1. Personal Jurisdiction (i.e., where you can be sued) A court must be able to exercise personal jurisdiction (also called en persona jurisdiction) over your person and subject matter jurisdiction over the relevant law governing the case in order for you to be sued in a certain location. A court is presumed to have personal jurisdiction over a plaintiff filing suit in its court, so the applied question only affects defendants. This is typically regarded as a constitutional question in America, regarding a citizen's rights (Casebook, 395). However, a state may only exercise jurisdiction to the extent that its relevant long-arm statute allows (but this is usually defined as the Constitutional limit, although it could be less). Personal jurisdiction may exist through either specific jurisdiction (relevant to a single instance giving rise to a suit), or through general jurisdiction (a systematic period of contacts). 1.1. Specific Jurisdiction a) Pennoyer v. Neff, 95 U.S. 714 (1877) Established original standard for specific jurisdiction TEST CHANGE "Every state possesses exclusive jurisdiction and sovereignty over persons and property within its territory. . . . no state can exercise direct jurisdiction and authority over persons or property without its territory." (Casebook, 405) Is this standard intended to preserve a form of Federalism that no longer exists? This is decided at the end of Reconstruction, so sectionalist concerns are very heavy. Represents one extreme of the requirement spectrum of specific jurisdiction (party must have property in the state's borders to be in proper jurisdiction). "Person" language becomes important again in Burnham. b) International Shoe Co. v. Washington, 326 U.S. 310 (1945) Court decided that the main concern of personal jurisdiction was satisfaction of the Due Process Clause of the 14th Amendment (which was passed in 1868), which called for a standard of fairness. TEST CHANGE New test for specific jurisdiction (International Shoe test): Party must have "certain minimum contacts" with state that are "systematic and continuous" so maintenance of suit does not offend "traditional notions of fair play and substantial justice." These minimum contacts must give rise to the suit. Justice Black dissents, favoring a much stronger rule for the states which would allow suit against any defendant doing any kind of business within that state's borders. This can be used to introduce the ideological concerns which often drive Supreme Court decisions: Black was an ardent Originalist and favored statesrights. This also shows that a party to a suit needs to show the judge how he can rule for you in a manner that is consistent with his doctrinal views. Justice Black's proposed rule falls much farther toward the opposite end of the spectrum from Pennoyer, close the extreme of universal jurisdiction (anyone can bring suit anywhere); the majority's rule is more toward the middle. b) McGee v. International Life Ins. Co., 355 U.S. 220 (1957) Facts: Plaintiff, a California resident, was the sole beneficiary of a life insurance policy purchased by another California resident. Policyholder purchased the policy from an Arizona company, which was bought out by a Texas company. Texas company sent a single piece of mail to the CA resident in California, who then paid his premiums by mail. TEST CHANGE: The Court held that this single contact was sufficient for specific jurisdiction in California over the Texas company. c) Hanson v. Denckla, 357 U.S. 235 (1958) Facts: Resident of PA establishes a trust in DE with a DE trustee. Nine years later, resident moves to FL and changed the terms of the trust. After the resident died, two sisters brought suit in FL, challenging the change of the trust as invalid under state law. Other relatives brought suit in DE asking the opposite. Court had to decide the two suits in conjunction. Court distinguished the case from McGee, holding that the FL court did not have jurisdiction over DE trustee. The Court held that the first prong of the International Shoe test required a purposeful contact with the forum state. "It is essential...that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits of its law." Hanson at 253. TEST CHANGE: A single contact may be sufficient, but the defendant must "purposefully avail itself" of the forum state. This is important because Due Process is a protection for the defendant that he presumably waives by availing himself of the forum state's law. All of these discussions ignore the other factor of specific jurisdiction: the balancing of state power. A state's sovereignty may be infringed if another state can exercise jurisdiction over the former's citizens. d) World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) New York residents suffered an accident in a Volkswagen purchased in New York while traveling through Oklahoma; victims sue dealership, importer, regional distributor, and manufacturer. Court applies a form of the International Shoe test, holding that there are no significant "minimal contacts" by the defendant that would allow personal jurisdiction in Oklahoma. Court specifically rejects "foreseeable" theory raised by plaintiffs, which would interpret the McGee "purposeful" standard as simply a contact which could be imagined by the defendant. By doing this, the court essentially held that "purpose" in determining personal jurisdiction means "desire or hope," not just "knowledge." This is a higher standard than the definition of "purposeful" in criminal law (which may mean "desire" or "with knowledge of the effects"). This new standard is illogical to some degree: a defendant is asked where he expects to be sued, and that governs where he can be sued. Justice Brennan offers a dissent in World-Wide; sets for a three-part balancing test: 1. Burden on defendant 2. State's interest 3. Defendant's contacts This makes no sense for a variety of reasons. For one, this is the test for personal jurisdiction, only in an incoherent form: the burden on defendant is the Due Process requirement, the state's interest is the state sovereignty argument, the defendant's contacts is the International Shoe test. Since the test has no hierarchy, application will be difficult. However, is it really worse than a test which offers a circular explanation of "purposeful"? Arguments for against this test (or other factors for bringing suit) are frequently explained in terms of protecting corporations, who are the typical targets of civil law suits. e) Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) Burger King, FL corporation, entered into franchise contract with defendant, who lived and did business in MI. Contract stipulated that FL law would apply to all disputes, but did not dictate forum. Burger King sued for breach of contract in Florida. Court described the Due Process Clause as affording protection of "an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful 'contacts, ties, or relations'" and applied the modified International Shoe test. 471 U.S. at 471-72. Court cited World-Wide that a "forum State does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum State." Since the defendants' actions were "purposefully directed" toward residents of the forum state and they were continuing in nature (in the form of an ongoing contractual relationship with Florida residents, they gave grounds for specific jurisdiction. Did this change the test? A single contact does not seem to be enough in Burger King to establish jurisdiction ("If the question is whether an individual's contract with an out of state party alone can establish sufficient minimum contacts in the other party;s home forum, we believe the answer clearly is that it cannot"). This is a counter-example to the typical "corporate defendant, small guy plaintiff paradigm; did that weigh in on the Court's final decision? After establishing the contacts, the Court discussed the various factors which may have made jurisdiction in Florida unfair, finding them unconvincing. This previews the new proposed balancing test in Asahi only two years away. Why won't Brennan's suggestion just go away? Is this a period of backlash against Due Process protections for defendants? Did the onset of the Reagan era (in which all three balancing-test suggestions were made) provoke the Court into new measures against corporate defendants? Brennan dissented in World-Wide, wrote the opinion in Burger King, and joined the new "majority test" in Asahi. f) Asahi Metal Industry Co. v. Superior Court, 480 U.S. 102 (1987) Complicated fact scenario which ended with Japanese corporation Asahi claiming that the court could not exercise jurisdiction over it in a case where it was brought in as an indemnification party to the original suit. In part II A of the opinion, the Court applied the modified International Shoe test to find whether the court had jurisdiction over the defendant. The decision came down to the test of whether the defendant, by placing its products "in the stream of commerce," purposefully availed itself of the the forum state. The court ruled that under this criteria, the court did not have proper jurisdiction over the defendant. This part of O'Conner's decision was joined by only three additional members of the court (Rehnquist, Scalia, Powell). TEST CHANGE: More importantly, in part II B, the Court took an entirely different approach, basing its decision on the "traditional notions of fair play and substantial justice," a line quoted in International Shoe. This test in part B is a balancing test which evaluates: Defendant's contacts Burden on defendant Interests of Forum State Plaintiff's interest in obtaining relief "Interstate judicial system's interest in obtaining the most efficient resolution of controversies" "Shared interest of the several States in furthering fundamental substantive social policies" Which test governs? Part IIB has the support of at least five justices, and possibly as many as eight, while Part IIA only has the support of four. Lower courts have split, possibly along ideological or political lines, but there are two theories: (1) courts prefer the clear guidance of a bright-line rule (such as Asahi IIA), or (2) courts are rational power self-maximizers who can recognize the discretion Asahi IIB gives them. g) Trend toward universal jurisdiction Court held that defendants in Calder v. Jones, 465 U.S. 783 (1984) and Keeton v. Hustler Magazine, 465 U.S. 770 (1984) were subject to jurisdiction in states where their newspapers enjoyed wide distribution. Rule 4(k) of the FRCP allows a federal court to hold jurisdiction if the defendant would be subject to general jurisdiction in the state in which the court sits. Rule 4(k)(2) goes a step further, allowing a federal court to have personal jurisdiction over any defendant who is not subject to general jurisdiction of the courts of any state, so long as jurisdiction is consistent with the Constitution and federal law. This is taken to the logical next level in Mwani v. bin Laden, 417 F.3d 1 (2005), where the plaintiff claimed the court could exercise personal jurisdiction over bin Laden under the theory of universal jurisdiction. h) Universal jurisdiction Would allow for jurisdiction of a defendant in any jurisdiction. Began with narrow provisions for criminal defendants (notably pirates), but has developed with a modern re-emphasis on the Alien Tort Claims Act. Arguments for universal jurisdiction: Hegemonic Stability Theory: dominant United States can address the grievances of the entire world. United States is the last resort for many plaintiffs. Global Deterrent effect on tortious actions. Maintain United States positive reputation. Forces the United States into diplomatic action. Arguments against universal jurisdiction: Reciprocity by foreign nations Judgments difficult to enforce Interference with international diplomacy (See Plaintiff's Diplomacy) Courts cannot practically accommodate such a caseload. 