CIVIL PROCEDURE OUTLINE PROF. KALSCHEUR 2008/09 Introduction to Civil Procedure .................................................................................................................... 2 ELEMENTS AND HISTORY OF DUE PROCESS ................................................................................................................ 2 Remedies and Stakes .....................................................................................................................................4 PROVISIONAL RELIEF ........................................................................................................................................................ 4 FINAL RELIEF ...................................................................................................................................................................... 5 CONTEMPT ........................................................................................................................................................................... 6 Pleadings ........................................................................................................................................................ 6 CLAIMS, CAUSES OF ACTION, ELEMENTS, AND BURDENS OF PROOF...................................................................... 6 PRELIMINARY MOTIONS ................................................................................................................................................... 9 ANSWERS ............................................................................................................................................................................ 11 AMENDMENTS ................................................................................................................................................................... 12 DEFAULT AND DEFAULT JUDGMENTS ......................................................................................................................... 13 Joinder, Counterclaims, Cross-Claims, 3rd Party Practice and Class Actions .......................................... 14 SIMPLE JOINDER ............................................................................................................................................................... 14 COUNTERCLAIMS AND CROSS-CLAIMS.......................................................................................................................... 15 THIRD-PARTY PRACTICE (IMPLEADER)........................................................................................................................ 16 CLASS ACTIONS................................................................................................................................................................. 17 Discovery ...................................................................................................................................................... 18 THE ROLE OF DISCOVERY.............................................................................................................................................. 18 THE MECHANICS OF DISCOVERY .................................................................................................................................. 21 ELECTRONIC DISCOVERY ............................................................................................................................................... 22 Summary Judgment ..................................................................................................................................... 24 NO NEED FOR TRIAL....................................................................................................................................................... 24 Dismissal, JMOL, Rewnewed JMOL, Motion for New Trial and Relief from Judgment ...................... 26 SEVENTH AMENDMENT .................................................................................................................................................. 26 DISMISSAL .......................................................................................................................................................................... 26 JUDGMENT AS A MATTER OF LAW (JMOL) A/K/A ―DIRECTED VERDICT‖.......................................................... 26 RENEWED JUDGMENT AS A MATTER OF LAW (RJMOL) A/K/A ―JNOV‖ ............................................................ 28 MOTION FOR NEW TRIAL ............................................................................................................................................... 28 Types of Verdicts, Remittitur/Additur, Appeals and Relief from Judgment........................................... 29 GENERAL V. SPECIAL VERDICTS ................................................................................................................................... 29 REMITTITUR/ADDITUR ................................................................................................................................................... 29 APPEALS ............................................................................................................................................................................. 29 RELIEF FROM JUDGMENT ............................................................................................................................................... 30 Personal Jurisdiction and General Jurisdiction .......................................................................................... 30 TRADITIONAL CONCEPTION OF PERSONAL JURISDICTION ..................................................................................... 30 MODERN CONCEPTION OF PERSONAL JURISDICTION.............................................................................................. 32 MINIMUM-CONTACTS ANALYSIS IN OPERATION ...................................................................................................... 34 PERSONAL JURISDICTION IN THE INTERNET AGE..................................................................................................... 37 JURISDICTION BASED ON THE PRESENCE OF DEFENDANT‘S PROPERTY .............................................................. 38 JURISDICTION BASED SOLELY ON PERSONAL SERVICE ............................................................................................ 40 JURISDICTION BASED ON CONSENT ............................................................................................................................. 40 GENERAL JURISDICTION ................................................................................................................................................. 41 Notice and Service of Process ..................................................................................................................... 41 ADEQUATE NOTICE......................................................................................................................................................... 41 SERVICE OF PROCESS ....................................................................................................................................................... 42
Venue, Transfer and Forum Non Conveniens ........................................................................................... 44 VENUE IN STATE COURT ................................................................................................................................................ 44 VENUE IN FEDERAL COURT........................................................................................................................................... 44 TRANSFER IN FEDERAL COURT ..................................................................................................................................... 45 FORUM NON CONVENIENS ............................................................................................................................................ 46 Subject Matter Jurisdiction, MMTJA, CAFA and Removal ...................................................................... 47 FEDERAL QUESTION JURISDICTION ............................................................................................................................. 47 DIVERSITY JURISDICTION ............................................................................................................................................... 47 SUPPLEMENTAL JURISDICTION ...................................................................................................................................... 51 REMOVAL ........................................................................................................................................................................... 54 Choice of Federal or State Law ................................................................................................................... 55 THE RULES OF DECISION ACT AND THE 96-YEARS BEFORE ERIE ........................................................................ 55 THE ―ERIE‖ DOCTRINE .................................................................................................................................................. 55 THE ERIE DOCTRINE SPLITS IN TWO........................................................................................................................... 57 REVERSE ERIE................................................................................................................................................................... 61 Finality and Preclusion ................................................................................................................................ 61 THE FINALITY DOCTRINE .............................................................................................................................................. 61 CLAIM PRECLUSION (RES JUDICATA)............................................................................................................................ 62 ISSUE PRECLUSION (COLLATERAL ESTOPPEL) ........................................................................................................... 64 NON-MUTUAL OFFENSIVE ISSUE PRECLUSION ......................................................................................................... 66 CLAIM PRECLUSION AND ISSUE PRECLUSION IN SPECIAL SITUATIONS................................................................. 67 CROSS-JURISDICTIONAL PRECLUSION .......................................................................................................................... 67 Diagrams and Flowcharts............................................................................................................................ 68 JOINDER DIAGRAMS ........................................................................................................................................................ 68 CLAIM PRECLUSION (RES JUDICATA) FLOWCHART.................................................................................................... 70 REMOVAL FLOWCHART ................................................................................................................................................... 71 MUST CONSIDER FOR EVERY CLAIM: (I) SUBJECT MATTER JURISDICTION, (II) PERSONAL JURISDICTION, (III) VENUE AND (IV) NOTICE
I. Introduction to Civil Procedure A. ELEMENTS AND HISTORY OF DUE PROCESS Fifth Amendment ―No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy or life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.‖ Fourteenth Amendment ―All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.‖ The Right to Be Heard
―No better instrument has been devised for arriving at truth than to give a person in jeopardy of a serious loss notice of the case against him and opportunity to meet it.‖ – Justice Felix Frankfurter.
Goldberg v. Kelly Facts: Welfare recipients in NYC brought class action suit against state officials claiming procedure of terminating benefits without a hearing prior to termination was a violation of the Due Process Clause of the Fourteenth Amendment. Holding: The Court stated that, although the requirement of a prior hearing involved some greater expense, and the benefits paid pending a hearing and decision likely could not be recouped, the State had some ability to minimize these increased costs by instituting procedures for prompt pretermination hearings and skillfully using of personnel and facilities. The stakes were too high for the welfare recipient, and the Supreme Court determined that the interests in favor of a pre-termination hearing outweighed those against. Reasoning: The fundamental requisite of due process of law is the opportunity to be heard. The hearing must be at a meaningful time and in a meaningful manner. These principles require that a recipient have timely and adequate notice detailing the reasons for a proposed termination, and an effective opportunity to defend by confronting any adverse witnesses and by presenting his own arguments and evidence orally. These rights are important in cases where recipients have challenged proposed terminations as resting on incorrect or misleading factual premises or on misapplication of rules or policies to the facts of particular cases. Matthews, Sec. of Health, Education & Welfare v. Eldridge Facts: Eldridge brought suit against government officials claiming procedure for assessing a continuing disability without a prior evidentiary hearing, for the continuation of Social Security disability benefits, violated the Due Process Clause of the Fifth Amendment. Holding: The Court found that Eldridge had not been denied procedural due process when he was not granted an evidentiary hearing prior to termination of his Social Security disability benefit payments. Procedural due process had been satisfied because respondent was not in as dire a position as that of a typical welfare recipient, and because of the myriad procedural safeguards of the process, including an evidentiary hearing before the denial of the claim became final. The public interest in limiting the procedures available was significant, given the cost of additional procedures. Reasoning: The balancing test of Mathews mandated consideration of the following three factors: (1) the private interest that will be affected by the official action; (2) the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and (3) the government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Hamdi v. Rumsfeld Facts: The citizen-detainee was born in the United States, detained in Afghanistan during the United States' military action against the Taliban regime, and transferred to the United States. Pursuant to a government official's declaration, the Government contended that the citizen-detainee was an enemy combatant. Aside from unspecified screening processes and military interrogations, the citizendetainee received no due process. Holding: The Court determined that the Authorization for Use of Military Force (AUMF), authorized the detention of individuals in the citizen-detainee's circumstances and that the AUMF satisfied 18 U.S.C.S. § 4001(a)'s requirement that a detention be "pursuant to an Act of Congress." However, under the Mathews analysis, the Court determined that the citizen-detainee, seeking to challenge his classification as an enemy combatant, was entitled to receive notice of the factual basis for his classification, and a fair opportunity to rebut the Government's factual assertions before a neutral decision maker. The Court rejected the Government's assertion that separation of powers principles mandated a heavily circumscribed role for the courts in such circumstances. Reasoning: ―We reaffirm today the fundamental nature of a citizen‘s right to be free from involuntary confinement by his own government without due process of law, and we weigh the opposing governmental interests against the curtailment of liberty that such confinement entails.‖ Majority suggested that once the government puts forth credible evidence that the habeas petitioner meets the enemy-combatant criteria, the onus could shift to the petitioner to rebut that evidence with more persuasive evidence that he falls outside the criteria.
Justice Scalia‘s and Steven‘s dissent reasoned that unless the writ of habeas corpus is suspended, as the Constitution allows the legislature to do in times of rebellion or invasion, the government either has to bring criminal charges or release the detainee.
II. Remedies and Stakes A. PROVISIONAL RELIEF Equitable remedies can be attained before any decision is made on claim (no juries for equitable claims). Invoked for two reasons: To secure a judgment (make sure plaintiff gets compensation awarded and could put pressure on someone to settle). To stop someone from continuing activity or to preserve the status quo. Rule 64 – Seizing A Person or Property At the commencement of and through an action, every remedy is available that, under the law of the state where the court is located, provides for seizing a person or property to secure satisfaction of the potential judgment. Includes: arrest, attachment, garnishment, replevin, sequestration and other corresponding or equivalent remedies. To obtain a writ of attachment, plaintiff usually must present a prima facie case on the underlying claim, and also demonstrate a risk that the property sought to be attached will disappear. Fuentes v. Shevin Facts: Fuentes brought action challenging the constitutionality of the Florida prejudgment replevin procedures under the Due Process Clause of the Fourteenth Amendment. Holding: The Court found that the statutes' prejudgment replevin provisions deprived petitioners of their property without due process insofar as they denied the right to prior notice and hearing before property was taken. Court noted that states had the power to seize goods prior to a final judgment in order to protect creditor's security interests, but only after the creditor tested their claim to the goods through the process of a fair prior hearing. Reasoning: Although the court has held that due process tolerates variances in the form of a hearing appropriate to the nature of the case, and depending upon the importance of the interests involved and the nature of the subsequent proceedings if any, the court has traditionally insisted that, whatever its form, opportunity for that hearing must be provided before the deprivation at issue takes effect. ―A temporary non-final deprivation of property is nonetheless a ‗deprivation‘ in the terms of the Fourteenth Amendment, and must be preceded by a fair hearing. The kind of property, whether or not it is essential to daily life, is not an important factor. Rule 65 – Injunctions and Restraining Orders A preliminary injunction is designed to protect a plaintiff from irreparable injury to his property or other rights of which a court of equity will take cognizance, by prohibiting or commanding the doing of certain acts, granted prior to a hearing on the merits, being in no way dependent upon such hearing, its purpose being merely to preserve the status quo until the final hearing on the merits. ―In the conventional approach to preliminary equitable relief, the issue court balances potentially uncertain factors: (i) whether the money damages would prove inadequate as relief for the plaintiff who wins at trial, (ii) the likelihood that the plaintiff will prevail on the merits, (iii) the scope and irreparability of the harm the defendant will suffer if the relief is wrongly granted, (iv) and the extent to which granting an injunction would harm the public interest – meaning at least interests beyond those of the immediate parties.‖ Can only be issued on notice to the adverse party. A temporary restraining order (TRO) may be issued without written or oral notice to the adverse party or its attorney only if: (A) specific facts in an affidavit or a verified complaint clearly show that immediate and irreparable injury, loss, or damage will result to the movant before the adversary
party can be heard in opposition; and (B) the movant‘s attorney certifies in writing any efforts made to give notice and the reasons why it should not be required. Although a TRO may be issued without notice of the hearing, due process requires that a person receive actual notice (by personal service or otherwise) of the TRO before he may be held in contempt for violating it. John D. Ashcroft v. American Civil Liberties Union (ACLU) Facts: Parties, including the ACLU, brought an action against the U.S. Attorney General, alleging that the Child Online Protection Act (COPA), violated the constitutional right to freedom of speech. They sought preliminary injunctive relief to keep the COPA from being implemented. Holding: The Supreme Court held that preliminary injunctive relief was warranted since the Attorney General failed to rebut the providers' contention that filtering software was a plausible, less restrictive, and available alternative to accomplish the congressional purpose. Reasoning: A statute that effectively suppresses a large amount of speech that adults have a constitutional right to receive and to address to one another is unacceptable if less restrictive alternatives would be at least as effective in achieving the legitimate purpose that the statute was enacted to serve. When plaintiffs challenge a content-based speech restriction, the burden is on the government to prove that the proposed alternatives will not be as effective as the challenged statute. In deciding whether to grant a preliminary injunction, a district court must consider whether the plaintiffs have demonstrated that they are likely to prevail on the merits. B. FINAL RELIEF Equitable and Declaratory Relief. Equitable relief is supposed to be available only when money damages would not be adequate (i.e., permanent injunctions, declaratory judgments). Congress has empowered courts to issue clarifications, or declaratory judgments, under the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, and most states have similar legislation authorizing suits that permit parties to obtain a declaration of rights. Equitable relief is enforced through civil contempt procedures - can entail either an order to pay the plaintiff for damage done by the failure to comply with the original order or a penalty for failure to comply, including fines and imprisonment Monetary Damages. Nominal damages are an award to which the plaintiff is entitled, although he gives no evidence of any particular amount of loss, because the law infers damage from the breach of an agreement or the invasion of a right. Compensatory damages are awarded not only as a recompense for actual injury to the person or property, including expenses, loss of time, bodily suffering, etc., occasioned by the defendant's wrongful act, but also such additional sum as in the opinion of the jury is warranted by the circumstances of contumely, anguish or oppression, including mental suffering and wounded sensibilities. Punitive damages are allowed as an enhancement of compensatory damages because of the wanton, reckless, malicious, or oppressive character of the acts of which the plaintiff complains. Supreme Court has rejected claims that the Excessive Fines Clause of the Eighth Amendment sets limits on punitive damages. In BMW v. Gore, Justice Stevens, writing for the majority, identified three ―guideposts‖ to clarify what constitutes unconstitutional excessiveness in punitive damage awards; most important is (i) how reprehensible is the defendant‘s conduct, but also (ii) the ratio of the award to the actual or potential harm inflicted and (iii) a comparison of the award to civil or criminal penalties that could be imposed for comparable misconduct. Rule 69 – Execution (Enforcement of Monetary Damages) A money judgment is enforced by a writ of execution, unless the court directs otherwise. Some state statutes exempt certain property from liens so that the defendant can remain able to house, clothe, and feed his or her family; many statutes also limit wage garnishment.
Other potential problems include the sheltering effects of bankruptcy, under which the defendant‘s total assets may be outweighed by total debts, and the prioritization of creditors, which assures secured creditors first dibs on the defendant‘s assets.
C. CONTEMPT Civil contempt is tied up with ongoing litigation, and is meant to induce some sort of outcome or remedy; the punishment is remedial and thus can be indefinite; the contempt is alleviated when the individual in contempt acquiesces to the court‘s will. Criminal contempt involves punishment for violating a court order or interfering with court power; while civil contempt is intended to compel, criminal contempt is expressly punitive. Court has noted that, ―contempt is neither wholly civil nor altogether criminal. And it may not always be easy to classify a particular act as belonging to either one of these two classes. It may partake of the characteristics of both.‖ Gompers v. Buck‘s Stove & Range Co. Walker v. City of Birmingham Facts: City brought suit against petitioner protestors to stop petitioner protestors from engaging in an organized march without a permit, a violation of Birmingham, Ala., City Code § 1159. The state circuit court granted a temporary injunction to block the march. When petitioner protestors went forward with the march, the circuit court held petitioner protestors in contempt. Holding: The court rejected petitioner protestors' argument that § 1159 was unconstitutional. The court applied the rule that a statute was not unconstitutional until it was judicially deemed as such. Because § 1159 had not been declared unconstitutional, and petitioner protestors failed to seek to dissolve, modify, or otherwise to challenge the injunction, or the underlying statute, they could not complain about the subsequent contempt citation. Similarly, petitioner protestors could not challenge the administration of the ordinance because they failed to seek a permit. Had they done so, and been denied a permit, they might have been able to show that the administration of § 1159 was arbitrary. Reasoning: If a trial court has general power to issue injunctions in equity, even if its exercise of the power was erroneous, the injunction is not void, and defendants are precluded from attacking it in a collateral proceeding. If the injunction is erroneous, jurisdiction is not thereby forfeited, and the error is subject to correction only by the ordinary method of appeal, and disobedience to the order constitutes contempt. The rule requiring obedience to a court order even if it is later found to be unconstitutional has been called the collateral bar rule because it forbids challenge by anyone who first disobeys the rule and then seeks to challenge it in court. The dissent notes that ―these constitutionally secured rights to challenge prior restraints invalid on their face are lost if the State takes the precaution to have a judge append his signature to an ex parte order which recites the words of the invalid statutes. The State neatly insulates its legislation from challenge by mere incorporation into an injunction.‖ III. Pleadings A. CLAIMS, CAUSES OF ACTION, ELEMENTS, AND BURDENS OF PROOF Plaintiffs have three obligations to win civil litigation: Must meet burden of pleading: In federal court, they must state a claim for which relief can be granted (i.e., the cause of action). Must meet burden or production (sufficient evidence to permit a reasonable person to find that each element of claim is true). Must meet a burden of persuasion by persuading fact finder that each element is true by a preponderance of the evidence. If the plaintiff can prove a prima facie case, the burden shifts to the defendant to prove why the plaintiff‘s case is incorrect. Rule 4(m) – Time Limit for Service If a defending party is not served within 120 days after the complaint is filed, the court – on motion or on its own after notice to the plaintiff – must dismiss the action without prejudice against that defendant or order that service be made within a specified time. But if the plaintiff shows good cause for the failure, the court must extend the time for service for
an appropriate period. This subdivision (m) does not apply to service in a foreign country under Rule 4(f) or 4(j)(1). The 120 day service period under Rule 4(m) applies to third-party claims, to crossclaims and to counterclaims. Good cause is likely (but not always) to be found when the plaintiff's failure to complete service in timely fashion is a result of the conduct of a third person, typically the process server, the defendant has evaded service of the process or engaged in misleading conduct, the plaintiff has acted diligently in trying to effect service or there are understandable mitigating circumstances, or the plaintiff is proceeding pro se. Rule 7 – Pleadings Allowed; Form of Motions & Other Papers Only these pleadings are allowed (1) a complaint; (2) an answer to a complaint; (3) an answer to a counterclaim designated as a counterclaim; (4) an answer to a cross-claim; (5) a thirdparty complaint; (6) an answer to a third-party complaint; and (7) if the court orders one, a reply to an answer. A motion is not a pleading! A reply is mandatory only when an answer contains a ―counterclaim denominated as such‖ and should be limited to the allegations of the counterclaim. Rule 7(a) provides that the pleadings are closed upon the filing of a complaint and an answer (absent a court-ordered reply), unless a counterclaim, cross-claim, or third-party claim is interposed, in which event the filing of a reply to a counterclaim, cross-claim answer, or third-party answer normally will mark the close of the pleadings. Rule 8(a) – Claim for Relief Must contain a ―short and plain‖ statement of (i) grounds for court‘s jurisdiction, (ii) claim show that the pleader is entitled to relief and (iii) demand for the relief sought, which may include relief in the alternative or different types of relief. Policy considerations for liberal requirement entail that if too much specificity required, some meritorious claims will not be brought or will be terminated for failure to meet standard. Rules 8(d)(2), 8(d)(3) and 8(e) – Alternative Statements, Inconsistency and Construing A party may set out two or more statements of a claim or a defense alternatively or hypothetically, either in a single count or defense or in separate ones. If a party makes alternative statements, the pleading is sufficient if any one of them is sufficient. A party may state as many separate claims or defenses it has, regardless of consistency. Pleadings must be construed as to do justice. Dioguardi v. Durning Facts: Dioguardi filed a complaint against the Collector of Customs in New York for a series of grievances. Because he filed his complaint pro se it was not well drafted and the defendant made a motion to dismiss for failure to state facts sufficient to constitute a cause of action. Holding: The court held that under Rule 8(a), the plaintiff was required to plead only a short and plain statement of claim showing entitlement to relief. He was not required to plead facts sufficient to constitute a cause of action. Conley v. Gibson Facts: Railroad workers filed a class suit against the union after forty-five of them were ousted from their jobs and replaced by Caucasians, and the union failed to give them protection comparable to that given the Caucasian employees. The defendant made a motion to dismiss for failure to state a claim upon which relief could be granted. Holding: The Court held that the railroad workers' complaint adequately set forth a claim upon which relief could be granted because there were facts which, if proven, would support the railroad workers' claims and would entitle them to their requested relief.
Reasoning: The Court stated that “a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that a plaintiff can prove no set of facts in support of his claim which would entitle him to relief.” After Leatherman v. Tarrant County Narcotics was affirmed by the Fifth Circuit, requiring a ―heightened pleading requirement‖, the Supreme Court reversed stating ―We think that it is impossible to square the heightened pleading standard applied by the Fifth Circuit with the liberal system of ‗notice pleading‘ set up by the Federal Rules of Civil Procedure.‖ Bell Atlantic v. Twombly Facts: Telephone and Internet subscribers alleged in a complaint that local telephone companies were violating antitrust laws. The District Court dismissed the complaint for failure to state a claim upon which relief could be granted. Holding: The Court held that in order for a complaint to survive dismissal on the pleadings, the complaint must include enough facts to state a claim to relief that is plausible on its face. That a claim is conceivable is not enough; it must be plausible. Reasoning: The risk of abusive litigation in certain subjects, like antitrust, requires the plaintiff to state factual allegations with greater particularity than Rule 8 requires, but it is not a ―heightened pleading standard.‖ Stevens, J., in dissent suggests that the Court seems to have wrongly appraised the plausibility of the ultimate factual allegation, rather than its legal sufficiency. Bower v. Weisman Facts: After a fifteen-year relationship with Weisman ended, Bower sought to enforce an agreement under which Weisman agreed to continue to provide her and her daughter with financial security. In response to her complaint, Weisman filed three motions to each claim – motion for a more definite statement, dismiss for failure to state with particularity and failure to state a claim upon which relief could be granted. Holding: The District Court held that a complaint is deficient if it either (i) fails to clearly indentify which defendant it refers to (if multiple defendants), (ii) only generally asserts misrepresentation and fraud, without specifics and (iii) fails to set forth facts to support a claim. Reasoning: The essence of a complaint is to inform the defendant as to the general nature of the action and as to the incident out of which a cause of action arose; there must be enough specificity to allow the defendant to effectively respond. Rule 9(b) – Fraud or Mistake; Condition of Mind In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a person‘s mind may be alleged generally. Rule 9(g) – Special Damages When items of special damage are claimed, they must be stated specifically. Items of general damage (suffering, lost income, hospital bills, etc.) need not be stated with specific dollar amounts. Rule 11(b) – Representations to the Court An attorney or unrepresented party certifies that the facts are accurate to the best of the person‘s knowledge, information, and belief, formed after an inquiry reasonable under the circumstances. Rule 11(c) – Sanctions If, after notice and a reasonable opportunity to respond, the court determines that Rule 11(b) has been violated, the court may impose an appropriate sanction on any attorney, law firm, or party that violated the rule or is responsible for the violation. Absent exceptional circumstances, a law firm must be held jointly responsible for a violation committed by its partner, associate, or employee. Applicable to any presentation to the court, in a pleading, written motion, or other paper – whether by signing, filing, submitting, or later advocating. Not applicable to discovery – covered by other rules.
Sanction imposed must be limited to what suffices to deter repetition of the conduct or comparable conduct by others similarly situated. May include nonmonetary directives, an order to pay a penalty into court, or, if imposed on motion and warranted for effective deterrence, an order directing payment to the movant of part or all of the reasonable attorney‘s fees and other expenses directly resulting from the violation. Policy Consideration: Encourages attorneys to consider merit before filing pleadings, motions, etc. to limit frivolous claims that may be allowed into court because of liberal rules. 1983 Amendments required mandatory monetary sanctions upon attorneys, but this created stifling effect and some meritorious claims weren‘t filed for fear of litigation. 1993 Amendments added a safe harbor provision; allows for withdrawal or appropriate correction within 21 days after service or within another time the court sets.
