Law School Outline - Jurisdiction and Choice of Law - Winter 2008

JURISDICTION AND CHOICE OF LAW 1.0 JURISDICTION OVER PERSONS AND PROPERTY ....................................................................................................... 3 1.1 In Personam Jurisdiction..................................................................................................................................... 3 1.11 The Old Way – Strict Territorialism ..................................................................................................................... 3 1.12 The Modern Approach – Contacts and Fairness ................................................................................................. 3 1.121 Introduction: “Minimum Contacts” and “Purposeful Availment” ................................................................ 3 1.122 Specific Jurisdiction Analysis ........................................................................................................................ 4 1.123 General Jurisdiction Analysis ........................................................................................................................ 6 1.124 Tag Jurisdiction Analysis ............................................................................................................................... 7 1.13 Defendant’s Consent Analysis ............................................................................................................................. 7 1.14 Defendant’s Waiver Analysis ............................................................................................................................... 8 1.15 Class Action Plaintiffs Analysis ........................................................................................................................... 8 1.2 Obtaining Jurisdiction With Property ................................................................................................................. 8 1.21 The Old Way (Pre Shaffer v. Heitner) .................................................................................................................. 8 1.22 The Modern Approach – Minimum Contacts / Fairness (Post Shaffer v. Heitner) .............................................. 9 1.221 Quasi-In-Rem Analysis .................................................................................................................................. 9 1.222 Pure In Rem Analysis .................................................................................................................................... 9 1.3 Venue, Transfer, & Forum Non Conveniens ........................................................................................................ 9 1.31 Venue .................................................................................................................................................................. 9 1.32 Forum Non Conveniens ..................................................................................................................................... 10 1.33 Transfer in the Federal Courts .......................................................................................................................... 11 2.0 JURISDICTION OVER SUBJECT MATTER (in the Federal Courts) .............................................................................. 11 2.1 Federal Question Jurisdiction ........................................................................................................................... 12 2.11 The Constitutional Standard ............................................................................................................................. 12 2.12 The Statutory Standard: The “Well-Pleaded Complaint” Rule .......................................................................... 12 2.13 Federal Question [§ 1331] Jurisdiction Analysis................................................................................................ 13 2.2 DIVERSITY JURISDICTION .................................................................................................................................. 13 2.21 Diversity Jurisdiction Analysis ........................................................................................................................... 14 2.3 Supplemental Jurisdiction ................................................................................................................................ 15 2.31 Supplemental Jurisdictional Analysis ................................................................................................................ 15 2.32 Pre-Enactment 28 U.S.C. § 1367 Analysis ......................................................................................................... 15 2.33 Post-Enactment 28 U.S.C. § 1367 Analysis ........................................................................................................ 16 2.4 Removal to the Federal Courts ......................................................................................................................... 17 2.41 Removal Analysis ............................................................................................................................................... 17 3.0 CHOICE OF LAW AMONG THE STATES ................................................................................................................... 17 3.1 The Traditional Approach: Vested Rights and Territoriality .............................................................................. 17 3.11 Background ....................................................................................................................................................... 17 3.12 Traditional [First Restatement] Choice of Law Analysis .................................................................................... 18 3.2 The Modern Approach...................................................................................................................................... 20 3.21 Modern Choice of Law Analysis ........................................................................................................................ 20 3.22 Center of Gravity Analysis ................................................................................................................................. 20 3.23 Evolution of the Interest Analytic Approach in the NY Courts .......................................................................... 20 3.24 Interest Analytic Analysis .................................................................................................................................. 21 3.25 “Better Law” Analysis *One of Leflar’s Choice-Influencing Considerations p. 205] .......................................... 23 3.26 Lex Fori Analysis ................................................................................................................................................ 23 3.27 The Second Restatement Analysis .................................................................................................................... 23 4.0 FEDERAL-STATE CHOICE OF LAW ........................................................................................................................... 24 4.1 The Baseline Rule: Federal Supremacy ............................................................................................................. 24 4.11 Federal Preemption Analysis............................................................................................................................. 24 4.2 Choice of Law for a Federal Court in Diversity .................................................................................................. 25 1 4.21 The Background of Erie ..................................................................................................................................... 25 4.22 Erie Analysis ...................................................................................................................................................... 25 5.0 RECOGNITION OF JUDGMENTS ............................................................................................................................. 27 5.1 Full Faith and Credit Among the States – Constitutional ................................................................................... 27 5.11 State Court Full Faith and Credit Exception Analysis ........................................................................................ 27 5.2 Full Faith and Credit in the Federal Courts - Statutory ...................................................................................... 28 5.21 Federal Court Full Faith and Credit Analysis ..................................................................................................... 29 2 1.0 JURISDICTION OVER PERSONS AND PROPERTY 1.1 IN PERSONAM JURISDICTION 1.11 THE OLD WAY – STRICT TERRITORIALISM PENNOYER V. NEFF (US 1877) Rule: o There are only two ways to exercise personal jurisdiction over a defendant:  1. Personal service of process in the forum state (always sufficient) OR  2. Voluntary surrender /consent Justification: o Two Fundamental Principles of Strict Territorialism”:  1. Every State possesses exclusive jurisdiction and sovereignty over person and property within its territory.  