1.2. General Jurisdiction General jurisdiction is essentially the first prong of the International Shoe test applied to such a degree that the contacts do not have to actually give rise to the grounds for the suit in question. The most obvious examples of general jurisdiction are when citizens are sued in states where they are residents for claims which are based on events which occurred elsewhere. Justice is obviously served in this context, but the scenario does not fit the second prong of the International Shoe test. a) Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408 (1984) explains the standard for general jurisdiction when the defendant is a corporation: Test for jurisdiction over the defendant, Helicopteros, in a tort claim. The corporation was based in Colombia, and the plaintiff did not even claim personal jurisdiction (as contacts giving rise to the claim would lead to a forum-selection clause in the contract signed by the victims of a crash and their employers). Court applied International Shoe precedent of "systematic and continuous contacts," as demonstrated in Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952), the only case where general jurisdiction had previously been successfully established. TEST: State of incorporation sufficient; primary place of business sufficient; merely purchasing from forum state insufficient; offices, or other physical manifestations of presence generally are enough. A corporation can generally be found to have enough contacts if it engages in a mailorder solicitation campaign within a forum state, and possibly even if it uses the internet to the same effect. b) Shaffer v. Heitner, 433 U.S. 186 (1977) helps explain the standard for general jurisdiction when the defendant is an individual. Plaintiff sued Greyhound Inc. and trustees, establishing general jurisdiction over them by sequestering their property of stock in the company in Delaware. Court invalidated quasi in rem standard under the "traditional notions of fair play and substantial justice" qualification from International Shoe. Citizenship in forum state is always enough. Quasi in rem jurisdiction is no longer enough (cannot be in general jurisdiction merely for possessing property within forum state) c) Burnham v. Superior Court of California, 495 U.S. 604 (1990) Simple question: can a state establish general jurisdiction over a defendant merely by serving the defendant in the forum state? Majority (Scalia) says "yes." The "traditional notions" mentioned in International Shoe included the notion that a defendant was always subject to general jurisdiction if he is served process in that location. International Shoe "continuous and systematic contacts" test only applies "with respect to suits arising out of the absent defendant's contacts with the state." Scalia pretty much says that this has always been the standard, we have never claimed to change it, why should we now? Scalia's opinion (other than the beatdown he lays on Brennan's dissent) is joined by three other justices. The dissent has four justices, espousing a multi-factor standard for establishing general jurisdiction. Stevens passes on the chance to clarify the law. Lower courts have generally followed the bright-line Scalia ruling, due to the ease of application. Scalia seems to recognize the court's opinion as being contradictory to the general direction of the Shaffer opinion, but instead appeals to time-honored tradition. How can a Supreme Court justice ignore or overrule the SC's precedent? Not bound by a court's own precedent (limited extent of stare decisis)--applies to every judicial system; precedent is only binding to lower courts. Justices can bypass a precedent by using the ambiguity of the words used in the opinion. Every precedent has inherent discretion implied in its application to the case at hand. This is how Supreme Court opinions can be effected by basic political or ideological motivations, even when precedents are not explicitly overruled. Between Shaffer and Burnham, court's composition changes to add O'Conner, Kennedy, and Scalia. However, two remaining justices (White and Rehnquist) also join the new direction the court takes in Burnham. The tide of public opinion has also shifted to judicial restraint in the period from 1977 to 1991. This can be explained through political considerations. Rehnquist had a reputation for being results oriented, and not particularly interested in the text of the opinion. This may be an additional explanation for his switch. How is Burnham a departure from the progression of cases on personal jurisdiction? This is the only case that did not alter any kind of the traditional process. Suing corporations: most states have said that merely having an agent in a state is not enough for general jurisdiction (few have), as this bypasses “systematic and continuous contacts” standard. d) Review: Personal Jurisdiction Specific Part IIA (Int. Shoe test) Part IIB (Multi-factor balancing test) General Corporation Headquarters, buildings, etc. (all under “continuous and systematic contacts” of Int. Shoe standard) Individual NO LONGER property in the state Citizen of state Service of Process in the state (classical option under English common law: arrest gives Court jurisdiction and the defendant notice) New process: File suit, have private party deliver papers; new problem from separation of the service of process and the establishment of jurisdiction, procedures for serving papers (Due Process concerns)--generally established that actual notice is not required if there is a reasonable effort. (p. 45-51, 490) (76-82 of Supplement) 1.3. Consent and Forum Selection Clauses a) Carnival Cruise Lines v. Shute, 499 U.S. 585 (1991) Shutes bought a ticket for a cruise, which included the stipulation that any lawsuit brought against the line would have to be adjudicated in the state of Florida. Shutes suffered an injury and brought suit in their home state of Washington. Personal jurisdiction over Carnival in Washington? (Yes, using Int. Shoe 1.4. a) b) c) d) e) f) g) "intentional contact" Hansen test.) Forum-selection clause enforceable? (Court says yes). Court rules that the clause must be enforced so long as it is fairly negotiated for (not obtained by fraudulent purposes) and the set forum would have personal jurisdiction over the defendant (here, the defendant's primary place of business was in Florida. Actual fairness or bargained-for nature in question in this case. This effectively eliminates the states-rights consideration of personal jurisdiction, reducing it to merely a question of satisfying due process. Brennan dissents, presumably for policy preference reasons. Dissent would essentially flip the court's allowance of ex ante forum-shopping by defendant (and constrained to a forum where there are contacts) and instead create a situation where a plaintiff could forum shop ex post. Two ideological concerns raised in this case: Corporations v. "little guy" Efficiency of litigation (or even allowance) Venue and Forum non Conveniens Third question that must be asked when filing suit (after addressing state-long arm and Due Process jurisdiction concerns). Intended "to protect the defendant against the risk that a plaintiff will select an unfair or inconvenient place for trial." Johnson Creative Arts. Inc. v. Wool Masters, Inc., 743 F.2d 947, 951 (1st Cir. 1984). Venue may be specified by state or federal statute for a specific type of case. Focused not on states, but on districts. Federal Statute for Venue 28 U.S.C. § 1391 governs questions of venue, divided in to subsections (a) and (b) (a) governs cases involving state law questions, but with diversity jurisdiction (b) governs cases involving federal law questions (no diversity) Venue is intended to cut down on forum shopping. Bates v. C & S Adjusters, 980 F.2d 865 (1992) Venue debate over the interpretation of § 1391(b)(2)'s "events giving rise to" clause. Court held that defendant held burden of preventing events from giving rise to a specific claim, giving the clause a very liberal interpretation (opening re-directed mail from a claim-collecting agency was "an event giving rise to" a fair collection Act claim). Somewhat ironic, since § 1391(a)(1) and (c)(1) (defining a corporation's place of residency as a district where it has personal jurisdiction when the action commenced) would not give the court venue over the defendant since the WorldWide "purposefully" interpretation of "intentional" and not "knowingly" would not be met in a New York district. Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981) Suit involving an aircraft crash, in which every party was clearly associated with Great Britain, with very limited U.S. ties. Court-appointed administratrix of one of the decease's estate files suit in California, removes to Federal Court, and then to Pennsylvania. 29 U.S.C. §§ 1391, 1404, and 1406 all satisfied. Defendant sues on common law doctrine of forum non conveniens. Court rejects the Appellate Court's test of the doctrine (cannot be transferred under the doctrine to a foreign court with laws less friendly to plaintiff). Instead the test is a balancing test and common law standard. Example of continuing influence of common law in the federal judiciary. Big questions and demonstration of the Byrd doctrine for handling disputes between federal common law and state law. Good examination of change of venue statutes §§ 1404 and 1406. Closing points on venue: Transfer between Federal Courts uses § 1404 and § 1406. International transfers (American to Scottish) need a transfer under forum non convenieus. State courts need the same doctrine. Some states have placed limitations on the use of the doctrine in statutory measures. The question of which law applies is a separate question from which court the suit is litigated in; however these two concerns are not independent of each other. Every state has its own rules as to which state's rules apply in an interstate matter; these are usually biased to the home state. In practice, this is almost always just one question. Venue is a central concern to litigating, either for plaintiffs or defendants—venue selection is a very strategic decision. 2. Subject Matter Jurisdiction Governed by Article III Section 2. Rule 12.h (p.116 in Supplement) allows anyone to bring up this issue. Federal subject matter jurisdiction is not exclusive: states can always hear the same claim. 2.1. Federal question jurisdiction: a) Federal question: comes from "arising under" clause of Constitution. b) 28 USC 1331 actually grants this type of jurisdiction to the district courts. c) Why these types of cases? Cases between states, aliens, etc.: risk of prejudice Cases of admiralty, maritime, ministers and consuls: international relations should be decided on a national, not state, level. Arising under federal law--federal judiciary should determine federal law (civil rights stuff). d) Why have federal question jurisdiction at all? Uniformity of interpretation of federal law across locations and venues. This does not always work in practice, but is arguably better than different interpretations in every state. Federal judges are appointed by the president and approved by Congress, and are therefore assumed to be more impartial and not subject to regionalistic concerns when interpreting federal law. (As opposed to state judges, who are often elected.) e) What is covered by federal question jurisdiction? Claims for which Congress gives the plaintiff a right to sue in Federal court explicitly. Congress may also create federal causes of action implicitly. f) What is not covered? Claims that anticipate a federal question or Constitutional defense. In Louisville & Nashville Railroad v. Mottley, the court established the well-pleaded complaint rule which held that claims not invoking a federal question had to be filed in the proper state venue, regardless of the anticipated defense the other party would raise. Very important: this rule is assumed to be a limitation imposed by federal statute, g) 2.2. a) b) c) d) e) f) not a limitation under the Constitution, according to Justice Marshall in Osborn (which held that the term "arise under" in the Constitution is very broad. In other words, Congress could change this requirement Constitutionally if it so wished. Claims under a federal cause of action which incorporate state law (such as 9/11 statute which allowed for a certain type of claims, but specified that the claimant's relevant state law would apply). We still are not clear whether state causes of action which incorporate federal law are grounds for federal question jurisdiction or not. Federal diversity jurisdiction 28 USC 1332 also provides federal subject matter jurisdiction for diversity cases, or cases in which the parties have diverse citizenship. These types of claims are when the parties are diverse and the plaintiff is bringing a state law claim. Why have diversity jurisdiction? To ensure unbiased adjudication (protecting out-of-state defendants from a “home field advantage” for the plaintiff, created by a judge who is elected only by residents of that state). This only works as far as the judge is concerned, as federal jury trials still draw jurors from residents of the host state. While this is a theoretical concern, empirical evidence does not usually support this