Chaplin v. Du Pont Advance Fiber Systems Facts: Several Du Pont employees, who were white, Christian, and Confederate Southern Americans brought Title VII suit against employer. Du Pont sought sanctions under Rule 11(b)(2) for filing a complaint for an improper purpose, under Rule 11(b)(2) for stating claims without a sufficient basis in law and under Rule 11(b)(3) for stating claims without sufficient basis in fact. Holding: Sanctions for filing a complaint with improper purpose are not necessarily warranted where the complaint ―creatively‖ pursues a new legal theory. Sanctions for filing a complaint containing claims that lack legal authority are not necessarily warranted where there is no authoritative precedent precluding the claims. But, sanctions for filing a complaint containing claims that lack factual basis are necessarily warranted where there is no factual basis whatsoever to support the complaint‘s allegations. Reasoning: The purpose of Rule 11 is not to thwart an attorney‘s enthusiasm or creativity in pursuing factual or legal theories, but merely to prevent claims that are designed to harass. B. PRELIMINARY MOTIONS Rule 12(a)(1) – Time to Serve a Responsive Pleading Unless another time is specified by this rule or a federal statute, the time for serving a responsive pleading is as follows: A defendant must serve an answer: (i) within 20 days after being served with the summons and complaint; or (ii) if it has timely waived service under Rule 4(d), within 60 days after the request for a waiver was sent, or within 90 days after it was sent to the defendant outside any judicial district of the United States. A party must serve an answer to a counterclaim or cross-claim within 20 days after being served with the pleading that states the counterclaim or cross-claim. A party must serve a reply to an answer within 20 days after being served with an order to reply, unless the order specifies a different time. A special provision is necessary in quasi-in-rem actions to take account of the use of service of process by publication under Rule 4(n). In such situations, the 20-day limit in Rule 12(a) is displaced by the provisions of the applicable statute or rule of court of the state in which the district court is located. Rule 12(a)(4) – Effect of a Motion Unless the court sets a different time, serving a motion under this rule alters these periods as follows: If the court denies the motion or postpones its disposition until trial, the responsive pleading must be served within 10 days after notice of the court's action; or If the court grants a motion for a more definite statement, the responsive pleading must be served within 10 days after the more definite statement is served. N.B. A defending party who makes a pre-answer motion need not file a responsive pleading until the motion is decided.
Rule 12(b) – Defenses and Objections Every defense to a claim for relief in any pleading must be asserted in the responsive pleading if one is required. But a party may assert the following defense by motion: 12(b)(1) – lack of subject matter jurisdiction; 12(b)(2) – lack of personal jurisdiction; 12(b)(3) – improper venue 12(b)(4) – insufficient process; 12(b)(5) – insufficient service of process; 12(b)(6) – failure to state a claim upon which relief can be granted; and 12(b)(7) – failure to join a party under Rule 19. A motion asserting any of these defenses must be made before pleading if a responsive pleading is allowed. No defense or objective is waived by joining with it one or more other defenses or objections in a responsive pleading or in a motion. If the defendant's answer contains a counterclaim, then the plaintiff must interpose any Rule 12(b) motion that is not protected by Rule 12(h)(2) that he wishes to make regarding the counterclaim before filing a reply to the counterclaim. Rule 12(b)(6) – Failure to State a Claim Upon Which Relief can be Granted The purpose of the motion is to test the validity of the legal cause of action of the plaintiff‘s allegations, not the factual truth of such allegations. The court does not assess whether the plaintiff is like to sufficiently prove them. Rather, the court asks, ―assuming all the facts are true, do they set forth a legal cause of action for which the court could grant some kind of remedy.‖ In the absence of controlling authority from the appellate courts, the question for the trial judge is whether the plaintiff‘s claim should be recognized, not whether it has been recognized before. Rule 12(c) – Motion for Judgment on the Pleadings After the pleadings are closed – but early enough not to delay trial – a party may move for judgment on the pleadings. The motion for a judgment on the pleadings only has utility when all material allegations of fact are admitted or not controverted in the pleadings and only questions of law remain to be decided by the district court. Rule 12(d) – Result of Presenting Matters Outside the Pleadings If, on a motion under Rule 12(b)(6) or 12(c), matters outside the pleadings are presented to and not excluded by the court, the motion must be treated as one for summary judgment under Rule 56. All parties must be given a reasonable opportunity to present all the material that is pertinent to the motion. Court thus decides whether there exists a genuine issue of material fact. Rule 12(g)(2) – Limitation on Further Motions Except for lack of subject matter jurisdiction or failure to state a claim upon which relief can be granted, a party that makes a motion under this rule must not make another motion under this rule raising a defense or objection that was available to the party but omitted from its earlier motion. If any 12(b) is filed prior to answer, need to consolidate defenses, including any plausible less-favored defenses in motion at the same time or lose defense. If answering without first bringing 12(b) motions, include all plausible defenses in answer. A party is not precluded from making a second motion based on a defense that he or she did not have reasonable notice of at the time that party first filed a motion to dismiss or on a defense that became available only after a motion had been made under Rule 12.
Rules 12(h)(1), 12(h)(2) and 12(h)(3) – Waiving and Preserving Certain Defenses Privileges lost if not included with other 12(b) motions or in responsive pleading or amendment [as a matter of course/right] include: personal jurisdiction, improper venue, insufficiency of process and insufficiency of service of process. Favored defenses are never waived, can be raised at any [generally] time and include: failure to state a claim upon which relief can be granted, failure to join indispensable party and objection of failure to state a legal defense to a claim. If court determines at any time that it lacks subject matter jurisdiction, it must dismiss. An omitted defense may only be added by an amendment as of right. Under Rule 15(a), an amendment as a matter of course to a responsive pleading must be made within 20 days of serving it (if no further pleading is allowed). Rule 12(e) – Motion For A More Definite Statement A party may move for a more definite statement of a pleading to which a responsive pleading is allowed but which is so vague or ambiguous that the party cannot reasonably prepare a response. Motion must be made before filing a responsive pleading and must point out the defects complained of and details desired. Rule 12(f) – Motion to Strike The court, on its own or on motion by either part, may strike from a pleading an insufficient defense or any redundant, immaterial, impertinent or scandalous matter, before responding to the pleading or within 20 days of being served with the pleading. In order to succeed on a Rule 12(f) motion to strike surplus matter from an answer, the federal courts have established a standard under which it must be shown that the allegations being challenged are so unrelated to the plaintiff's claims as to be unworthy of any consideration as a defense and that their presence in the pleading throughout the proceeding will be prejudicial to the moving party. C. ANSWERS Filed after motion to dismiss is denied, within 20 days from when party is served, unless time is modified or if party responds to a complaint with a motion. A reply by the plaintiff is required within 20 days only when the defendant‘s answer contains a counterclaim denominated as such or when the court so orders. A plaintiff need not reply to an affirmative defense; he is deemed to deny or avoid the allegation of the defense (Rules 7, 12). Rules 8(b)(3), 8(b)(4), 8(b)(5), and 8(b)(6) – Defenses; Admissions and Denials A party that intends in good faith to deny all the allegations of a pleading – including jurisdictional grounds – may do so by a general denial. A party that does not intend to deny all allegations must either deny specific allegations or generally deny all except for those specifically admitted. A party that intends in good faith to deny only part of an allegation must admit the part that is true and deny the rest. A party that lack knowledge or information sufficient to form a belief about the truth of an allegation must so state, and the statement has the effect of a denial. An allegation – other than relating to amount of damages – is admitted if a responsive pleading is required and the allegation is not denied. If a responsive pleading is not required, allegations not denied are taken as denied or avoided. The court may allow denial of something that is true if the defendant objects to how it is worded in the pleading. Rule 8(c) – Affirmative Defenses In responding to a pleading, a party must affirmatively state any avoidance or affirmative defense, including: accord and satisfaction, arbitration and award, assumption or risk,
contributory negligence, discharge in bankruptcy, duress, estoppel, failure of consideration, fraud, illegality, injury by fellow servant, laches, license, payment, release, res judicata, statute of frauds, statute of limitations; and waiver. If a party mistakenly designated a defense as a counterclaim, or a counterclaim as a defense, the court must, if justice requires, treat the pleading as though it were correctly designated. D. AMENDMENTS Rules 15(a)(1) and 15(a)(2) – Amendments Before Trial A party may amend its pleading once as a matter of course before being served with a responsive pleading or within 20 days after serving the pleading if a responsive pleading is not allowed. In all other cases, a party may amend its pleading only with the opposing party‘s written consent or the court‘s leave. The court should freely give leave when justice so requires. Considerations include whether leave to amend would cause an unreasonable delay, would prejudice the other party, would raise an issue in bad faith and whether the new issue is futile. A party may amend to assert a federal claim that could not have been presented in the state court when an action has been removed from the state to federal court. Where a claim asserted by a plaintiff is against a number of defendants jointly liable for their combined conduct or acts, ―a responsive pleading‖ is not served until all of the defendants have answered the claim, not just some of them. Rules 15(b)(1) and 15(b)(2) – Amendments During and After Trial If, at trial, a party objects that evidence is not within the issue raised in the pleadings, the court may permit the pleadings to be amended. The court should freely permit an amendment when doing so will aid in presenting the merits and the objecting party fails to demonstrate that the evidence would prejudice that party‘s action or defense on the merits. The court may grant continuance to enable objecting party to meet the evidence. When an issue not raised by the pleadings is tried by the parties‘ express or implied consent (i.e., one party failed to object), it must be treated in all respects as if originally raised in the pleadings. Rule 15(c)(1) – Relation Back of Amendments An amendment to a pleading relates back to the date of the original pleading when: (A) The law that provides the applicable statute of limitations allows relation back; (B) The amendment asserts a claim or defense that arose out of the conduct, transaction or occurrence set out, or attempted to be set out, in the original pleading; (C) The amendment changes the party or naming of the party against whom a claim is asserted, if arose out of the same conduct, transaction or occurrence (Rule 15(c)(1)(B) above), and if asserted within 120 days of filing complaint (Rule 4(m)), and the party to be brought in: Received such notice of the action that it will not be prejudiced in defending on the merits; and Knew or should have known that the action would have been brought against it, but for a mistake concerning the proper party‘s identity. Rule 15(d) - Supplemental Pleadings On motion and reasonable notice, the court may, on just terms, permit a party to serve a supplemental pleading setting out any transaction, occurrence, or event that happened after the date of the pleading to be supplemented. Court may permit supplementation even though the original pleading is defective in stating a claim or defense. Court may order that the opposing party plead to the supplemental pleading within a specified time.
Singletary v. Pennsylvania Department of Corrections Facts: Subsequent to filing suit and after the running of the statute of limitations period, Singletary‘s mother moved for leave to amend her original complaint to substitute ―unknown corrections officer‖ with an individual named Robert Regan, under the ―relation back‖ doctrine. The District Court denied her motion and she appealed. Holding: After the statute of limitations has run, a new party may not be added to a suit under the ―relation back‖ doctrine unless such party received notice of the institution of the action within 120 days of the filing of the original complaint. Reasoning: Notice concerning the institution of an action may be actual, constructive or imputed. Constructive or implied notice can be by two methods: (a) the shared attorney method or (b) the identity of interest method. Notice can be implied under the shared attorney method where the attorney‘s later relationship with the newly named defendant gives rise to the inference that the attorney, within the 120-day period, gad some communication or relationship, and thus gave notice of the action to, the newly named defendant. Notice can be implied under the identity of interest method where the parties are so closely related in their business operations or other activities that the institution of an action against one provides notice of the litigation to the other. A non-management employee, like Robert Regan, generally does not share a sufficient nexus of interests with his or her employer so that notice given to the employer can be imputed to the employee for Rule 13(c)(3) purposes. His interests as an employee were not identical to the prison‘s interests. Amending „John Doe‟ and “Unknown Persons‟ Complaints Most courts seem to take the position that not knowing the identity of a defendant is not a mistake concerning the defendant‘s identity. Thus, amending a ‗John Doe‘ complaint, i.e., the substituting of real names for ‗John Does‘ or ‗Unknown Persons‘ named in an original complaint, does not meet the ―but for a mistake‖ requirement in Rule 15(c)(3)(B). E. DEFAULT AND DEFAULT JUDGMENTS A default is simply a notation in the case file by the clerk that there has been no answer filed within the time permitted by the rules. A default judgment is a judgment, with the same effect as any other judgment, which is entered because the defendant did not oppose the case. Rule 55(a) – Entering a Default When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default. N.B. Once a default has been entered, the party may not proceed with the action until the default has been set aside by the court. Rule 55(b) – Entering a Default Judgment If the plaintiff's claim is for a sum certain or a sum that can be made certain by computation, the clerk – on the plaintiff's request, with an affidavit showing the amount due – must enter judgment for that amount and costs against a defendant who has been defaulted for not appearing and who is neither a minor nor an incompetent person. In all other cases, the party must apply to the court for a default judgment. N.B. A defendant against whom a default is entered loses the right to contest liability. However, the amount of damages must still be determined before a default judgment may be entered and the defaulting party can be heard at the hearing for damages.
IV. Joinder, Counterclaims, Cross-Claims, 3rd Party Practice and Class Actions A. SIMPLE JOINDER Rule 18 – Joinder of Claims [Any] party asserting a claim, counterclaim, cross-claim or third-party claim may [then] join, as independent or alternative claims, as many claims as it has against an opposing party [subject to the limitations imposed by the requirements of federal subject matter jurisdiction]. A party may join two claims even though one of them is contingent on the disposition of the other; but the court may grant relief only in accordance with the parties‘ relative substantive rights. N.B. Every time a joinder provision is used in federal court, it raises the need to assess proper jurisdiction (SMJ and PJ) and venue. It has been held that when venue has been established for purposes of adjudicating a federal claim, there is no need to meet the venue requirement as to a nonfederal claim joined under Rule 18(a), or as to another related federal claim that has been combined with the original claim. Rules 20(a)(1) and 20(a)(2) – Permissive Joinder of Parties Persons may join in one action, as plaintiffs or defendants, if any right to relief is asserted jointly, severally, or in the alternative with respect to or (i) arising out of the same transaction, occurrence or series of transactions or occurrences and (ii) any question of law or common fact to all plaintiffs/defendants will arise in the action. If a new party is joined in an offensive capacity (to assert a claim), he has submitted himself to the personal jurisdiction of the court and waives any objection to it. If the requirements for joinder of parties have been satisfied, Rule 18 may be invoked independently to permit plaintiff to join as many other claims as plaintiff has against the multiple defendants or any combination of them, even though the additional claims do not involve common questions of law or fact and arise from unrelated transactions. Rule 20(b) – Protective Measures Court may issue orders – including an order for separate trials – to protect a party against embarrassment, delay, expense, or other prejudice that arises from including a person against whom the party asserts no claim and who asserts no claim against the party. Rule 21 – Misjoinder and Nonjoinder of Parties On motion or on its own, the court may at any time, on just terms, add or drop a party. The court may also sever any claim against a party. Misjoinder of parties is not a ground for dismissing an action. Rules 42(a) and 42(b) – Consolidation; Separate Trials If actions before the court involve a common question or law or fact, the court may join for hearing or trial any or all matters at issue in the actions; consolidate the actions; or issue any other orders to avoid unnecessary cost or delay. For convenience, to avoid prejudice, or to expedite and economize, the court may order a separate trial of one or more separate issues, claims, cross-claims, counterclaims, or thirdparty claims. When ordering a separate trial, the court must preserve any federal right to a jury trial. Kedra v. City of Philadelphia Facts: Plaintiff and her children filed a civil rights action against the city, stemming from an alleged series of incidents, involving various individuals over a 15-month period, constituting police brutality. Defendants moved to dismiss arguing joinder was improper given length of time. Holding: The fact that certain claims and parties relevant thereto span a lengthy period of time will not, in itself, prevent joinder.
Reasoning: As long as a claim or party is ―reasonably related‖ to the main claim, joinder will be appropriate. The joinder rules are liberal to allow the broadest scope of an action, yet still fair. B. COUNTERCLAIMS AND CROSS-CLAIMS Rule 13(a) – Compulsory Counterclaim A pleading must state as a counterclaim any claim that – at the time of its service – the pleader has against an opposing party if the claim: Arises out of the transaction or occurrence that is the subject matter of the opposing party‘s claim. Four Exceptions: the pleader need not state the claim if (i) the counterclaim that has not matured at the time he serves his pleading (i.e., if acquired after serving an answer); (ii) if ―the presence of third parties of whom the court cannot acquire jurisdiction‖ is required for its adjudication (applies to personal jurisdiction); (iii) if claim is pending in another proceeding; and (iv) if ―the opposing party brought suit upon the claim by attachment or other process by which the court did not acquire jurisdiction to render a personal judgment of that claim, and the pleader is not stating any counterclaim under this Rule 13. If the court cannot join another party, then the claim is not compulsory and there is no res judicata effect. If a federal court has subject matter jurisdiction over plaintiff's claim, it also will have supplemental jurisdiction over a counterclaim that arises from the same transaction or occurrence. The jurisdictional amount requirement is inapplicable because compulsory counterclaims are ancillary to the principal claim and do not need to present an independent basis of federal jurisdiction. Supplemental jurisdiction is important in situations where, for example, a plaintiff brings an action against a citizen of his own state alleging copyright infringement, and defendant counterclaims for the breach of a contract purporting to give him a license to use the copyright. The counterclaim, since it does not present a federal question, cannot be heard unless it comes under the court's supplemental jurisdiction. Rule 13(b) – Permissive Counterclaim A pleading may state as a counterclaim against an opposing party any claim that is not compulsory. When it is clear that the counterclaim is unrelated to the main transaction and there is some doubt as to the court's power to hear the claim, the court must examine the counterclaim to determine whether it raises a federal question or involves diversity of citizenship and the required jurisdictional amount. N.B. Since a permissive counterclaim is by definition unrelated to the underlying transaction or occurrence that is the subject matter of the original action, it will not invoke supplemental jurisdiction. Podhorn v. Paragon Group, Inc. Facts: A landlord sued tenants in state court for failure to pay rent. The tenants did not counterclaim, but later filed a federal claim against the landlord that was based on the same period of tenancy that gave rise to the original state court claim. Holding: A claim arising out of the transaction that is the subject matter of the opposing party‘s claim, and which does not require for its adjudication the presence of third parties over whom the court does not have jurisdiction, must be stated as a counterclaim, even where the counterclaim may not have be triable in the court where the original pleading was filed. Rule 13(g) – Cross-claim Against a Co-Party A pleading may state as a cross-claim any claim by one party against a co-party if the claim arises out of the transaction or occurrence that is the subject matter of the original action or of a counterclaim, or if the claim relates to any property that is the subject matter of the original action.
The cross-claim may include a claim that the co-party is or may be liable to the cross-claimant for all or part of a claim asserted in the action against the crossclaimant (i.e., indemnification). Cross-claims are subject to basically the same transactional test as compulsory counterclaims under Rule 13(a). Since cross-claims are always permissive, a party who does not want to bring a claim under Rule 13(g) will not be barred by res judicata, waiver, or estoppel from asserting the claim at another time.
Rule 13(h) – Joining Additional Parties A defending party asserting a counterclaim or cross-claim can join as parties to the claim ―persons other than those made parties to the original action‖ so long as the new parties are joined in accordance with the provisions of Rules 19 and 20. Can serve similar function as impleader, but counterclaim/cross-claim must already exist. An additional party under Rule 13(h) need answer only those counterclaims over which the court either has supplemental or independent subject-matter jurisdiction. Defendant allowed to join parties to a counterclaim against plaintiff even though they are citizens of the same state as defendant. But if the counterclaim is deemed to be permissive, third parties cannot be brought in as defendants when diversity will be defeated. C. THIRD-PARTY PRACTICE (IMPLEADER) Rule 14(a) – When a Defending Party May Bring in a Third Party A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it. i.e., indemnification, contribution, subrogation Impleader is proper even if defendant‘s liability is not established (i.e., original defendant ―is or may be‖ liable to the original plaintiff). A federal court must obtain personal jurisdiction over a third-party defendant before it proceeds to adjudicate a third-party claim. Although personal jurisdiction must be obtained over the third-party defendant, it has been held that the minimum contacts test may be satisfied by looking to that party's contacts with both the plaintiff and the third-party plaintiff, making it easier to meet the due process requirements in some cases. According to existing case law, the statutory venue limitations have no application to Rule 14 claims even if they would require the third-party action to be heard in another district had it been brought as an independent action. Rule 14(b) – When a Plaintiff May Bring in a Third Party When a claim is asserted against a plaintiff, the plaintiff may bring in a third party if this rule would allow a defendant to do so. The point is that only a defending party can join an absentee through impleader. Rule 14(a)(2) – Third-Party Defendant's Claims and Defenses Once served, the ―third-party defendant‖ must: Assert any defense against third-party plaintiff's claim under Rule 12; and Assert any counterclaim against the third-party plaintiff under Rule 13(a) [compulsory], and may assert any counterclaim against the third-party plaintiff under Rule 13(b) [permissive] or any cross-claim against another third-party defendant under Rule 13(g). The ―third-party defendant‖ then may: Assert against the plaintiff any defense that the third-party plaintiff has to the plaintiff's claim; and also Assert against the plaintiff any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff [original defendant].
A third-party defendant brought in under Rule 14(a) may be able to assert a claim against any co-party of the third-party plaintiff. There should be no difference between the rights of a third party brought in under Rule 14(a) and one joined under Rule 13(h). N.B. As long as venue is proper in the underlying case, a third-party defendant has no right to object to venue.
Rule 14(a)(3) – Plaintiff's Claims Against a Third-Party Defendant The plaintiff may assert against the third-party defendant any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the thirdparty plaintiff. A plaintiff cannot, however, assert a claim against a non-diverse third-party defendant in a diversity action under supplemental jurisdiction (i.e., destroying diversity under § 1332). The plaintiff must wait until the third-party defendant asserts a claim against it because then, acting in a defensive capacity, the original plaintiff must assert a counterclaim and supplemental jurisdiction will attach. The third-party defendant must then assert any defense under Rule 12 and any counterclaim under Rule 13(a), and may assert any counterclaim under Rule 13(b) or any cross-claim under Rule 13(g). If plaintiff exercises the right given by Rule 14(a) to assert a claim against the third-party defendant, independent jurisdictional grounds are necessary. Venue over a claim by plaintiff against the third-party defendant should be held to be ancillary if the court has subject-matter and personal jurisdiction over it. Rule 14(a)(5) – Third-Party Defendant's Claim Against a Nonparty A third-party defendant may proceed under this rule against a nonparty who is or may be liable to the third-party defendant for all or part of any claim against it. A fourth-party defendant is granted the same rights and privileges as the third-party defendant (i.e., third to fourth, fourth to fifth, etc…). Gross v. Hanover Insurance Co. Facts: Gross brought claim against his insurer for theft of jewelry consigned to a retail jewelry store. Hanover, his insurer, then sought to implead Joseph and Anthony Rizzo; an employee and the owner of the store at the time of the theft. Holding: A third-party defendant may be impleaded under Rule 14(a) in the sound discretion of the court, when such third-party is purportedly liable to the defendant for all or part of the defendant‘s liability to the plaintiff. Reasoning: Permitting a defendant to implead another party, which may be liable to the defendant for all or part of his liability to the plaintiff, serves the interest in judicial economy. The court emphasized that the district court has considerable discretion on this issue. Prejudice to plaintiff due to additional discovery may be outweighed by benefits of more efficient litigation gained by impleader. Rule 14 Impleader v. Rule 13(h) Joinder To use Rule 13(h), there must already exist a counterclaim or cross-claim. If a counterclaim or cross-claim is not being asserted, Rule 14 must be used. D. CLASS ACTIONS Rule 23(a) – Class Action Prerequisites One or more members of a class may sue or be sued as representative parties on behalf of all members only if: The class is so numerous that joinder of all members is impracticable, There are questions of law or fact common to the class, The claims or defenses of the representative parties are typical of the claims or defenses of the class; and The representative parties will fairly and adequately protect the interests of class.