2. No state can exercise jurisdiction and authority over person or property without its territory. o Courts at this time had a very territorial way of thinking. Pennoyer highlights 3 Different Forms of Jurisdiction: o 1. In Personam Jurisdiction:  Jurisdiction over the person/individual – able to adjudicate on all rights pertaining to the individual. Secured through personal service in the forum state or consent. The most expansive. o 2. In Rem Jurisdiction:  Jurisdiction over a thing. Brings a piece of property within the power of the court. As part of the process of the initiation of the lawsuit – the property is seized. Pure In Rem cases are actually about the property itself. Things that are relevant to the rights and responsibilities bound up with the parcel. Attachment must be pre-suit. o 3. Quasi in Rem Jurisdiction:  A hybrid – Cases in which the court and Plaintiff attempt to leverage the fact that the defendant owns property within the forum state in order to get the court to adjudicate a lawsuit that has nothing to do with the property. The power of the court here is limited by the value of the property. You must attach or seize the property before adjudication of the lawsuit. Importance of Pennoyer: o This decision is important because before this decision, there was little or no case law defining the limits of a state court’s jurisdiction. o A state is allowed impose stricter requirements than the Constitution, but cannot have more expansive jurisdiction than what is provided for in the Constitution. A state can draw it’s own “statutory box.” 1.12 THE MODERN APPROACH – CONTACTS AND FAIRNESS 1.121 INTRODUCTION: “MINIMUM CONTACTS” AND “PURPOSEFUL AVAILMENT” No longer "is it there" but rather, "is it fair.” International Shoe (US 1945) (“due process requires only that . . . he have certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ”). Why do we have a doctrine of personal jurisdiction? th Protection of individual rights under Substantive Due Process clause of the 14 ADT. Federalism concerns. World Wide Volkswagen (“Nevertheless, we have never accepted the proposition that state lines are irrelevant for jurisdictional purposes, nor could we, and remain faithful to the principles of interstate federalism embodied in the Constitution.”) The “Personal Jurisdiction Triangle” 3 - - - In personal jurisdiction cases, keep in mind the “Personal Jurisdiction Triangle” between: o 1) The Litigation; o 2) The Defendant; and o 3) The Forum. In specific jurisdiction cases, there must be a connection between all three. (Will almost never be concerned with the connection between litigation and defendant, if that is not present the plaintiff has a serious problem). In general jurisdiction cases, the defendant is so bound up in the forum that it does not care about one side of the triangle – the connection between the litigation and the forum. Litigation Defendant Forum 1.122 SPECIFIC JURISDICTION ANALYSIS 1. MINIMUM CONTACTS [Int’l Shoe] / PURPOSEFUL AVAILMENT [Hanson] SATISFIED? o More likely to be satisfied with affirmative answer to any of the following:  1. FORESEEABLE USE, PURCHASE, OR SALE? [ordered from least to most stringent]  Foreseeable Use – Gray (Ill 1961) o “If a corporation elects to sell its products for ultimate use in another State, it is not unjust to hold answerable there for any damage caused by defects in those products.”  Foreseeable Purchase/Sale – World Wide Volkswagen (US 1980) o “The forum state does not exceed its powers under the Due Process Clause if it asserts personal jurisdiction over a corporation that delivers into the steam of commerce with the expectation that they will be purchased . . . in the forum state.” o Asahi (J. Brennan dissenting)  “*T+he Court [in WWV] contrasted the foreseeability of litigation in a State to which a consumer fortuitously transports a defendant’s product (insufficient contacts) with the foreseeability of litigation in a state where the defendant’s product was regularly sold.”  Purchase Plus Asahi (US 1987) o Placing a product into the “stream of commerce,” by itself is insufficient. Additional conduct is necessary. E.g.,:  designing the product specifically for the forum state  establishing channels for providing regular advice to customers in the forum state  marketing the product through a distributor who has agreed to serve as the sales agent in the forum state  Currently, “Foreseeable sale” is the law in some jurisdictions, while “Purchase plus” is the law in other jurisdictions.  2. DIRECT SALE OR SOLICITATION IN FORUM?  Keeton v. Hustler (US 1984) o “Such regular monthly sales of thousands of magazines cannot by any stretch of the imagination be characterized as random, isolated, or fortuitous.”  Mcgee (US 1957) (High watermark for long arm jurisdiction) 4 o A single contract that has “substantial connection with that State” is sufficient minimum contacts.  3. CONTEMPLATION OF LONG TERM CONTRACT IN FORUM?  Burger King (US 1985) o “*Defendant+ established a substantial and continuing relationship with Burger King’s Miami Headquarters, and received fair notice from the contract documents and course of dealing that he may be subject to suit in Florida.” o “He entered into a carefully structured 20-year relationship that envisioned continuing and wide reaching contacts.”  4. CAUSING INTENTIONAL HARMFUL EFFECTS IN THE FORUM STATE?  Calder (US 1984) o Jurisdiction is proper where the defendant intentionally engages in conduct calculated to cause harm in the forum state.  See also Burger King (US 1985), which holds that mere foreseeability of injury, by itself, is insufficient to satisfy the minimum contacts requirement.  Luban v. Griffis (Minn. 2002) o Two Interpretations of Calder (Minn. adopts 2nd.)  1. Broad Interpretation – 7th Cir.  The victim of an intentional tort can always sue in the place that she suffers the harm. [The next step up from this requires the defendant to know the plaintiff is in the forum state [9th Cir.]]  Thus, a defendant accused of an intentional tort is always subject to jurisdiction in the place where the plaintiff resides (injury occurs).  2. Narrow Interpretation: Three-Part Test – 3rd Cir.  1. Defendant committed an intentional tort  2. P felt the brunt of the harm caused by the tort in the forum.  3. The defendant “expressly aimed” the tortious conduct at the forum state and the forum was the focal point of the tortious activity.  5. PLAINTIFF’S RESIDENCE IN FORUM?  Keeton v. Hustler (US 1984) o The “plaintiff’s residence in the forum may, because of defendant’s relationship with the plaintiff, enhance defendant’s contacts with the forum.” Less likely to be satisfied with affirmative answer to any of the following:  1. ONLY UNILATERAL ACTIVITY OF PLAINTIFF?  Hanson (US 1958) o “The unilateral activity of those who claim some relationship with a defendant cannot satisfy the requirement of contact with the forum State”).  2. MERELY FORESEEABLE INJURY IN THE FORUM?  Burger King (US 1985) o The “foreseeability of causing injury in another state . . . is not a sufficient benchmark for exercising personal jurisdiction.”  3. MERELY FORESEEABLE USE IN THE FORUM?  Worldwide Volkswagen (Brennan dissenting) o “*I+f foreseeability of where the product could be brought was sufficient it would make the defendant’s chattel his agent for service of process.” o “It is foreseeable that the purchasers of automobiles sold by World-Wide and Seaway may take them to Oklahoma. But the mere ‘unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State.’” 5 o - - 4. “RANDOM, ISOLATED, OR FORTUITOUS” CONTACTS”? [Keeton (US 1984)] 5. NON-COMMERCIAL CONTACTS?  Kulko (US 1979) o The cause of action arises from “his personal domestic relations. It thus cannot be said that appellant has sough a commercial benefit from solicitation of business from a resident of California that could reasonably render him liable to suit in a state court.”  Griffis (Minn. 2002) o Ct. held that there were no minimum contacts, in part, because defendant had no commercial contacts with the forum.  6. NO MORE THAN A CONTRACT?  Burger King (US 1985) o A contract with an out-of-state party, without more, cannot automatically “establish sufficient minimum contacts.” o If no minimum contacts then (almost certainly) no personal jurisdiction.  But see Burger King – Ct. was not explicit about whether the minimum contacts requirement was satisfied. 2. LITIGATION “ARISE OUT OF OR RELATE TO” THOSE ACTIVITIES? [Helicopteros (US 1984)]. o The SCOTUS "has not yet explained the scope of this requirement.” The U.S. Court of Appeals has adopted three different approaches.  1. But-For Cause?  2. Proximate Cause" ?  3. "Substantial Connection" or "Discernible Relationship"? 3. “FAIRNESS FACTORS” MAKE JURISDICTION [IN]CONSISTENT WITH FAIR PLAY AND SUBSTANTIAL JUSTICE? [Burger King (US 1985)] o Query whether the following factors would convince a judge to dismiss/uphold jurisdiction.  1. Burden on defendant  2. State’s interest (e.g., may be demonstrated by statute)  3. Plaintiff’s interest in obtaining relief  4. Interstate interest in obtaining efficient resolution to controversy  5. Shared interest of the several States in furthering fundamental substantive social policies.  6. The procedural and substantive interests of other nations. [Asahi at 115 (US 1987).]   1.123 GENERAL JURISDICTION ANALYSIS 1. DEFENDANT’S CONTACTS “CONTINUOUS AND SYSTEMATIC”? o Origins in Int’l Shoe (US 1945):  “[T]here have been instances in which the continuous corporate operations within a state were thought so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities.” o Factors: For each of the following factors ask “how much?” “how often?” “what fraction of the business?” “how important is this to the company?” [see Perkins v. Benguet Mining (US 1951)] (Jurisdiction Proper) and Helicopteros (US 1985) (Jurisdiction Improper)]. For general jurisdiction, we will consider contacts between the defendant and the forum up until the point the suit is filed, before or after the actions giving rise to litigation.  