idea. However, there is an empirically proven bias against corporations in state courts, so the practical reason that this type of jurisdiction still exists is to protect diverse corporations by allowing them to bring suit (or remove) to federal court. Generally, federal judges appear to be more competent (selected by president and approved by senate as opposed to elected). Concept of diversity jurisdiction is currently being challenged by critics who allege that in the new era of the United States in which state borders are much less important, diversity jurisdiction has outlived its usefulness; however, due to a variety of factors (most notably inertia and reason number 2 above), it doesn't seem to be going anywhere. In 1906 the Supreme Court held in Strawbridge that the diversity requirement for section 1332 was complete diversity, meaning that every plaintiff had to be diverse from every defendant in the suit. Like section 1331, this interpretation of 28 USC 1332 is narrower than the Constitution's requirement, which is only minimal diversity, meaning the presence of at least one plaintiff who is diverse from at least one defendant. This standard of diversity reappears when we talk about class-action suits. The chronology of this interpretation, however, is opposite that of 1331. Early in U.S. law history, Justice Marshall defined the Constitution's definition of "arising under" very broadly in Osborn (1824); later, the court implemented the well-pleaded complaint rule in Mottley (1908), seen as applying to 1331 and limiting federal jurisdiction. This may be due to contemporary concerns about state rights. On the other hand, section 1332 was first interpreted as requiring complete diversity in Strawbridge (1806), while the broader Constitutional requirement was established in a series of cases from 1880-1920. Possible interpretations: Coincided with the rise and decline of federalism concerns; very important in early 19th century, not important after the Civil War, and the federal government wanted more power to hear cases (especially in the South) after it. Coincided with the rise in the number of corporations, who were able to influence the courts and Congress into expanding federal jurisdiction for diversity. Makes sense, especially if you consider the class action diversity requirements. Federal question jurisdiction did not take the same path; Marshall merely wanted to expand authority at the beginning, but perhaps the limits of Congressional power made Marshall's broad interpretation irrelevant until Congress adopted more power after Reconstruction. As a whole, perhaps the courts are inclined to interpret legislative mandates of judicial authority narrowly (creating the gap between the Constitution and sections 1331 and 1332. g) Requirements Complete diversity of citizenship (required by Strawbridge) Citizenship of persons determined using a two-part test (from Sheehan v. Gustafson, 1992): Two-part test: Presence in purported state of domicile Intent to remain in purported state of domicile These two tests are answered by a jury that considers a series of types of evidence, such as property owned in the state, driver's license, etc. "Mixed question of law and fact" Suing in federal court for diversity in defendant's home state seen as purposeless, and possibly rejected by courts. Citizenship of a corporation is determined by two factors, according to section 1332(c): Primary place of buisness--two possible ways of determining: "Nerve center test" ("where the activities of the coroporations are controlled and directed" or "where its executive headquarters are located" Peterson v. Cooley) "Place of operations test" (where corporation does most of its "active" operations) State of incorporation; corporations chartered by the federal government are citizens only where its primary place of business is (Wachovia v. Schmidt) Citizenship of partnerships (except in class actions) is determined by the citizenship of each partner. In Carden v. Arkoma Assc., Scalia held that corporations had been given a one-time Congressional definition of citizenship, so partnerships are still only legally citizens in the same way their members are. This means that "citizen" in 1332(a)(1) is different from "citizen" in 1332(a)(2). Interesting implication of this rule: international law firms based in the U.S. will never be able to file or remove under diversity jurisdiction since Rule 4(k) of FRCP makes an international U.S. citizen a citizen of any state. This was clarified in Cresswell v. Sullivan. In the same way, a U.S. citizen living abroad cannot bring a suit for diversity jurisdiction against a U.S. citizen since the plaintiff is not a "subject of a foreign state." Smith v. Carter. The "matter in controversy" must have a value over $75,000. 2.3. a) b) c) d) Supreme Court has held that in most suits (not class actions), each individual plaintiff has to be able to meet the amount-in-controversy requirement. Snyder v. Harris (1969) Additionally, a court can look at either the plaintiff's or defendant's estimation of the amount in controversy, but is not bound to either figure. Del Vecchio v. Conseco (2000) Finally, the court must review claims for punitive damages with more scrutiny to find that they meet the amount in controversy requirement. In order to dismiss a case on the grounds of failing this requirement, the court must find "to a legal certainty" that the plaintiff is not entitled to enough damages to meet the amountin-controversy requirement. More on this later... Important note: a defendant is assumed to have waived his objections to the court's establishment of personal jurisdiction if he does not object (or fail to appear) at the beginning of the suit. However, a defendant (or a court sua sponte) can raise a question of subject matter jurisdiction at any time. Removal Section 1441(a) of Title 28 allows for a defendant to remove any civil action brought in state court that the district court would have subject matter and personal jurisdiction over. This applies to both federal question and diversity jurisdiction cases. However, section 1441(b) gives an important exception: defendants cannot remove a diversity suit to district court if any defendant is a citizen of the state in which the suit was initially brought. The theory is that a home-state defendant would not need the bias-protection in federal court. In practice, this is less evident if we assume federal courts exist to protect corporations from civil suits. This provision does fit the "expertise" theory that federal judges are experts on federal law. Section 1446(b) provides guidance for removal, allowing a defendant thirty days to file for removal after being named in an action. If the action is initially non-removable, but another party joins or leaves the suit or a federal claim central to the suit is added and the action becomes removable, then the defendant has thirty days from notice of the change to the suit to file for removal. However, this does not apply if the suit becomes removable under 1332 diversity jurisdiction more than 1 year after the action was commenced. In Ritchey v. Upjohn Drug Co. (1998) the Ninth Circuit held that that the one-year limitation only applies when the case is not originally removable, as suggested by a literal reading of the text and thwarting a potential loophole the plaintiff thought he had found to defeat removal. The court found that extra defendants were joined fraudulently merely to thwart removal, so the original case was removable and the one-year time limitation did not apply. Discussion on textualism v. intentionalism, use of legislative history, etc... Defendants have ways to counter plaintiff's methods of taking advantage of the one-year limitation. For example, if plaintiff files a suit that is originally non-removable due to not meeting the amount-in-controversy requirement, he can file an amended claim for a greater amount more than a year later and preclude removal. To counter this, a defendant may: Counter claim with a higher estimation of damages (meeting the requirement--best option) Fight the amended claim, showing it to be purely opportunistic and capping the e) f) 2.4. a) b) c) d) e) f) plaintiff's damages at the lower amount (less viable option) Waiting until trial and using the bait-and-switch damages as negative evidence for the jury (least viable option) There are other allowances for removal in the US code, mostly concerned with suits against or related to employees or agents of the Federal Government. In Watson v. Phillip-Morris USA, the cigarette manufacturer successfully removed a suit under 28 USC 1442 under the theory that the cigarette maker was an "agent" of the federal government due to the degree of self-regulation it employed. The Supreme Court ended this ridiculousness unanimously. Note: removal under 1367 supplemental jurisdiction requires the assent of all named defendants, while removal under 1441 only requires some. In other words, only the those defending a federal question claim have to move for removal, while those defending state law claims who are attached to the same 1367 "case" can be removed without assenting or filing a motion. Landford v. Prince William County. Supplemental Jurisdiction In some scenarios, federal courts can hear state law claims if they are closely connected to valid federal law claims. This is called supplemental or pendent jurisdiction. In United Mine Workers v. Gibbs, the Supreme Court held that a federal court had proper supplemental jurisdiction over a state law claim when it is related to a valid federal law claim by since they both "arose from the same nucleus of operative fact and reflected alternative remedies." This was a common law rule allowing supplemental jurisdiction. Thus, under Gibbs, the authority of the judiciary to hear supplemental claims stems from their Article III authority to hear "cases." Gibbs defined a "case" as inclusive of all claims stemming from the same nucleus of facts. This common law rule was codified in 28 USC 1367(a), which provides district courts with supplemental jurisdiction "over all other claims that are so related to the claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the United States Constitution." Why have supplemental jurisdiction? Efficiency. However, this is not really valid, since: Whatever expertise federal courts may have in adjudicating federal law claims is nullified by their lack of expertise in applying state law. Due to quirks in the language of the removal provisions, courts have created a system in which claims that could never have been filed in federal court may be removed there. Section 1367 allows for supplemental jurisdiction over additional state law claims when they form part of the same "case or controversy under Article III." Section 1441(a) allows for removal of claims that could have originally been filed in federal court, including claims that require 1367 supplemental jurisdiction. However, 1441(c) allows for supplemental removal jurisdiction over the entire case when a "separate and independent" federal question claim is joined with "one or more otherwise non-removable claims or causes of action." This is up to the court's discretion, but may be exercised. In other words, supplemental removal jurisdiction may be asserted over claims which are not "of the same case or controversy" as a federal question claim and could not have been filed in federal court. Is this Constitutional? Yes: "Arising under" broad enough in Osborn to include "separate and independent" claims. No: Gibbs interpreted that the Constitutional terms case and "arising under" meant related to a "common nucleus of fact"; "separate and independent" claims would clearly exceed this limit, and the federal judiciary would have no authority to hear them. 3. Which Law to Apply: The Erie Doctrine 3.1. Erie permanently changed the process of determining which substantive laws applied in diversity cases. a) There are two questions to answer when dealing with choice of law questions: Federal law or state law? If state, which state? b) In a federal question case, this is easy--the federal substantive law providing the basis for the claim applies. However, it is not always clear which procedural laws apply. c) For diversity cases, the claims brought on state statutes were clearly governed by that state's law. However, it was not clear which state's law (common law) governed claims brought on common law grounds, since both the federal judiciary and the states had developed a common law system. Side note: what is common law? Common law is the judicial principle laid down when