Rule 23(b) – Types of Class Actions A class action may be maintained if Rule 23(a) is satisfied and if: Prosecuting separate actions by or against individual class members would create a risk of: (A) inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for the party opposing the class; or (B) adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests; The party opposing the class has acted or refused to act on grounds that apply generally to the class, so that final injunctive relief or corresponding declaratory relief is appropriate respecting the class as a whole; or The court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy. The matters pertinent to these findings include: The class members' interests in individually controlling the prosecution or defense of separate actions; The extent and nature of any litigation concerning the controversy already begun by or against class members; The desirability or undesirability of concentrating the litigation of the claims in the particular forum; and The likely difficulties in managing a class action. Effect of Judgment in a Class Action All members of a class will be bound by the judgment rendered in a class action except those in a ―common question‖ class action who notify the court that they do not wish to be bound (―opting out‖). Personal Jurisdiction Over Absent Class Members The Supreme Court has held that a class action judgment is not binding on an absent class member over whom the court lacked personal jurisdiction. The Court has also stated that a class action judgment is not binding on a class member who was not adequately represented. Jurisdiction in a Class Action In a diversity action, only the citizenship of the named representatives of the class is taken into account to establish diversity. The Supreme Court has held that the same rule applies for determining if the amount in controversy requirement is satisfied in a class action that invokes diversity of citizenship – so long as the representative‟s claim exceeds $75k, the class action may proceed in federal court even if class members‟ claims do not exceed $75k. Claims by class members that do not exceed $75k invoke supplemental jurisdiction. In a federal question action, the citizenship of the class and the amount are irrelevant. V. Discovery A. THE ROLE OF DISCOVERY Timeline: Rule 26(f) [plan for discovery] Rule 26(a)(1) Rule 16(b) [pre-trial conference] Policies behind expanded discovery: Elimination of surprise/trial by ambush so cases are tried on their merits; Allows for both sides to access strength and weaknesses of their case; Narrows issues to be disputed at trial, reducing drain of resources on court; Allows for a higher probability of informed settlement instead of trial; Increases effectiveness of summary judgment; Preservation of testimony in cases where it becomes unavailable; and
Balance to liberal pleading rules.
Rule 26(a)(1) – Initial Disclosures A party must, without awaiting a discovery request, provide to the other parties: The name and, if known, the address and telephone number of each individual likely to have discoverable information that the disclosing party may use to support its claims or defenses, unless the use would be solely for impeachment; A copy – or a description by category and location – of all documents, electronically stored information, and tangible things that the disclosing party has in its possession, custody, or control and may use to support its claims or defenses, unless the use would be solely for impeachment; A computation of each category of damages claimed by the disclosing party including materials bearing on the nature and extent of injuries suffered; and Any insurance agreement under which an insurance business may be liable to satisfy all or part of a possible judgment in the action or to indemnify or reimburse for payments made to satisfy the judgment. A party must make its initial disclosures based on the information then reasonably available to it. A party is not excused from making its disclosures because it has not fully investigated the case or because it challenges the sufficiency of another party's disclosures or because another party has not made its disclosures. Rule 26(a)(2) – Disclosure of Expert Testimony Requires certain disclosures of expert testimonies not later than 90 days before trial date. Requires disclosures of identities of witnesses and documents to be used at trial at least 30 days before trial. Rule 26(b)(1) – Scope in General Parties may obtain discovery regarding any non-privileged matter that is relevant to any party's claim or defense – including the existence, description, nature, custody, condition, and location of any documents or other tangible things and the identity and location of persons who know of any discoverable matter. N.B. Allows any party to seek discovery regarding any other party‘s claim or defense, not just its own claim or defense. For good cause, the court may order discovery of any matter relevant to the subject matter involved in the action. Relevant information need not be admissible at the trial if the discovery appears reasonably calculated to lead to the discovery of admissible evidence. Moss v. BC/BS of Kansas, Inc. Facts: Moss brought suit against BC/BS under the Family and Medical Leave Act for allegedly interfering with her FMLA rights. During the discovery process, BC/BS objected to several interrogatories and requests for production of documents. Holding: (i) When discovery sought appears relevant, the party resisting discovery has the burden of establishing the lack of relevance; (ii) the party resisting discovery on grounds that it is overly broad and unduly burdensome has the burden of demonstrating that the time or expense involved in responding to the request is unduly burdensome, unless the discovery request is unduly burdensome on its face. Reasoning: Courts often ask whether the request‘s wording ―requires the answering party to engage in mental gymnastics‖ to determine what information may/not be remotely responsive. Yet, ―the mere fact that compliance with an inspection order will cause great labor and expense or even considerable hardship and the possibility of injury to the business of the party from whom discovery is sought does not itself require denial of the motion.‖
Rule 26(b)(2) – Limitations on Frequency and Extent A party need not provide discovery of electronically stored information from sources that the party identifies as not reasonably accessible because of undue burden or cost. On motion or on its own, the court must limit the frequency or extent of discovery otherwise allowed by these rules or by local rule if it determines that: The discovery sought is unreasonably cumulative or duplicative, or can be obtained from some other source that is more convenient, less burdensome, or less expensive; The party seeking discovery has had ample opportunity to obtain the information by discovery in the action; or The burden or expense of the proposed discovery outweighs its likely benefit, considering the needs of the case, the amount in controversy, the parties' resources, the importance of the issues at stake in the action, and the importance of the discovery in resolving the issues. Rule 26(e) – Supplementation of Disclosures and Responses A party who has made a disclosure under Rule 26(a) – or who has responded to an interrogatory, request for production, or request for admission – must supplement or correct its disclosure or response: In a timely manner if the party learns that in some material respect the disclosure or response is incomplete or incorrect, and if the additional or corrective information has not otherwise been made known to the other parties during the discovery process or in writing; or as ordered by the court. Rule 26(b)(3) – Trial Preparation: Materials (Work Product Doctrine) Ordinarily, a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (including the other party's attorney, consultant, surety, indemnitor, insurer, or agent). If the court orders discovery of those materials, it must protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a party's attorney or other representative concerning the litigation. But, subject to Rule 26(b)(4), those materials may be discovered if: They are otherwise discoverable under Rule 26(b)(1); and The party shows that it has substantial need for the materials to prepare its case and cannot, without undue hardship, obtain their substantial equivalent by other means. Rule 26(b)(5) – Claiming Privilege or Protecting Trial-Preparation Materials When a party withholds information otherwise discoverable by claiming that the information is privileged or subject to protection as trial-preparation material, the party must: Expressly make the claim; and Describe the nature of the documents, communications, or tangible things not produced or disclosed – and do so in a manner that, without revealing information itself privileged or protected, will enable other parties to assess the claim. If information produced in discovery is subject to a claim of privilege or of protection as trial-preparation material, the party making the claim may notify any party that received the information of the claim and the basis for it. After being notified, a party must promptly return, sequester, or destroy the specified information and any copies it has; must not use or disclose the information until the claim is resolved; must take reasonable steps to retrieve the information if the party disclosed it before being notified; and may promptly present the information to the court under seal for a determination of the claim. The producing party must preserve the information until the claim is resolved. Hickman v. Taylor Facts: Five crewmembers drowned when their tugboat sank. Anticipating litigation, the attorney for the tug owner interviewed the survivors. Hickman, as representative of one of the deceased, brought a
wrongful death action and tried by means of discovery to obtain copies of the statements the tug owner‘s attorney obtained from the survivors. Holding: Material obtained by counsel in the preparation of litigation is the work product of the lawyer, and while such material is not protected by the attorney-client privilege, it is not discoverable on mere demand without a showing of necessity or justification. Reasoning: The general policy against invading the privacy of an attorney in performing his various duties is so well recognized and so essential to the orderly working of our legal system that the party seeking work product material has a burden to show reasons to justify production. Oral testimonies: issues of inaccuracy, untrustworthiness, protecting attorney‘s thought process, evaluation of evidence which could appear in transcription; Written statements: not privileged if witness no longer available. Idea that other party could obtain same info from witness; Attorney might be less willing to write stuff down if his thought process were discoverable, causing trial preparation to suffer. Rule 26(c) – Protective Orders The court may, for good cause, issue an order to protect a party or person from annoyance, embarrassment, oppression, or undue burden or expense (see list of orders). Rule 37(a) – Motion For An Order Compelling Disclosure or Discovery On notice to other parties and all affected persons, a party may move for an order compelling disclosure or discovery. The motion must include a certification that the movant has in good faith conferred or attempted to confer with the person or party failing to make disclosure or discovery in an effort to obtain it without court action. B. THE MECHANICS OF DISCOVERY Depositions (Rules 27 to 32) Used to question potential nonparty and party witnesses under oath about their knowledge of underlying action. Rule 30(b)(1) requires notice be given to all parties of the deposition. If despondent is a nonparty, moving party must subpoena the nonparty. Subpoena can require the nonparty not only to attend and be deposed, but also to bring documents or things with him/her; an order called subpoena duces tecum. Deponent required to testify upon her present knowledge and recollection; no obligation to review all relevant documents before being deposed. Deponent may request opportunity to review testimony and correct any errors before signing it under penalty of perjury. Rule 30(c)(2) states that parties may object to questions during deposition, but despondent has to answer all questions unless objection was to form of question or an objection to question that would reveal privileged information. Anything recorded in deposition is available for use at trial (i.e., can be used if witness unavailable or to impeach witness‘ testimony). Unless a court order or stipulation by the parties permits, Rule 30(a)(2) limits each party to no more than 10 depositions (whether oral or written) and prohibits deposing the same person more than once. When depositions are not taken: If attorney doesn‘t want opposing party to know of her theories; If she wants to wait to trial to confront witness. Positive aspects: Attorneys can follow up on answers, take deposition in new direction; Can request parties to bring documents. Negative aspect: Expense! Written Interrogatories (Rule 33) Written questions to which the responding party must respond in writing within 30 days.
Rule 33(a)(1) states that a party, unless otherwise stipulated or ordered by the court, may serve on any other party no more than 25 written interrogatories, including subparts. Can only be served on other parties; no provision for nonparties. Useful for discovering background facts (i.e., names, addresses, dates of contracts – any objective data, etc…). Attorneys will often submit ‗contention interrogatories‘ forcing the party to detail their account of the cause of action; thus forcing them to take a position. In responding to interrogatories, party must give information reasonably available to it; thus if the information is in the party‘s files, he/she must go through the files. Rule 33(d), referred to as the ―business records option,‖ states that if the burden of finding an answer would be substantially the same for both parties, the responding party can simply provide access to his/her business records to the other party. Negative aspect: Almost always drafted to contain as little information as possible.
Requests for Production (Rule 34) Allows a party to request for production/inspecting/copying/testing any designated documents or electronically stored information – stored in any medium from which information can be obtained either directly or, if necessary, after translation by the responding party into a reasonably usable format and any designated tangible things. Only applies to documents and ―things‖ within the party‘s possession, custody or control. Responding party ―shall produce [documents] as they are kept in the usual course of business or shall organize and label them to correspond with the categories in request. Must describe with ―reasonable particularity‖ each item or category of items requested. Can be difficult to find balance between under/over inclusive. Medical Examinations (Rule 35) Only discovery tool that always requires a court order. Rule 35(a) states that the requesting party must demonstrate (i) that the person‘s physical or mental condition is in controversy and (ii) good cause for the examination. Only available to a party or of a person in the ―custody or legal control‖ of a party – employees do not meet this requirement. Examination need not be performed by an M.D., only a suitably licensed/certified person. Party requesting examination pays for it and expense becomes a ―cost‖ of litigation. Rule 35(b)(1) states that the person examined may request a copy of the report, but Rule 35(b)(2) states that by doing so, the person examined waives any privilege in the reports of other professionals concerning the same condition. Requests for Admission (Rule 36) Can only be served on parties. Allows a party to force another party to admit or deny any discoverable matter relating to ―statements or opinions of fact, or to the application of law to fact, including the genuineness of any documents described in the request.‖ Not so much a discovery tool as it is a method to force the party to take a position on specific issues – can narrow scope of issues to be tried. If responding party fails to deny a request to admit, the matter is deemed admitted. A party must not object solely on the ground that the request presents a genuine issue of fact for trial. C. ELECTRONIC DISCOVERY Rule 34(b)(2)(D) – Responding to a Request for Production of Electronically Stored Info Response may state an objection to a requested form for producing electronically stored information. If the responding party objects to a requested form – or if no form was specified in the request – the party must state the form or forms it intends to use.
Rule 34(b)(2)(E) – Producing the Documents or Electronically Stored Information Unless otherwise stipulated or ordered by the court: A party must produce documents as they are kept in the usual course of business or must organize and label them to correspond to the categories in the request; If a request does not specify a form for producing electronically stored information, a party must produce it in a form or forms in which it is ordinarily maintained or in a reasonably usable form or forms; and A party need not produce the same electronically stored information in more than one form. Quinby v. WestLB AG Facts: As part of her lawsuit for discrimination, Quinby requested the production of emails of seventeen current and former employees if they related to her claim (i.e., key terms search). WestLB saved the email of six former employees on backup tapes, a process that converts the emails into inaccessible formats. WestLB argued that Quinby‘s request was overbroad and unduly burdensome because the retrieving the emails from the backup tapes would be too expensive. Holding: If a party creates its own burden or expense by converting into an inaccessible format data that it should have reasonably foreseen would be discoverable material at a time when it should have anticipated litigation, then it should not be entitled to shift the costs of restoring and searching the data. Reasoning: Denying the cost-shift allows parties to maintain data in whatever format they choose, but discourages them from converting evidence into inaccessible formats because the party responsible for conversion will bear the cost of restoring the data. It also prevents parties from taking unfair advantage of a self-inflicted burden by shifting part of the costs of undoing the burden to an adversary. Cost-shifting analysis entails application of the 7 factors established in Zubulake v. UBS. (i) The extent to which the request is specifically tailored to discover relevant information; (ii) the availability of such information from other sources; (iii) the total costs of production, compared to the amount in controversy; (iv) the total costs of production, compared to the resources available to each party; (v) the relative ability of each party to control costs and its incentive to do so; (vi) the importance of the issues at stake in the litigation; and (vii) the relative benefits to the parties of obtaining the information. The factors are weighed in descending order, the first factor being the most important consideration and the seventh factor the least important. N.B. Cost-shifting analysis only appropriate where e-discovery imposes an undue burden or expense and the party seeking to shift costs did not create its own expense by converting data into an inaccessible format that it should have known would be necessary for pending litigation. Rule 37(e) – Failure to Provide Electronically Stored Information Absent exceptional circumstances, a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, goodfaith operation of an electronic information system. Safe harbor provision intended to capture situations where an electronic system itself, usually without input from or the awareness of the operator, deletes data. An analysis of ―good faith‖ will include a review of the steps the party took to comply with its preservation obligations. For example, the advent of litigation may require intervention to alter the operation of such a system in order to prevent loss of discoverable information. Spoliation Courts generally hold that three elements must be shown to warrant an adverse inference instruction for spoliation: (i) the party having control over the evidence had an obligation to preserve it when it was destroyed; (ii) the destruction or loss was accompanied by a ―culpable state of mind;‖ and (iii) the evidence that was destroyed was relevant to the claims or defenses of the party that sought discovery of the spoliated evidence, to the extent that a
reasonable factfinder could conclude that the lost evidence would have supported the claims or defenses of the party that sought it. Teague v. Target Corp. Facts: A Target employee who brought a wrongful termination action against the company discarded a computer containing files that purported to show her job search efforts. Target filed a motion to dismiss her claim for back pay due to spoliation. Holding: A party may issue an adverse inference instruction when the party had an obligation to preserve the evidence, has a culpable state of mind and the evidence was relevant to the case. Reasoning: A plaintiff has an obligation to preserve evidence relating to his/her claims and defenses and the affirmative duty to preserve material evidence arises long before he filing of an initial pleading. A ―culpable state of mind‖ could include bad faith/knowing destruction, gross negligence and ordinary negligence. VI. Summary Judgment A. NO NEED FOR TRIAL Rules 56(a) – Motion for SJ by a Claiming Party A party claiming relief may move, with or without supporting affidavits, for summary judgment on all or part of the claim. The motion may be filed at any time after: 20 days have passed from commencement of the action [filing of complaint]; or The opposing party serves a motion for summary judgment. Rule 56(b) – Motion for SJ by a Defending Party A party against whom relief is sought may move at any time, with or without supporting affidavits, for summary judgment on all or part of the claim. Rule 56(c) – Proceedings Summary judgment should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law. SJ can still be granted, even with many disputed facts, if there is a failure of evidence as to one element (or affirmative defense should be taken as true). The burden is on the moving party to affirmatively show the absence of a genuine issue as to any material fact – the fact that the burden would be on the other party on the same fact at trial is of no matter. Nonmoving party is to receive benefit of all reasonable doubts. Motion typically made after discovery and before trial. Importantly, in contrast to a Rule 12(b)(6) motion where the test is simply whether the plaintiff has alleged enough to get pass the pleading stage, the court may go beyond pleadings and consider evidence in ruling on a SJ motion. The court tries to predict what evidence will be at trial, based pleadings, affidavits, and discovery but the court cannot weigh credibility. Purpose of the SJ motion is to challenge a party‘s ability to prove an allegation made in the pleadings – court decides whether the issue exists, not the issue itself. Rule 56(d) states that the court can determine specific issues in the case on a SJ motion – a party need not seek an all-or-nothing motion. Provides method for resolving cases where the parties‘ disagreement is not about the facts themselves but about the legal effects of the facts. Rule 56(e)(2) – Opposing Party's Obligation to Respond When a motion for summary judgment is properly made and supported, an opposing party may not rely merely on allegations or denials in its own pleading; rather, its response must – by affidavits or as otherwise provided in this rule – set out specific facts showing a
genuine issue for trial. If the opposing party does not so respond, summary judgment should, if appropriate, be entered against that party. Adickes v. S.H. Kress & Co. Facts: In a civil rights action in which a conspiracy between the police and Kress & Co. was alleged, summary judgment was granted when Adickes could not produce evidence at the pleading stage to support a conspiracy. Holding: In an action based on conspiracy, summary judgment may not be granted unless a defendant can show that no evidence thereof exists. Here, while at trial, Adickes would have to prove the presence of the police earlier in the day; at the summary judgment stage, the burden was on the defendant Kress to prove they were not. No longer considered good law (i.e., the moving party‘s burden to show the absence of a genuine issue concerning a material fact). Celotex Corp. v. Catrett Facts: Catrett‘s husband died and she brought suit against several asbestos manufacturers, claiming the death resulted from exposure to their products. Celotex moved for SJ on the basis that no evidence existed that the decedent had been exposed to Celotex products specifically. The district court granted the motion but the court of appeals reversed holding that Celotex had not offered sufficient evidence to rebut Catrett‘s allegations. Holding: Summary judgment must be entered against a party who fails to make a showing sufficient to establish the existence of an element essential to his/her case on which he/she bears the burden of proof at trial. Reasoning: The court explained that the burden on the moving party may be discharged by ―showing‖ – that is, point out to the district court – that there is an absence of evidence to support the nonmoving party‘s case. Reaffirms procedural importance of summary judgment to secure just, speedy, and inexpensive determination of every action—court more favorable to summary judgment. Represents an attempt by the Court to dissuade and terminate what the majority thought was a growing number of meritless lawsuits. Decision was helpful to defendants in that it forced plaintiffs to ―put their cards on the table‖ and produce evidence support each aspect of his/her claim. Dissent: Brennan stated that the moving party has the burden of establishing the nonexistence of a genuine issue. This burden has two distinct components: an initial burden of production, which shifts to the nonmoving party if satisfied by the moving party; and an ultimate burden of persuasion, which always remains on the moving party. Anderson v. Liberty Lobby Made clear that the summary judgment inquiry is functionally similar to that made in ruling on a motion for a motion for judgment as a matter of law (JMOL). Court also rejected the approach that would allow a nonmoving party to defeat a SJ motion by producing even a ―scintilla‖ of evidence in support. Court held that the nonmoving party must produce sufficient evidence from which a reasonable jury could find in favor of the nonmoving party. Matsushita Electric Industrial Co. v. Zenith Radio Corp. Court held that where the plaintiff‘s theory was implausible, the plaintiffs were required to come forward with more persuasive evidence than would otherwise be required to defeat summary judgment. Though the nonmoving party receives the benefit of all reasonable doubts, the Court emphasized that those doubts must be reasonable; the courts should not ―slip into sheer speculation‖ when assessing the nonmoving party‘s position. Recognizes, whether right or wrong, that a court may assess the plausibility of a theory in determining how much evidence a nonmoving party must produce to defeat a motion for summary judgment.
Scott v. Harris Facts: Harris was severely injured when a police officer, Scott, rammed his car with his police cruiser to stop a high-speed chase. Harris claimed that the officer‘s excessive use of force constituted a violation of his Fourth Amendment protection against unreasonable seizure. The police cruiser‘s windshield camera produced videotape that arguably contradicted Harris‘ claim that he was driving responsibly. Holding: Although the court is required to view the facts and draw reasonable inferences in the light most favorable to the party opposing the summary judgment motion, where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is not genuine issue for trial. Reasoning: When opposing parties tell two different stories, one of which is blatantly contradicted by the record, so that no reasonably jury could believe it, a court should not adopt that version of the facts for the purposes of ruling on a motion for summary judgment. Nonmoving party must do more than simple show that there is some ―metaphysical doubt‖ as to the material facts. Dissent: Stevens stated, ―if two groups of judges can disagree so vehemently about the nature of the pursuit and the circumstances surrounding that pursuit, it seems eminently likely that a reasonable juror could disagree with the Court‘s characterization of events.‖ VII. Dismissal, JMOL, Rewnewed JMOL, Motion for New Trial and Relief from Judgment A. SEVENTH AMENDMENT There is no absolute right to a jury trial in a civil case in a federal court. Judges have always played a gatekeeper role, allowing a jury to deliberate only if there is sufficient evidence to warrant the submission of evidence to it. The standard is whether there is a legally sufficient evidentiary basis for a reasonably jury to find for a party on a particular issue. B. DISMISSAL Rule 41(a) – Voluntary Dismissal The plaintiff may dismiss an action without a court order by filing (i) a notice of dismissal before the opposing party serves either an answer or a motion for summary judgment; or (ii) a stipulation of dismissal signed by all parties who have appeared. Unless the notice or stipulation states otherwise, the dismissal is without prejudice. But if the plaintiff previously dismissed any federal- or state-court action based on or including the same claim, a notice of dismissal operates as an adjudication on the merits. Except as provided in Rule 41(a), an action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper. If a defendant has pleaded a counterclaim before being served with the plaintiff's motion to dismiss, the action may be dismissed over the defendant's objection only if the counterclaim can remain pending for independent adjudication. Rule 41(b) – Involuntary Dismissal If the plaintiff fails to prosecute or to comply with these rules or a court order, a defendant may move to dismiss the action or any claim against it. Permits dismissal of the entire action or any specific claim. Also permits a district court to dismiss sua sponte without a motion by the ∆. Unless the dismissal order states otherwise, a dismissal under this subdivision (b) and any dismissal not under this rule – except one for lack of jurisdiction, improper venue, or failure to join a party under Rule 19 – operates as an adjudication on the merits. C. JUDGMENT AS A MATTER OF LAW (JMOL) A/K/A ―DIRECTED VERDICT‖ Rule 50(a) - Judgment as a Matter of Law in a Jury Trial If a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have a legally sufficient evidentiary basis to find for the party on that issue, the court may: MM
Resolve the issue against the party; and Grant a motion for judgment as a matter of law against the party on a claim or defense that, under the controlling law, can be maintained or defeated only with a favorable finding on that issue. Moving party must specify the judgment sought and the law and facts on which it is entitled to judgment as a matter of law. No requirement that a party move for summary judgment before trial to preserve the right to move for JMOL at trial. Typical defendant will be able to move for JMOL twice: once at the close of the plaintiff‘s case and again at the close of all the evidence. The court asks whether a jury, looking at the evidence, could rationally be convinced of it, that is, if the decision is in the debatable range. Nonmoving party must be given the benefit of every legitimate inference that can be drawn from the evidence. As one court noted, it is preferable to ―refrain from granting a motion for JMOL and instead allow the case to be decided – at least in the first instance – by the jury… If the jury reaches what the judge considers to be an irrational verdict, the judge may grant RJMOL. If this ruling is reversed on appeal, they jury‘s verdict may simply be reinstated. If, however, the trial court granted JMOL, and that ruling is reversed on appeal, an entire new trial must be held.‖ Konik v. Champlain Valley Physicians Hosp.
Defining Legally Insufficient Evidentiary Basis for Rule 50(a) – JMOL First, the judge is not to grant a motion for JMOL because he thinks the defendant‘s proof (on one or more of the elements of a claim) is stronger than the plaintiffs. No weighing! Second, in deciding whether to grant a motion for JMOL, the judge does not decide for himself whether the witnesses are telling the truth. Except where testimony is literally incredible, the judge must assume that the jury will construe evidence in favor of the nonmoving party (i.e., whether the evidence is such that, without weighing the credibility of the witnesses or otherwise considering the weight of the evidence, there can be but one conclusion as to the verdict that reasonable persons could have reached). Third, if certain testimony would support two inferences, one that supports recovery and one that doesn‘t, it is for the jury to decide which inference to make. Therefore, the judge is supposed to take the case in the light most favorable to the plaintiff, assume that the jury will resolve conflicts in the testimony in the plaintiff‘s favor, and ask, if it does, would there be adequate evidence to support a plaintiff‘s verdict. Galloway v. United States Facts: Galloway sued to prove that he was eligible for insurance benefits due to a permanent disability that developed before the date that his G.I. insurance policy lapsed. The lower court granted the government‘s motion for JMOL on the ground that the evidence introduced by Galloway was legally insufficient to sustain a verdict in Galloway‘s favor. Holding: The power of a judge to direct a verdict, thereby preventing the evidence from going to the jury, does not violate the constitutional guarantee of a trial by jury. Reasoning: Courts have always had, since the adoption of the Seventh Amendment, the ability to remove a case from jury consideration by the devices of a demurrer to the evidence or a motion for a new trial. The standard for determining whether proof is sufficient to allow submission of the evidence to the jury is that ―mere speculation‖ cannot take the place of probative facts, after making allowance for all reasonable inferences in the favor of the nonmoving party. Dissent: Black stated that the jury is the best judge of disputed facts. Moreover, to prevent abuse of the procedure that would allow judges to decide cases that should go to the jury, it should only be used where there is no room in the evidence for an honest difference of opinion.