1. Facilities, offices, bank accounts in the forum state?  2. Employees in the forum state?  3. Solicitation in the forum state?  4. Correspondence relating to the business from the forum state?  5. Items sold in (rather than purchased from) the forum state? o Continuous and Systematic Purchases?  Continuous and systematic purchases alone is not enough for general jurisdiction.  “’*M+ere 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 those purchase transactions.” [Helicopteros (US 1985)]. 2. DEFENDANT A DOMICILIARY OF THE FORUM STATE? o Rule - Courts have general jurisdiction over all domiciliaries of their state. 6 o Domicile Requirements: 1. Physically Present?  A person must be physically present at a location for that location to be his domicile (but need not establish home in a particular dwelling there, e.g., living with in-laws)  2. State of Mind?  A person must intend to make that place his home (for some undefined period of time). Absent domiciliary?  Miliken (US 1940)  “Domicile in the state is alone sufficient to bring an absent defendant within the reach of the state’s jurisdiction for purposes of a personal judgment by means of appropriate substitute service.”  o 1.124 TAG JURISDICTION ANALYSIS 1. TRADITION SATISFIED? [Scalia in Burnham (plurality opinion)] o Scalia reads Int’l Shoe as expanding the “constitutional box” defined by Pennoyer, but keeping in tact the means of getting jurisdiction under Pennoyer.  Int’l Shoe only addresses cases where a court seeks jurisdiction over an absent defendant. In those cases, due process requires a fairness inquiry. Int’l Shoe does not disturb the traditional method of personal service in the forum state, it remains sufficient.  Judges are actually worse than other entities in determining fairness; judges are an unelected minority disconnected from the American people.  Scalia is not thwarted by Shaffer (US 1977), which holds that “all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny,” because of his limitation of Int’l Shoe’s holding. 2. FAIRNESS SATISFIED? [Brennan concurring in Burnham] o Brennan’s problem with Scalia’s analysis is that he believes due process requires an inquiry into fairness.  “Traditional notions of fair play and substantial justice can be as readily offended by the perpetuation of ancient forms that are no longer justified as by the adoption of new procedures that are inconsistent with the basic values of our constitutional heritage.” [quoting Shaffer] 3. AGENT OF ABSENT DEFENDANT SERVED WITH PROCESS? o Sufficient so long as agent provides prompt notice to the defendant. [Nat’l Equipment (US 1964)]. 1.13 DEFENDANT’S CONSENT ANALYSIS 1. CONSENT OBTAINED EX ANTE VIA CONTRACT? o Agent agreement?  Rule – If process served on an agent in the forum state, and the parties previously agreed that the person would be an agent for service of process, then the jurisdiction of the forum is valid even though the defendant is absent from the forum state.  Szukhent (US 1964) - “It is settled . . . that parties to a contract may agree in advance to submit to the jurisdiction of a given court to permit notice to be served by the opposing party, or even waive notice altogether.” o Forum selection clause?  “Unreasonable” under the circumstances?  Rule – Forum selection clauses are presumptively valid, and should be enforced unless enforcement is shown to be “unreasonable” under the circumstances. *The Bremen (US 1972].  Factors: o 1. Fraud? o 2. Undue Influence? o 3. Disproportionate bargaining power? o 4. Serious inconvenience to the party?  May be a sign of unequal bargaining power o 5. Two domestic parties selecting foreign forum? 7  Presumptively invalid – Here, we’re concerned about domestic parties attempting to run-around the significant public policies of the jurisdiction in which they live. But see Carnival Cruise Lines (US 1991) where the court severely limited what it means to be “unreasonable”: o 1. Disproportionate bargaining power does not lead to automatic unenforcement. o 2. Inconvenience must be severe. o 3. Fraud, by itself, may still be sufficient.  “*T+here is no evidence that petitioner obtained respondents’ accession to the forum clause by fraud or over reaching.” o 4. Context is important.  Routine transaction?  (e.g., The Bremen (exceptional), while Carnival (routine)  Reason to suspect bad faith?  - 2. EX POST CONSENT? o Probably sufficient. Problems typically arise only in the contract scenario. 1.14 DEFENDANT’S WAIVER ANALYSIS DID DEFENDANT RAISE QUESTION OF JURISDICTION? o 1. Defendant fail to make a R 12 motion?  Rule – If the defendant litigates on the merits, but fails to raise the question of jurisdiction, then defendant is precluded from raising the question of jurisdiction later. [FRCP 12(h)(1)(B)] o 2. Defendant makes R 12 motion but fails to challenge jurisdiction?  Rule - If a party makes a motion (or pleading) but does not claim lack of personal jurisdiction, the party cannot thereafter make such a motion. [FRCP 12(g)] 1.15 CLASS ACTION PLAINTIFFS ANALYSIS CLASS ACTION WITH ABSENT CLASS MEMBERS? o Rule – No affirmative consent required. Plaintiffs do not face the unique burdens faced by defendants. “A class action plaintiff is not required to fend for himself” [Phillips Petroleum v. Shutts (US 1985)].  1) need not hire counsel or appear  2) rarely subject to counterclaims or cross-claims, or liability for fees or costs  3) not subject to coercive or punitive remedies  4) adverse judgment typically will not bind an absent plaintiff for damages  5) BUT an adverse judgment may extinguish any of the plaintiff’s claims which were litigated. 1.2 OBTAINING JURISDICTION WITH PROPERTY QUASI IN REM Court has power over defendant to adjudicate any matter, related or unrelated to the res – but, the award, if any, will be capped at the value of the attached property. PURE IN REM Court only has power over the object (e.g., the land) that is attached by the court, not over the non-resident individual. Even though the court only has the power to adjudicate rights over that object, its power in that respect is unlimited (i.e., the judgment can bind all parties that have an interest in the object.) 1.21 THE OLD WAY (PRE SHAFFER V. HEITNER) QUASI IN REM HARRIS V. BALK (US 1906) – METAPHYSICAL PRESENCE SUFFICIENT o The Court held that jurisdiction was proper where a court awarded judgment to a creditor who served a “writ of attachment” to seize money from a third party debtor of the debtor (i.e., allowed the debt to be garnished). o Two Important Holdings Were Necessary 8   1. Intangible property, like tangible property (debt), may be seized in order to obtain jurisdiction. 2. A legal fiction – the debt is “located” where the debtor is and not where the creditorowner is. PURE IN REM Rule – Property in the state is sufficient for obtaining jurisdiction if notice is “reasonably calculated” to alert all interested parties of the litigation. Notice by publication is sufficient for unknown parties, but for known parties there must be notice by mail or personal service. o E.g., suppose Person A moves to Ann Arbor and performs a title search. It comes up clean and Person A moves in. Later, Person B comes to house and claims that the house is hers instead. Person A initiates lawsuit to quiet title. Both parties show up and present evidence. Person A wins. Three weeks later, someone else, Person C, claims that he has title and did not receive valid notice of the procedure.  Notice by publication does not satisfy due process for Person B, but is sufficient for Person C.  With notice, Person C would be bound by the decision, bc the property is physically located within the state.  Since this is an example of “Pure In Rem” jurisdiction. Minimum contacts is not an issue. 1.22 THE MODERN APPROACH – MINIMUM CONTACTS / FAIRNESS (POST SHAFFER V. HEITNER) 1.221 QUASI-IN-REM ANALYSIS SUFFICIENT MINIMUM CONTACTS? o Rule – The Int’l Shoe standard (minimum contacts) must be applied to all assertions of state court jurisdiction. [Shaffer v. Heitner (US 1977)] o Shaffer v. Heitner (US 1977)  Overturns Harris v. Balk (US 1906). Harris is an example of a case where the property is completely unrelated to the plaintiff’s cause of action, but serves as the basis of state court jurisdiction. This, in itself, is insufficient to satisfy due process.  Fairness, not physical presence, is the touchstone of the jurisdictional inquiry.  The parallel of Int’l Shoe (US 1945): “Is it there?”  “Is it fair?”  Snfld – “The crucial thing about Shafer is that the presence of property alone in the forum is no longer sufficient, it must be cranked through the Int’l Shoe analysis.” o Result – Quasi in rem now has little or no purpose: if the test is the same as in personam, a plaintiff would likely prefer in personam because the court’s power to award damages under quasi is limited.  Quasi in rem may be still be useful in cases where minimum contacts are satisfied, but the state long-arm statute (for in personam) is smaller than the constitutional box and, thus, does not allow for jurisdiction. 1.222 PURE IN REM ANALYSIS Rule – The Int’l Shoe standard must be applied to all assertions of state court jurisdiction. *Shaffer v. Heitner (US 1977)] o IMPORTANT NOTE – In Pure in rem cases, jurisdiction is being asserted over the property, not the person. Minimum contacts is therefore not an issue. Thus, Shaffer arguably leaves the old method of Pure in rem analysis undisturbed. 1.3 VENUE, TRANSFER, & FORUM NON CONVENIENS 1.31 VENUE VENUE GENERALLY Rule o A suit must not only be brought in a court of proper jurisdiction, but also in a court of proper “venue.”  