the judge is not merely interpreting or applying a statute if it has lasting binding authority. Common law is frequently found in the states (except for LA, of course), but after Erie only rarely is created by federal judges. d) In order to clarify this, Congress took two actions: In 1789 it passed the Rules of Decision Act, which stated that the "laws of the several states...shall be regarded as rules of decision in civil actions in the courts of the United States," with an exception for Constitutional provisions, treaties, and Acts of Congress. From the beginning of the republic until the 1930s, Congress passed a series of acts known as the Process or Conformity Acts. These statutes held that federal courts should follow the "practice, forms, and procedures" of the forum state's courts. This was probably passed due to practicality concerns, since there was no standard procedural system for federal courts (i.e., no FRCP or FRE) e) Swift v. Tyson (1842) Diversity case heard in New York: choice of law between New York or federal common law decided the verdict. Court applied the contemporary doctrine of judicial theory that courts had an ability to "discover" the actual law (natural law). Using this theory, the Court easily decides that the RDA does not apply in governing whether a state or federal judge's application of the law, since the two courts would (presumably) come to the same decision, or at least a right one and a wrong one. In other words, Swift held that the RDA did not apply to questions of common law. The court had two possibilities stemming from this holding: RDA did not apply to common law, so state common law governs RDA did not apply, so federal common law governs Court arbitrarily chose the latter, holding that federal common law governed in diversity suits unless there was a statutory provision of applicable law in the forum state. The implication is that the court looked at the delegation of authority in the RDA, found that Congress had clearly given state law authority when there was statutory law but not when there is common law, so it implicitly delegated this authority to the federal courts. (Weak expresio unius argument). f) So, after Swift: Things as a matter of "practice, form, or procedure"--state law applies Things that are "rules of decision"--state statutory law or federal common law applies. g) Erie Railroad Co. v. Tompkins (1938) Suit on negligence claim, under which the forum state's common law would clearly prevent recovery, whereas the federal common law may allow it. Interestingly, the defendant in the suit Erie Railroad actually does not ask for a rewrite of the law, allowing state law to apply, probably recognizing that this would in sum be a worse deal for the railroad, since it governed claims against it under federal common law, which seemed to be more favorable. However, the Court overturns Swift on five grounds, holding that state common law or state statutory law governs diversity claims: The drafting history of the RDA (as analyzed by Prof. Charles Warren) seemed to suggest that this was the original intent of the enacting Congress. While this would not be sufficient in itself, the Court does have a duty to be self-correcting in interpretation errors of substantial importance (where Congress cannot fix them, like Constitutionality). Swift promoted forum shopping, which the court (probably correctly) finds to be inefficient. For example, see Black & White Taxicab Co. v. Brown & Yellow Taxicab Co. (1928). Swift promoted concerns about uniformity of the judicial principles, since state common law and federal common law could hold entirely different substantive defaults. Swift was unconstitutional in that it assigned law-making authority to the judiciary. The federal branches' powers are limited by the Constitution, and the judiciary is not authorized to make laws, even if Congress tried to delegate that authority. New perspective of legal positivism: law does not exist until the people make it exist. This gives it its source of authority and power. This also means that judges are not special in their ability to discern the natural law, so they cannot be vested with the power to make laws. Scholarship on Erie (notably, Reconstructing Erie) argues that the arguments presented in Justice Brandeis' opinion are not nearly strong as they appear: Brandeis' reliance on the Warren analysis of the drafting history appears to be unwarranted. Closer review reveals that Swift correctly followed the drafters' intentions. Although forum shopping is a concern raised by Swift, it could presumably be eliminated simply by making one body of law superior to the other, so it would govern regardless of the forum (within the jurisdictional bounds). Swift is clearly not unconstitutional in any strict sense, since the broad interpretation of the Commerce Clause would allow Congress to have created the laws eventually formed by the judiciary--Congress simply delegated this responsibility. h) i) j) 3.2. a) Legal positivism remains as the dominant legal philosophy today. So, of the five arguments presented in Erie, only three have any weight today. So why is the Erie doctrine still in existence? Separation of Powers Constitutionality argument--different from the one in the opinion, but still valid. More convincing reason: more democratic to have elected (read: democratically accountable) state judges handing down the law. After Erie: 1. Something that is a "rule of decision" is adjudicated by state common law or statute. 2. Something that is not a "rule of decision": Congress passed the Rules Enabling Act (28 USC 2072) which gave the Supreme Court (with the approval of Congress) the ability to make its own binding procedural rules. The REA limits this authority in section 2072(b) by holding that "such rules shall not abridge, enlarge, or modify any substantive right." So in other words, a complete flip from the situation after Swift. Tricky questions raised by this: Can a something be both a rule of decision (governed by the RDA) and a procedure that is not substantive (REA)? In other words, are these two bodies of law exclusive or overlapping? Can something be neither a rule of decision nor a procedure that is not substantive? In other words, is the universe only divided into REA and RDA categories (regardless of overlap)? What if something falls under the REA, but the Supreme Court has not actually prescribed a procedural rule for it yet? What criteria do we use to define the terms and picture the "universe." Substance versus Procedure Sibbach v. Wilson (1941) Showdown between FRCP 35 and relevant state common law: if FRCP applies, then plaintiff must take medical exam to validate her claim; if state law, she does not. Court holds that federal law cannot trump state substantive law. This means that the RDA covers "substantive law"--the question is whether it only covers this, or overlaps the REA. In an odd twist of the facts, if the law is determined to be substantive, another state's law would force the examination per the forum state's choice of law statutes. Therefore, the plaintiff argues that this is not a matter of "substantive law" (which would force the other state's law to apply and compel her to take the exam), but of "substantive right," which would mean that the REA would not apply, and the forum state's procedural law would apply. This argument requires the justices to believe that "substantive" has a different meaning in each section of law. The court rejects this argument, but makes their ruling slightly ambiguous. Court actually holds that the test for whether a rule infringes on a substantive right is whether it is "really procedural. This implies either: There is an exclusive world of "substantive law" cases (RDA) and "procedural" cases (REA) with no overlap, OR There is an exclusive world of RDA and REA, but where the two overlap, the REA controls. b) Guaranty Trust Co. v. York (1945) State statute bars suits from investors due to statute of limitations, but plaintiffs claim that federal doctrine of laches (invocation of federal common law) should allow the suit to proceed in federal court. Court could have held that this type of suit was clearly barred by the RDA (in equity as well as law); however, while the court did choose to bar the suit, it created a new distinction for the applicability of the RDA and the REA. The court held that the distinction of "substantive" v. "procedural" was irrelevant for two reasons: No federal rule in question Major ruling: the distinction itself was a departure from the Erie spirit of rule of law: Court feels that the purpose of Erie was to eliminate incentives for forumshopping by plaintiffs. In order to reach this goal, courts have to look at the ex ante expectations of the parties and see whether suing in federal court v. state court would have any advantages or disadvantages--if so, then the matter of law is "substantive" (in at least that context), and the state law should govern, eliminating the difference. This is called the outcome-determinative test: if the outcome of the case would be affected by the venue, then the matter is substantive and would fall under the RDA, defaulting to state law. c) Ragan v. Merchants Transfer and Warehouse (1949) Another statute of limitations question: state law would preclude the claim, whereas the FRCP would seem to allow it. Court holds that since the cause of action is a state law one, the state law governing the procedures of the claim is binding. In other words, this may be an example of an overlap between the REA and RDA, but the RDA is superior, causing state law to govern. d) Byrd. Blue Ridge Rural Electrical Company (1958) This issue in this case was whether the jury or the judge should determine the plaintiff's status as any "employee" of the defendant, which would determine different types of remedies available under state law. The defendant argued for the standard federal practice of using a jury, while the plaintiff argued that the state law practice of using a judge was proper. The Court issued an opinion which has been seen as both undermining and upholding the Erie doctrine: Court reiterated that federal courts must honor the "definition of state-created rights and obligations by the state courts." (from Erie). This is because the federal courts have no authority to make law in these matters since there is no federal common law. However, in this case, the state law allowing a judge to decide "employee" status was not a definition of the rights of the parties, but only a "form and mode of enforcing" compensation. The Court then applied the York modification of the Erie doctrine, the outcomedeterminative test. Justice Brennan recognizes that this test would acknowledge a change in outcome and force the application of state law. However, Brennan adds a third element to the choice-of-law question: when deciding whether to follow state law in matters of "form and mode" (i.e. matters of policy, not matters of constitutional command), the Court must consider any countervailing federal policies that arise from the federal court's status as an independent judicial system. In this case, the Seventh Amendment's right to a jury is tangentially connected to the case, so the Court should follow the alternative Erie goal of uniformity of the law by yielding to the standard federal court practice. In other words, there is now a three-part balancing test for deciding whether to apply the RDA: State's interest in the application of its laws (huh?) Whether choice-of-law is outcome determinative (York test) Whether there is a substantial federal interest This is seen as a somewhat of a departure from the natural course of Erie law development, although the E & E book suggests that it may be a better reflection of the true intentions behind the Erie decision. The real implication in Byrd is that a case of substantial importance (read: Constitutional concern, we're just not saying that outright) will have federal law applied to either satisfy or avoid the Constitutional question. e) So, at this point: Matters of clearly substantive law ("bound up with the rights and obligations" created by state law")--> apply state law (Erie) Matters of "form and mode" (procedure) where applying separate rule would likely affect the outcome--> apply state law (York) Matters of "form and mode" where applying separate rule would likely affect the outcome, but there are important federal countervailing considerations--> apply federal law (Byrd) Matters of "form and mode" where applying separate federal rule is unlikely to affect outcome--> apply federal law (REA) f) Hanna v. Plumer (1965) Controversy over controlling law in service of process. If the state statutory law governed, then the service was not valid; if the FRCP process governed, then it was. Court's opinion is essentially divided into two parts: In the first part, the court weighs the "outcome determinative" test of York and finds that the test is not sufficient for deciding whether the rule is procedural or substantive. Instead, CJ Warren concludes that the outcome determination must be done in light of the twin policies underlying Erie: prevention of forum shopping and inequitable administration of the laws. A true outcomedeterminative test would ask if the party ex ante cared which forum he filed suit in, and the forum would probably not matter in this case over such a trivial detail as service of process. Therefore, this matter does not fall under the RDA and is to be governed by federal, not state, law. However, Warren goes even further and holds that when the FRCP are the federal law at issue, they are given the presumption of superiority over state procedures. Since the FRCP have Congressional statutory authority, they are assumed to be valid and "procedural" (and therefore binding under the REA) unless the plaintiff meets a very high standard of proof showing that they are not (or that they infringe on a substantive right). g) So what universe do we have now? Two worlds under which everything falls: RDA governs substantive rules and I tiny set of procedural rules which infringe on the plaintiff's substantive rights. REA governs almost all procedural rules, other than the few which may infringe on a substantive right. New two-part test: Modified outcome-determinative test: based on the goals of avoidance of forum shopping and inequitable administration of the laws, should state law apply? If the FRCP are involved, does the plaintiff meet the high burden of proof of showing that either this rule is not really procedural or infringes on a substantive right? In other words, state common law v. federal common law or federal statute: use outcome-determinative test. State common or statutory law v. FRCP: use "arguably procedural test (and FRCP prevails). h) Walker v. Armco (1980) Almost exact facts of Ragan revisited, where statute of limitations is tolled differently depending on use of state or federal law. State statute v. FRCP. Court holds that the FRCP alleged to be at issue in this case is not actually in conflict with the state's statute. This means that the state statute is paired off with federal common law, the modified outcome-determinative test is invoked, and the statute prevails under the RDA. In other words, this is an example of Hanna I. If the court had found that the FRCP actually conflicted with the statute, it would have been a Hanna II case and the federal rule would have won. Court did not want this outcome, though, since it would have to find a way to distinguish the decision from the contrary opinion in Ragan. i) Possible universes from this decision: Overlapping universe in which everything which is outcome-determinative (including procedural law), but not FRCP--> RDA (state law) Overlapping universe in which the REA is the FRCP, the RDA covers everything else, which is assumed to be substantive, and the REA trumps substantive law where it overlaps. j) Stewart v. Ricoh (1988) Case ended the legal fiction that the outcome-determinative test of Hanna I is really the issue at stake. Contract with forum-selection clause; federal court rulings would uphold it, state law would not. Court asks three preliminary questions: Statute at issue constitutional? Statute within Congressional power of drafting? Statute sufficiently on point to control the issue? Implication of this decision is that the RDA only applies when there is no federal statutory law on the issue. Note: this fits with section 2072(b)'s supremacy clause which overrides any substantive law which conflicts with the REA. k) So what do we have today? Four possible scenarios given by the cases: Conflict between state law and Constitution: Constitutional rules without exception. Implication from Byrd. Conflict between state law and Federal Statute: First, is the statute Constitutional and crafted on valid basis? Is the statute sufficiently on point to control the issue? (Ricoh) If so, then federal statute controls. Ricoh, Section 2072(b)'s override provision. Conflict between state law and Federal Rule. If the Federal Rule is valid and "arguably procedural," it controls under the REA. Hanna (part II test) Same test in effect as Sibbach's "really procedural." Conflict between state common law and federal common law. If there is no rightful authority for the court to make common law, Erie would probably guarantee the state law wins. If the practice relates to the conduct of the litigation (or other rightful grounds for law), apply the modified outcome-determinative test of Hanna I (with other implications of the Erie decision in mind, but no consideration of broad "state's interests.") State law wins. Erie, Ragan, Walker, York. l) How do you explain the current Erie doctrine? Basically, the discussion comes down to a look at the source of authority to make the law. If the authority for Federal law is valid and constitutional, it carries due to the Supremacy Clause. This can be explained to the extent that it promotes democracy. A politicallyaccountable Congress can either pass valid statutes that override state laws (since the public can react) or delegate limited lawmaking authority to the judiciary because they are still required to be elected. This explains why Federal rules are valid in trumping state law. However, unelected individual judges should not have the power to craft a federal common law that cannot be responded to by the public because this is not democratic. One exception to this: Chamber v. Nasco, in which a court held 5-4 to apply federal common law over state common law. The subject matter: penalties for lawyers. 3.3. "Reverse Erie doctrine" a) When a federal complaint is filed in state court, the same problem arises: which set of law governs? b) Generally, the set of law a court applies depends on the source of the cause of action. c) This is somewhat ironic, as the reverse Erie doctrine does seem to craft a standing, binding body of federal common law that the state courts must apply in adjudicating claims on federal grounds. d) Dice v. Akron, Canton & Youngstown RR (1952) Basically the reverse of Byrd, where the plaintiffs had a federal claim in state court and a factual assertion that was to be decided by either a judge or jury; state law says judge, federal law says jury. If it were merely a Constitutional issue that the Seventh Amendment required a jury trial, then the decision would be easy--however, the court recognizes that the Seventh Amendment had not been incorporated yet and this was not the case. e) 3.4. a) b) c) Instead, the court holds that the Federal Employers' Liability Act (FELA) controls, and that this act implies the need for juries (even though the rule is arguably procedural in form). Jinks v. Richland County, S.C. (2003) State law claim in state court in which the Court held that a federal statute dictated when the statute of limitations tolled. Same basic test as Erie doctrine: is the federal law validly enacted? Due to the expansive scope of federal authority now (especially through the Commerce Clause), the answer is almost inevitably "yes." Basically just an example of bold use of federal power and the few limitations on it. Horizontal Choice of Law Two questions when dealing with any case, once vertical choice of law answered: Which state's law applies? How do you determine what that law is? The same question arise regardless of whether the suit is in state or federal court. Which state's law applies? First, look at the forum state's law to see if there is a clear statutory or (more likely) common law answer to the choice of law question. States will often set default provisions that discourage forum shopping, i.e. if state X has personal jurisdiction and its laws would apply, we will adopt their law for this case. Three years after Erie was decided, the Supreme Court held in Klaxton v. Stentor Manufacturing Co. that the same policy mandated the application of the forum state's choice of law rules as well as its substantive law. In other words, the plaintiff should not have an advantage in federal court due to the "accident of diversity." However, the effect of this has been to create a system in which there are incentives to forum shop; although plaintiffs will no longer contemplate state v. federal (in theory), they will consider state 1 v. state 2. The counter to this problem could be the balance of personal jurisdiction. Second, apply the rule to the facts. Approaches for identifying the rule: Traditional common law rule that the place of the injury (or alternatively, the place of the last event necessary to give rise to the claim) is the state whose law governs (See Quillen v. International Playtex (1986)) More modern view: state law rules vary wildly, but are summarized (or perhaps suggested) in the Restatement of Conflicts of Law 2d (Colorado court in Wood Bros. Homes v. Walker Adjustment Bureau (1979): Section 6 of the Restatement presents general terms for consideration: (1) "A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law." (2) "When there is no such directive, the factors relevant to the choice of the applicable rule of law include: (a) the needs of the interstate and international systems, (b) the relevant policies of the forum, (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue, (d) the protection of justified expectations, (e) the basic policies underlying the particular field of law, (f) certainty, predictability and uniformity of result, and (g) ease in the determination and application of the law to be applied. Section 188 provides more specific factors for consideration when the parties did not seem to pick a state's laws: (1) The rights and duties of the parties with respect to an issue in contract are determined by the local law of the state which, with respect to that issue, has the most significant relationship to the transaction and the parties under the principles stated in s 6. (2) In the absence of an effective choice of law by the parties (see s 187), the contacts to be taken into account in applying the principles of s 6 to determine the law applicable to an issue include: (a) the place of contracting, (b) the place of negotiation of the contract, (c) the place of performance, (d) the location of the subject matter of the contract, and (e) the domicile, residence, nationality, place of incorporation (3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in ss 189-199 and 203. d) Generally, this two-part test only applies to questions of substantive law; the forum state's procedural law is expected to govern. However, as we have discovered, it can be difficult to differentiate between the two. e) Danielson v. National Supply Company (2003) Minnesota Appellate Court has to decide whether the question of a statute of limitations is procedural or substantive--if procedural, then the Minnesota statute governs and allows the suit, if substantive than another state's law may govern and bar the suit from being filed. Court analyzes the question both ways, deciding that under the traditional classification of "procedural," the suit would be allowed; under the new classification as "substantive," the multi-factor Restatement 2d test suggests that Minnesota law still applies and allows the suit. This could be argued as convenient. A few interesting factors of this case: In holding that the statute of limitations is a procedural law, the court comes to a different conclusion than the Supreme Court in Ragan, Walker, and York. Court implies that Minnesota is the best forum for the suit, despite the fact that the main test is convenience of the defendant, not the plaintiff. Defendant barely has any contact with the state (other than one store), and this would have to establish general jurisdiction, as that store had nothing to do with the "events giving rise to the claim." Supreme Court allows use of another state's law even when the court there would not have personal jurisdiction over the defendant; for whatever reason, the limits brought by Due Process are stricter on jurisdiction than choice of law. f) Webber v. Sobba (2003) State law claim; court denied plaintiff's claim for partial summary judgment, plaintiff dismissed suit and re-filed in federal court. The Eight circuit held that the denial of the claim was improper under Arkansas law