D. RENEWED JUDGMENT AS A MATTER OF LAW (RJMOL) A/K/A ―JNOV‖ Rule 50(b) - Renewing the Motion After Trial; Alternative Motion for a New Trial If the court does not grant a motion for judgment as a matter of law made under Rule 50(a), the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion. Seventh Amendment ―reexamination clause‖ provides that federal courts may not reexamine facts determined by juries otherwise than according to the rules of the common law. A motion for JMOL is a mandatory prerequisite for moving for RJMOL. Does not to be need made at the close of all evidence. Some judges ignore technical noncompliance in order to preserve the moving party‘s right to the RJMOL motion by reviewing whether the party raised the issue of sufficiency of evidence before the case was submitted to the jury (i.e., objection to jury instructions or a motion for involuntary dismissal). No later than 10 days after the entry of judgment – or if the motion addresses a jury issue not decided by a verdict, no later than 10 days after the jury was discharged – the movant may file a renewed motion for judgment as a matter of law and may include an alternative or joint request for a new trial under Rule 59 [a remedy for the party who lost the verdict initially and asks for judgment as a matter of law under Rule 50(b). By the alternative motion, he asks the court to grant him a new trial if he is wrong in his contention that he is entitled to judgment]. In ruling on the renewed motion, the court may: Allow judgment on the verdict, if the jury returned a verdict; Order a new trial (discretion exists only if party entitled to RJMOL); or Direct the entry of judgment as a matter of law. Court has concluded that a jury verdict may be set aside on RJMOL ―only when there is a complete absence of probative facts to support the conclusion reached.‖ Some commentators have read the Court‘s conclusion as adopting a ―scintilla‖ test – that is JMOL and RJMOL must be denied if the nonmoving party has produced a scintilla of evidence support his/her claim. However, the Court expressly rejected the ―scintilla‖ test in with regard to the summary judgment standard in Anderson. E. MOTION FOR NEW TRIAL Rule 59(a)(1) – Grounds for New Trial The court may, on motion, grant a new trial on all or some of the issues – and to any party – as follows: After a jury trial, for any reason for which a new trial has heretofore been granted in an action at law in federal court; or After a nonjury trial, for any reason for which a rehearing has heretofore been granted in a suit in equity in federal court. A motion must expressly state the grounds for a new trial. Can be granted if: (i) clear mistake that would be reversible error, (ii) when jury verdict is so excessive or inadequate as to demonstrate that the jury has misunderstood their duty or acted with extreme prejudice, (iii) jury misconduct, (iv) against weight of the evidence. Generally held that ―it is the duty of the trial judge to set aside the verdict and grant a new trial, if he is of the opinion that the verdict is against the clear weight of the evidence, or is based upon evidence that is false, or will result in a miscarriage of justice, even though there may be substantial evidence which would prevent the [direction of a verdict/JMOL].‖ Rule 59(d) – New Trial on the Court's Initiative or for Reasons Not in the Motion No later than 10 days after the entry of judgment, the court, on its own, may order a new trial for any reason that would justify granting one on a party's motion. After giving the parties notice and an opportunity to be heard, the court may grant a timely motion for a new trial for a reason not stated in the motion.
In either event, the court must specify the reasons in its order.
VIII. Types of Verdicts, Remittitur/Additur, Appeals and Relief from Judgment A. GENERAL V. SPECIAL VERDICTS Traditionally, juries rendered general verdicts in which the jury was asked to find for the plaintiff or the defendant, and if for plaintiff, to state the amount of monetary damages. Rule 49(a) – Special Verdict The court may require a jury to return only a special verdict in the form of a special written finding on each issue of fact. The court may do so by: Submitting written questions susceptible of a categorical or other brief answer; Submitting written forms of the special findings that might properly be made under the pleadings and evidence; or Using any other method that the court considers appropriate. Provides a means by which trial judges can structure a jury‘s reasoning process – effectively outlining the way the jury should approach the issue, step by step. Said to ―improve the deliberation process by packaging the dispute in distinct, manageable components,‖ concentrating the jury‘s attention on certain matters. Rule 49(b) – General Verdict with Answers to Written Questions The court may submit to the jury forms for a general verdict, together with written questions on one or more issues of fact that the jury must decide. The court must give the instructions and explanations necessary to enable the jury to render a general verdict and answer the questions in writing, and must direct the jury to do both. B. REMITTITUR/ADDITUR If a judge considers the damages awarded to be excessive, he/she can consider a ―conditional‖ order of new trial in an attempt at remittitur. Permitted only if the court allows the plaintiff the option of accepting either (i) the figure set by the court or (ii) the order of new trial. The Seventh Amendment prohibits the court from entering a lesser amount. In contrast, the use of additur is prohibited in federal courts. C. APPEALS 28 U.S.C. § 1291 – Final Judgment Rule Provides that the courts of appeals ―shall have jurisdiction of appeals from all final decisions of the district courts of the United States…‖ It is a statutory right, not a constitutional right – and limited to final decisions. Every order by a district court is either final or interlocutory – are mutually exclusive. Denials of motions that would resole a case (i.e., motion to dismiss, SJ or JMOL) are interlocutory. Collateral Order Doctrine Supreme Court upheld the ―appealability‖ of certain issues under § 1291 if the issue met three requirements: (i) the issue appealed must be both legally significant and ―not an ingredient of the cause of action and does not require consideration‖ with it; (ii) the issue appealed must have been decided finally by the trial court; and (iii) waiting for final judgment would effectively deny appellate review of the issue. Review by Extraordinary (or “Prerogative”) Writ A party seeking such a writ actually commences a new proceeding by filing a petition for the appropriate writ in the appellate court itself. Writ of Mandamus orders the trial court to do something it has a mandatory duty to do. Writ of Prohibition stops the trial court from doing something it has no jurisdiction to do.
Standards of Review On matters of law, the appellate court gives no deference and reviews de novo, meaning that the appellate court is free to substitute its judgment for that of the trial court. On questions of fact, the appellate court must give ―due regard to the trial court‘s opportunity to judge witnesses‘ credibility‖ and must not set aside any finding of fact unless clearly erroneous. Jury findings are entitled to even greater deference because of ―reexamination clause‖ of the Seventh Amendment. On mixed questions of law and fact, the appellate court reviews de novo. On discretionary matters, the trial judge is called upon to decide any number of matters in his/her ―sound discretion‖ and as such, the appellate court can reverse only if the trial judge abused his/her discretion. D. RELIEF FROM JUDGMENT Rule 60(a) - Corrections Based on Clerical Mistakes; Oversights and Omissions The court may correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order, or other part of the record. The court may do so on motion or on its own, with or without notice. But after an appeal has been docketed in the appellate court and while it is pending, such a mistake may be corrected only with the appellate court's leave. Rule 60(b) - Grounds for Relief from a Final Judgment, Order, or Proceeding On motion and just terms, the court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons: Mistake, inadvertence, surprise, or excusable neglect; Newly discovered evidence that, with reasonable diligence, could not have been discovered in time to move for a new trial under Rule 59(b); Fraud (whether previously called intrinsic or extrinsic), misrepresentation, or misconduct by an opposing party; The judgment is void; The judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or Any other reason that justifies relief. Relief from a judgment is to be ―upon such terms as are just.‖ Thus the court, in addition to its general discretion whether to reopen a judgment, has further discretion to impose such conditions as it deems fit, with the moving party then having the choice either of complying with the conditions or allowing the judgment to stand. These conditions are within the court's power so long as they are a reasonable exercise of discretion. IX. Personal Jurisdiction and General Jurisdiction A. TRADITIONAL CONCEPTION OF PERSONAL JURISDICTION ―[E]very State possesses exclusive jurisdiction and sovereignty over persons and property within its territory‖ – Justice Field. Full Faith and Credit Clause – Article IV § 1 of the Constitution Such acts, records and judicial proceedings shall have full faith and credit in every court of the United States as they have in the state in which they were adjudicated. Only applies to valid judgments. Mainly a reflection of the geographic limitations in the judicial power of the sovereign states within the federal system. Extends full faith and credit to federal courts. Supreme Court stated that full faith and credit command is ―exacting,‖ not discretionary, with respect to a judgment rendered by a court possessing adjudicatory authority over the subject matter and persons governed by the judgment.
A court‘s power to exercise jurisdiction is not self-executing under the Constitution – it must be granted by an act of the legislature.
Challenging Personal Jurisdiction In a collateral attack, the defendant typically fails to show up in court and deliberately suffers a default judgment against him/her with the intention of challenging jurisdiction when the plaintiff later sues to enforce the judgment in the defendant‘s home state. Risky because defendant can no longer defend ―on the merits‖ of the case. In a direct attack, the defendant files a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction in the original proceeding. If trial court rules against defendant and the ruling is upheld on appeal, the determination of personal jurisdiction is binding and forecloses the jurisdictional issue for any collateral challenge to the judgment. Defendants can usually make a ―special appearance‖ in state courts to challenge personal jurisdiction without consenting to the court‘s jurisdiction. Pennoyer v. Neff Facts: Neff alleged that Pennoyer‘s deed from a sheriff‘s sale was invalid because the court ordering the sale never obtained personal jurisdiction of Neff. Holding: Where the object of an action is to determine the personal rights and obligations of the parties, service by publication against nonresidents is ineffective to confer jurisdiction on the court. Reasoning: Substituted service by publication may be sufficient in proceedings in rem. The law assumes that property is always in the possession of the owner or agent and proceeds upon the theory that a seizure of the property will inform the owner to look to any proceedings. But where the entire object of the action is to determine personal right and obligations, the action is in personam, and service by publication is ineffectual to confer jurisdiction over a nonresident. Process sent out of state to a nonresident is equally ineffective. The authority of every tribunal is necessarily restricted by the territorial limits of the State in which it is established. Any attempt to exercise authority beyond those limits would be deemed in every other forum, as has been said by this court, an illegitimate assumption of power, and be resisted as mere abuse. Since the adoption of U.S. Const. amend. XIV, the validity of judgments against persons who have not been personally summoned or had notice of the proceeding may be directly questioned, and their enforcement in the State resisted, on the ground that proceedings in a court of justice to determine the personal rights and obligations of parties over whom that court has no jurisdiction do not constitute due process of law. Harris v. Balk Facts: Harris and Balk were both North Carolina residents. Harris owed balk $180. Balk also owed Epstein, a Maryland resident $300. While temporarily in Maryland, Epstein brought suit and issued a writ of attachment, attaching the debt Harris owed Balk. Harris did not contest and paid the judgment that was entered in favor of Epstein for $180 of the $300 that he was owed. A week later, Balk brought suit in North Carolina for the $180 that Harris owed him. Holding: A debtor‘s obligation to pay debt accompanies him wherever he goes, and the question of jurisdiction is not dependent on the situs of the debt or the nature of debtor‘s stay in a state. Reasoning: A debtor is as much bound to pay the debt in a foreign state when sued there by a creditor as he is in the state where the debt was contracted. The creditor has a right to sue in another state because he/she is entitled to the privileges and immunities of citizens of all states. If a garnishee is found in a state and process is personally served on him there, the court thereby acquires jurisdiction over him, and he can garnish the debt due from him and condemn it, provided the garnishee would be sued by his creditor in that state. It was quasi-in-rem jurisdiction. The debt that Harris owes to Balk is property that Balk owns; Harris carried that property with him when he traveled to Baltimore; therefore, there was property within the state, which the court attached.
Hess v. Pawloski Facts: A Mass. statute provided that nonresident motorists were deemed to have impliedly consented, by use of the roads, to have appointed the registrar of motor vehicles as their agent for service of process arising out of accidents or collisions involving them. The statute also required notice of service and a copy of the process be sent by registered mail to the defendant. Hess argued that the statute violated due process. Holding: In advance of a nonresident‘s use of its highways, a state may require the nonresident to appoint one of the state‘s officials as his agent on whom process may be served in proceedings arising out of such highway use. Reasoning: In the public interest, a state may make and enforce regulations reasonably calculated to promote care on the part of all who use its highways. The statute was limited to actions relating to use of the highways and made no hostile determination against nonresidents. Within the traditional Pennoyer framework, notice and jurisdiction were virtually inseparable because the primary basis for establishing in personam jurisdiction, namely service of process on defendant within the state (or his agent), simultaneously provided notice of the lawsuit. B. MODERN CONCEPTION OF PERSONAL JURISDICTION Under pressure from an ever-expanding interstate economy, the rigid Pennoyer framework was abandoned and a theory of personal jurisdiction based on actual connections between the defendant and the forum state was adopted. International Shoe Co. State of Washington Facts: Wash. State sought to collect from International Shoe, a nonresident corporation, a deficiency in the payment of contributions to the state unemployment compensation fund. Wash. State personally served Shoe's salesman with notice of the suit and mailed a copy of the notice to Shoe's out-of-state headquarters. Shoe sought review, on due process grounds, of a judgment from the Supreme Court of Washington that affirmed the denial of Shoe's motion to dismiss an order and notice of assessment of delinquent contributions. Holding: Holding that the systematic and continuous activities carried on in-state by Shoe's salesmen made it reasonable and just to permit Wash. State to enforce the tax by suit against Shoe in the forum, the Court affirmed. The Court held that in order to subject Shoe to a judgment in personam, due process required only that Shoe have certain minimum contacts with the forum state such that the maintenance of the suit did not offend traditional notions of fair play and substantial justice. The court also held that a corporation was deemed to have a "presence" in a state for jurisdictional purposes where its in-state activities had been continuous and systematic and gave rise to the liability sued on. The court held that the activity of Shoe‘s salesmen was not only substantial, but also gave rise to the obligation to contribute to the unemployment compensation fund. Reasoning: To the extent that a corporation exercises the privilege of conducting activities within a state, it enjoys the benefits and protection of the laws of that state. The exercise of that privilege may give rise to obligations, and, so far as those obligations arise out of or are connected with the activities within the state, a procedure which requires the corporation to respond to a suit brought to enforce them can, in most instances, hardly be said to be undue. Whether due process standards are met depends upon the ―quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure.‖ Established a constitutional basis for the exercise of personal jurisdiction that focused on the nonresident‘s activities or contacts with the forum state. Dissent: J. Black argued, the constitution leaves to each state the power to tax and to open the doors of its courts for its citizens to sue corporations who do business in the state. It is a judicial deprivation to condition the exercise of this power on the court‘s notion of ―fair play.‖
Level of Forum Activity: Relation of Claim to Activity: Effects of Out-ofState Conduct Felt Within the Forum Only Related Claims Single Act Within the Forum Only Related Claims Mid-Range of Activities Within Forum Only Related Claims Continuous, Systematic & Substantial Activities Within the Forum All Claims, Related or Not
The “International Shoe Test” Assesses two variables: (i) the level of activity of the defendant in the forum and (ii) whether the claim asserted against the defendant is related to the defendant‘s activities within the forum state. Where a defendant has "continuous and systematic" contacts with the forum state, the court can exercise "general" jurisdiction over a nonresident defendant for all purposes, even for a claim that is not related to the defendant's contacts with the forum state. Where a nonresident defendant's contacts with the forum state are not sufficient for general jurisdiction, the defendant may nonetheless be subject to "specific" jurisdiction, that is, jurisdiction over a claim that allegedly arise out of the defendant's contacts with the forum. State Long-Arm Statutes Do not supplant the traditional grounds for general in personam jurisdiction, namely domicile, citizenship, incorporation in the forum state, service of process in the forum state, appearance in court and consent. Rather, they provide legislative authority, subject to the International Shoe limitations, to reach nonresidents who, falling outside the traditional categories, engage in activities in the state that give rise to a plaintiff‘s claim. Can be limited to acts enumerated in the statute or ―in every case not contrary to the provisions of the constitution or the laws of the United States.‖ McGee v. International Life Ins. Co. Facts: An insurance beneficiary obtained a judgment under a long-arm statute against the insurer in a California state court and attempted to enforce it through an action in the Texas state courts. The Texas courts refused to enforce the California judgment, holding that the judgment was void under the Fourteenth Amendment because service of process outside California could not give the courts of California jurisdiction over the insurer. Holding: The Supreme Court found that the Due Process Clause did not preclude the California court from entering a judgment that was binding on the insurer. The Court found it sufficient for purposes of due process that the suit was based on a contract that had substantial connection with California. The contract was delivered in California, the premiums were mailed from there, and the insured was a resident of California when he died. There was no contention that the insurer did not have adequate notice of the suit or sufficient time to prepare its defenses and appear. The Court determined that the insurer had no vested right not to be sued in California and concluded that due process was satisfied because the insurer had certain minimum contacts with California. Court emphasized three things: The suit was based on a contract which had substantial connects with forum; California had a ―manifest interest in providing effective means of redress for its residents;‖ and Balance of inconveniences favored allowing plaintiff to sue in California. Personal Jurisdiction in Federal Court Although the constitutional constraints on a federal court‘s exercise of jurisdiction are defined by the national boundaries of the United States, the federal courts have not been given the full extent of their potential adjudicatory power. Rule 4(k)(1) – Territorial Limits on Effective Service (plus “100 Mile Bulge Rule”) Serving a summons or filing a waiver of service establishes personal jurisdiction over a defendant: (A) Who is subject to the jurisdiction of a court of general jurisdiction in the state where the district court is located; or (B) Who is a party joined under Rule 14 or 19 and is served within a judicial district of the United States and not more than 100 miles from where the summons was issued; or (C) When authorized by a federal statute.
Jurisdictional reach of a federal court is thus equivalent to the state court with the exceptions of Rules 4(k)(1)(B) and 4(k)(1)(C).
Rule 4(k)(2) – Federal Claim Outside State-Court Jurisdiction Allows federal courts to exercise personal jurisdiction ―over the person of any defendant who is not subject to the jurisdiction of the courts of general jurisdiction of any state‖ when sued on claims ―arising under federal law‖ and where the ―exercise of jurisdiction is consistent with the Constitution and the laws of the United States.‖ (i) Claim must arise under federal law; (ii) defendant must be beyond the reach of any state court (i.e., contacts are scattered through the U.S.); and (iii) exercise of jurisdiction must not violate the defendant‘s rights under the Constitution. Most often used in cases involving foreign defendants. C. MINIMUM-CONTACTS ANALYSIS IN OPERATION Hanson v. Denckla Facts: While living in Pennsylvania, Mrs. Donner set up a trust in Delaware with a Delaware bank. Under the trust, she would receive periodic payments and reserved the right to designate the persons who would receive the property in the trust upon her death. She later moved to Florida and continued to receive payments until her death there. Her estate was probated in Florida and litigation ensued between her siblings over the assets. Her daughters won in the Florida courts and sought to enforce their judgment in Delaware courts disagreed that the trustee was subject to in personam jurisdiction in Florida. Holding: The Supreme Court held that to have a relevant contact under the International Shoe test, the defendant must have ―purposefully availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.‖ The ―unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.‖ Reasoning: The ―purposeful availment‖ gloss on the minimum-contacts test proved to be a crucial restraint on the exercise of jurisdiction. World-Wide Volkswagen Corp v. Woodson Facts: W-WV sought a writ of prohibition to keep district court Judge Woodson from exercising in personam jurisdiction over it, alleging it did not have sufficient contracts with the forum state of Oklahoma to render it subject to such jurisdiction. Holding: A state court may exercise personal jurisdiction over a nonresident defendant only so long as there exists sufficient minimum contacts between him and the forum state such that maintenance of the suit does not offend traditional notions of fair play and substantial justice. Reasoning: The concept of minimum contacts protects the defendant against the burdens of litigating in a distant or inconvenient forum; acts to ensure that the states, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system; and serves a function of the individual liberty interest preserved by the Due Process Clause. Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another state; even if the forum state has a strong interest in applying its law to the controversy; even if the forum state is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the state of its power to render a valid judgment. It is unconstitutional for a state to exercise jurisdiction based solely on the fact that a plaintiff took a unilateral action that brought [the product] to another state and was subsequently injured using it there. The “Foreseeability” Theory The foreseeability that is critical to due process analysis is not the mere likelihood that a product will find its way into the forum state. Rather, it is that the defendant's conduct and connection with the forum state are such that he should reasonably anticipate being haled into court there.
The “Stream of Commerce” Theory Brennan, J., dissenting, expressed the view that it was not unfair or unreasonable to require the retailer and wholesale distributor to defend in Oklahoma, since each defendant did have contacts with Oklahoma, having purposefully interjected goods into the stream of interstate commerce that predictably would be used in the forum state, and having derived substantial benefits from states other than New York in view of the nature of the product they sold, and since such contacts were sufficiently significant in light of Oklahoma's connection to the litigation as, among other things, the state where the accident occurred, and the state where essential witnesses and evidence were located. N.B. ―The 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,‖ citing Gray v. American Radiator & Standard Sanitary Corp The “Fairness and Substantial Justice” Theory Marshall, J., joined by Blackmun, J., dissented, expressing the view that a distributor of automobiles to a multistate market and a local automobile dealer who makes himself part of a nationwide network of dealerships can fairly expect that cars they sell may cause injury in distant states, and that the retailer and wholesale distributor had judicially cognizable contacts with Oklahoma, so that in view of all the interest and policies at stake, it was not beyond the bounds of the Constitution to require the retailer and wholesale distributor to defend the action in Oklahoma. Calder v. Jones Facts: California resident, Jones, brought a libel action against a national magazine based in Florida and against Calder, a reporter and the magazine's editor, individually. Calder, served by mail in Florida, moved to quash service for lack of personal jurisdiction, and the state appellate court reversed the lower court order and found jurisdiction. Calder appealed. Holding: A state court may exercise jurisdiction over an out-of-state party whose intentional conduct is calculated to cause, and does cause, injury to the complainant in the forum state. Jones‘ career was centered in California, the article was drawn from California sources, and the harm was suffered in California. Reasoning: Court noted that petitioners were not charged with untargeted negligence, but rather their intentional, and allegedly tortious, actions were expressly aimed at California, and under the circumstances, petitioners must have reasonably anticipated being sued there. Where one state is the focal point both of the story and of the harm suffered, jurisdiction over defendants in a defamation suit is proper in that same state based on the "effects" of their conduct in that state even though the conduct occurs in another state. Griffis v. Luban ―While the record supports the conclusion that Luban‘s statements were intentionally directed at Griffis, whom she knew to be an Alabama resident, we conclude that the evidence does not demonstrate that Luban‘s statements were ―expressly aimed‖ at the state of Alabama. The fact that the messages posted to the newsgroup could have been read in Alabama, just as they could have been read anywhere in the world, cannot suffice to establish Alabama as the focal point of the defendant‘s conduct. The “Calder Effects” Test The Calder effects test is not satisfied by the mere allegation that the plaintiff feels the effect of the defendant's conduct in the forum because the plaintiff is located there. As interpreted by the Third Circuit, the test requires the plaintiff to show that: (i) the defendant committed an intentional tort; (ii) the plaintiff felt the brunt of the harm caused by that tort in the forum such that the forum state was the focal point of the plaintiff's injury; and (iii) the defendant expressly aimed the tortious conduct at the forum such that the forum state was the focal point of the tortious activity. To satisfy the third prong, the plaintiff must show that the defendant knows that the plaintiff will suffer the brunt of the harm caused by the tortious conduct in the forum, and
point to specific activity indicating that the defendant expressly aims its tortious conduct at the forum. Asahi Metal Indus. Co. v. Superior Court of California Facts: Petitioner, a Japanese corporation, manufactured a valve that was sold to respondent, a Taiwanese corporation (Cheng Shin), who used it in the manufacture of a motorcycle tire. When the tire exploded while the motorcycle owner was driving it in California, the driver filed a products liability action against Cheng Shin, who filed a cross-complaint for indemnity against Asahi. After pretrial settlements, the suit became Cheng Shin v. Asahi for indemnification. Asahi appealed on the grounds that there did not exist minimum contacts between itself and California. Cheng Shin Rule 13(g) Tire Manufacturer Sealant Manufacturer Rule 13(h) Asahi Holding: Supreme Court held that the mere fact that petitioner knew that some of its component parts would be used in products that would be sold in the state did not provide the necessary minimum contacts for the state to exercise personal jurisdiction over petitioner, since petitioner did nothing to purposely avail itself of the privilege of conducting activities in the state. Since there were no minimum contacts, the state was estopped by Fourteenth Amendment due process from exercising personal jurisdiction over petitioner. Concurrence/Dissent: Brennan, J., joined by White, Marshall, and Blackmun, expressed the view that while the exercise of personal jurisdiction over the Japanese company would not comport with fair play and substantial justice, the facts found by the California Supreme Court supported its finding of minimum contacts between the company and the state, in that while the company did not design or control the system of distribution that carried its valve assemblies into California, the company was aware of the distribution system's operation and knew that it would benefit economically from the sale in California of products incorporating its components. Concurrence/Dissent: Stevens, J., joined by White and Blackmun, expressed the view that (i) the exercise by the state of personal jurisdiction over the Japanese company was unreasonable and unfair, so as to violate the due process clause, (ii) this finding alone required reversal, so that it was not necessary to the court's decision to examine minimum contacts to determine whether the state court's assertion of personal jurisdiction was constitutional, and (iii) even assuming that it was necessary to articulate purposeful direction or any other test as the nexus between an act of the company and the forum state that was necessary to establish minimum contacts, the test was misapplied in this case, because the Japanese company's conduct consisting of a regular course of dealing that resulted in deliveries of over 100,000 units annually over a period of several years constituted purposeful availment of the forum's market even though the item delivered to the forum state was a standard product marketed throughout the world. Justice O‟Connor‟s “Stream of Commerce ” Theory The substantial connection between the defendant and the forum state necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum state. The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum state. A defendant's awareness that the stream of commerce may or will sweep the product into the forum state does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum state. Additional conduct of the defendant that may indicate an intent or purpose to serve the market in the forum State, include for example, (i) designing the product for the market in the forum State, (ii) advertising in the forum State, (iii) establishing channels for providing regular advice to customers in the forum State, or (iv) marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. Justice Brennan‟s “Stream of Commerce” Test Brennan suggests that so long as the defendant places a product in the stream of commerce and is aware that the final product is being marketed in the forum state, the possibility of a lawsuit there cannot come as a surprise.