Venue – The correct geographic location within a court system. Important Note 9 - A judgment entered rendered by a court in the wrong venue is NOT invalid because venue is not a matter of constitutional due process. Federal Venue o In the federal system, venue is very important because the various district courts operate under different procedural regimes. The Civil Justice Reform Act and the Federal Rules of Civil Procedure have allowed for increasing “balkanization” (i.e., fragmentation) especially of discovery rules. o See 28 U.S.C.A. § 1391. Venue generally (p. 71 of CP) o FEDERAL VENUE ANALYSIS 1. FEDERAL JURISDICTION BASED SOLELY ON DIVERSITY OF CITIZENSHIP? [28 U.S.C.A. § 1391(a)] o Venue is proper in a judicial district:  1. in which a substantial part of the events giving rise to the litigation occurred  2. in which a substantial part of the property subject to the action is located o Defendants all reside in same state?  3. If so, then venue is also proper in a judicial district where any defendant resides o If none of the above is satisfied:  4. then venue is also proper where any defendant is subject to personal jurisdiction. 2. FEDERAL JURISDICTION NOT BASED SOLELY ON DIVERSITY OF CITIZENSHIP? [28 U.S.C.A. § 1391(b)] o Venue is proper in a judicial district:  1. in which a substantial part of the events giving rise to the litigation occurred  2. in which a substantial part of the property subject to the action is located o Defendants all reside in same state?  3. If so, then venue is also proper in a judicial district where any defendant resides o If none of the above is satisfied:  4. then venue is also proper where any defendant may be found. 3. DEFENDANT A CORPORATION? [28 U.S.C.A. § 1391(c)] o Subject to personal jurisdiction within any judicial district?  If so, then deemed to reside in any such district. o Subject to personal jurisdiction within the state?  If so, then deemed to reside in any district within the state where it has sufficient minimum contacts for personal jurisdiction; OR  if no such district exists, the judicial district where it has the most significant contacts. 1.32 FORUM NON CONVENIENS FORUM NON CONVENIENS Definition o In cases where the defendant is amenable to process in two forums. The forum non conveniens doctrine allows a court to decline the exercise of jurisdiction even if jurisdiction is authorized by a general venue statue. Purpose o General venue statutes are necessarily written somewhat broadly and this incentivizes some plaintiffs to pursue trial at the most inconvenient place for his adversary, even at some inconvenience to himself. [Gulf Oil (US 1947)]. That is plaintiffs are incentivized to vex, harass, and oppress the defendant. Id. o Seinfeld: The reason for forum non conveniens is that we want to lower the threshold for plaintiffs, but also want to allow an escape hatch for defendants. Important Note o It is still an open question whether a federal court, sitting in diversity, may apply a federal doctrine of forum non conveniens when the state law of forum non conveniens differs. Separation of Powers Issue o The federal govt separates powers. It is the legislature makes the rules of federal jurisdiction, thus, Congress has told a plaintiff that her suit may be heard in X court. o Conventional means of wiggling out of SOP problem – some common law rules are so deeply woven into how we administer justice in the U.S. that they are swept into our rules. Even though venue and jurisdiction is proper, Congress has “authorized” forum non-conveniens. In addition, there may be the 10 sense that judges are better-suited than legislators to make the determination of whether a suit should be under its jurisdiction on a case-by-case basis FORUM NON CONVENIENS ANALYSIS [Gulf Oil (US 1947)] 1. PREREQUISITES TO FORUM NON CONVENIENS ANALYSIS SATISFIED? (affirmative response to each required) o Venue and jurisdiction proper in the forum? o At least two forums where the defendant is amenable to process? 2. BALANCE OF THE FACTORS STRONGLY IN FAVOR OF THE DEFENDANT? (“the plaintiff’s choice of forum should rarely be disturbed.”) o 1. Private Interest Factors  1. relative ease of access to evidence and witnesses  2. compulsory process – the ability to retain witnesses and cost of obtaining witnesses  3. enforceability of the judgment  4. balance of hardships – only if strongly in favor of defendant will plaintiff’s choice of forum be disturbed.  “The possibility of a change in law should ordinarily not be given conclusive or even substantial weight in the forum non conveniens inquiry.” *Piper Aircraft Co. (US 1981)] o 2. Public Interest Factors  1. court congestion, burden on courts  2. the burden of jury duty on people in a community far removed from the source of the litigation.  3. preference for localized controversies to be decided locally  4. avoidance of conflict/choice of law problems 3. FOREIGN (I.E., FROM OUTSIDE COUNTRY) DEFENDANT? [Piper Aircraft Co. (US 1981)] o The presumption that plaintiff has chosen an appropriate forum is relaxed. o Change of law is not dispositive, nor should it receive “even substantial weight in the forum non conveniens inquiry.” o Must not be so concerned with a defendant’s incentive to engage in forum shopping, that the convenience inquiry is reduced to a single factor, change of law. o The Piper Court was concerned with preventing the U.S. from becoming become even more of an International tort magnet. It did not want to make it more difficult for international suits to be kicked out. 1.33 TRANSFER IN THE FEDERAL COURTS Important Note: Under the federal transfer provisions, “venue” refers both to “venue” AND “jurisdiction”. FEDERAL TRANSFER STATUTE Change of Venue - 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 . . . [28 U.S.C. § 1404] [E.g., Bolivia v. Phillip Morris (Texas 1999)] o Convenience – test is the same as for forum non conveniens o “where it might have been brought” – The relevant time here is at the “bringing of the action” NOT at “the time of the transfer.” Cure or waiver of defects – A district court is permitted to dismiss a case where venue is improper OR, if in the interest of justice, it may transfer such a case to the district where it could have been brought. [28 U.S.C. § 1406] o I.e., a court is permitted to transfer even if jurisdiction is lacking. Multidistrict litigation – In civil actions involving common questions of law and fact are pending in different districts, such actions may be transferred to any district court for coordinated or consolidated pretrial proceedings. [28 U.S.C. § 1407] 2.0 JURISDICTION OVER SUBJECT MATTER (IN THE FEDERAL COURTS) SUBJECT MATTER JURISDICTION Definition 11 - - The term subject matter jurisdiction to describes the entire list of terms found in Article III § 2 of the Constitution. It is entirely distinct from personal jurisdiction. o It is a limit on congress, not (directly) the courts. The Article III grant of power is NOT self-executing. That is, it must be enacted by Congress. Article III § 2 Const. o “The judicial power shall extend [1] to all cases, in law and equity, arising under this Constitution, the laws of the United States, and treaties made, or which shall be made, under their authority;--[2] to all cases affecting ambassadors, other public ministers and consuls;--[3] to all cases of admiralty and maritime jurisdiction;--[4] to controversies to which the United States shall be a party;--[5] to controversies between two or more states;--[6] between a state and citizens of another state;--[7] between citizens of different states;--[8] between citizens of the same state claiming lands under grants of different states, and [9] between a state, or the citizens thereof, and foreign states, citizens or subjects.” Note o Nothing in the Constitution constrains the subject matter jurisdiction of state courts. 2.1 FEDERAL QUESTION JURISDICTION o 2.11 THE CONSTITUTIONAL STANDARD CONSTITUTIONAL STANDARD SATISFIED? [Osborn (US 1824) (J. Marshall)] Is a federal question an “ingredient” (i.e., lurking anywhere in the background) of the original cause? o Y  Congress has the power to give the federal courts jurisdiction over such a cause, even if there are other [state] question of fact or law that may be involved. o N  Congress lacks the power to give the federal courts jurisdiction.  Note: The grant of authority is not self-executing – must be enacted by Congress. Osborn v. Bank of the U.S. (US 1824) Justifications Theoretical o To expand the power of the federal government over the long haul. Marshall creates a big reservation of power under the Constitution for Congress which gives it flexibility in granting as much power as it wants to the federal courts. o Federal courts are better at adjudicating questions of federal law. Pragmatic o Reflects a distrust of state courts. Marshall wants to protect the US Bank because state courts are hostile to the Bank and federal law during this early period of the Union. The Court wanted to protect certain federal interests even if the interest is not bound up in federal law. 2.12 THE STATUTORY STANDARD: THE “WELL-PLEADED COMPLAINT” RULE 28 U.S.C. § 1331 (1875) – The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States. STATUTORY STANDARD SATISFIED? [MOTTLEY (US 1908)] Federal claim appear on the face of the plaintiff’s “well-pleaded” (i.e., bare bones) complaint (not responses to anticipated defenses)? o Y  Federal question jurisdiction is proper o N  No federal question jurisdiction  See Mottley (US 1908) where even though it was virtually certain that defendant would answer with a 5th Amendment claim, there was no “arising under” jurisdiction within the meaning of § 1331. What is a well-pleaded complaint? o A well-pleaded complaint is bare bones, it states all that is necessary for the plaintiff to state a complaint for relief. Louisville & Nashville RR v. Mottley, (US 1908) Justification Docket Control 12 o Here, the court chops off half the suits “arising under” federal law. It gives the term “arising under” a new meaning in the statutory context. This is to eliminate cases (e.g., Western land grants cases) clogging up the federal courts. 