payment of costs
• Economic analysis of settlement
– Settlement is attractive to parties because it enables them to save on the
cost of litigation
– Settlements is sometimes not possible, because parties are sometimes
too optimistic about trial outcomes
– Settlement is sometimes not reached, if the parties are too stubborn
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(strategic) in their negotiations
Intro to Settlement II
• Economic analysis of settlement
– Settlement attractive to parties because saves on litigation costs
• Total litigation costs often equal net amount plaintiff recovers
• Suppose plaintiff wins $90,000
– Usually pays one third to lawyer.
» So plaintiff’s lawyer gets $30,000
» So plaintiff nets $60,0000 = $90,000 - $30,000
– Defendant usually pays lawyers roughly same amount: $30,000
– So lawyers get $60,000 ($30,000 + $30,000) and plaintiff gets
$60,0000
– Defendant pays $120,000 = $90,000 + $30,000
• If settle early, parties can both be better off
– E.g. Defendant settles with plaintiff for $80,000
– Of course, depends in part on how much parties have already
invested in litigation
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Intro to Settlement III
• Economic analysis of settlement (cont.)
– Settlement possible if it makes both sides better off than trial
– Need to calculate outcome if case did not settle
• Easy if trial outcome known with certainty
• Plaintiff. Judgment minus lawyers fees. 90K -30K=60K
• Defendant. Judgment plus lawyer’s fees. 90K+30K=120K
• So any settlement amount between 60K and 120K would make both
parties better off
• Of course, may fail to settle because of hard bargaining
– If trial outcome uncertain, need to calculate expected value
• Expected value = probability that plaintiff will prevail x judgment
amount if plaintiff prevails
• Suppose 50% probability that plaintiff will get 100K
• Plaintiff better off with settlement greater than:
– (50% x 100K) – 30K = 50K – 30K = 20K
• Defendant better off with settlement less than:
– (50% x 100K) + 30K = 50K + 30K = 80K
• So any settlement between 20K and 80K would make both parties
better off
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– Of course, lots of simplifying assumptions….
Intro ADR
• ADR = Alternative Disputes Resolution
– Mediation. Settlement negotiations with assistance from neutral person
• Mediator does not have power to imposed settlement
• Used with increasing frequency
– Arbitration. Adjudication by private judge
– Settlement is sometimes classified as ADR
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