and granted it. In other words, even though the state judge applied the state's law and found against the plaintiff, the federal court still ruled the exact opposite way. How is this possible? Federal courts required to rule as the supreme court of the relevant state would rule on that state's law, so lower decisions are not binding. Court also seems to be able to ignore state supreme court dicta in some circumstances (since it seemed to imply that the court would rule the other way in this case). Hierarchy of evidence for applying state law: State supreme court decisions Law scholars Public policy Related precedents State appellate court decisions Dicta from supreme court Trial court opinions 4. The Federal Rules of Civil Procedure (How to file a suit) 4.1. Pleadings a) Complaint Statute of Limitations tolling: Rules 3 & 6 A suit is commenced (according to Rule 3) when it is filed; for the purposes of federal court, this action tolls the statute of limitations (West v. Conrail) Note the difference in the explicit function of the federal rule, as opposed to the given opinion in Walker. Despite the emphasis on notice pleading and other liberal standards, courts generally hold strictly to time deadlines, especially when the parties have sophisticated representation. In Pincay v. Andrews, prominent attorney relied on paralegal's calendar and missed filing deadline--not only lost opportunity for suit, but subjected to Rule 11 sanctions as well. Plaintiff required to give defendant timely and proper notice of service: Rules 4 & 5 Rule 7 gives the types of pleadings allowed; Rule 7.1 compels nongovernmental corporate parties to disclose stock ownership to prevent court's conflict of interest. Notice Pleading: Rule 8(a) The FRCP adopt the practice of notice pleading, which, in theory, holds that all the information needed in the initial filing of a suit is enough to put the defendant on notice of the proceedings. Notice pleading reflects the purpose of the FRCP, which was to end the legal system of equity, which was a highly technical practice which frequently excluded suits not on their merits, but on procedural deficiencies. Three parts of a complaint, per 8(a): Short and plain statement for grounds of the court's jurisdiction; Short and plain statement of claim for which pleader is entitled relief; Demand for the relief sought. The idea is just to put the defendant "on notice" that a suit has been filed. Biggest change in pleadings under the FRCP: alternative pleadings allowed. Previously, parties had to submit a demur, which admitted to all alleged facts, in order to submit an alternative defense. Now parties can go along parallel lines of reasoning. McCormick v. Kopmann Rule 11 Sanctions Rule 11(c) gives the court the authority to impose sanctions upon counsel or parties to the suit who violate the conditions of Rule 11(b) (pretty much sum to lying to the court). Note: courts pretty much only impose sanctions on attorneys or unrepresented parties, not represented ones. These sanctions can be initiated on the opposing party's motion, or merely on the court's own initiative. If the opposing party moves for sanctions, the party being accused has 21 days to remove the offending pleading before the court acts. Courts generally only impose sanctions for when parties or attorneys actually lie to the court. In re Pennie & Edmonds LLP (2003) Court overturned lower court's sua sponte ruling for sanctions without the 21 day window to withdraw the suit. Court instead stated that the test for sanctions in a sua sponte decision is subjective good faith (which was met in this instance). b) Motions to Dismiss Rule 12(b)(6) Motion to Dismiss Rule 12(b)(6) gives a defendant the ability to file a motion for dismissal of the case because the plaintiff failed to state a claim upon which relief can be granted--in other words, not providing the criteria required in Rule 8(a). This is done almost universally (why not if it has a chance of working?). In theory, it should be very hard to get a suit dismissed under this section, since notice pleading is designed to keep claims in court until discovery indicates that they are without merit (not just lack of material in the claim itself). Basically two types of 12(b)(6) motions: Substantive motion. Defense claims (but does not admit) that even if everything alleged to have taken place is true, the plaintiff does not have grounds for a proper claim. This may be due to: No cause of action in this jurisdiction No standing to bring suit Statute of limitations has run Other type of claim is that plaintiff has failed to allege sufficient factual material for his claim. This is used rarely as it directly conflicts with the idea of notice pleading. Conley v. Gibson Claim for damages from union resulting from wrongful termination due to racial bias. Defendant moved to dismiss under Rule 12(b)(6) under both types of claims. Court held: Claims should only be dismissed (by Rule 12(b)(6)?) when "it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Instead, liberal notice pleading of FRCP leaves dismissal for after opportunity to present evidence. Rule 8(f) of the FRCP preserves "substantial justice" (through lenient pleading standards). Claim is only intended to give defendant notice--additional information should never be required. Other rules provide for information disclosure (such as Rule 12(e)). Notice pleading form is short and direct and should be adequate. In other words, yay notice pleading, boo 12(b)(6) motions. Leatherman v. Tarran County Narcotics Team (1993) Plaintiff sued city for dama'ges after police officers mishandled a bust, alleging "improper training," but with no facts asserted actually related to the training. Defendant moved for 12(b)(6) dismissal due to lack of factual basis of claim, based on the respondeat superior doctrine that creates a higher pleading standard for suits against municipalities. Court rejects this rule, once again hearkening to notice pleading: Rule 9(b) provides a list of the kinds of pleadings which need more detail than just notice and respondeat superior is not on the list. (Expresio unius) If this is a mistake, it is to be corrected by the drafters. Longer pleadings are not valid due to notice pleading standard. Once again, summary judgment is the proper remedy here (after evidence has been presented). Swierkiewicz v. Sorema Plaintiff alleges unlawful demotion due to age and race related biases, offering dates and information about his replacement. Defendant filed 12(b)(6) motion for lack of information. Court ruled that the framework that defendant relied upon was valid only for summary judgment, not Rule 12(b)(6): Test cannot be applied before discovery (like Conley) Rule 12(e) is the proper remedy Purpose is fair notice (nothing more) Above expresio unius argument Form compliance argument Proper amendment of rules argument Alternative of summary judgment argument Likelihood of success at trial irrelevant for purposes of 12(b)(6) motions Why the low standard of only notice? Plaintiffs often lack information and access to information when they file a complaint. That is why after discovery, the bar for establishing a case becomes higher. So, for 45 years the Supreme Court held onto the notice-pleading standard almost uniformly, despite the fact that lower courts across the country have tried to raise the bar. Why raise the bar? Lower courts swamped with cases, happy to dismiss some early. Political implications may also be involved when the companies and parties with money want a higher pleading standard. Courts have also recognized that the low pleading standard allows in suits with a high nuisance value, but low substantive value, creating incentives for companies to settle frivolous suits. Why has the Supreme Court refused to change? Insulation from political pressures Respect for precedent and tradition Fitzpatrick theory: SC justices so far removed from realities of real court practice and trial advocacy. Bell Atlantic v. Twombly (2007) Twombly represented a dramatic shift in the Supreme Court's policy on notice pleading. Plaintiff alleges illegal collusion among the AT&T descendants, hampering competition and keeping prices raised. Defendant files 12(b)(6) motion alleging lack of information, and court grants it(!). New standard: Notice pleading good, but must also be specific enough to save defendants from overly burdensome discovery. Form 9 gives dates and parties--this is now a required element If the facts must be discovered in discovery, then plaintiff may be out of luck. Summary judgment inadequate remedy due to discovery costs. Why? Court may have finally caught up to the rest of the federal judiciary, or simply finally reviewed a case with an enormous sum of money at stake in discovery. New standard seems to be that a complaint needs to sound "plausible" to the court. However, the Court subsequently decided Erickson v. Pardus, holding for the notice-pleading low standard, which suggests that Twombly may be just a "perfect storm" exception due to the huge size of the suit. If defendants do not answer claim, they must move to dismiss under either Rule 12(b) or 12(f) within 20 days of service of the complaint. The possible criteria for dismissal: Lack of subject matter jurisdiction (defense never waived) Lack of personal jurisdiction (can be waived) Venue (waived) Problem with service (waived) Failure to state a claim (not waived) Necessary party not joined (not waived) If this motion is successful, the suit is dismissed, although a court has the authority to grant plaintiff leave to amend a deficient complaint. c) Answer Rule 8(b) requires the defendant to answer all claims and assert all affirmative defenses. Rule 12(a) requires the answer to be returned within 20 days of service of the complaint, or sixty days if requirement of service is waived. Court can hold that a failure to "admit or deny" averments in the complaint amount to acceptance of their veracity. See King Vision Pay Per View, LTD v. J.C. Dimitri's Restaraunt, Inc. (1998). d) Affirmative defenses Affirmative defenses are listed in Rule 8(6) (but there may be others). If defendant fails to state affirmative defenses, court may: Eliminate defense in course of suit Allow amended answer Allow defense if its absence was not prejudice against the plaintiff The difficulty is that affirmative defenses look like regular defenses. Seems courts should be generous in granting amended answers, since they are with plaintiffs. Posner is, at least: Carter v. United States (2003) e) Amending the pleadings Rule 15 allows either party to amend a pleading once at any time before a responsive pleading is served. If the pleading required no response, but the action had not been placed on the trial calendar, the pleading may be amended within 20 days after service. Otherwise, parties may only amend pleadings with leave of the court or written consent of the adverse party. Leave from court is to be "freely given when justice requires." The test for this comes from Robinson v. Sappington (example of liberal tilt of the FRCP): Other party has adequate notice of intent to amend Other party not prejudiced by amended pleading Parties must respond to amended pleadings within the time frame for the response to the original pleading, or within 10 days (whichever is longer). Rule 15(c) also allows pleadings to "relate back" to the original pleading when: Relation back is permitted by the law that provides the SOL Claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading, or Amended pleading validly changes the party or naming of party against whom the claim is asserted (see FRCP 15(c)(3)) Rule 16 attempts to balance these liberal measure by calling for active case management from judges. Tran v. Alphonse Hotel Corp (2002) Plaintiffs brought suit on FLSA claims that were dismissed. However, plaintiff was granted leave to amend his complaint to add a RICO claim against the defendant--this claim would be barred by the SOL unless it was for the "same transaction" and could related back to the filing of the FLSA claim. Court held that the claims were not of "same transaction": claims of the injury are not the same as claims of fraud and conspiracy, which are the bases for the RICO claim. 4.2. Discovery a) Discovery Devices Interrogatories (Rule 33): not exceptionally valuable, but responding poorly is dangerous. This is limited in number by statute (25 currently). Requests for admission (Rule 26): not all that valuable, except for disposing with some basic issues. Mental/physical exam (Rule 35): usually unavailable or irrelevant Requests for documents (Rule 34): most important (or at least most expensive and time-consuming) part of litigation Depositions (Rules 26-32): way of gathering sworn testimony if witness cannot be present at trial, if witness tries to testify otherwise at trial, or for the purposes of summary judgment.