2.13 FEDERAL QUESTION [§ 1331] JURISDICTION ANALYSIS 1.DOES FEDERAL LAW CREATE THE CAUSE OF ACTION FOR PLAINTIFF’S WELL-PLEADED COMPLAINT? o Y  Federal question jurisdiction exists o N  Continue  See American Well Works (US 1916) (J. Holmes) where the court held that “[a] suit arises under the law that creates the cause of action.” Holmes intended this test to be one of inclusion and exclusion, but it has survived only as a test of inclusion. If the law that creates the cause of action is federal, there is federal question jurisdiction.  Note: The vast majority of federal question cases fall into this category. 2. IS THERE “NESTING JURISDICTION”? o An affirmative answer is required for all four of the following questions for there to be “nesting jurisdiction.”  1. Is the “nested” federal claim necessary for the plaintiff to recover?  See e.g., Smith (US 1921) where the plaintiff s-holders sued that the company had violated a state law prohibiting the purchase of unlawful bonds. The bonds were allegedly unlawful because they were purchased pursuant to a federal act that was claimed to be unconstitutional. Thus, the federal claim was necessary for state law recovery. Smith held that where the plaintiff’s “right to relief depends upon” federal law, the federal courts have jurisdiction. o See also Merrell Dow (US 1986) which seemed to seriously narrow Smith by requiring a federal cause of action for plaintiff’s nested federal claim. The court held that it would “flout, or at least undermine, congressional intent” to allow for federal jurisdiction where a federal cause of action has not been provided for by Congress. The holding of Merrell Dow, has been severely limited by Grable & Sons (US 2005) which held that the lack of a federal cause of action is merely evidence of congressional intent. “The Court saw the missing cause of action not as a missing federal door key, always required, but as a missing welcome mat.”  2. Is the “nested” federal claim sufficiently substantial?  Federal cause of action? o Y  Automatically sufficiently substantial o N  Is there a serious federal interest in resolving such suits in the federal forum?  See e.g., Grable & Sons (US 2005) where the court held that the meaning of a federal tax provision is an important issue of federal law because the Government has a strong interest in the “prompt an certain collection of delinquent taxes.”  3. Is the federal question actually in dispute?  4. Will federal litigation NOT upset or radically alter the federal/state balance of “judicial responsibilities”?  For example, consider o the state’s interest in deciding state law claims; o federal interest in docket control; o federal interest in deciding questions of federal law 2.2 DIVERSITY JURISDICTION PURPOSE Diversity jurisdiction is motivated by fear of bias against out-of-staters in state courts. o CJ. Marshall, Bank of U.S. v. Deveraux (1809): “*T+he constitution itself” is apprehensive of whether state courts “will administer justice as impartially” as the federal courts. o W. Virg. Supreme Ct. Justice Richard Nealy: State court judges have a strong incentive to redistribute wealth from out-of-state companies to in-state plaintiffs. 13 SPECIAL AREAS IMMUNE TO DIVERSITY JURISDICTION Domestic relations cases and probate proceedings have traditionally been viewed as a “special concern of the states” and have been left to the state courts even when all the requirements of diversity jurisdiction have been met. 28 USC § 1332 “The district courts shall have original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value of $75,000 . . . and is between—citizens of different States . . . .” o Citizen of a State. “To be a citizen of a State within the meaning of section 1332, a natural person must be both a citizen of the United States and a domiciliary of that State.” Domicile is the same as for general in personam jurisdiction: the place of “his . . . permanent home and principal establishment, and to which he has the intention of returning whenever he is absent.” A person can change domicile w/n 1332 only by “(a) taking up residence in a different domicile with (b) the th intention to remain there.” Mas (5 Cir. 1974). TWO CRUCIAL WAYS IN WHICH CONGRESS HAS DECLINED TO CONFER DIVERSITY JURISDICTION 1. Amount in Controversy Requirement (since 1789) currently $75k o Purpose: Docket control. Only important matters deserve to get into federal court (dollar amount being used as a proxy for important matters). 2. Complete Diversity – Strawbridge (US 1806) o Purpose: Docket control. The federal courts only want diversity cases where bias is a factor. State bias is not really a factor when there is a party from the same state on both sides. The idea behind the requirements: “We don’t want to make a federal case out of everything” 2.21 DIVERSITY JURISDICTION ANALYSIS 1. COMPLETE DIVERSITY? [Strawbridge (US 1806)] o 1. A party from the same state on both sides of the “v.” at the time suit was filed?  Y  No Diversity  N  Continue  See Strawbridge (US 1806) where CJ Marshall held that “where the interest is joint, each of the persons concerned in that interest must be competent to sue, or liable to be sued, in those courts.”  See also Mas (5th Cir. 1974) which held that “the diverse citizenship among diverse parties must be present at the time the complaint is filed. Jurisdiction is unaffected by subsequent changes.” o 2. Collusion to Create Diversity? [28 U.S.C. § 1359]  Y  No Diversity  N  Complete Diversity Satisfied  28 U.S.C. § 1359. “A district court shall not have jurisdiction of a civil action in which any party, by assignment or otherwise, has been improperly or collusively made or joined invoke the jurisdiction of such court.”  See Kramer (US 1969) (holding that even if the assignment of an interest in a contract is valid under state law, the obvious collusion deprives the federal courts of jurisdiction) 2. AMOUNT IN CONTROVERSY SATISFIED? o 1. Plaintiff’s [aggregate] claim for relief [against a single defendant] meets the AIC requirement [$75,000] at the time suit was filed? [Allapattah (US 2005)]  Y  Continue  N  No Diversity o 2. Presumption of plaintiff’s good faith claim rebutted? [Red Cab (US 1938)]  1. On the face of the pleadings, can it be shown with “legal certainty” that plaintiff cannot recover the amount?  Y  Presumption Rebutted - No Diversity  N  Continue 14  2. During litigation, has it become clear that plaintiff could never have recovered that amount?  Y  Presumption Rebutted - No Diversity  N  Complete diversity o See Red Cab (US 1938) where the court held that events occurring subsequent to the institution of suit which reduce the amount recoverable below the statutory requirement do not oust the court of jurisdiction. It further held that a reduction in the amount claimed after removal does not, by itself, oust the court of jurisdiction. 2.3 SUPPLEMENTAL JURISDICTION SUPPLEMENTAL JURISDICTION IS NECESSARILY COMPRISED OF TWO COMPONENTS: 1) A claim that is unquestionably eligible for federal jurisdiction (the foothold claim); and 2) A claim that by itself is unquestionably ineligible for federal jurisdiction (i.e., a state law claim lacking diversity). Supplemental jurisdiction is “the jurisdiction of coat tails.” For different federal claims, depending on what the predicate for jurisdiction is, “there may be coat tails of different lengths.” 2.31 SUPPLEMENTAL JURISDICTIONAL ANALYSIS 1. IS THERE A FOOTHOLD CLAIM? [a claim that is unquestionably eligible for federal jurisdiction?] o Y  Continue o N  No supplemental jurisdiction 2. IS THERE A STATE LAW CLAIM LACKING DIVERSITY? [a claim that is unquestionably ineligible for federal jurisdiction?] o Y  Continue o N  No supplemental jurisdiction 3. ARE BOTH OF THE ABOVE CLAIMS BASED ON “A COMMON NUCLEUS OF OPERATIVE FACT”? [Gibbs (US 1966) (representing the constitutional boundary of supplemental jurisdiction] o Y  Continue o N  No supplemental jurisdiction 4. ORDINARILY EXPECTED TO TRY SUCH CLAIMS IN A SINGLE PROCEEDING? [Gibbs (US 1966)] o Y  Continue o N  No supplemental jurisdiction  See e.g., Gibbs (US 1966) where the plaintiff, Gibbs, sued the United Mine Workers for violations of both federal and state labor law. The court held that if there is one claim properly under the Constitution in its own right, then there is jurisdiction over state law claims that “derive from a common nucleus of operative fact” where one would ordinarily be expected to try them all in one judicial proceeding over those claims? 5. PRE- OR POST-ENACTMENT OF 28 U.S.C § 1367 (1990)? o Pre-Enactment  Perform Pre-Enactment 28 U.S.C. § 1367 Analysis o Post-Enactment  Perform Post-Enactment 28 U.S.C. § 1367 Analysis 2.32 PRE-ENACTMENT 28 U.S.C. § 1367 ANALYSIS 1. FEDERAL QUESTION FOOTHOLD? o Pendent party jurisdiction? [Adding parties, rather than claims that are independently ineligible for federal jurisdiction?]?  Y  No supplemental jurisdiction  See Finley (US 1989) where the court held that regardless of the foothold claim there is no “pendent party” jurisdiction.  