The Fairness Factors The Court listed five factors relevant to assessing the ―fairness‖ of the jurisdictional inquiry: (i) the burden on the defendant (a ―primary concern); (ii) the forum state‘s interest in adjudicating the dispute (citing McGee); (iii) the plaintiff‘s interest in obtaining convenient and effective relief; (iv) the ―interstate judicial system‘s interest in obtaining the most efficient resolution of controversies;‖ and (v) the ―shared interest of the several States in furthering fundamental substantive social policies.‖ N.B. The question of fairness is relevant only after the court finds substantial contacts. Burger King Corp. v. Rudzewicz Facts: Rudzewicz entered into a franchise agreement with Burger King, a Florida corporation, which held that the contract was to be governed by Florida law. All periodic payments were sent to, and all material decisions were made, in Florida. Rudzewicz argued that the Florida courts lacked personal jurisdiction over him. Holding: The Supreme Court determined that a party that avails themselves of the protections and benefits of the law of a forum state is subject to personal jurisdiction of that state. Court found that Rudzewicz had entered into a contract and established a substantial and continuing relationship with Burger King. Court further found that Rudzewicz had fair notice that he might be subject to suit in Florida. Court further found that the exercise of jurisdiction would not offend due process and reversed the holding of the court of appeals and remanded for further proceedings. Reasoning: Where the defendant "deliberately" has engaged in significant activities within a State, or has created "continuing obligations" between himself and residents of the forum he manifestly has availed himself of the privilege of conducting business there, and because his activities are shielded by the benefits and protections of the forum's laws it is presumptively not unreasonable to require him to submit to the burdens of litigation in that forum as well. Court notes that a contract in itself is not sufficient; but rather the contract represents a history of prior dealing and future obligations. Once you can show purposeful contact, there is a presumption that the jurisdiction will be reasonable unless there is a compelling showing by the defendant that it would be unfair or unconstitutional (i.e., Brennan suggests the burden falls on the defendant who is seeking to dismiss the action to persuade the court that the assertion of personal jurisdiction over the defendant would be unreasonable). Recognize the difference between choice of law clause and choice of forum clause; choice of law covers only the contract and is not determinative of jurisdiction. Dissent: Stevens, J., joined by White, J., dissented, arguing Rudzewicz did not prepare his french fries, shakes, and hamburgers in Michigan, and then deliver them into the stream of commerce "with the expectation that they [would] be purchased by consumers in" Florida. To the contrary, Rudzeicz did business only in Michigan, his business, property, and payroll taxes were payable in that State, and he sold all of his products there, and agreeing with the Court of Appeals that jurisdiction under the circumstances would offend the fundamental fairness which is the touchstone of due process. D. PERSONAL JURISDICTION IN THE INTERNET AGE Note that the Zippo sliding scale approach is not a personal jurisdiction litmus test. Judge McLaughlin articulated the test only as a way of establishing the “likelihood” that personal jurisdiction would be proper over a given defendant. Correspondingly, the approach should be understood at best as a jurisprudential heuristic, and at worst as potentially misleading. Ultimately, personal jurisdiction over a defendant that maintains a website must, like personal jurisdiction over all other defendants, satisfy the jurisdictional constraints placed upon the federal court by the forum state or any applicable federal statute and the due process analysis established by International Shoe and its progeny. ALS Scan, Inc. v. Digital Serv. Consultants, Inc. Facts: ALS Scan, a Maryland corporation, sued DSC, a Georgia Internet Service Provider (ISP), for copyright infringement. The District Court for the District of Maryland granted the ISP's motion to dismiss for lack of personal jurisdiction. The corporation filed an interlocutory appeal. The question for the appeals court was whether a person electronically transmitting or enabling transmission of information via the Internet, causing injury in a state, subjected the person to its jurisdiction.
Holding: Adopting the Zippo model, the Fourth Circuit held that Maryland could not, consistent with due process, exercise judicial power over an out-of-state ISP where it did not (i) direct electronic activity into the state, (ii) with the manifested intent of engaging in business or other interactions within the state, and (ii) create, for the in-state corporation, a potential cause of action cognizable in the state's courts. Reasoning: The ISP's activity was passive, as it functioned from Georgia as an ISP, and in that role provided bandwidth to the other defendant, also in Georgia, to enable it to create a website and send information over the Internet. It did not select or knowingly transmit infringing photographs to Maryland. The Zippo “Sliding Scale” Test At one end of the spectrum are situations where a defendant clearly does business over the Internet. If the defendant enters into contracts with residents of a foreign jurisdiction that involve the knowing and repeated transmission of computer files over the Internet, personal jurisdiction is proper. At the opposite end are situations where a defendant has simply posted information on an Internet Web site, which is accessible to users in foreign jurisdictions. A passive Web site that does little more than make information available to those who are interested in it is not grounds for the exercise [of] personal jurisdiction. The middle ground is occupied by interactive Web sites where a user can exchange information with the host computer. The court concluded that "the likelihood that personal jurisdiction can be constitutionally exercised is directly proportionate to the nature and quality of [interactivity] and commercial activity that an entity conducts over the Internet." Snowney v. Harrah‘s Entertainment, Inc. Facts: Nevada Hotels advertised heavily in California and obtained a significant percentage of their business from California residents. The hotels also maintained an Internet Web site and toll-free phone number where visitors or callers could obtain room quotes and make reservations. Holding: The court held that the hotels were subject to specific jurisdiction in California. The hotels purposefully availed themselves of the privilege of doing business in California. The guest's causes of action were premised on alleged omissions during the hotels' consummation of transactions with California residents and in their California advertisements. Reasoning: Because the harm alleged by the guest related directly to the content of the hotels' promotional activities in California, an inherent relationship between the guest's claims and the hotels' contacts with California existed. By purposefully and successfully soliciting the business of California residents, the hotels could reasonably anticipate being subject to litigation in California in the event their solicitations caused an injury to a California resident. Assertion of specific jurisdiction over the hotels was fair. E. JURISDICTION BASED ON THE PRESENCE OF DEFENDANT‘S PROPERTY With Schaffer, the Court reassessed in-rem principles under the minimum-contacts test. “True” In-Rem A proceeding that seeks to adjudicate the title to specific property, as against all possible claimants, known or unknown (i.e., an action to forfeit property to the government). Court suggests this type would be satisfied under the minimum-contacts test. Quasi-in-Rem A proceeding that seeks to ―secure a pre-existing claim in the subject property and to extinguish or establish the nonexistence of similar interests of particular persons.‖ It does not affect other potential claimants‘ interests in the property, but simply seeks a declaration that, as between the party bringing the action and a particular other contender, the plaintiff‘s claim is superior (i.e., an action to foreclose a mortgage).
Quasi-in-Rem a/k/a “Attachment Jurisdiction” A proceeding where a thing owned by a specified person is seized as a basis for exercising jurisdiction to decide a claim against the owner. The claim does not concern interests in the thing; it concerns some other transaction. Court suggests most exercises of attachment jurisdiction would fail the minimumcontacts test since they usually involve seizure of property completely unrelated to the plaintiff‘s claim against the defendant. But not always! For example, a case in which a plaintiff sues for an injury suffered on the land of the defendant, and brings the action by attachment, rather than seeking personal jurisdiction over the defendant. N.B. Judgment does not bind the defendant personally and cannot be enforced against any other property (outside state territorial limits) owned by the defendant. Schaffer v. Heitner Facts: Heitner, a nonresident shareholder of Greyhound, brought a derivative suit in Delaware, the state of Greyhound‘s incorporation. Jurisdiction was based on sequestration of Greyhound stock that was deemed by statute to be located within the state of incorporation. The Delaware statute allowed property within the state to be seized ex parte to compel the owner to submit to the in personam jurisdiction of the court. Schaffer argued that permitting courts of that state to take jurisdiction of a lawsuit by sequestering defendant's property located in the state violated the due process clause of the 14th Amendment, as it permitted state courts to exercise jurisdiction despite the absence of sufficient contacts with the state. Holding: The Court held that jurisdiction cannot be founded on property within a state unless there are sufficient contacts within the meaning of the test developed in International Shoe. Court expressly overrules line of cases represented by Harris v. Balk. Note that the court easily rejects the concept of quasi in rem despite the fact that it had been used for over one hundred years – a traditional judicial tool. Reasoning: (i) all assertions of state jurisdiction, including in rem and quasi in rem actions, must be evaluated according to the minimum contacts standard, and (ii) neither the presence of the nonresident defendants' stock in Delaware nor the fact that the nonresident defendants were officers of a Delaware chartered corporation, provided the requisite contacts to establish the jurisdiction of Delaware courts. Concurrence: Powell, J., concurring, expressed the view that judgment should be reserved on whether the ownership of some forms of property whose situs is indisputably and permanently located within a state may, without more, provide the contacts necessary to subject a defendant to jurisdiction within the state to the extent of the value of the property. Concurrence: Stevens, J., concurring in the judgment, expressed the views that (i) since a purchaser of stock could hardly be expected to know that he has thereby become subject to a suit in a forum remote from his residence and unrelated to the transaction, the Delaware statute which based jurisdiction on sequestration of stock created an unacceptable risk of judgment without notice, and (ii) in rem jurisdiction where real estate is involved should not be invalidated, nor should other long accepted methods of acquiring jurisdiction over persons with adequate notice of both the particular controversy and also that their local activities might subject them to suit. Concurrence/Dissent: Brennan, J., concurring in part and dissenting in part, although agreeing that the minimum contacts approach was the appropriate standard to determine state court jurisdiction, further expressed the views that (i) since the Delaware sequestration statute did not operate on a contacts theory, but rather on an embodiment of quasi in rem jurisdiction which was no longer constitutional, the Court should not have determined whether there were sufficient contacts present, and (ii) nevertheless, if the minimum contacts issue must be decided, it should have been decided that sufficient contacts were present. Officers of corporation voluntarily associated themselves with a Delaware corporation and the state has a great interest in adjudicating its corporation laws.
F. JURISDICTION BASED SOLELY ON PERSONAL SERVICE Burnham v. Superior Court of California Facts: The Burnhams lived in New Jersey. After they separated, the wife moved to California and filed a divorce action in that state. At one point, Mr. Burnham came to California on business. While there, he was served with the divorce action papers. He moved to quash, contending that his contacts with California were insufficient to confer jurisdiction. Holding: In a plurality opinion, the Supreme Court affirmed the decision of the appeals court. The forum state had jurisdiction over petitioner after he was served with process while temporarily in the state for activities unrelated to the pending divorce action. Reasoning: Due process under the Fourteenth Amendment was satisfied because nothing in the line of cases supporting the minimum contacts doctrine supported the proposition that physical presence was itself insufficient to establish jurisdiction. Jurisdiction based on physical presence alone constitutes due process because it is one of the continuing traditions of the United States legal system that define the due process standard of traditional notions of fair play and substantial justice. Service in-state is not necessary to the exercise of personal jurisdiction, but it certainly remains sufficient for the exercise for the exercise of personal jurisdiction. Scalia suggests that ancient forms comply with traditional notions because they are just that, traditional; Scalia also argues that it would be incorrect for the judges to apply ―their‖ notions of fair play because it would constantly be subject to the whims of the justices of the court. Concurrence: Brennan, J., concurring, stated ―I do not propose that the "contemporary notions of due process" to be applied are no more than "each Justice's subjective assessment of what is fair and just." Rather, the inquiry is guided by our decisions beginning with International Shoe, and the specific factors that we have developed to ascertain whether a jurisdictional rule comports with "traditional notions of fair play and substantial justice." This analysis may not be "mechanical or quantitative," but neither is it "freestanding," ante, or dependent on personal whim. Our experience with this approach demonstrates that it is well within our competence to employ.‖ Brennan suggests that we should judge ancient forms by current standards of fair play and substantial justice; Brennan basically argues against Scalia‘s stating that since its traditional, it satisfies due process; Brennan suggests that traditional things are not always dispositive. G. JURISDICTION BASED ON CONSENT Carnival Cruise Lines v. Shute Facts: Shutes were residents of the State of Washington, and they boarded Carnival's ship in California. Shute wife was injured while the ship was in international waters off the coast of Mexico. Shutes filed an action in a District Court in Washington, which then granted Carnival‘s motion for summary judgment, since the contract between Shutes and Carnival provided that all suits were to be brought in Florida. Ninth Circuit reversed and held the forum selection clause in Carnival‘s contract for passengers on its cruise lines was unenforceable, since enforcement would effectively deprive Shute injured party of her right to a day in court because of distance involved, and because it violated Limitation of Vessel Owner's Liability Act, 46 U.S.C.S. App. § 183c. Holding: The Supreme Court held that because respondents had notice of the forum clause, because petitioner's principal place of business was in Florida, and since there was no bad faith motive for the choice of a Florida forum, Florida was not an inconvenient forum. Forum selection clause must reasonable and fair. Dissent: Stevens, J., joined by Marshall, J., dissented, expressing the view that (i) the forum-selection clause was unreasonable, because only the most meticulous passengers would be likely to become aware of it in the fine print on their tickets, and many would have that opportunity only after they had purchased the tickets, at which point another clause of the contract would bar any refund; (ii) under prevailing admiralty rules, forum-selection clauses are not enforceable if they were not freely bargained for, create additional expense for one party, or deny one party a remedy; and (iii) the forum-selection clause in question lessened or weakened the couple's ability to recover for the accident because it was safe to assume that any witnesses could be assembled with less expense and inconvenience at a west coast forum than thousands of miles away in Florida.
H. GENERAL JURISDICTION Idea that sometimes defendant‘s contact with the forum state is (i) continuous, (ii) systematic, and (iii) substantial that it is fair to exercise general jurisdiction over the defendant for all claims in the forum state. Thus, the threshold for satisfying the requirements for general jurisdiction before considering convenience or more general fairness concerns is substantially higher than in specific jurisdiction cases. A court should consider all of a defendant's contacts with the forum state prior to the filing of the lawsuit, rather than just those contacts that are related to the particular cause of action the plaintiff asserts. Helicopteros Nacionales de Colombia v. Hall Facts: A foreign corporation entered into contract negotiations in Texas with decedents' employer to provide helicopter services. They signed a contract in Peru that provided for decedents' employer to make payments to the corporation's United States bank account. The corporation did not maintain a place of business in Texas, but purchased helicopter parts there and sent employees there for training. The decedents' representatives filed a wrongful death action in Texas against the corporation following the decedents' deaths in a helicopter crash in Peru. Holding: The Supreme Court held that the corporation's contacts with the state were not sufficient to subject it to the state court's in personam jurisdiction because the representatives' causes of action for wrongful death arose out of the crash in Peru, and were not related to the corporation's contacts with the state, and the corporation's business contacts with the state were not continuous and systematic enough to satisfy the requirements of the Due Process Clause of the Fourteenth Amendment. Reasoning: Mere purchases, even if occurring at regular intervals, are not enough to warrant a State's assertion of in personam jurisdiction over a nonresident corporation in a cause of action not related to the purchases. And the fact that corporation sent personnel to Texas for training in connection with the purchases did not enhance the nature of corporation‘s contacts with Texas. Dissent: Brennan, J., dissented on the ground that the undisputed contacts between the foreign corporation and the state of Texas were sufficiently important, and sufficiently related to the underlying cause of action, to make it fair and reasonable for the state to assert personal jurisdiction over the foreign corporation. X. Notice and Service of Process A. ADEQUATE NOTICE Under traditional Pennoyer framework, notice of the lawsuit occurred simultaneously with the act that gave rise to jurisdiction; namely personal service or attachment of property within the state. After International Shoe, notice needed to comply with the minimum contacts analysis. Restatement (Second) of Judgments § 2 – Adequate Notice Notice is adequate if: The notice is official in tenor, and states that the action is pending or about to be commenced and that there is opportunity to be heard concerning it and affords a reasonable time in which that opportunity may be exercised; and The notice is transmitted in a manner that actually notifies the person being addressed or someone who can adequately represent him, or has a reasonable certainty of resulting in such notice; and The form of the notice and the method employed for transmitting it sufficiently comply with the procedure prescribed for giving notice. If the party responsible for effectuating notice knows that the person to be notified is so situated or is in such condition that ordinarily employed means of notice will be ineffectual, other means must be used that actually notify, or have a reasonable certainty of resulting in actual notice to, the person or someone who can adequately represent him. When the identity or the whereabouts of a person cannot be ascertained despite reasonably diligent inquiry, it is sufficient that the person is addressed by name or suitable identifying characteristics in notice that is suitably publicized. An action may proceed without notice to a person interested therein when:
Urgent public or other necessity justifies an expedited provisional remedy in the action; and Giving notice to the person is impractical or would frustrate the purpose of the remedy; and The person is afforded an adequate subsequent opportunity to protect his interest.
Mullane v. Central Hanover Bank & Trust Co. Facts: Hanover established a common trust fund that complied with N.Y. Banking Law. Hanover petitioned for a settlement of its first account as a common trustee. Upon the filing of the petition, Mullane was appointed the special guardian. The only notice given to the beneficiaries was by a publication in a local newspaper that was in strict compliance with N.Y. Banking Law. Appellant objected, contending that the notice and statutory provisions for notice to beneficiaries were inadequate to afford due process. Holding: The Supreme Court reversed, holding that the notice requirement under N.Y. Banking Law was inadequate because it did not provide for a means to contact those who could easily be informed by other means. The notice had to reasonably convey the required information and afford a reasonable time for those interested to make their appearance. Reasoning: An elementary and fundamental requirement of due process in any proceeding, which is to be accorded finality, is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections. Statutory notice by publication of judicial settlement of accounts under N.Y. Banking Law to trust beneficiaries whose interests or whereabouts cannot with due diligence be ascertained is sufficient to meet the requirements of due process. Notice by publication is incompatible with the requirements of the Fourteenth Amendment as a basis for adjudication depriving known persons whose whereabouts are also known of substantial property rights. The means employed ―must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.‖ Jones v. Flowers ―We do not think that a person who actually desired to inform a real property owner of an impending tax sale of a house he owns would do nothing when a certified letter sent to the owner is return unclaimed.‖ If statute provides for certified mail but it is returned unclaimed, State is constitutionally required to resend by regular first class mail. B. SERVICE OF PROCESS Rule 4(c) – Service A summons must be served with a copy of the complaint. The plaintiff is responsible for having the summons and complaint served within the time allowed by Rule 4(m) and must furnish the necessary copies to the person who makes service. Rule 4(e) – Serving an Individual Within a Judicial District of the United States Unless federal law provides otherwise, an individual – other than a minor, an incompetent person, or a person whose waiver has been filed – may be served in a judicial district of the United States by: Following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made; or Doing any of the following: (i) delivering a copy of the summons and of the complaint to the individual personally; (ii) leaving a copy of each at the individual‘s dwelling or usual place of abode with someone of suitable age and discretion who resides there; or (iii) delivering a copy of each to an agent authorized by appointment or by law to receive service of process.
Rule 4(f) - Serving an Individual in a Foreign Country Unless federal law provides otherwise, an individual - other than a minor, an incompetent person, or a person whose waiver has been filed - may be served at a place not within any judicial district of the United States: By any internationally agreed means of service that is reasonably calculated to give notice, such as those authorized by the Hague Convention on the Service Abroad of Judicial and Extrajudicial Documents; If there is no internationally agreed means, or if an international agreement allows but does not specify other means, by a method that is reasonably calculated to give notice: As prescribed by the foreign country's law for service in that country in an action in its courts of general jurisdiction; As the foreign authority directs in response to a letter rogatory or letter of request; or Unless prohibited by the foreign country's law, by: (i) delivering a copy of the summons and of the complaint to the individual personally; or (ii) using any form of mail that the clerk addresses and sends to the individual and that requires a signed receipt; or By other means not prohibited by international agreement, as the court orders. Rule 4(h) – Serving a Corporation, Partnership, or Association Unless federal law provides otherwise or the defendant‘s waiver has been filed, a domestic or foreign corporation, or a partnership or other unincorporated association that is subject to suit under a common name, must be served: In a judicial district of the United States: In the manner prescribed by Rule 4(e)(1) for serving an individual; or By delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process and — if the agent is one authorized by statute and the statute so requires — by also mailing a copy of each to the defendant; or At a place not within any judicial district of the United States, in any manner prescribed by Rule 4(f) for serving an individual, except personal delivery under (f)(2)(C)(i). 28 U.S.C. § 1697 - Service in Multiparty, Multi-forum Actions When the jurisdiction of the district court is based in whole or in part upon § 1369 of this title, process, other than subpoenas, may be served at any place within the United States, or anywhere outside the United States if otherwise permitted by law. Rule 4(d)(1) – Requesting a Waiver of Service An individual, corporation, or association that is subject to service has a duty to avoid unnecessary expenses of serving the summons. The plaintiff may notify such a defendant that an action has been commenced and request that the defendant waive service of a summons. The notice and request must: Be in writing and be addressed to the individual defendant; or to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process; Name the court where the complaint was filed; Be accompanied by a copy of the complaint, 2 copies of a waiver form, and a prepaid means for returning the form; Inform the defendant of the consequences of waiving and not waiving service; Give the defendant a reasonable time of at least 30 days after the request was sent — or at least 60 days if sent to the defendant outside any judicial district of the United States — to return the waiver; and Be sent by first-class mail or other reliable means.
A waiver of service does not waive the defendant‘s right to object to venue and jurisdiction.
Rule 4(d)(2) – Failure to Waive If a defendant located within the United States fails, without good cause, to sign and return a waiver requested by a plaintiff located within the United States, the court must impose on the defendant: The expenses later incurred in making service; and The reasonable expenses, including attorney‘s fees, of any motion required to collect those service expenses. Rule 4(d)(3) – Time to Answer After a Waiver A defendant who, before being served with process, timely returns a waiver need not serve an answer to the complaint until 60 days [compared to 20 days with service] after the request was sent – or until 90 days after it was sent to the defendant outside any judicial district of the United States. XI. Venue, Transfer and Forum Non Conveniens A. VENUE IN STATE COURT Venue serves as an administrative funnel to direct cases to those locales (i.e., particular counties or particular courts within a county) in which the action may be brought. Varies greatly from state to state but often include, for example from Maryland, where the defendant (i) resides; (ii) carries on regular business; (iii) is employed; or (iv) habitually engages in a vocation. Statutes represent the legislatures assessment of a convenient place for trial. B. VENUE IN FEDERAL COURT Venue provisions apply to original parties and are not affected by third parties added by impleader or otherwise. Proper venue is not a constitutional requirement for a valid judgment. N.B. A resident defendant may not avail himself or herself of the objection that another defendant is not a resident of the district. If the venue statutes were satisfied for the original action, there is no reason to bar the assertion of additional claims for and against those already made parties, whether by way of compulsory counterclaim, permissive counterclaim, cross-claim, or claims between the plaintiff and one who already has been made a third-party defendant. 28 U.S.C. § 1391(a) – Venue Generally (Diversity of Citizenship) A civil action wherein jurisdiction is founded on diversity of citizenship may, except as otherwise provided by law, be brought only in: (1) Any district in which all defendants reside and if all defendants reside in different districts of the same state, venue is proper in any district in which a defendant resides; or (2) A judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated; or (3) A judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought (Fallback Provision). Must involve a claim that arose outside the United States. 28 U.S.C. § 1391(b) – Venue Generally (Federal Question) A civil action wherein jurisdiction is not founded solely on diversity of citizenship may, except as otherwise provided by law, be brought only in: (1) Same as above. (2) Same as above.