\ Experts' opinions (Rule 26(a)(2)): Rule requires disclosure of expert, his opinion, the methodology he uses, and makes him available for deposition. b) Limitations on Discovery Discovery cannot be allowed if it is abusive or cost of burden outweighs benefits (Zublake); Rule 26(b)(2) limits this, with a seven factor test implemented to test whether the discovery is abusive. Under Rule 26(b)(2)(B), discovery is limited when searching electronically stored information if retrieving it causes unreasonable or undue costs; court can specify conditions for this kind of discovery: Limit searches by key-word searches Sampling Allow defendant to keep certain information based on key-word searches. Privileged information Privileged information is defined in common-law under FRE 501. Rule 26(a)(5)(A) requires parties withholding validly privileged (protected) information to make a log of it available for the other party. Work done in preparation of a trial is also privileged under the work-product class, although work prepared by an expert witness is an important exception. If a party fails to turn over information not privileged, the counsel can be subject to enormous sanctions. c) Economics of litigation Litigation can be thought of as a game in which each party has a picture of the result or goal and has the ability to inflict costs on the other in order to settle. There is almost always a gain to trade through settlement (in that each party thinks he is better off than he would be with a trial). If one side has an expected outcome of a low settlement, but enormous costs of discovery (such as a big corporation), the outcome will likely be a settlement more than the trial would produce. Part of the reason that judges have been handed more case management authority under Rule 16 in the past decade is to combat the risings costs of discovery, but this is a very limited measure. Parties each have an expected outcome at the filing of the suit: plaintiffs high, defendants low. For a while, there are marginal returns from discovery in the form of a better prediction of the outcome of the trial which are higher than the costs of conducting it. However, at some point this ceases to be the case, and the parties would rather settle, since this is Pareto optimal. However, parties also have incentives to engage in rent-seeking behavior by bluffing and posturing and inflicting higher costs on the other side, making it more likely to settle for a higher amount. What are the problems with this system? 4.3. a) b) c) d) 4.4. a) b) c) d) e) 4.5. a) Inefficiencies of rent-seeking behavior. Assymetric costs of discovery lead to settlement outcomes that depart from the trial value of the case--we could argue that this is unjust. Remedies: Rule 16 case management Cost shifting Pre-trial case management under Rule 16 Judges make a good faith effort to limit discovery costs on parties by invoking the applicable FRCP (such as putting clients "on notice" of settlement offers under Rule 16(c)), promoting mediation, and trying to cut down on posturing with the threat of sanctions. However, judges have to be very deferential to the parties' actions in the American adversarial system, so they have limited means and bases of intervention into the actual settlement agreements. Rule 16(e) authorizes judges to hold a final pre-trial conference with both parties in which they will formulate trial plans. The idea behind this was to establish a system where both parties knew what to expect at trial and could not posture or evade for an advantage. However, Rule 16(e) also provides that the order of the trial established in the final pretrial conference is binding and only able to be altered to prevent "manifest injustice." R.M.R. v. Muscogee School District (1999) Suit for misconduct by an employee; literally on the courtroom steps, another witness appears with testimony for plaintiff. Court barred plaintiff from calling witness, as it varied from pre-trial order and was unfairly prejudice to the defendant. On appeal, the court upheld the decision, telling plaintiff that he should have filed for a continuance or a mistrial, which would have led to him not being bound by this decision without the key witness. Court has a good point that this was prejudicial, but there was no guarantee that the alternatives it suggests would have been granted either. This seems to be a failure of the liberal notice-pleading system. Rule 68 Cost-shifting The newly revised Rule 68(d) provides a way for a losing party to recover costs of litigation if the other party wins at trial less than what the loser offered to settle for. This is a mild incentive for a party to limit its posturing, however; in most cases, a plaintiff probably knows the expected outcome at trial and is unlikely to refuse a settlement larger than it (including the additional costs of litigation). Other possible remedy: English loser-pays system: posturing becomes much less viable for a person with a weak claim. Some measure between these two extreme may help the situation. Two reason asymmetric discovery costs are not really all that bad: Defendants are generally risk-averse and therefore may balance the additional costs. Plaintiffs' lawyers work on contingency, and therefore real reimbursement to plaintiff might need to take this extra fee into account. Summary Judgment The idea of summary judgment is that there are no materially factual issues in the suit to be decided, so we can skip the jury stage and simply have the judge apply the law. b) SJ developed as a procedural function in the FRCP (not as a common law device). c) Summary judgment relies heavily on the notion of shifting burdens of proof and persuasion throughout the course of a suit: Burden of persuasion The burden of persuasion is the proof necessary to convince an otherwise unsure jury to decide for your. This burden is statutory and varies with the type of claim. Burden of production The burden of production may switch throughout the course of the trial. Initially, the plaintiff must introduce enough evidence to take the case to trial. Next, the plaintiff must introduce enough evidence to make it reasonably possible that a jury could find in his favor (p1). Finally, a plaintiff wants to introduce enough evidence that a reasonable jury must find in his favor (p2). Once the plaintiff reaches (p1), the defendant must begin introducing his own evidence in order to push back the plaintiff's proof. After discovery, each party will probably file a Rule 50 motion for judgment as a matter of law. If the court finds that the evidence is at a point past (p2), he will find for the plaintiff. If the court finds that the evidence did not reach (p1), he will find for the defendant. If the court feels the evidence is between (p1) and (p2), it allows the case to go to jury trial. Same analysis and burden for Rule 56 Summary Judgment (but filed before discovery is complete). Parties attach all the material they have, court weighs it, along with evaluating possible future additions. Two possible SJ scenarios: Party without burden of persuasion or production files, alleging opposing party has met neither (common scenario). Party with burden of production and persuasion files, alleging he has met both and other party has not countered effectively. d) Two questions to ask in all SJ motions: What does the party requesting SJ have to show? If it is the party without the burden of production, is he assumed to be innocent/not liable in a SJ evaluation? Adickes v. S.H. Kress (1970) Defendant files for summary judgment, offers evidence which seems to counter pretty much all of the plaintiff's claims. Court holds that this is not even enough to compel further testimony from plaintiff, much less for SJ. In other words, even though defendant would begin at a point before (p1) in trial, he is presumed to be either between (p1) and (p2) or past (p2) when he files for summary judgment. Plaintiff still begin in box 1 as well in this scenario, however. Second question: once the party with the burden of proof has moved it into the gap between (p1) and (p2), what can the opposing party due to bring it back to a point before (p1) in order to get SJ? e) f) g) 4.6. a) b) 4.7. a) Arnstein v. Porter (1946) Defendant claimed that he had never even heard songs that he was accused of stealing and presented evidence of this to refute the plaintiff's claims. Court denies defendant SJ on the "slightest doubt" theory--if there is the slightest doubt that the jury could find for the plaintiff, the trial needs to go to jury (essentially just moves p1 back). So, traditionally a party moving for summary judgment must: Include enough evidence to convince court there is no issue of genuine material fact (Adickes standard), even if that party does not bear the burden of proof, and Leave no holes or possibilities of credibility issues which would allow the slightest doubt the jury could find for the non-moving party. Arnstein. Supreme Court overturns this standard rather dramatically in three cases in 1986: Anderson v. Liberty Lobby Court held that standard for Rule 50(a) and Rule 56 motions were identical. Court next invalidated the scintilla of evidence rule (from Arnstein and others in favor of a rule which required judicial discretion, not speculation on the possibilities of a jury trial). Celotex v. Catrett Court holds that a party without the burden of production needs only to indicate that the other party has insufficient evidence to win at trial (begins with assumptions in his favor). Only way to distinguish this from Adickes is assume that the court reviewed all of the evidence in the earlier case and still came to this conclusion--the defendant actually had begun at a point before p1. Justice White seems to recognize the impact of this decision, and offers a concurrence that is more moderate and probably closer to the real new standard. Matsushita v. Zenith Court holds that implausibility of claim makes mountain of evidence and testimony irrelevant. In other words, claims must be "plausible" in order to pass summary judgment. Despite its reputation, the 1986 trio did not appear to have a huge empirical effect on the number of summary judgment decisions. Why is this? Same caseload concerns as notice pleading. Perception of summary judgment change led to increase settlements. Possibility that Matsushita and Twombly are different because they involved antitrust law: Antitrust law very expensive to litigate Substantive law very different Voluntary dismissal: In certain cases, a plaintiff may wish to voluntarily dismiss his suit and refile it to accommodate changing situations or circumstances. A plaintiff always has this right under Rule 41, with the narrow exception of class actions and related suits. Trial Why would the parties go to trial? Have the facts resolved. Have the law applied to the facts. b) c) d) 4.8. a) These elements may be decided in bench trials (judges) or in jury trials, but in both cases, the trier-of-the-fact decides both issues. When is there a jury trial for civil suits? Plaintiff requests and the Seventh Amendment provides (Rule 38(a), (b)) Consent by both parties (even with Amendment VII support) Rule 38(c) Plaintiff requests and specific statutory right given (Rule 38 a, b) So when does the Seventh Amendment provide for jury trials? Chauffeurs, Teamsters, and Helpers, Local no. 391 v. Terry (1990) Suit against union in which plaintiffs requested jury trial; union sought strike it. Court looks at Seventh Amendment: "Suits at common law" over sum of $20. Question is whether this is a suit at common law. Contemporary understanding of the Amendment was that juries should be available for suits in common law courts, but not in equity--therefore, the first test is whether this claim would have fallen under equity or common law. (Court says this is not clear) Second step of test is whether the remedy for the suit is of equitable or legal nature (Court says that the two tests for equitable remedies, restitutionary damages and injunctive relief, are not present here, so this is a suit under common law and should be heard by a jury). One of the few instances where the Court actually even pretends to take an Originalist view of the text of the Constitution. Why this approach as opposed to the shifting view of Due Process? Perhaps the use of the term "due process" anticipating the