N  Supplemental Jurisdiction is proper 2. DIVERSITY FOOTHOLD? o 1. Does the supplemental claim “contaminate” the foothold claim by destroying complete diversity? [Kroger (US 1978)]  Y  No supplemental jurisdiction  See Kroger (US 1978) where the plaintiff attempted to sue a third-party defendant of the same state after he was joined by the original defendant. The court held that 15 o o o plaintiff’s claim against the third-party defendant destroyed complete diversity. The plaintiff would have been unable to sue the third-party defendant at the outset. Thus, to allow diversity permits plaintiffs to end run-around the complete diversity requirement.  N  Continue 2. Multiple Plaintiffs? [Clark (US 1939)]  Y  [Next Subquestion]  Does each plaintiff’s claim satisfy the AIC requirement? o Y  Continue o N  No supplemental jurisdiction for plaintiffs below the threshold  Do the plaintiffs have a “joint or common interest? o Y  Continue o N  No supplemental jurisdiction for claims with separate/distinct interest from foothold claim.  N  Continue 3. Class Action? [Zhan (US 1973)]  Does each class member satisfy the AIC requirement?  Y  Continue  N  No supplemental jurisdiction for class members below the threshold 4. Pendent Party Jurisdiction? [Adding parties, rather than claims that are independently ineligible for federal jurisdiction?]  Y  No supplemental jurisdiction over parties in diversity cases.  Two possible interpretations of the Kroger and Gibbs holdings: o 1. Where the foothold claim is diversity there is not supplemental jurisdiction. o 2. Regardless of the foothold claim, there is not supplemental jurisdiction over parties (only supplemental claims).  Finley (US 1989) adopts the second interpretation, but the result in Finley is later overturned by 28 U.S.C. § 1367.  N  Supplemental jurisdiction is proper – Analysis Complete 2.33 POST-ENACTMENT 28 U.S.C. § 1367 ANALYSIS FEDERAL QUESTION FOOTHOLD? o Analysis Complete  Supplemental jurisdiction is proper  § 1367(a) and (c) essentially codifies Gibbs with respect to federal question footholds: “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. [§ 1367(a)].  § 1367(a) explicitly overturns the result in Finley: “Such supplemental jurisdiction shall include claims that involve the joinder or intervention of additional parties. DIVERSITY FOOTHOLD? [Allapattah (US 2005)] o 1. Does the supplemental claim “contaminate” the foothold claim by destroying complete diversity? [Kroger (US 1978)]  Y  No supplemental jurisdiction  N  Continue  See Allapattah (US 2005) where Kennedy explains that without complete diversity there would be no “civil action of which the district courts have original jurisdiction” in the first place and, therefore, no predicate for supplemental jurisdiction under § 1367(a). o 2. Does at least one claim independently satisfy the AIC requirement?  Y  Continue  N  No supplemental jurisdiction  See Allapattah (US 2005) where Kennedy explains that without, at least, one claim satisfying the AIC requirement there would be no “civil action of which the district courts have original jurisdiction” in the first place and, therefore, no predicate for supplemental jurisdiction under § 1367(a). o 3. Adding Defendants? [RR 14, 19, 20, 24] 16 o Y  Claims against each defendant independently satisfy the AIC requirement?  Y  Continue  N  No supplemental jurisdiction  N  Continue 4. Adding Plaintiffs?  Y  Under RR 19 (compulsory joinder) or 24 (intervening plaintiffs)?  Y  Claims by each plaintiff independently satisfy the AIC requirement? o Y  Supplemental jurisdiction is proper o N  No supplemental jurisdiction  N  Supplemental jurisdiction is proper o This represents the result in Allapatah, the plaintiffs were not joined under RR 19 or 24, but under R 20 (permissive joinder) and R 23 (class actions).  N  Supplemental jurisdiction is proper 2.4 REMOVAL TO THE FEDERAL COURTS  2.41 REMOVAL ANALYSIS 1. Could the plaintiff have originally brought the action in federal court? o Y  Continue o N  Removal improper  A defendant [only] has a right to remove “any civil action brought in State court of which the district courts of the United States have original jurisdiction.”  28 USC § 1441(a)  Note: Defendants cannot add to the plaintiffs claim to satisfy amount-incontroversy for removal. 2. Federal Question? o Y  Defendant can remove the case “without regard to the citizenship of residence of the parties.”  28 USC § 1441(b) o N  Continue 3. Diversity ? o Y  Defendant can only remove if he (and all other defendants) are not “citizens of the State in which such action is brought.”  28 USC § 1441(b)  Presumption is that removal is not necessary because there shouldn’t be bias against Δ. o N  Must be either Diversity or Federal Question 4. Amended Complaint? o Defendant may remove after complaint is amended to create federal jurisdiction.  Purpose: If we think that a federal court is particularly qualified to decide cases arising under federal law, then it should not matter who (plaintiff or defendant) wants to bring it there. Similarly, if defendant would suffer bias litigating in state court, defendant should have an opportunity to remove such bias. 3.0 CHOICE OF LAW AMONG THE STATES 3.1 THE TRADITIONAL APPROACH: VESTED RIGHTS AND TERRITORIALITY 3.11 BACKGROUND Territorialism o The Territorial approach to choice of law is based on the premise that States get to establish the rules for conduct that occurs within its borders. That is, every nation possesses an exclusive sovereignty and jurisdiction within its own territory and, and only within its own territory. This is Pennoyer type thinking. Vested Rights [Joseph Beale] o When the relevant event occurs, a “right vests” upon the occurrence of that event. When a tort victim goes into another state to have his right vindicated, he is only asking the state to recognize the existence of a fact, a right that has vested. o The court is simply interested in what vested rights a plaintiff has tucked into his pocket. 17 - Criticisms o 1.The vested rights approach is conceptually unsatisfying because the court decides which law controls by determining whether a particular fact occurred in the past. But the question of what facts are relevant is determined in the present (e.g., whether the contract is bilateral or unilateral). There all kinds of discretionary judgments about where relevant events occurred. Sometimes it’s not easy to determine whether something is a tort or contract case. In essence, “[t]he content of the facts that occurred in the past are determined in the present.” o 2. It is arbitrary. The First Rest. approach takes a single event and gives talismanic significance to that single event. o 3. The traditional approach does not provide us with the vocabulary to deal with questions of conflicts justice (applied across the run of cases) or substantive justice (where the court’s sympathy lies in the instant case). There’s no room in the 1st rest. scheme for consideration of interest, justice, etc. The more complicated a choice of law analysis becomes, the more the vested rights approach collapses. o 4. Due to escape devices, it doesn’t deliver on predictability, ostensibly its greatest virtue. 3.12 TRADITIONAL [FIRST RESTATEMENT] CHOICE OF LAW ANALYSIS 1. IDENTIFY THE CONFLICT OF LAWS o Be certain to state this explicitly 2. WHAT TYPE OF CONDUCT/CAUSE OF ACTION IS AT ISSUE? o 1. Corporate?  Internal Affairs Apply law of the state of incorporation (Internal Affairs Doctrine).  See e.g., McDermott Inc. (Del. 1987) where the court held that a corporation’s voting scheme affected the internal affairs of the corporation.  External Affairs Continue  When a corporation acts like an individual and enters a contract, commits torts, or deals in property, the choice of law determination will depend on whether the corporation had sufficient contacts with the forum state. o 2. Tort? [Lex loci delicti]  Apply the law of the place where the injury occurred.  See e.g., Alabama RR (Ala. 1892) where even though the negligence occurred in Alabama, the court applied the law of Mississippi because “*t+he place of the wrong is in the state where the last event necessary to make an actor liable for an alleged tort takes place.” This is necessarily the place of the injury. o 3. Contract? [Lex loci contractus]  Contract Performance or Contract Validity Question?  Contract Validity  Apply law of the place of contracting. o See e.g., Milliken (Mass. 1878) where the court enforced a contract it construed as “made” in Maine (claiming it was a unilateral contract and, therefore, “made” where accepted by the offeree) without considering factors such as the domicile of the parties.  Contract Performance  Apply law of the place of performance. o 4. Property? [Situs Rule]  Apply the law of the place where the property is located.  But See Burr v. Beckler (Ill 1914) where the ultimate dispute is about title to land, but the court holds that the deed to the land is incidental to a contract and, thus, construes the case as a contract case. o 5. Other?  Under the traditional approach, the aim is the apply the law of the place where the conduct most relevant or the last event necessary to the cause of action occurred. 3. ANY ESCAPE DEVICES AVAILABLE? o 1. Characterization? [esp. in tort/contract cases]  Frame the case as a different cause of action. For example, reframing a seemingly straight forward tort case into a contract case so that different law applies.  