(3) A judicial district in which any defendant may be found, if there is no district in which the action may otherwise be brought (Fallback Provision). Must involve a claim that arose outside the United States.
28 U.S.C. § 1391(c) – Venue for Domestic Corporations For purposes of venue, a defendant that is a corporation shall be deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced. In a State which has more than one judicial district and in which a defendant that is a corporation is subject to personal jurisdiction at the time an action is commenced, such corporation shall be deemed to reside in any district in that State within which its contacts would be sufficient to subject it to personal jurisdiction if that district were a separate State, and, if there is no such district, the corporation shall be deemed to reside in the district within which it has the most significant contacts. Venue for Domestic Unincorporated Associations For purposes of venue, an unincorporated association ―resides‖ where it does business. 28 U.S.C. § 1391(d) – Venue for Aliens An alien may be sued in any district. 28 U.S.C. § 1441(a) – Actions Removable Generally Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, [only] to the district court of the United States for the district and division embracing the place where such action is pending. For purposes of removal under this chapter, the citizenship of defendants sued under fictitious names shall be disregarded. C. TRANSFER IN FEDERAL COURT 28 U.S.C. § 1404 – Change of Venue (a) For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought. (b) Upon motion, consent or stipulation of all parties, any action, suit or proceeding of a civil nature or any motion or hearing thereof, may be transferred, in the discretion of the court, from the division in which pending to any other division in the same district. (c) A district court may order any civil action to be tried at any place within the division in which it is pending. Statute bars transfer to a district court that would lack subject matter jurisdiction. Statute also bars transfer of a case to a district in which the defendant is not subject to service of process and where, therefore, in personam jurisdiction cannot be obtained over the defendant. In suits against multiple defendants, transfer is proper only to a district in which all of the defendants would have been amenable to process and in which the venue would be proper for bringing an action against all of them. The transfer order does not terminate the action but preserves it against the running of a statute of limitations and for all other purposes. ―Where the defendants seek transfer, the transferee district court must be obligated to apply the state law that would have been applied if there had been no change of venue. A change of venue under § 1404(a) generally should be, with respect to state law, but a change of courtrooms.‖ A forum selection clause does not obviate the need for a judicial analysis of the factors set forth in § 1404(a) and does not necessarily determine the ruling on the motion for transfer.
28 U.S.C. § 1406 – Cure or Waiver of Defects (a) The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought. (b) Nothing in this chapter shall impair the jurisdiction of a district court of any matter involving a party who does not interpose timely and sufficient objection to the venue. § 1404(a) v. § 1406(a) – Which Statute to Apply? § 1404(a) applies when the transferor court (i.e., original court) is a proper venue, whereas § 1406(a) applies when the transferor court is an improper venue. The assessment of whether the original federal court will be made by applying the provisions of § 1391(a) or § 1391(b). If case is removed from state to federal court, then § 1391 is totally irrelevant. If case is removed from state to federal court under § 1441, it is possible that the defendant will not be subject to personal jurisdiction there although the venue is proper. D. FORUM NON CONVENIENS The phrase refers to a common law doctrine of dismissal – a case, though pending in an appropriate forum, is dismissed because there is another forum that is more appropriate. The court dismisses because it cannot transfer. Can be made conditional on parties‘ agreement to litigation in another forum. Piper Aircraft Co. v. Reno Facts: Following an air crash that occurred in Scotland, a California probate court appointed an administratrix of the estates of several Scottish citizens killed in the accident. Subsequently, she commenced wrongful death actions against the American manufacturers of the plane and its propellers in the Superior Court of California, claiming negligence and strict liability. Piper and Hartzell removed the case to federal court for the Central District of California. The court then granted their motion to transfer the case to the federal district court for the Middle District of Pennsylvania. The District Court granted forum non conveniens motions, concluding after balancing private interest factors affecting the convenience of the litigants and public interest factors affecting the convenience of the forum that Scotland was the appropriate forum, and explicitly rejecting the plaintiff's contention that dismissal would be unfair because Scotish law was less favorable to the plaintiffs, reasoning that the possibility that dismissal might lead to an unfavorable change in the law did not deserve significant weight. The Third Circuit reversed, holding that the District Court abused its discretion in conducting the forum non conveniens analysis and that, in any event, dismissal is never appropriate where the law of the alternative forum is less favorable to the plaintiff. Holding: The Supreme Court reversed and held that (i) plaintiffs may not defeat a motion to dismiss on the ground of forum non conveniens merely by showing that the substantive law that would be applied in the alternative forum is less favorable to the plaintiffs than that of the chosen forum, since the possibility of a change in substantive law should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry, and (ii) the Federal District Court did not abuse its discretion in weighing the private and public interests and granting the defendants' motion to dismiss, since the District Court (a) did not act unreasonably in concluding that fewer evidentiary problems would be posed if the trial were held in Scotland, a large proportion of the relevant evidence being located in Great Britain, (b) correctly concluded that the problems posed by the inability to implead potential third party defendants clearly supported holding the trial in Scotland, and (iii) did not act unreasonably in deciding that the public interest favored trial in Scotland, the accident having occurred in its air space, all the decedents being Scottish, and apart from the manufacturers, all potential plaintiffs and defendants being either Scottish or English. Reasoning: Court reasoned that the Third Circuit made a mistake in its interpretation of 28 U.S.C. § 1404, which suggests that a transfer in venue should not result in material changes of the law. The Third Circuit assumed the same principle should apply to the forum non conveniens doctrine but the Supreme Court disagreed.
XII. Subject Matter Jurisdiction, MMTJA, CAFA and Removal A. FEDERAL QUESTION JURISDICTION 28 U.S.C. § 1331 – Federal Question The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. Louisville & Nashville R.R. Co. v. Mottley Facts: A railroad company, entered into a contract with the Mottleys, a married couple, to give them travel passes every year. When a new federal law prohibited railroads from issuing free passes, the railroad company declined to renew the passes. The Mottleys sued in federal court for specific performance of the contract, and the circuit court granted an injunction. Holding: The Supreme Court found it improper to plead that a defense under federal law was anticipated, reversed the judgment and remanded to the circuit court with instructions to dismiss the action for lack of federal question jurisdiction. Reasoning: A suit arises under the Constitution and laws of the United States only when the plaintiff's statement of his own cause of action shows that it is based upon those laws or that Constitution. It is not enough that the plaintiff alleges some anticipated defense to his cause of action and asserts that the defense is invalidated by some provision of the Constitution of the United States. Referred to as the ―well-pleaded complaint rule.‖ N.B. Counterclaims cannot give rise to federal jurisdiction if there was no federal jurisdiction in original claim. In theory, the rule ―probably stems from the conceptual notion that unless the initial pleading is sufficient to invoke the jurisdiction of the court, the court lacks power to require responsive pleadings or take any other act in the case.‖ Plaintiff can strategically only disclose state law complaints (instead of state and federal claims) in order to keep the defendant from requesting removal to the federal courts. B. DIVERSITY JURISDICTION 28 U.S.C. § 1332(a) – Diversity of Citizenship; Amount in Controversy; Costs The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs, and is between: Citizens of different States; Citizens of a State and citizens or subjects of a foreign state; Citizens of different States and in which citizens or subjects of a foreign state are additional parties; and A foreign state, defined in § 1603 (a) of this title, as plaintiff and citizens of a State or of different States. For the purposes of this section, § 1335, and § 1441, an alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled. Diversity of citizenship [statutory] has been held to require complete diversity. Must have diversity on both sides of the ―v‖ (i.e., every plaintiff must be of diverse citizenship from every defendant – however, parties on the same side of a dispute can be co-citizens). Results from the Supreme Court‘s interpretation of § 1332 and its predecessor. The Constitutional provision (minimal-diversity) only requires at least one plaintiff to be of diverse citizenship from one defendant (i.e. MA v. VT + MA would be constitutionally sufficient). N.B. Diversity must exist at the time the complaint is filed. It need not exist at the time the cause of action arose and is not defeated if, after commencement of the action, one party becomes a citizen of an opposing party‘s state of citizenship.
Defining Citizenship of a Human Being Determined by the concept of domicile, defined as the person‘s ―true, fixed, and permanent home and principal establishment, and to which he has the intention of returning whenever he is absent therefrom.‖ Court may examine factors including (i) the places where the litigant exercises civil and political rights, (ii) pays taxes, (iii) owns real and personal property, (iv) has his drivers and other licenses, (v) maintains bank accounts, (vi) belongs to clubs and churches, (vii) has places of business or employment, and (viii) maintains a home for his family. Defining Citizenship of Domestic Incorporated/Unincorporated Association For diversity purposes, a domestic corporation is deemed a citizen of both its state of incorporation and the state where it has its principal place of business. Two tests are used to determine a corporations principle place of business: (i) the ―nerve center‖ test indentifies the state in which the corporation performs its executive and administrative functions and (ii) the ―place of operations‖ test determines the one state in which corporate activity is significantly greater than any other state. 28 U.S.C. § 1332(c)(1) creates an exception which states that in ―any direct action against the insurer of a policy or contract of liability insurance, whether incorporated or unincorporated, to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the (i) insured is a citizen, as well as of (ii) any State by which the insurer has been incorporated and (iii) of the State where it has its principal place of business For diversity purposes, an unincorporated domestic association (i) may sue or be sued in its own name if local state law so permits or (ii) as an aggregate of individuals if local state law follows the common law rule. In either case, the unincorporated association‘s citizenship is that of each and every one of its members. The citizenship of a general partnership is that of each and every general partner. The citizenship of a limited partnership is that of each and every partner, both limited and general. Rule 25 – Substitution of Parties Note that the citizenship of the substituted party is disregarded; that of the original party controls – distinguished from an amendment replacing a party in which case the replacement party must be diverse to the party or parties on the opposing side. Death. If a party dies and the claim is not extinguished, the court may order substitution of the proper party. A motion for substitution may be made by any party or by the decedent's successor or representative. If the motion is not made within 90 days after service of a statement noting the death, the action by or against the decedent must be dismissed. After a party's death, if the right sought to be enforced survives only to or against the remaining parties, the action does not abate, but proceeds in favor of or against the remaining parties. The death should be noted on the record. A motion to substitute, together with a notice of hearing, must be served on the parties as provided in Rule 5 and on nonparties as provided in Rule 4. A statement noting death must be served in the same manner. Service may be made in any judicial district. If a party becomes incompetent, the court may, on motion, permit the action to be continued by or against the party's representative. The motion must be served as provided in Rule 25(a)(3). If an interest is transferred, the action may be continued by or against the original party unless the court, on motion, orders the transferee to be substituted in the action or joined with the original party. The motion must be served as provided in Rule 25(a)(3).
An action does not abate when a public officer who is a party in an official capacity dies, resigns, or otherwise ceases to hold office while the action is pending. The officer's successor is automatically substituted as a party. Later proceedings should be in the substituted party's name, but any misnomer not affecting the parties' substantial rights must be disregarded. The court may order substitution at any time, but the absence of such an order does not affect the substitution.
Amount in Controversy N.B. Amount must exceed $75,000 – pleading exactly $75k is not sufficient. To dismiss for lack of jurisdiction minimum, ―it must appear to a legal certainty that the claim is really for less than the jurisdictional amount.‖ Federal jurisdiction is not lost retroactively because a judgment is ultimately rendered for less than the jurisdictional minimum. However, federal judges to have authority under § 1332(b) to impose court costs on a plaintiff who recovers less than the minimum. One Plaintiff v. One Defendant. For purposes of meeting the jurisdictional minimum amount, a plaintiff may aggregate all his claims against a single defendant. The aggregation is permitted regardless of whether the claims are legally or factually related to each other. One Plaintiff v. Several Defendants. A plaintiff who has an action against several defendants cannot aggregate claims based on separate liabilities (i.e., cannot have a claim against ∆1 for $35k and a claim against ∆2 for $40k on separate causes of action). However, there is no problem if the plaintiff is asserting a joint claim against multiple defendants. There the court looks to the total liability. Several Plaintiffs v. One Defendant. Several plaintiffs can aggregate their claims only where they are seeking to ―enforce a single title or right in which they have a common or undivided interest.‖ Supplemental Jurisdiction Over Claims < $75k in Diversity Cases. The supplemental jurisdiction statute permits the exercise of diversity jurisdiction even where some plaintiffs fail to satisfy the minimum [against one defendant] as long as: (i) at least one plaintiff does meet it; (ii) complete diversity exists among the parties; and (iii) all the claims are part of the same case or controversy. Counterclaims. A defendant‘s counterclaim cannot be aggregated with the plaintiff‘s claim. A compulsory counterclaim does not need to meet the jurisdictional amount requirement because the court will have supplemental jurisdiction over it. A permissive counterclaim must have an independent jurisdictional basis and thus must meet the jurisdictional amount requirement. Ochoa v. PV Holding Corp. Facts: Ochoa was injured while riding in a car that was rear-ended by Paul Gulley, who was driving a Budget rental car. The accident happened in New Orleans. Ochoa, a Louisiana citizen, sued Paul Gulley, Budget Rent A Car System, Inc., and PV Holding Corporation (the title holder of Budget rental cars) in state court. Defendants removed the suit to federal court invoking the Court's diversity jurisdiction since Budget was a citizen of Delaware and Gulley was currently residing in Texas since being displaced from New Orleans by Hurricane Katrina. Ochoa moved to remand, contending that the Court lacks subject matter jurisdiction. The issue before the Court was the evacuee Paul Gulley' s domicile at the time the state court petition was filed. Holding: The Court agreed that it lacked subject matter jurisdiction and remanded to the case back to the state court. Reasoning: Court should look to all evidence shedding light on the litigant's intention to establish domicile. The actual fact of residence and the real intention of remaining there, as disclosed by a person's entire course of conduct, are the controlling factors. The moving party has the burden of showing diverse citizenship because he/she is attempting to invoke the court's subject matter jurisdiction. 28 U.S.C. § 1369 – The Multiparty, Multi-forum Trial Jurisdiction Act (MMTJA) The district courts shall have original jurisdiction of any civil action involving minimal diversity between adverse parties that arises from a single accident, where at least 75 natural persons have died in the accident at a discrete location, if [one must be satisfied]: MM
(1) A defendant resides in a State and a substantial part of the accident took place in another State or other location, regardless of whether that defendant is also a resident of the State where a substantial part of the accident took place; (2) Any two defendants reside in different States, regardless of whether such defendants are also residents of the same State or States; or (3) Substantial parts of the accident took place in different States. In any action in a district court which is or could have been brought, in whole or in part, under this section, any person with a claim arising from the accident described in subsection (a) shall be permitted to intervene as a party plaintiff in the action, even if that person could not have brought an action in a district court as an original matter.
28 U.S.C. § 1369 – Limitations on Jurisdiction of District Courts under MMTJA The district court shall abstain from hearing any civil action in which: (1) The substantial majority of all plaintiffs are citizens of a single State of which the primary defendants are also citizens; and (2) The claims asserted will be governed primarily by the laws of that State. Passa v. Derderian Facts: A fire in a nightclub in Rhode Island killed more than 100 people and injured over 200 more. Several lawsuits were subsequently filed, some in federal court, some in state court. All cases were then removed to federal court. The nightclub argued that the federal court lacked jurisdiction to hear the consolidated cases. Holding: The Court held that jurisdiction was proper under 28 U.S.C. §1369 and that the court was not required to abstain in the present case under § 1369(b). Reasoning: A district court is required to abstain if (i) the substantial majority of plaintiffs are citizens of a single state of which the primary defendants are also citizens and (ii) the claims will be governed by the laws of that State. To satisfy the first, a court need not consider only the plaintiffs who have filed, but all who might file, a reading that is consistent with congressional intent. Rhode Island residents make up less than 50% of the total number of potential plaintiffs and therefore fail to constitute a simple majority. Congress intended the MMJTA to allow for easy consolidation in one federal court for discovery and trial for litigation stemming from one major disaster – corrective inefficiencies that arise from duplicative litigation. It does not apply to cases that may involve one defendant but do not arise in one specific location or time. 28 U.S.C. § 1332(d)(2) – Class Action Fairness Act (CAFA) The district courts shall have original jurisdiction of any civil action in which the matter in controversy exceeds the sum or value of $5,000,000, exclusive of interest and costs, and is a class action in which: (A) Any member of a class of plaintiffs is a citizen of a State different from any defendant; (B) Any member of a class of plaintiffs is a foreign state or a citizen or subject of a foreign state and any defendant is a citizen of a State; or (C) Any member of a class of plaintiffs is a citizen of a State and any defendant is a foreign state or a citizen or subject of a foreign state. 28 U.S.C. § 1332(d)(3) – Court May Decline Jurisdiction under CAFA A district court may, in the interests of justice and looking at the totality of the circumstances, decline to exercise jurisdiction over a class action in which greater than onethird but less than two-thirds of the members of all proposed plaintiff classes in the aggregate and the primary defendants are citizens of the State in which the action was originally filed based on consideration of: (A) Whether the claims asserted involve matters of national or interstate interest; (B) Whether the claims asserted will be governed by laws of the State in which the action was originally filed or by the laws of other States;
(C) Whether the class action has been pleaded in a manner that seeks to avoid Federal jurisdiction; (D) Whether the action was brought in a forum with a distinct nexus with the class members, the alleged harm, or the defendants; (E) Whether the number of citizens of the State in which the action was originally filed in all proposed plaintiff classes in the aggregate is substantially larger than the number of citizens from any other State, and the citizenship of the other members of the proposed class is dispersed among a substantial number of States; and (F) Whether, during the 3-year period preceding the filing of that class action, 1 or more other class actions asserting the same or similar claims on behalf of the same or other persons have been filed.
28 U.S.C. § 1332(d)(4) – Court Shall Decline Jurisdiction under CAFA A district court shall decline to exercise jurisdiction: (i) Over a class action in which: (I) Greater than two-thirds of the members of all proposed plaintiff classes in the aggregate are citizens of the State in which the action was originally filed; (II) At least 1 defendant is a defendant: (aa) From whom significant relief is sought by members of the plaintiff class; (bb) Whose alleged conduct forms a significant basis for the claims asserted by the proposed plaintiff class; and (cc) Who is a citizen of the State in which the action was originally filed; and (III) Principal injuries resulting from the alleged conduct or any related conduct of each defendant were incurred in the State in which the action was originally filed; and (ii) During the 3-year period preceding the filing of that class action, no other class action has been filed asserting the same or similar factual allegations against any of the defendants on behalf of the same or other persons. Preston v. Tenet Healthsystem Memorial Medical Center, Inc. Facts: Patients and relatives of deceased who were hospitalized at Tenet Medical Center when Hurricane Katrina devastated New Orleans brought suit for negligence and intentional misconduct by the Medical Center. Preston, seeking a remand motion, cited both the local controversy exception (§ 1332(d)(4)(A)) and the discretionary jurisdiction provision (§ 1332(d)(3)). Holding: The discretionary jurisdiction exception in the CAFA allows a trial court, in the interests of justice and looking at the totality of the circumstances, to decline federal jurisdiction over the lawsuit if at least one-third of the proposed class members are residents of the state in question. Reasoning: Establishing the domicile of more than one hundred plaintiffs must be based on practicality and reasonableness. Affidavits from eight class members – including six plaintiffs – stated that they intended to return to Louisiana when they could, and the court said that information plus the residency information taken from the emergency contact data of the deceased, gave the lower court a reasonable indication as to the citizenship of unaccounted-for persons. Thus, the affidavits support the court‘s conclusion that at least one-third of the class was Louisiana citizens when the suit was filed. C. SUPPLEMENTAL JURISDICTION Supplemental jurisdiction arises out of the intersection of the liberal joinder rules and the limited jurisdiction of the federal courts. Supplemental jurisdiction is never available to get the original case into federal court. N.B. Every single claim asserted in a case in federal court (not just original claim) must satisfy a basis of federal subject matter jurisdiction. N.B. The Federal Rules of Civ. Pro cannot expand the jurisdiction of federal courts.
United Mine Workers of America v. Gibbs Facts: After a coal company had hired Gibbs as mine superintendent, armed members of one of the local unions of the defendant international union forcibly prevented the opening of the mine and threatened him. Gibbs lost his job as superintendent and allegedly began losing other trucking contracts and mine leases he held in nearby areas. Gibbs then sued the Union in District Court seeking damages under § 303 of the Labor Management Relations Act and also seeking damages under state law on the basis of an unlawful boycott and an unlawful conspiracy to interfere with his contract of employment and his contract of haulage. Holding: The Supreme Court held that where there are both state and federal claims involved in the same set of facts and the claims are such that the plaintiff would ordinarily expect to try them all in one judicial proceeding, the federal court has the power to hear both the state and federal claims under the doctrine of pendent jurisdiction. The Court reasoned that Article III‘s grant of jurisdiction of ―cases‖ or ―controversies‖ meant jurisdiction over the entire case or controversy, including an otherwise insufficient claim, if and only if, the claim ―derived from a common nucleus of operative fact.‖ Court held that supplemental jurisdiction was proper If the federal issue is dismissed before trial, so to should the state claim be dismissed. Its justification lies in considerations of (i) judicial economy, (ii) convenience and (iii) fairness to litigants; if these are not present a federal court should hesitate to exercise jurisdiction over state claims. Gibbs stands for concept that if the court has jurisdiction based on a valid federal claim, the court can hear joined claims that would otherwise be insufficient for jurisdiction. Owen Equipment & Erection Co. v. Kroger Facts: Kroger filed a wrongful-death action against a power company. The power company filed a third-party complaint against Owen. Summary judgment was granted for the power company, and the case went to trial between the Kroger and Owen. Owen appealed the district court's denial of its motion to dismiss. Holding: The Supreme Court held that the District Court lacked power to entertain the claim against the third-party defendant following the dismissal of the action as to the primary defendant, absent an independent basis for federal jurisdiction over that claim, since (i) § 1332(a)(1) required complete diversity of citizenship among the parties, and (ii) such a claim was not within the ancillary jurisdiction of federal courts over nonfederal claims. Reasoning: It held that it was undisputed that there was no independent basis of federal jurisdiction over Kroger's state-law tort action against Owen because both were citizens of Iowa. Thus, Kroger could not originally have brought suit in federal court naming the Owen and the power company as codefendants, because citizens of Iowa would have been on both sides of the litigation. Moreover, Kroger‘s claim against the Owen was entirely separate from her original claim against the power company, where the Owen‘s liability to the Kroger depended not at all upon whether or not the power company was also liable. Neither the convenience of litigants nor considerations of judicial economy can suffice to justify extension of the doctrine of ancillary jurisdiction to a plaintiff's cause of action against a citizen of the same state in a diversity case. Under the reasoning of the Court of Appeals in this case, a plaintiff could defeat the statutory requirement of complete diversity by the simple expedient of suing only those defendants who were of diverse citizenship and waiting for them to implead non-diverse defendants. If, as the Court of Appeals thought, a "common nucleus of operative fact" were the only requirement for ancillary jurisdiction in a diversity case, Congress' requirement of complete diversity would thus have been evaded completely. Kroger stands for the concept that the court must consider whether it has constitutional jurisdiction but also whether there is statutory authority to hear such a claim. Finley v. United States Facts: After her husband and children died in a plane crash, petitioner widow filed a state court action against San Diego electric company. Upon discovering that the FAA was also partly responsible, she filed a district court action which based jurisdiction on 28 U.S.C. § 1346(b) of the Federal Tort Claims Act (FTCA). On Finley's motion, the district court asserted pendent jurisdiction over the state-court defendants and allowed her to amend her claim to also include the electric
company. The Ninth Circuit reversed the district court‘s judgment that allowed her to include claims against defendants over whom the federal courts would not otherwise have had jurisdiction in her action against the FAA under the FTCA. Holding: The Supreme Court affirmed the ruling of the Ninth Circuit. Reasoning: In cases of pendent-claims jurisdiction, federal courts were allowed to assume jurisdiction over state claims when the claims derived from a common nucleus of operative fact and plaintiffs would ordinarily be expected to try them in one judicial proceeding. Where, as here, no independent basis of jurisdiction existed over the non-federal parties, the case was one of pendent-party jurisdiction and demanded careful attention to the relevant statutory language. The FTCA conferred jurisdiction only over civil actions on claims against the United States. Since the language of the FTCA expressed no intention to include jurisdiction over other parties, pendent-party jurisdiction was not available. Court suggested no supplemental jurisdiction unless Congress affirmatively granted it. Dissent: Blackmun, J., dissented, arguing that because congressional preference here made the federal forum the only possible one in which to hear the constitutional case as a whole, pendent-party jurisdiction should be permitted. Dissent: Stevens, J., dissented, arguing that forcing a plaintiff to litigate a case in both federal and state courts impairs the ability of the federal court to grant full relief and imparts a fundamental bias against utilization of the federal forum owing to the deterrent effect imposed by the needless requirement of duplicate litigation if the federal forum is chosen. 28 U.S.C. § 1367(a) – Supplemental Jurisdiction Except as provided in subsections (b) and (c) or as expressly provided otherwise by Federal statute, in any civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to 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 (Gibbs). Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties (overrules Finley). 28 U.S.C. § 1367(b) – Diversity Exceptions to Supplemental Jurisdiction In any civil action of which the district courts have original jurisdiction founded solely on § 1332 of this title (diversity), the district courts shall not have supplemental jurisdiction under subsection (a) over claims by plaintiffs against persons made parties under Rule 14 [impleader], Rule 19 [required joinder], Rule 20 [permissive joinder], or Rule 24 [intervention] of the Federal Rules of Civil Procedure, or over claims by persons proposed to be joined as plaintiffs under Rule 19 of such rules, or seeking to intervene as plaintiffs under Rule 24 of such rules, when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdictional requirements of § 1332 [diversity and jurisdictional minimum amount requirement]. 28 U.S.C. § 1367(c) – Declining Supplemental Jurisdiction The district courts may decline to exercise supplemental jurisdiction over a claim under subsection (a) if: The claim raises a novel or complex issue of State law; The [state] claim substantially predominates over the claim or claims over which the district court has original jurisdiction; The district court has dismissed all claims over which it has original jurisdiction; In exceptional circumstances, there are other compelling reasons for declining jurisdiction. 28 U.S.C. § 1367(d) – Tolling Statute of Limitations under Supplemental Jurisdiction The period of limitations for any claim asserted under subsection (a), and for any other claim in the same action that is voluntarily dismissed at the same time as or after the dismissal of the claim under subsection (a), shall be tolled while the claim is pending and for a period of 30 days after it is dismissed unless State law provides for a longer tolling period.