shifting nature of its understanding, so court is validated in using contemporary understanding. More likely, the court allocates more power to the federal government in each case. Why are juries good? Possibly pro-plaintiff (to balance out other factors) Less corruptible Human touch on black letter law by a cross-section of society Check on government (democracy!) Juries better fact finders because they are collectively less biased. Post-trial motions Judgment as a Matter of Law (JMOL) Technically the same standard as Summary Judgment (after Anderson) Can be filed on two different sections: Rule 50(a) Judgment as a Matter of Law (before jury verdict) Rule 50(b) Judgment notwithstanding the Judgment (within 10 days of judgment on the particular issue at stake (not whole trial)) You have to file a 50(a) in order to file a 50(b) Court will ignore your 50(a) renewal unless you filed a 50(b) motion. Most courts now let you raise a different issue on a 50(b) motion than on 50(a), so long as it does not prejudice the opposing party by referring to the evidence. Standard for granting motion: Adjusted over time like summary judgment From "scintilla of evidence" (like "slightest doubt" in SJ) to "substantial evidence" to "reasonable jury and all reasonable inferences of that party" (like "plausible" in SJ and Rule 12(b)(6) motions). Galloway v. United States (1943) Plaintiff claims that he was "continuously insane" over a long span of years as proof of his injury. Court grants defendant JMOL due to a lack of "substantial evidence" produced by the plaintiff. Seems to raise bar on survining motions for dismissal. Mac theory: the real issue in this case is that the information is clearly in the possession of the plaintiff and that he failed to present it, so the easy conclusion is that it does not exist. Reeves v. Sanderson (2000) Reeves creates a new twist on JMOL: apparently, a party can satisfy his burden of production and persuasion enough to merit at least a trial, have his evidence contradicted by the opposing party enough to lessen his case, and then bring the case back into jury territory merely by refuting the opposing party's evidence (not producing more himself). How does this square with the Galloway standard? In Galloway the plaintiff may never have reached the point of a jury trial in the first place, and certainly did not seem to provide the evidence needed to overcome the opposing party's doubts about his claim. Reeves puts a small, but logical limit on the party without the burden of proof's ability to receive JMOL: he cannot simply refute the other party's prima facie case, but must be prepared to counter secondary evidence as well. Courts in Rule 12(b)(6), 50(a) and (b), and Rule 56 all seem to be trying to balance the increasing costs of discovery and caseload burden with the traditional protections for the plaintiff's rights. b) Rule 59 Motions for a New Trial The FRCP allow for motions for a new trial based on the common law grounds for such motions. Courts have held (notably in Unitherm) that a party must file a Rule 50 motion in order to reserve its right to later file a Rule 59 New Trial motion if the Rule 59 motion covers the topic of admissibility of evidence. This is not the only grounds for a grant of a new trial, but the most common one. FRCP 50(c)(1) causes Rule 50 and Rule 59 motions to be combined when adjudicated in the name of efficiency. Constitutionality: Seventh Amendment gives the right to a jury in civil trials and limits when the jury decisions can be "re-examined" to only according to the rules of common law. Assuming that "common law" has the same meaning as the first part of the Amendment, which provides the test for the need of a jury in a federal civil trial, there are five types of procedures which allowed common law jury verdict reexamination in 1791: Demurrer to the pleading Demurrer to the evidence Special case Compulsory nonsuit New trial The Rule 59 new trial provision clearly meets this as it was part of the procedures available in 1791. The Rule 50(a) directed verdict motion is on much shakier grounds: In all of the contemporary procedures for judicial closure of the case, the judge made no statement on the veracity of the facts (since they were admitted or disregarded), and ruled nonetheless. In Rule 50(a) motions, the judge is required to make a judgment on the facts of the case. Despite all this, the majority in Galloway upholds Rule 50(a)'s Constitutionality (See Galloway and the additional article). The same argument applies to Rule 50(b) and Rule 56 motions to dismiss. Arguments for and against using an originalist view of the Constitution: For: Democracy upheld in the strict letter of the law Stability Against: World is different from what Framers intended, Constitution too hard to amend. Reference to "common law" intended to mean a term that changes with time. Founders weren't too keen on juries or pure democracy. History is very hard to interpret and apply. 4.9. Conclusions: a) Courts have gradually drifted into protection of the defendant as costs of litigation have grown. This explains the increasing role of SJ and 12(b)(6). b) Courts made a quantum leap in extending authority to 50(a) and (b) motions in 1943, due to the influences of: Rising jury judgments Increased enfranchisement Rise in lobbying 5. Res judicata 5.1. Claim Preclusion a) Restatement provides the basic principles of claim preclusion (p. 309-310) b) Old rule for res judicata was that the judgment had to be "on the merits" in order to preclude future claims. c) New rule is about the same, but fleshes out the standard a little. Grants of 12(b)(6), Rule 56, and Rule 50 motions are considered to be on the merits (according to Restatement Section 20), while grants of motions for dismissal based on jurisdictional, venue, or prematurity of plaintiff's actions are not considered to be preclusive. d) Manego v. Orleans Board of Trade (1985) Plaintiff sued defendant for improperly denying his request for a business license due to civil rights violations; when he was defeated on summary judgment, he changed the defendants named in the suit and alleged anti-trust violations. Court held that this claim was precluded by the judgment since it was over the same "injury" as the first (making it over the "same transaction"). e) f) g) 5.2. a) b) c) d) Since claim preclusion is not binding on parties that have not appeared in court (unlike issue preclusion), the court does not dismiss the suit against the new defendant on this theory, but instead on its merits. In other words, the test for preclusion is whether the secondary claim could have been brought in the first forum. This means that the test for preclusion appears to be the same test as for supplemental jurisdiction under 1367 (as same case or controversy). Claim preclusion is inter-jurisdictional in that a claim that could have been brought in the first forum (assuming it is a state court) is precluded under the Full Faith and Credit Clause in the second court (as in, we'll give full faith and credit to the fact that the state's laws would have allowed this claim to be heard the first time). This becomes a bit more complicated when the first forum is a federal forum: Under Parklane Hosiery Co. v. Shore (1979), when the judgment of the F1 federal court is on a federal-law matter, the preclusion law of F2 is a uniform federal law. Under Semtek Int'l. Inc. v. Lockheed Martin Corp. (2001), when the judgment of the F1 federal court is on a state-law claim, the federal common law allows the F2 court to still apply the principles of claim preclusion, but the law of the forum state of F1 will be the governing law. The idea of claim preclusion is to work with the equivalent of FRCP Rule 18, which allows any party to the lawsuit to bring as many claims as it wishes against other parties. Rule 13(a) requires compulsory counterclaims arising from the "same transaction or occurrence" to be filed with the original suit. In other words, claim preclusion will preclude any claims that could have been filed as counterclaims under Rule 18 or 13. Issue Preclusion In addition to claim preclusion, the courts also can preclude the litigation of issues that have already been "actually litigated" in court. Once again, the Restatement on this section provides a good summary of the binding law (see p. 317-318). Three requirements under Restatement Section 27: 1. Issue actually litigated 2. Issue actually determined 3. Issue "essential" to judgment Little v. Blue Goose Motor Company (1931) Plaintiff sued defendant for injuries from a bus crash; defendant claims contributory negligence and wins a general verdict. Defendant then wants to sue plaintiff for negligence. This is not claim precluded, since the parties are different (unless it was a compulsory counterclaim). However, the issue of the defendant's contributory negligence (and inability to recover in this state) is precluded. Halpern v. Schwartz (1970) Plaintiff sues for involuntary petition of bankruptcy for the defendant, court grants it on three independent grounds; second then sues on one of the grounds for a related injury, wants to preclude its veracity. Court denies issue preclusion: when the original judgment could have been in full force from other grounds (such as findings in the alternative), issue preclusion does not apply. Note: under Restatement 27, if the original case was heard on appeal and decided on narrower grounds, the issues could be precluded.. e) Non-mutual issue preclusion The United States recognizes non-mutual issue preclusion; that is, issues litigated between p1 and d1 are preclusive in a case between p2 and d1 on the same transaction. Restatement 29(3). This was established in two cases: Parkland Hosiery and Blonder-Tongue. Blonder Tongue Laboratories v. U. of Illinois Foundation (1971) created nonmutual defensive issue preclusion when the plaintiff had already litigated the issue against another defendant and lost. Parklane Hosiery Co. v. Shore allowed non-mutual offensive issue preclusion when the defendant had already lost to another plaintiff. However, due to Due Process Concerns, defensive non-mutual issue preclusion is not allowed, since every plaintiff should have "his day in court." This is to preserve Due Process, but creates very dangerous scenarios for big defendants subject to many suits. f) United States v. Mendoza (1984) Court held that the United States could not be subjected to non-mutual issue preclusion due to its unique status and openness to injuries. g) The whole idea behind the Restatement's approach to preclusion is to motivate parties to bring all claims they have in a single suit and then appeal the judgments instead of trying to initiate new suits. 6. Complex Litigation: 6.1. Joinder of Claims a) Claim joinder by plaintiff Under Rule 18, there is no limit on the number of claims a plaintiff can bring against the defendant, but there must be independent subject matter jurisdiction for each claim (under federal question, diversity, or supplemental). b) Claim joinder by defendant Federal Rules 18 and 13 allow the defendant to bring all claims he has against the plaintiff as counterclaims. Once again, there must be subject matter jurisdiction for all of these claims independently. Rule 13(a) compels the defendant to bring all counterclaims arising out of the "same transaction" as the plaintiff's suit. Claims not brought by the defendant will be precluded in future suits. Painter v. Harvey (1988) Plaintiff brought claim, defendant counterclaimed and won. Plaintiff appealed on the basis that the court did not have proper jurisdiction over the counterclaim since it did not have independent subject matter jurisdiction. Court holds that the "same transaction" test in Rule 13(a) covers all claims that could have been brought under supplemental jurisdiction in 1367(a) (in other words, same case or controversy). In other words, either "same transaction" is entirely within "same case," or the two spheres are the same thing. This means that any time a defendant must counterclaim under Rule 13(a), that counterclaim will have subject matter jurisdiction. The odd result of this stems from the difference in 1331 and the Constitution: if plaintiff sues under state law and defendant counterclaims under a federal question stemming from the same transaction, the suit cannot be removed under the well-pleaded complaint rule. However, defendant would seem to be precluded from bringing the claim later if the counterclaim really did stem from the same transaction. Holmes (2002) seemed to affirm this quirk.
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