See e.g., Levy v. Daniel’s U-Drive (Conn. 1928) where the court applied lex loci contractus in a case that looked very much like a standard tort case. In Levy, there was a car accident involving a rental car in Massachusetts. The court held that the 18 o o o o law of Connecticut (the place of contracting) should control because the rental contract was only possible by accepting the strict liability condition of Connecticut law [a stretch because such law is nowhere mentioned in the rental contract]. 2. Depecage? [esp. in immunity/status cases]  Splitting a single cause of action into two or more issues so that the law of State A will apply to issue 1 and the law of state B will apply to issue 2, etc.  See e.g. Haumschild (Wis. 1959) where both the wife and husband were domiciled in Wisconsin, but were in involved in an accident in California. The court held that California’s interspousal immunity law shall not apply because it is not a tort issue and more properly determined by reference to Wisconsin law, the state of family domicile.  Note: A quirk can be created by depecage as it is possible to create a legal result that could not have occurred under the law of one sovereign. 3. Substance/Procedure? [A different form of characterization]  Courts have always been thought permitted to apply their only rules of procedure. This is uncontroversial.  If the issue is procedural, apply the law of the forum.  If the issue is substantive, then there is a choice of law question.  Justification:  1) Litigation would be especially burdensome otherwise. Both judges and local lawyers would be burdened with unfamiliar foreign procedure  2) Differences in procedural rules are less likely to lead to forum shopping  The difficulty lies in making the distinction between substantive and procedural questions.  See Grant v. McAuliffe (Cal. 1953) where the court held that survival of a cause of action is a procedural. The court, however, may have been disingenuous as the issue was determinative of whether P had a cause of action. This seems substantive. Here, however, J. Traynor used the rule to accomplish “rough justice” because all the meaningful contacts were in the forum state, and the First Rest. does not address this concern.  Helpful Questions:  Is the rule “specifically tethered” to a substantive right? o A rule may be directed “so specifically” to a substantive right as to warrant saying that it qualified the right. Bournias (2d Cir. 1955). In such cases, the rule may properly be considered substantive.  See Bournias (2d Cir. 1955) where the court held that because the statute of limitations was not specifically tethered to a substantive right, the assumption should be that the purpose of the statute of limitations was docket control. The court therefore held that the statute of limitations was a procedural rule.  Does the rule govern primary conduct? o Courts sometimes recognize a distinction between rules that govern primary conduct and rules that govern in court conduct. Renvoi? [largely discredited]  Even if the forum court is supposed to look to the substantive law of another jurisdiction under the First. Rest., the forum court may include the choice-of-law approach of that jurisdiction. If the foreign jurisdiction would apply the forum court’s law under its choice of law approach the foreign jurisdiction is “sending back” to the forum.  See Haumschild (Wis. 1959) (J. Fairchild concurring) (arguing that California’s substantive law includes choice of law; and that Calif. choice of law would resolve the question of status by looking to the seat of the relationship, which happens to be Wisconsin)  Renvoi is largely discredited, in part, because of the possibility of infinite circle.  But See American Motorists Insurance(Md 1995) where the court adopted use of the “limited renvoi exception,” which allows the forum to “accept the reference to its own law, refer no further, and apply its own law.” Penal Exception? 19 o There is a longstanding rule that courts do not apply the penal laws of another state. Thus, escape is possible by classifying (or not classifying) something as “penal” in nature so as to apply the desired law.  See e.g., Loucks v. Standard Oil (NY 1918) where J. Cardozo classifies a Massachusetts statute that assigns damages based exclusively on culpability as nonpenal because “the purpose of the punishment is reparation” and the money “is solace to the individual who has suffered a private wrong.” Public Policy?  Even if the law is not penal, allowing recovery certain conditions will simply offend public policy. Essentially, this is where a court says we’re not applying the laws of another jurisdiction because we don’t like it. This seems easily manipulable, but the rule has not been exploited. This escape has been limited to situations to where the difference in public policy would “violate some fundamental principle of justice . . . shock *the forum’s+ sense of justice. Loucks v. Standard Oil (NY 1918). Mere differences in public policy, by themselves, are not sufficient. Id. 3.2 THE MODERN APPROACH  3.21 MODERN CHOICE OF LAW ANALYSIS APPLY THE ANALYSIS OF THE APPROPRIATE ANALYTIC METHOD: o 1. Center of Gravity o 2. Interest Analytic Approach o 3. Better Law o 4. Lex Fori o 5. Most Significant Relationship (The Second Restatement) 3.22 CENTER OF GRAVITY ANALYSIS 1. IDENTIFY THE CONFLICT OF LAWS o Be certain to state this explicitly 2. WHICH PLACE HAS THE MOST SIGNIFICANT CONTACTS WITH THE MATTER IN DISPUTE? o See Auten (NY 1954) where the court held that English law should be applied to determine the validity of the separation agreement, regardless of where the contract was “made,” because, among other factors, England was the jurisdiction of marital domicile and the place where the wife and children will reside. o Justification 1. By stressing the significant contacts the court can reflect the “relative interest of the several jurisdictions” and the probable “intention of the parties.” Auten (NY 1954). 2. Generally, it is a good thing to expand the sphere of relevant considerations when discussing choice of law problem. Even though this may result in greater difficulty for the court, this added difficulty should be more than offset by gains in justice. o Criticism 1. Grouping contacts may afford less certainty and predictability than the First Rest. approach. 2. Courts did not always conclude that the same contacts were important even in factually similar cases. The fear is that a court may simply list factors.  See e.g., Haag v. Barnes (NY 1961) which involves a factual scenario similar to that of Auten (1954) but the court held despite the fact that the mother and daughter reside in New York, that Illinois had the most significant contacts because the husband lived there and that is where the contract was formed (seemingly weak contacts). 3.23 EVOLUTION OF THE INTEREST ANALYTIC APPROACH IN THE NY COURTS 1. In the beginning there was Babcock (NY 1963). o In a series of cases involving car accidents and guest statutes the NY courts developed the interest analytic approach. The first of these cases was Babcock (NY 1963) which took the first step in abandoning the vested rights regime. Babcock held that “*j+ustice, fairness, and ‘the best practical result” may be achieved by giving controlling effect to the law of the jurisdiction which, because of its 20 - - - relationship or contact with the occurrence or the parties has the greatest concern.” Thus, it held that although a car accident occurred in Ontario, all the meaningful contacts (car registration/insurance, domicile, to/from, etc.) were in New York. In Babcock, the court does not simply group contacts, but looks at the policies underlying the competing laws and asks whether such policies are at issue in this particular case. 2. In Dym (NY 1965) the court asked: What is the “seat of the relationship”? o In Dym (NY 1965), both parties are domiciliaries of New York, but the court places great emphasis on the “seat of the relationship.” The court thus held that Colorado had a “superior interest in having its policy or law applied.” Note: Reading this decision together with Babcock, it is clear that neither domicile or the place of the accident is a dispositive factor. But in both cases, the place of the “seat of the relationship” and where the trip starts/ends is consistent with the choice of law made by the court. Also note: Although this case may be considered an outlier, in light of the Tooker decision, that, with the exception of domicile, almost all of the relevant contacts (accident, to/from, seat of relationship) were with Colorado. 3. Macey (NY 1966) created peace: Who cares where you’re going or where you’re coming from. o After Macey (NY 1966) it was clear that where the trip starts/ends was not the dispositive factor as the trip started/ended in Canada, but the court chose to apply NY law. It seems that the “seat of the relationship” is the dispositive factor. 4. Tooker (NY 1969) introduced chaos: the “seat of the relationship” is no longer dispositive, domicile is still relevant. o The court in Tooker NY 1969) applies a full-blown bona fide interest analysis to conclude that Michigan (although the place of the accident, seat of the relationship, and the starting and ending point of the trip) did not have an interest in whether a NY plaintiff is denied recovery against a NY defendant. The court explains that the seat of the relationship, without more, does not speak to the policies underlying the relevant laws. 3.24 INTEREST ANALYTIC ANALYSIS 1. IDENTIFY THE CONFLICT OF LAWS o Be certain to state this explicitly. 2. DETERMINE THE POLICIES UNDERLYING EACH LAW o Consider whether the laws are conduct regulating or loss allocating (many rules will be both).  