D. REMOVAL Jurisdictional statutes give plaintiffs an initial choice of state or federal courts for cases in which federal and state court jurisdictions are concurrent. Congress has also given defendants the power to second-guess plaintiffs who choose a state court through a process known as removal. Only original, not third-party, defendants may remove a case. Removing a case to federal court does not waive the right to object to personal jurisdiction. In diversity of citizenship actions, the amount in controversy requirement must be satisfied. 28 U.S.C. §§ 1441(a), 1441(b) and 1441(c) – Actions Removable Generally (a) Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending. For purposes of removal under this chapter, the citizenship of defendants sued under fictitious names shall be disregarded. (b) Any civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties. Any other such action shall be removable only if none of the parties in interest properly joined and served as defendants is a citizen of the State in which such action is brought. Referred to as the ―forum defendant rule.‖ (c) Whenever a separate and independent claim or cause of action within the jurisdiction conferred by § 1331 of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which State law predominates. 28 U.S.C. § 1446(b) – Procedure for Removal The notice of removal of a civil action or proceeding shall be filed within 30 days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter. If the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by § 1332 [diversity] of this title more than 1 year after commencement of the action. 28 U.S.C. § 1447 – Procedure After Removal (c) A motion to remand the case on the basis of any defect other than lack of subject matter jurisdiction must be made within 30 days after the filing of the notice of removal under § 1446(a). If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded. If a case lacking subject matter jurisdiction was originally filed in state court, then removed to federal court, the case is not dismissed but remanded to state court. If a case lacking subject matter jurisdiction was originally filed in federal court then the case is just dismissed. (d) An order remanding a case to the State court from which it was removed is not reviewable on appeal or otherwise, except that an order remanding a case to the State court from which it was removed pursuant to 28 U.S.C. § 1443 [civil rights cases] shall be reviewable by appeal or otherwise. (e) If after removal the plaintiff seeks to join additional defendants whose joinder would destroy subject matter jurisdiction, the court may deny joinder, or permit joinder and remand the action to the State court.
N.B. Once a case is removed pursuant to § 1441, there is only one possible venue so the parties cannot argue that venue is inappropriate because of a lack of residence (i.e., §§ 1391(a) and 1391(b) do not apply).
Burnett v. Birmingham Board of Education Facts: School employees filed a state court complaint consisting of a petition for writ of mandamus seeking to force the school board and its superintendent to pay them in accordance with the scale allegedly called for by their job classification. The employees also added a due process claim invoking 42 U.S.C. § 1983. Following the school board's and superintendent's removal of the case to federal court, the employees filed a timely motion to remand pursuant to 28 USC § 1441(c), asserting that, because state law predominated, the entire "matter" should be remanded. Holding: Employing the routinely accepted proposition that removal statutes are always to be construed against removal, the court found that the language of § 1441(c) could not be interpreted to recognize an exception for all state cases, which simply contain a claim invoking 42 USC § 1983, as to which state courts have concurrent jurisdiction. The court ruled that because there was no nucleus of operative fact common to the state and federal claims, the state law claims were not pendent to the federal claim but were dominant. Notes: Some courts hold that, under § 1441(c), a district court has the discretion to remand any matter in which state law predominates. A district court, in exercising that discretion, must bear in mind that removal statutes are to be strictly construed against removal. Other courts hold that that § 1441(c) does not allow for the removal or remand unless the federal claim is "separate and independent" from the state claim or claims and defines "separate and independent" as not arising out of a common nucleus of operative facts. XIII. Choice of Federal or State Law A. THE RULES OF DECISION ACT AND THE 96-YEARS BEFORE ERIE 28 U.S.C. § 1652 - State Laws as Rules of Decision The laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply. Swift v. Tyson The Court interpreted the phrase ―laws of several States‖ to include only state statutes and state common law of local concern. As to common law matters of general concern, the Court concluded that federal courts in diversity cases were free to apply their own conception of ―general‖ [federal] common law. Rests upon the assumption that there is a transcendental body of law outside of any particular state but obligatory within it unless and until changed by statute, that federal courts have the power to use their judgment as to what the rules of common law are, and that in the federal courts the parties are entitled to an independent judgment on matters of general law. B. THE ―ERIE‖ DOCTRINE Erie Railroad Co. v. Tompkins Facts: Tompkins brought a negligence action in a New York District Court against Erie Railroad Co., seeking damages for injuries sustained when he was hit by a door projecting from Erie's train while he was walking along a railroad right of way in Pennsylvania. The Second Circuit affirmed the judgment in favor of Tompkins, refusing to consider Erie‘s claim that it was not liable for Tompkins‘ injuries under Pennsylvanian State common law. It held instead that liability was a question of general law about which federal courts were free to render independent decisions. Why did Tompkins choose to file this motion in NY federal court rather than state court? If Tompkins filed in New York state court, they would still have to apply Pennsylvania state law because of the state‘s ―choice of law‖ statute. However, by filing in federal court, the court would apply the federal ―general laws.‖
Holding: The Supreme Court reversed and remanded, holding that there was no federal general common law, and that except in matters governed by the U.S. Constitution or by acts of Congress, the law to be applied by federal courts in any diversity case was the law of the state. Reasoning: The court disapproved the contrary doctrine of Swift v. Tyson, finding it an unconstitutional assumption of powers by federal courts that invaded state autonomy and prevented uniformity in administering state law. Whether the law of the state shall be declared by its legislature in a statute or by its highest court in a decision is not a matter of federal concern because there is no federal general common law. Concurrence: Reed, J., concurred, but addressed the issue that federal courts must apply state ―substantive law‖ but may apply federal ―procedural‖ law. Congress has no power to declare substantive rules of common law applicable in a state. The Swift interpretation was unconstitutional, but not because the federal common law rules that had been developed under it were encroaching on areas of ‗state substantive law‘… It was unconstitutional because nothing in the Constitution provided the central government with a general lawmaking authority of the sort the Court had been exercising under Swift.‖ 28 U.S.C. § 2072 – The Rules Enabling Act The Supreme Court shall have the power to prescribe general rules of practice and procedure and rules of evidence for cases in the United States district courts (including proceedings before magistrate judges thereof) and courts of appeals. Such rules shall not abridge, enlarge or modify any substantive right. All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect. Guaranty Trust Co. v. York Facts: York brought a class action suit against Guaranty Trust in federal court on diversity jurisdiction. The action was barred in the state courts by the statute of limitations and the district court granted summary judgment to Guaranty Trust on the basis that the state statute governed the lawsuit. The Second Circuit reversed holding that suits in equity were not controlled by the state statute of limitations. Holding: The Supreme Court held that in all cases where a federal court is exercising diversity jurisdiction, the outcome of the case should be substantially the same, so far as legal rules determine the outcome of a litigation, as it would be if tried in a state court. Reasoning: The doctrine required the federal diversity court to follow state law, and if the statute of limitations under state law barred recovery in a state court, the federal court could not afford recovery. The court reiterated that the source of substantive rights enforced by a federal diversity court was state law, and that this law determined the outcome regardless of the forum or whether the remedy was in law or in equity. In giving federal courts "cognizance" of equity suits in cases of diversity jurisdiction, Congress never gave, nor did the federal courts ever claim, the power to deny substantive rights created by state law or to create substantive rights denied by state law. A statute that would completely bar recovery in a suit if brought in a state court bears on a state-created right vitally and not merely formally or negligibly. The “Outcome Determinative” Test If disregarding a state rule would significantly affect outcome of a diversity action in federal court, the state law should be applied (determines if state law is rule of decision or merely a procedural rule). But, there is no rule – no matter how plainly non-substantive – that does not become ―outcome determinative‖ at some point. Byrd v. Blue Ridge Rural Electric Cooperative, Inc. Facts: Plaintiff, injured while engaged in work in connection with the construction of an electric company's substation, sought recovery, claiming negligence on the part of the electric company, in a diversity suit in District Court in South Carolina. Blue Ridge argued that it was immune from negligence suits because of the State‘s workmen‘s compensation statute. The trial judge refused to allow the defense but the case was later remanded allowing the defense to be presented. Under South
Carolina law, however, the issue of immunity from negligence was to be tried by a judge, not a jury. Byrd argued that despite Erie, S. Carolina law couldn‘t be allowed to preclude his right to a jury trial. Holding: The Supreme Court held that that the question whether the electric company was entitled to the immunity accorded by the South Carolina statute was to be decided by the jury, notwithstanding South Carolina decisions holding this question to be one for the court. Reasoning: The Erie doctrine requires that federal courts in diversity cases must respect the definitions of rights and obligations created by state courts, but state laws cannot alter the essential characteristics and functions of the federal courts, and the jury function is such an essential function. The requirement that the determination of immunity is to be tried by a judge appears to be merely a form and mode of enforcing the immunity and not a rule intended to be bound up with the definition of the rights and obligations of the parties. The Analysis under Byrd v. Blue Ridge As to issues of form and mode, and when failure to apply a state law would be outcome determinative, the federal court will apply state law ―in the absence of other considerations.‖ Since the federal courts are part of an independent judiciary system, there are certain ―affirmative countervailing considerations‖ that justify a federal court ignoring state law. C. THE ERIE DOCTRINE SPLITS IN TWO Hanna v. Plumer Facts: Hanna, a citizen of Ohio, filed her complaint in District Court in Massachusetts to recover for personal injuries resulting from an automobile accident allegedly caused by the negligence of a Massachusetts citizen deceased at the time of the filing of the complaint. Service was made upon the executor of the deceased by leaving, in compliance with Rule 4(d)(1), copies of the summons and the complaint with the executor's wife at his residence. But because Mass. law required service by "delivery in hand" upon the executor, the District Court entered summary judgment for defendant, and the First Circuit affirmed. Hanna argued that Rule 4(d)(1) should govern. Plumer argued that application of the federal rule would necessarily alter the outcome of the case. Holding: The Supreme Court reversed, holding that Rule 4(d)(1) transgressed neither constitutional bounds nor exceeded the congressional mandate embodied in the Rules Enabling Act. It was further held that the Rule was the standard against which the District Court should have measured the adequacy of the service. Reasoning: Not only are non-substantial, or trivial, variations not likely to raise the sort of equal protection problems which troubled the Supreme Court in Erie; they are also unlikely to influence the choice of a forum. Congress has the long-recognized power to prescribe housekeeping rules for federal courts even though some of those rules will inevitably differ from comparable state rules. The "outcome-determination" test therefore cannot be read without reference to the twin aims of the Erie rule: (i) discouragement of forum-shopping and (ii) avoidance of inequitable administration of the laws. In determining whether or not a federal court sitting in a diversity case must apply state law, the importance of a state rule is relevant, but only in the context of asking whether application of the rule would make so important a difference to the character or result of the litigation that failure to enforce it would unfairly discriminate against citizens of the forum state, or whether application of the rule would have so important an effect upon the fortunes of one or both of the litigants that failure to enforce it would be likely to cause a plaintiff to choose the federal court. The Erie rule has never been invoked to void a Federal Rule. The holdings of previous cases was not that Erie commanded displacement of a Federal Rule by an inconsistent state rule, but rather that the scope of the Federal Rule was not as broad as the losing party urged, and therefore, there being no Federal Rule which covered the point in dispute, Erie commanded the enforcement of state law. When a Federal Rule applies, the court must apply the Federal Rule so long as it is valid. To determine if the rule is valid, the court must analyze it under the Rules Enabling Act. Concurrence: Harlan, J., concurred with the result but argued that the primary question should be whether state law must govern when the issue is one that ―would substantially affect those primary decisions respecting human conduct.‖
The “Two Prongs” Test The Hanna Prong Does the Federal Rule cover what the state rule embodies (i.e., sufficiently broad)? Is there a direct collision? If so, is the federal rule valid under the Rules Enabling Act and Constitution (i.e., is it a procedural rule and does it abridge, modify or enlarge a substantive right)? If valid, then it controls and it displaces state law because of Supremacy Clause. The Erie Prong If no direct collision, then you follow another track, the ―unguided-Erie‖ test and apply the twin aims of the Erie doctrine; (i) discouragement of forum-shopping and (ii) avoidance of inequitable administration of the laws. Walker v. Armco Steel Corp Facts: Walker was injured when a nail he was hammering shattered in August 1975. He filed a suit claiming negligence against the out-of-state manufacturer in August 1977. Although summons was issued on the day the complaint was filed, service of process was not made on the manufacturer's authorized service agent until December 1977. The manufacturer thereafter filed a motion to dismiss the complaint on the ground that the action was barred by the applicable two-year Oklahoma statute of limitations; Oklahoma law not deeming an action "commenced" for purposes of the statute of limitations until service of the summons on the defendant. Walker argued that while his case would be foreclosed if it had been brought in an Oklahoma state court, Rule 3, which provides that "a civil action is commenced by filing a complaint," governed the manner in which an action was commenced in federal court for all purposes, including the tolling of the state statute of limitations. The District Court dismissed the complaint as barred by the Oklahoma statute of limitations, concluding that the service requirement was an integral part of the state statute of limitations, and that under the Supreme Court's decision in Ragan v Merchants Transfer & Warehouse Co., state law applied. The Tenth Circuit affirmed, even though the court concluded that the state requirement of actual service was in direct conflict with Rule 3. Holding: The Supreme Court affirmed. The Court reviewed prior rulings concerning statutes of limitation, and held that under those rulings, the state tolling provisions applied. The Court noted that in diversity actions, Rule 3 governed the date on which various timing requirements of the Federal Rules began to run, but it did not affect state statutes of limitation. On the other hand, the state statute was a statement of a substantive decision by the state that actual service on the defendant was an integral part of the several policies served by the statute of limitations. Rule 3 and the Oklahoma therefore each controlled its own intended sphere of coverage without conflict. A state statute of limitations is deemed substantive for defining the state created right. "We cannot give [the cause of action] longer life in the federal court than it would have had in the state court without adding something to the cause of action. This is not to suggest that the Federal Rules of Civil Procedure are to be narrowly construed in order to avoid a "direct collision" with state law. The Federal Rules should be given their plain meaning. Stewart Organization, Inc. v. Ricoh Corp Facts: A dealership contract, negotiated by an Alabama dealer and Ricoh Corp. with headquarters in New Jersey and significant corporate operations in Manhattan, contained a forum-selection clause providing that "any appropriate state or federal district court" located in Manhattan would have "exclusive jurisdiction over any case or controversy arising under" the contract. The Alabama dealer then brought an action against Ricoh in Alabama state court. Ricoh had the case removed to Federal Court and then moved, pursuant to the forum-selection clause, to transfer the action under 28 U.S.C. § 1404(a) to the District Court for the Southern District of New York. The District Court denied the Ricoh‘s motion to transfer, refusing to enforce the forum-selection clause, based in part on its conclusion that state law – in this case, Alabama law, which deemed such clauses contrary to public policy – governed the clause's enforceability. The Eleventh Circuit reversed the District Court, concluding that the forum-selection clause was in all respects enforceable generally as a matter of federal law. Holding: The Supreme Court disagreed with the intermediate appellate court that the relevant inquiry was whether the choice of forum clause was enforceable. Instead, the Court stated that the relevant
inquiry was whether § 1404(a) controlled Ricoh‘s request to give effect to the forum-selection clause and transfer the case. It was held that 28 U.S.C. § 1404(a) governs the decision of a District Court sitting in diversity whether to give effect to a contractual forum-selection clause and transfer an action to a venue provided in such clause, and therefore that the case would be remanded so that the District Court could determine in the first instance the appropriate effect, under federal law, of the forumselection clause on the Ricoh's § 1404(a) transfer motion. Reasoning: If no federal statute or Federal Rule covers the point in dispute, the district court proceeds to evaluate whether application of federal judge-made law disserves the so-called twin aims of the Erie rule: discouragement of forum-shopping and avoidance of inequitable administration of the laws. If application of federal judge-made law disserves those two policies, the district court shall apply state law. Dissent: While Justice Scalia agreed with the opinion of the Court that the initial question was whether the validity between the parties of a contractual forum-selection clause fell within the scope of 28 U.S.C. § 1404(a), he disagreed that the question should be answered affirmatively, and he did not believe that the federal courts could, consistent with the twin aims test of Erie fashion a judgemade rule to govern this issue of contract validity. In Justice Scalia‘s analysis, no federal statute or rule or procedure governed the validity of a forum selection clause, and the federal courts lacked authority to fashion a rule on this issue. As such, state law should govern. N.B. Under the Hanna Prong there is no opportunity to assess outcome determination, twin aims, or to balance the relative state and federal interests. Gasperini v. Center for Humanities, Inc. Facts: Gasperini lent 300 of his photographic transparencies to the Center for Humanities, which later lost them. Gasperini filed a diversity action against the Center and they conceded liability. After a damages trial, the jury awarded Gasperini $450,000 in compensatory damages. The Center moved for a new trial under Rule 59 on the grounds including excessiveness. The District Court denied the motion but the Second Circuit set aside the $450,000 jury verdict and ordered a new trial unless the individual agreed to a reduced award of $100,000, expressing the view that under the New York review statute, the verdict materially deviated from what was reasonable compensation. Holding: The Supreme Court vacated the Court of Appeals' judgment and instructed the Second Circuit to remand the case to the District Court so that the trial judge, revisiting his ruling on the new trial motion, could test the jury's verdict against the New York statute's "deviates materially" standard. It was held that (i) a federal trial judge – in ruling on a new trial motion claiming that an itemized jury verdict awarded excessive damages in a diversity action based on New York law – was required to apply the "deviates materially" standard, with federal appellate control of the trial judge's ruling limited to review for abuse of discretion, because among other factors, (a) under the Erie doctrine, the New York statute was both "substantive," in that the "deviates materially" standard controlled how much a plaintiff could be awarded, and "procedural," in that the statute assigned decision making authority to the state's intermediate appellate courts, (b) while parallel application of the New York statute at the federal appellate level would disrupt the federal system's division of trial and appellate court functions – an allocation weighted by the Seventh Amendment's re-examination clause – New York's dominant interest could be respected once it was recognized that a District Court could apply the "deviates materially" standard in line with New York case law, under which the standard guided trial as well as appellate courts in New York, and (c) Rule 59 did not provide a federal standard leaving no room for the New York statute's operation; and (ii) in the case at hand, it did not appear that the District Court had checked the $450,000 verdict against the relevant New York case law demanding more than "industry standard" testimony to support an award of that size. On the Hanna Prong, the Court held that Rule 59 did not apply to the issue at hand; though the rule does permit new trials for various reasons, including excessive verdicts, it simply gives no standard for determining when a verdict is excessive. Because there was no conflict between Rule 59 and the application of the New York damages limit, the case was controlled by Erie and the Rules of Decision Act, rather than by the Rules Enabling Act's limitation on federal procedural rules that conflict with state substantive rights. The Court then applies the twin aims test and concludes that ignore state law would cause plaintiffs to flock to federal court. Thus a federal court must apply the New York deviates materially standard for granting a new trial, but not the provision for de novo appellate review.
A Suggested Synthesis for Vertical Choice of Law (1) First question always is whether there is a federal directive on point. If yes, the case is governed by Hanna and does not implicate Erie or the RDA. If no, apply Erie or the Rules of Decision Act analysis. (2) Starting with the Byrd analysis, is the state law part of that state‘s definition of rights or obligations? If yes, the Tenth Amendment requires the federal court to apply state law. If no, must ask whether the state rule is ―bound up‖ with the state‘s definition of rights of obligations. If yes, the Tenth Amendment requires the federal court to apply state law. If no, the issue concerns ―form and mode.‖ (3) As to rules of ―form and mode,‖ must ask whether ignoring the state law in federal court would be outcome determinative. Under the outcome-determination test, would the case come out differently if the court ignored state law than if it applied it? Under the modified-outcome-determination test, would the case come out different if the court ignored state law than if it applied it and/or would it encourage litigants to shop for federal rather than state court?
Federal Question Jurisdiction 28 U.S.C. § 1331
Diversity of Citizenship Jurisdiction 28 U.S.C. § 1332
Under § 1331, Federal Law and Procedure Govern the Case
Must Determine Source of the Federal Practice
A FRCP or US Code Provision Apply as long as: It can be characterized as ―practice or procedure.‖ It does not ―abridge, enlarge or modify any substantive right.‖ There was no significant risk of forum shopping on day of filing, which will usually be the case if the first two requirements are satisfied. Hanna v. Plumer
Federal Custom or Practice (i.e., Judge Made) If the conflict is ―substantive‖ / outcome determinative within definition of Erie and Guaranty Trust, apply the state rule Walker v. ARMCO Steel
Federal Practice is Essential to Character of Federal Litigation Apply Federal Practice as long as: The conflicting state practice is not ―bound up‖ with substantive rights and obligations. There is not a significant degree of outcome determination or risk of forum shopping. Byrd v. Blue Ridge Coop.
D. REVERSE ERIE The Supreme Court has recognized that just as federal courts are constitutionally obligated to apply state law to state claims (i.e., Erie), so too the Supremacy Clause imposes on state courts a constitutional duty to proceed in such manner that all the substantial rights of the parties under controlling federal law [are] protected. Shaw v. Leatherberry Burden of proof was not ―a mere incident of a form of procedure‖ but a ―substantive aspect of the cause of action,‖ and the state court could not alter the ―substantial rights which Congress, by providing the alternative remedy [of § 1983], intended to make less not more secure.‖ XIV. Finality and Preclusion A. THE FINALITY DOCTRINE Restatement (Second) of Judgments - § 13 – Requirement of Finality The rules of res judicata are applicable only when a final judgment is rendered. However, for purposes of issue preclusion (as distinguished from merger and bar), ―final judgment‖ includes any prior adjudication of an issue in another action that is determined to be sufficiently firm to be accorded conclusive effect. To hold invariably that that kind of carry-over is not to be permitted until a final judgment in the strict sense has been reached in the first action can involve hardship – either needless duplication of effort and expense in the second action to decide the same issue, or, alternatively, postponement of decision of the issue in the second action for a possibly lengthy period of time until the first action has gone to a complete finish. The court should determine that the decision to be carried over was adequately deliberated and firm, even if not final in the sense of forming a basis for a judgment already entered. That the parties were fully heard, that the court supported its decision with a reasoned opinion, that the decision was subject to appeal or was in fact reviewed on appeal, are factors supporting the conclusion that the decision is final for the purpose of preclusion. Restatement (Second) of Judgments § 17 – Effects of Former Adjudication A valid and final personal judgment is conclusive between the parties, except on appeal or other direct review, to the following extent: If the judgment is in favor of the plaintiff, the claim is extinguished and merged in the judgment and a new claim may arise on the judgment; If the judgment is in favor of the defendant, the claim is extinguished and the judgment bars a subsequent action on that claim; and A judgment in favor of either the plaintiff or the defendant is conclusive, in a subsequent action between them on the same or a different claim, with respect to any issue actually litigated and determined if its determination was essential to that judgment. Restatement (Second) of Judgments § 24 – Dimensions of “Claim” When a valid and final judgment rendered in an action extinguishes the plaintiff's claim pursuant to the rules of merger or bar, the claim extinguished includes all rights of the plaintiff to remedies against the defendant with respect to all or any part of the transaction, or series of connected transactions, out of which the action arose. What factual grouping constitutes a ―transaction‖, and what groupings constitute a ―series‖, are to be determined pragmatically, giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage. The present trend is to see claim in factual terms and to make it coterminous with the transaction regardless of the number of substantive theories, or variant forms
of relief flowing from those theories, that may be available to the plaintiff; regardless of the number of primary rights that may have been invaded; and regardless of the variations in the evidence needed to support the theories or rights. The transaction is the basis of the litigative unit or entity which may not be split. B. CLAIM PRECLUSION (RES JUDICATA) To make out the defense of claim preclusion or res judicata, which must be pled affirmatively under Rule 8(c), three elements must be shown: A prior suit that proceeded to a final judgment on the merits; The present suit arises out of the same claim as the prior suit; and The parties in both suits are the same, or in privity. Car Carriers, Inc. v. Ford Motor Company Facts: Car Carriers, brought an action alleging a violation of the Sherman Act. This action was dismissed with prejudice. Car Carriers then brought another action under the RICO Act and the Interstate Commerce Act utilizing the same basic fact situation. The district court dismissed the second action as barred by res judicata because the claims were based on the same factual situation as the earlier dismissed action. Holding: The Seventh Circuit affirmed the decision and held that the district court properly applied the same transaction test to dismiss appellants' federal claims because the RICO and Sherman Act claims arose out of the same cause of action. Reasoning: Under res judicata, a final judgment on the merits bars further claims by parties or their privies based on the same cause of action. Under this test, a cause of action consists of a single core of operative facts which give rise to a remedy. This same transaction test is decidedly fact-oriented. Once a transaction has caused injury, all claims arising from that transaction must be brought in one suit or be lost. Thus, a mere change in the legal theory does not create a new cause of action. Therefore, prior litigation acts as a bar not only to those issues which were raised and decided in the earlier litigation but also to those issues which could have been raised in that litigation. Heacock v. Heacock Facts: Defendant husband caused plaintiff wife to sustain serious physical injuries prior to the time of the parties' pending divorce. The wife filed a tort action seeking damages for personal injuries. Following the final divorce decree, husband filed a motion to dismiss under Mass. R. Civ. P. 12(b)(5) arguing that the case was precluded by a prior divorce judgment entered in probate court in which the wife presented evidence of the assault and injuries to support her claim for divorce. The superior court judge dismissed the plaintiff's tort action on the basis of issue preclusion, collateral estoppel, and res judicata [Don‟t do this!]. Holding: The Supreme Judicial Court reversed, holding that the divorce judge did not resolve any issues relating to defendant's assault and that plaintiff's tort action was not based on the same underlying claim as the divorce. Reasoning: The purpose of the tort action was to redress a legal wrong in damages, while that of the divorce action was to sever a marital relationship between the parties. The court held that maintenance of plaintiff's tort claim would not subject defendant and the courts to the type of piecemeal litigation that the doctrine of claim preclusion sought to prevent. Restatement (Second) of Judgments § 20(1) – Judgment for ∆ - Exceptions to Rule of Bar A personal judgment for the defendant, although valid and final, does not bar another action by the plaintiff on the same claim: When the judgment is one of dismissal for lack of jurisdiction, for improper venue, or for non-joinder or misjoinder of parties; or When the plaintiff agrees to or elects a non-suit (or voluntary dismissal) without prejudice or the court directs that the plaintiff be non-suited (or that the action be otherwise dismissed) without prejudice; or When by statute or rule of court the judgment does not operate as a bar to another action on the same claim, or does not so operate unless the court specifies, and no such specification is made.
Semtek International, Inc. v. Lockheed Martin Corp. Facts: Lockheed removed Semtek‘s California state-court suit to District Court based on diversity of citizenship, and successfully moved to dismiss the case "on the merits" as barred by California's statute of limitations. Semtek then brought suit in a Maryland state court, alleging the same causes of action, which were not time barred under Maryland's statute of limitations. That court dismissed the case on the ground of res judicata. In affirming, the Maryland Court of Special Appeals held that, regardless of whether California would have accorded claim-preclusive effect to a statute-oflimitations dismissal by one of its own courts, the California federal court's dismissal barred the Maryland complaint because the res judicata effect of federal diversity judgments is prescribed by federal law, under which the earlier dismissal was on the merits and claim preclusive. Holding: Because the claim-preclusive effect of a federal court's dismissal ―upon the merits‖ of a diversity action on state statute-of-limitations grounds is governed by a federal rule, which in turn (in diversity cases) incorporates the claim-preclusion law that would be applied by state courts in the State in which the federal court sits, the Maryland Court of Special Appeals erred in holding that the California federal court's dismissal ―upon the merits‖ necessarily precluded the Maryland state-court action. Reasoning: Federal common law governs the claim-preclusive effect of a dismissal by a federal court sitting in diversity, and it is up to this Court to determine the appropriate federal rule. Since in diversity cases state, rather than federal, substantive law is at issue, there is no need for a uniform federal rule; and nationwide uniformity is better served by having the same claim-preclusive rule (the state rule) apply whether the dismissal has been ordered by a state or a federal court. Any other rule would produce the sort of forum shopping and inequitable administration of the laws that Erie seeks to avoid. While the federal reference to state law will not obtain in situations in which the state law is incompatible with federal interests, no such conflict exists here. Taylor v. Sturgell Facts: Herrick filed a Freedom of Information Act (FOIA) request asking the FAA for copies of technical documents related to an airplane. The FAA denied his request based on FOIA's exemption for trade secrets. Herrick then filed an unsuccessful FOIA lawsuit to secure the documents. Less than a month after that suit was resolved, petitioner Taylor, Herrick's friend and an antique aircraft enthusiast himself, made a FOIA request for the same documents Herrick had unsuccessfully sued to obtain. When the FAA failed to respond, Taylor filed suit in District Court. Holding the suit barred by claim preclusion, the District Court granted summary judgment to the FAA and to Fairchild, as intervenor in Taylor's action. The court acknowledged that Taylor was not a party to Herrick's suit, but held that a nonparty may be bound by a judgment if she was "virtually represented" by a party. The D. C. Circuit affirmed, announcing a five-factor test for "virtual representation." It found the "identity of interests," "adequate representation," and "close relationship" factors satisfied because the two men sought release of the same documents, were "close associates," had discussed working together to restore Herrick's plane, and had used the same lawyer to pursue their suits. Holding: The Supreme Court rejected of the theory of preclusion by "virtual representation." The preclusive effects of a judgment in a federal-question case decided by a federal court should instead be determined according to the established grounds for nonparty preclusion. Reasoning: Extending the preclusive effect of a judgment to a nonparty runs up against the "deeprooted historic tradition that everyone should have his own day in court." Indicating the strength of that tradition, the Court noted the often repeated general rule that "one is not bound by a judgment in personam in a litigation in which he is not designated a party or to which he has not been made a party by service of process." The rule against nonparty preclusion is subject to exceptions, grouped for present purposes into six categories. First, "[a] person who agrees to be bound by the determination of issues in an action between others is bound in accordance with the [agreement's] terms." Second, nonparty preclusion may be based on a pre-existing substantive legal relationship between the person to be bound and a party to the judgment, e.g., assignee and assignor. Third, "in certain limited circumstances," a nonparty may be bound by a judgment because she was "'adequately represented by someone with the same interests who [wa]s a party'" to the suit.
Fourth, a nonparty is bound by a judgment if she "assume[d] control" over the litigation in which that judgment was rendered. Fifth, a party bound by a judgment may not avoid its preclusive force by re-litigating through a proxy. Preclusion is thus in order when a person who did not participate in litigation later brings suit as the designated representative or agent of a person who was a party to the prior adjudication. Sixth, a special statutory scheme otherwise consistent with due process—e.g., bankruptcy proceedings—may "expressly foreclos[e] successive litigation by nonlitigants."
C. ISSUE PRECLUSION (COLLATERAL ESTOPPEL) Restatement (Second) of Judgments § 27 – Issue Preclusion When an issue of fact or law is (i) actually litigated and determined by a (ii) valid and final judgment, and the determination is (iii) essential to the judgment, the determination is (iv) conclusive in a subsequent action between the parties, whether on the same or a different claim. Restatement (Second) of Judgments § 33 – Effect of Declaratory Judgment A valid and final judgment in an action brought to declare rights or other legal relations of the parties is conclusive in a subsequent action between them as to the matters declared, and, in accordance with the rules of issue preclusion, as to any issues actually litigated by them and determined in the action. Restatement (Second) of Judgments § 28 – Exceptions to General Rule of Issue Preclusion Although an issue is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, re-litigation of the issue in a subsequent action between the parties is not precluded in the following circumstances: The party against whom preclusion is sought could not, as a matter of law, have obtained review of the judgment in the initial action; or The issue is one of law and (a) the two actions involve claims that are substantially unrelated, or (b) a new determination is warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws; or A new determination of the issue is warranted by differences in the quality or extensiveness of the procedures followed in the two courts or by factors relating to the allocation of jurisdiction between them; or The party against whom preclusion is sought had a significantly heavier burden of persuasion with respect to the issue in the initial action than in the subsequent action; the burden has shifted to his adversary; or the adversary has a significantly heavier burden than he had in the first action; or There is a clear and convincing need for a new determination of the issue (a) because of the potential adverse impact of the determination on the public interest or the interests of persons not themselves parties in the initial action, (b) because it was not sufficiently foreseeable at the time of the initial action that the issue would arise in the context of a subsequent action, or (c) because the party sought to be precluded, as a result of the conduct of his adversary or other special circumstances, did not have an adequate opportunity or incentive to obtain a full and fair adjudication in the initial action. Restatement (Second) of Judgments § 29 – Subsequent Litigation with Others A party precluded from re-litigating an issue with an opposing party, in accordance with §§ 27 and 28, is also precluded from doing so with another person unless the fact that he lacked full and fair opportunity to litigate the issue in the first action or other circumstances justify affording him an opportunity to re-litigate the issue. The circumstances to which considerations should be given include those enumerated in § 28 and also whether: Treating the issue as conclusively determined would be incompatible with an applicable scheme of administering the remedies in the actions involved; MM
The forum in the second action affords the party against whom preclusion is asserted procedural opportunities in the presentation and determination of the issue that were not available in the first action and could likely result in the issue being differently determined; The person seeking to invoke favorable preclusion, or to avoid unfavorable preclusion, could have effected joinder in the first action between himself and his present adversary; The determination relied on as preclusive was itself inconsistent with another determination of the same issue; The prior determination may have been affected by relationships among the parties to the first action that are not present in the subsequent action, or apparently was based on a compromise verdict or finding; Treating the issue as conclusively determined may complicate determination of issues in the subsequent action or prejudice the interests of another party thereto; The issue is one of law and treating it as conclusively determined would inappropriately foreclose opportunity for obtaining reconsideration of the legal rule upon which it was based; or Other compelling circumstances make it appropriate that the party be permitted to re-litigate the issue.
Hoult v. Hoult Facts: A jury awarded damages to daughter in an action she brought against her father for assault, battery, intentional infliction of emotional distress, and breach of fiduciary duty, alleging that appellant sexually abused, raped, and threatened her for 12 years when she was a child. The father then brought a defamation action against his daughter after she repeated her charges of rape to several professional associations. The trial court dismissed the action on the ground that the father was barred by the doctrine of collateral estoppel from re-litigating the issue of whether or not he had raped his daughter. The father appealed. Holding: The First Circuit affirmed the dismissal because the rape charges were the central issue in the first action and could not be re-litigated. Reasoning: An issue may be actually decided for collateral estoppel purposes even if it is not explicitly decided, for it may have constituted, logically or practically, a necessary component of the decision reached. Confronted with a general verdict in the earlier case, courts commonly ask whether a finding was "necessary" to the judgment, and answer the question by looking primarily to the instructions and the result. But a finding is "necessary" if it was central to the route that led the factfinder to the judgment reached, even if the result "could have been achieved by a different, shorter and more efficient route." And in deciding whether the jury did make and rest centrally upon a finding not expressly made, it is proper to consider not only what was "logically" but also what was "practically" a "necessary component of the decision reached." Generally speaking, courts do not want to deny a person due process through preclusion. Jarosz v. Palmer Facts: Jarosz appealed an order dismissing his claims on issue preclusion grounds against who he considered to be his former lawyer. The appeals court determined that the requirements for issue preclusion had not been met and reversed the superior court's order dismissing the case. The parties appealed. Holding: The Supreme Judicial Court found that issue preclusion required that a decision be "subject to review," and that because the likelihood of obtaining interlocutory review of a motion to disqualify was so remote, it was not sufficient to invoke the doctrine of issue preclusion. The appeals court concluded correctly that the issue of the lawyers' attorney-client relationship with a client was actually litigated in a prior case. The issue was briefed by the parties, and after a hearing the judge determined the issue. The nature of the attorney-client relationship was clearly not essential to a determination on the merits of the client's underlying claim. Therefore, the issue was not essential to the judgment, and issue preclusion did not apply. The decision in the prior case did not have the requisite level of finality because the judge's determination was not subject to appellate review. The opportunity for review of the motion to disqualify was so remote that the appellate court could not say that the order was "subject to review."
Reasoning: While it is true that preclusive effect should not be given to issues or claims that are not actually litigated in a prior action, an evidentiary hearing or trial is not required before issue preclusion can apply. The appropriate question is whether the issue was subject to an adversary presentation and consequent judgment that was not a product of the parties' consent. Proceeding have a preclusive effect where a court has before it the relevant documents and read and heard the litigants' opposing views on what meaning and effect should be afforded to those documents. For a ruling to have preclusive effect, it must have a bearing on the outcome of the case. "If issues are determined but the judgment is not dependent upon the determinations, relitigation of those issues in a subsequent action between the parties is not precluded." i.e., the same way that dicta is not binding. D. NON-MUTUAL OFFENSIVE ISSUE PRECLUSION Parklane Hoisery Co., Inc. v. Shore Facts: In a stockholder's class action against Parklane and certain of its officers, directors, and stockholders, instituted in District Court, the Shore alleged that the defendants had issued a materially false and misleading proxy statement in violation of the Securities Exchange Act of 1934 and implementing regulations. Before this action came to trial, the SEC instituted an injunction action against the same defendants in the District Court, alleging that the proxy statement was materially false and misleading in essentially the same respects as those that had been alleged in the stockholder's action. After a nonjury trial in the Commission's action, the District Court found that the proxy statement was materially false and misleading in the respects alleged, and entered a declaratory judgment to that effect. Thereafter, the Shore in the stockholder's action moved for partial summary judgment against the defendants, asserting that the defendants were collaterally estopped from relitigating the issues that had been resolved against them in the Commission's action. The District Court denied the motion on the ground that such an application of collateral estoppel would violate the defendants' Seventh Amendment right to a jury trial, but the Second Circuit reversed. Holding: The Supreme Court held that a litigant who was not a party to a prior judgment may use that judgment ―offensively‖ to prevent a defendant from re-litigating issues resolved in the earlier proceeding. Unless the application of offensive estoppel would be unfair to the defendant, a trial court has broad discretion to determine when it should be applied. The scope of collateral estoppel is no longer limited by the doctrine of mutuality of parties whereby a party could not use a prior judgment as an estoppel against the other party unless both parties were bound by the judgment. N.B. Offensive use of issue preclusion does not promote judicial economy in the same manner as defensive use does. The general rule should be that a trial judge should not allow the use of offensive collateral estoppel where a plaintiff could easily have joined in the earlier action, or where the application of offensive estoppel would be unfair to a defendant, such as where (i) the defendant was sued for small or nominal damages in the first action and thus had little incentive to defend vigorously (particularly if future suits were not foreseeable), (ii) the judgment relied upon as a basis for the estoppel was itself inconsistent with one or more previous judgments in favor of the defendant, or (iii) the second action afforded the defendant procedural opportunities unavailable in the first action that could readily cause a different result. The defendants' Seventh Amendment right to a jury trial was not violated by the plaintiff's offensive use of the collateral estoppel doctrine, since even though under the common law as it existed in 1791 collateral estoppel was permitted only where there was mutuality of parties, nevertheless the subsequent developments in the law of collateral estoppel, like the law in other procedural areas defining the scope of the jury's function, were not repugnant to the Seventh Amendment simply because they did not exist in 1791. Dissent: Rehnquist, J., dissented, expressing the view that (i) the Seventh Amendment requires a jury trial if a jury would have been impaneled in a particular kind of case in 1791, when the Amendment was adopted, although it does not bind the federal courts to the exact procedural incidents of jury trial obtaining in 1791, (ii) the defendants in the case at bar were denied their Seventh Amendment right to a jury trial, since they would have been entitled to such a trial on the proxy statement issues under the common law as it existed in 1791, and since the subsequent development of "nonmutual"
estoppel was not a mere change in "procedure," and (iii) in any event, offensive use of collateral estoppel should not be allowed in the instant case, since its use ran counter to the strong federal policy favoring jury trials, and since the opportunity for a jury trial in the stockholder's action could easily lead to a different result than that obtained in the Commission's action, it thus being unfair to estop the defendants from re-litigating the issues before a jury. E. CLAIM PRECLUSION AND ISSUE PRECLUSION IN SPECIAL SITUATIONS Judgments for Specific Performance Rules of bar and issue preclusion apply in actions for specific performance, however, merger does not apply because such a judgment cannot be enforced by brining suit on the judgment. Thus, if the defendant fails to obey the first judgment, the claimant may sue again. In-Rem Judgments If a court exercises in-rem jurisdiction over some property or status within its control, and if proper notice has been given to all interested parties, the judgment as to title or status is binding on all persons. Quasi-in-Rem Judgments A quasi-in-rem judgment determines rights of the parties only in the specific property before the court. No personal judgment granted against any party and no other property is affected. F. CROSS-JURISDICTIONAL PRECLUSION The working rule is that a court in one system will give the same res judicata effect to a judgment that it would be given in the court that rendered it. i.e., the court in which the second action is filed will apply the preclusion law of the court that decided the first action. State Court State Court The Full Faith & Credit Clause of the Constitution mandates that a court in State B accord a judgment rendered in State A the same preclusive effect the judgment would have in State A. State Court Federal Court 28 U.S.C. § 1378 imposes the same ―full faith and credit‖ obligation on federal courts with regard to judgments of any state court. Restatement (Second) of Judgments § 86 - State Court Judgment in Later Federal Action A valid and final judgment of a state court has the same effects under the rules of res judicata in a subsequent action in a federal court that the judgment has by the law of the state in which the judgment was rendered, except that: An adjudication of a claim in a state court does not preclude litigation in a federal court of a related federal claim based on the same transaction if the federal claim arises under a scheme of federal remedies which contemplates that the federal claim may be asserted notwithstanding the adjudication in state court; and A determination of an issue by a state court does not preclude re-litigation of that issue in federal court if according preclusive effect to the determination would be incompatible with a scheme of federal remedies, which contemplates that the federal court may make an independent determination of the issue in question. Federal Court State Court Where the judgment was entered in a federal question case (§ 1331), it is accorded the preclusive effect that federal common law provides. Where the judgment was entered in a diversity case (§ 1332), Semtek International v. Lockheed Martin mandates that federal common law incorporate the preclusion rules that would be applied by the state courts in the state in which the judgment was rendered. This is in order to avoid forum-shopping and inequitable administration of justice problems underlying the Erie doctrine.
XV. Diagrams and Flowcharts MUST CONSIDER FOR EVERY CLAIM: Arising out of the sameJtransaction, occurrence or seriesJURISDICTION, or occurrences andIV) (I) SUBJECT MATTER URISDICTION, (II) PERSONAL of transactions (III) VENUE AND ( (ii) any question of all plaintiffs/defendants will arise in the action. A. JOINDER DIAGRAMSlaw or common fact toNOTICE If no SMJ alone – invoke § 1367 supplemental. asdasd Rule 18(a) – Joinder of Claims Rule 20(a) – Permissive Joinder of Parties Rule 20(a) – Permissive Joinder of Parties State Tort Claim State Tort Claim Over $75k State Tort Claim Over $75k Over $75k State Tort Claim Breach of K Claim from Same Over $75k Over $75k Claim from Same Transaction Transaction Claim from Same
π π π
(NY) (NY) (NY) - 1
∆∆ ∆ ∆
(MA) (MA) - 1 (MA) (MA) - 2
(NY) – 2
Transaction Arising out of the same transaction, occurrence or series of transactions or occurrences and (ii) anyaquestioncourt has subject matter to all plaintiffs/defendants claim, it alsothe action. If federal of law or common fact jurisdiction over plaintiff's will arise in will have supplemental jurisdiction If no a counterclaim that arises from the same transaction or occurrence over SMJ alone – invoke § 1367 supplemental. asdasd Rule 13(b) – Permissive Counterclaim State Tort Claim Over $75k
Breach of K (unrelated claim) Permissive counterclaims must invoke SMJ through either federal question or diversity of citizenship. If diversity of citizenship, counterclaim must meet the jurisdictional amount. Since it is unrelated to the main claim, § 1367 supplemental jurisdiction will not apply.
State Tort Claim (NY) Over $75k
13(g) Claim from Same Transaction A pleading may state as a cross-claim any claim by one party against a co-party if the claim arises out of the transaction or occurrence that is the subject matter of the original action or of a counterclaim, or if the claim relates to any property that is the subject matter of the original action. Rule 13(a) – Compulsory Counterclaim
π π π
Rule 13(g) – Cross-claim + Compulsory Counterclaim from ∆2
(NY) (NY) (NY)
Rule 13(h) – Joining New Parties State Tort Claim Over $75k 13(g)
∆ ∆ ∆
(MA) - 1 (MA) - 1
∆ ∆ – 3 [new defendant] ∆ 13(a) 13(h) Once ∆Under 13(h), new parties must be∆joinedClaimassert any counterclaim that arises out of brings a cross-claim againstState Tort in ∆ , must then 13(g)
Claim from Same Transaction
(MA) - 2 [co-defendant] (MA) - 2 [co-defendant]
the transaction or occurrence& 19.is$75ksubject matter of the original action. accordance with Rules 20 Over the that
Rule 14(a) – Third-Party Practice
State Tort Claim Over $75k 14(a)
(MA) - 1
A defending party may, as third-party plaintiff, serve a summons and complaint on a nonparty who is or may be liable to it for all or part of the claim against it. A federal court must obtain personal jurisdiction over a third-party defendant before it proceeds to adjudicate a third-party claim.
(MA) - 2 [TPD]
Rule 14(a) – TPD‟s Claim Against Original Plaintiff
State Tort Claim Over $75k 14(a) “Downward Slanting 14(a) Claim”
(MA) - 1
(MA) - 2 [TPD]
TPD may assert against the plaintiff any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff [original defendant].
Rule 14(a) – Plaintiff‟s Claim Against TPD
State Tort Claim Over $75k 14(a) Must have independent SMJ (and be related)
(MA) - 1
(MA) - 2 [TPD]
The plaintiff may assert against the third-party defendant any claim arising out of the transaction or occurrence that is the subject matter of the plaintiff's claim against the third-party plaintiff. A plaintiff cannot, however, assert a claim against a non-diverse third-party defendant in a diversity action under supplemental jurisdiction (i.e., destroying diversity under § 1332). The plaintiff must wait until the third-party defendant asserts a claim against it because then, acting in a defensive capacity, the original plaintiff must assert a counterclaim and supplemental jurisdiction will attach.
B. CLAIM PRECLUSION (RES JUDICATA) FLOWCHART Do the issues in the current case stem from the same transaction or occurrence as a previously litigated case?
Was there a final judgment in the previous case? (Final means all steps in the adjudication except execution & appeal) No Jurisdiction Venue Joinder of an Indispensable Party
Was it considered ―on the merits‖?
Yes 12(b)(6) Default judgment or Consent decree Summary judgment & Directed Verdict (JMOL)
Was it valid? Proper court with subject matter and personal jurisdiction? §1738 ―Full Faith & Credit‖ valid state court decisions are binding in federal court unless state court lacked competency.
Does 2nd Action Involve Same Parties or Those In Privity? (Privity requires a legal relationship between the parties)
CLAIM PRECLUSION Entire claim is precluded, including matters that were or should have been litigated.
NO CLAIM PRECLUSION RJ won‘t apply if the matter hasn‘t been finally and validly decided by a proper Court!
C. REMOVAL FLOWCHART STATE Court 4. 5. 6. State to Federal ONLY; ALL ‘s must consent; ORIGINAL ‘s only; no counterclaim ‘s
Removal: 28 U.S.C. §1441 FEDERAL Court 1. 2. 3. Completely Discretionary Must have been qualified to grant original jurisdiction. May grant supplemental jurisdiction as long as at least one separate and independent federal claim eligible for removal.
Federal Question Claims Pass Through Federal Question Filter 28 U.S.C. §1331
Non-Federal Question Claims Pass Through Supplemental Jurisdiction Filter 28 U.S.C. §1367 No Same Case or Controversy? Common Nucleus of Facts?
Federal Question Flow Chart Yes Does the π‘s well pleaded complaint allege an express or implied federal cause of action?
Does the π‘s well pleaded complaint allege a state law cause of action in which federal law is an essential element?
Meets Supplemental Jurisdiction Requirements under §1367? Yes No Not Part of Same Constitutional Case Separate & Independent Claim?
Does the federal law that is an element authorize a private right of action?
Yes There is FQJ There is NO FQJ.
§1441(a) Court May Exercise or Decline Per Authority Granted under §1367(c)
§1441(a) Court Must Hear
§1441(c) Court May Keep Or Court May Remand