Conduct Regulating  The law of the place of the injury is given greater weight because:  1) the place of the injury has an interest in regulating primary conduct, specifically in deterring conduct (an admonitory interest) AND  2) it is often better reflective of the reasonable expectations of the parties. o See Schultz v. BSA (1985) where the court held that the interest of New York, the place of the injury, was comparably small because the charitable immunity rule is loss allocating and not conduct regulating. o But See Hurtado v. Superior Ct. (Calif. 1974) where the court holds that Mexico’s limitation on wrongful death damages is not loss allocating.  Loss Allocating  The law of the place of the state of domicile will have more weight because:  1) parties reliance interest or expectations don’t run with physical presence  2) we want parties to feel confident wedding themselves to the menu of legal rules available in a given jurisdiction o See Schultz v. BSA (1985) where the court held that the interest of New York, the place of the injury, was comparably small because the charitable immunity rule is loss allocating and not conduct regulating. o But See Hurtado v. Superior Ct. (Calif. 1974) where the court holds that Mexico’s limitation on wrongful death damages is not loss allocating. 3. DETERMINE THE NATURE OF THE CONFLICT o 1. False Conflict?  Does only one state have an interest? (e.g., where there is common domicile among the parties, Neumeier (NY 1972)) 21  Rule: Apply the law of the only interested state (the law of the parties’ common domicile). Neumeier (NY 1972)) o This is called a false conflict because only one state has an interest in the application of its policy. Neumeier explains that because state policies are designed to run to the benefit of domiciliaries, where there is common domicile, there’s no conflict.  But see Conklin (Wisc. 1968) where despite both the plaintiff and defendant being from Illinois, it held that this accident case posed a “serious true conflict” because accepting the Illinois guest statue defeats the deterrent effect hoped for by Wisconsin law, and accepting Wisconsin law defeats the interest of Illinois in protecting a host and insurer from liability. Here, the court blurs the distinction between loss-allocating and conduct-regulating rules. As an instrument of state policy, it held that it must apply Wisconsin law. o o 2. True Conflict?  What is the domicile of the parties?  See Reich (Calif. 1967) where the court held that domicile is determined at the time the relevant events leading to injury occurred because it would otherwise lead to plaintiffs and companies moving to gain more favorable law.  Do multiple states have an interest? (e.g., where there is split domicile, and both P and D are reliant upon the law of their own state)  Neumeier Rule – Apply the law of the place of the accident (reverts back to First. Rest. Approach).  Brainerd Currie Rule: o 1. Where a “more moderate and restrained” interpretation of state policies avoids the conflict, frame the case instead as a false conflict.  For example, apply the comparative impairment test. Determine if one state’s interest would be more significantly impaired if it’s policy was subordinated to the policy of the other state. This is claimed to be different form a weighing process.  See e.g., Harrah’s Club (CA 1976) where the court held that California’s interest in protecting the public would be more significantly impaired than Nevada’s interest in protecting tavern keepers from civil liability. o 2. If there can be no avoidance of the conflict, apply the law of the forum.  See Lilienthal (OR 1964) where the court held that neither the interest of Oregon in protecting its public authority from spendthrifts or the interest of California in having its creditors paid was clearly more important and thus the law of the forum should apply. 3. Unprovided for case?  Is there split domicile where both parties are reaching across the “v.”?  Neumeier Rule – Apply the law of the place of the accident EXCEPT where 1) deviating will advance the relevant substantive policies of some other jurisdiction AND 2) such deviation will not encourage forum shopping.  Brainerd Currie Rule – Apply the law of the forum. o Currie claims that in such cases, the court should not attempt to improvise a solution sacrificing the legitimate interests of its own state . . .  See Hurtado v. Superior Ct. (Calif. 1974) where there is split domicile (D of California, P of Mexico) and both parties are reaching across the “v.” (D wants Mexico’s limits on wrongful death; P wants California’s unlimited recovery for wrongful death). The court applies California law finding that it should apply its own damage measure unless Mexico has some interest in having its damage measure applied. 22 3.25 “BETTER LAW” ANALYSIS [One of Leflar’s Choice-Influencing Considerations p. 205] 1. IDENTIFY THE CONFLICT OF LAWS o Be certain to state this explicitly. 2. SELECT THE “BETTER” RULE OF LAW [Controversial] o 1. Which rule makes the most socio-economic sense for the time when the court speaks?  See Conklin (Wisc. 1968) where the court held that “guest statutes are anachronistic vestiges of the early days . . . and do not reflect present day socio-economic conditions.” o 2. Which rule creates greater transparency? o 3. Which rule will result in greater justice over the long term?  See Conklin (Wisc. 1968) where the concludes that guest statutes result in haens for those who wrongfully cause harm with impunity. o 4. Which rule protects the justified expectations of the parties? o 5. Which law is objectively better?  See Conklin (Wisc. 1968) where the notes it must not be as a matter of parochial preference, but in the honest belief that is better 3.26 LEX FORI ANALYSIS 1. IDENTIFY THE CONFLICT OF LAWS o Be certain to state this explicitly. 2. DOES ANY FOREIGN STATE HAVE AN INTEREST IN THE APPLICATION OF ITS LAW? o Y  Does the interest of the forum mandate that its law be applied?  Y  Apply the law of the forum  N  Apply foreign law. o N  Apply the law of the forum.  See e.g., Sutherland (Mich. 1992) where the court found that there was no rational basis for displacing the presumption of applicable forum law. 3.27 THE SECOND RESTATEMENT ANALYSIS 1. IDENTIFY THE CONFLICT OF LAWS o Be certain to state this explicitly. 2. TORT, CONTRACT, OTHER? o Tort  Perform §145 Tort Contacts Analysis o Contract  Perform § 187 Contracts Analysis o Other  Perform §6 Analysis 3. SECTION 145 TORT CONTACTS ANALYSIS [tort cases] o 1. Consider whether the states have the following contacts:  1. the place where the injury occurred  2. the place where the conduct causing the injury occurred  3. the domicile of the parties  4. the seat of the relationship o 2. Personal Injury Case?  Y  SECTION 146 PERSONAL INJURY ANALYSIS  Apply the law of the place of the injury UNLESS the § 6 analysis suggests otherwise. o See e.g., Bates v. Superior Court where the court decided to apply the law of the place of the injury as its analysis was inconclusive under § 145, and under § 6, the reasonable expectations of the parties would be satisfied by the application of either law.  N  Perform the § 6 analysis on those states with sufficient contacts under § 145.  But See Griggs (Missouri 1972) where the court summarily dismisses of the § 145 analysis and proceeds almost directly to the § 6 analysis. 4. SECTION 187 CONTRACT CASE ANALYSIS o Apply the parties’ chosen state UNLESS:  1. the chosen state has no substantial relationship OR  2. the parties choice is contrary to the policy of the state with a greater interest and such state would be favored under the § 188 analysis.  SECTION 188 CONTRACT CASE ANALYSIS 23 - In light of the following factors, which state has the most significant relationship to the transaction:  1. place of contracting  2. place of negotiation  3. place of performance  Under this factor is important to consider whether the rule at issue is conduct-regulating or loss-allocating. If the rule is loss-allocating, this factor is of much lesser importance. See e.g., Chrysler (Mich. 1994) where even though the contract was to be performed in Illinois, the court found this factor insignificant as the rule at issue determined the validity of an indemnification provision, a loss-allocating rule.  4. location of the subject matter of the contract  5. domicile of the parties 5. SECTION 6 MOST SIGNIFICANT RELATIONSHIP ANALYSIS [choice of law generally] o Consider the following factors to determine the applicable choice of law:  1. needs of the interstate and international systems  2. relevant policies and interests of the forum and other interested states  3. protection of justified expectations  4. basic policies underlying a particular field of law  5. certainty, predictability, and uniformity  6. ease in the determination and application of the law to be applied 4.0 FEDERAL-STATE CHOICE OF LAW 4.1 THE BASELINE RULE: FEDERAL SUPREMACY o THE SUPREMACY CLAUSE [ARTICLE IV § 6] “This Constitution, and the laws of the United States which shall be made in pursuance thereof; and all treaties made, or which shall be made, under the authority of the United States, shall be the supreme law of the land; and the judges in every state shall be bound thereby, anything in the Constitution or laws of any State to the contrary notwithstanding.” 4.11 FEDERAL PREEMPTION ANALYSIS 1. EXPLICIT PREEMPTION? o Does Congress express an intent to preempt explicitly in the statute’s language?  Y  Explicit Preemption  N  Continue 2. IMPLICIT PREEMPTION? o Is there implicit preemption in the statute’s structure and purpose?  1. Does the state law conflict with federal law? [conflict preemption] OR  2. Does the federal law so thoroughly occupy a legislative field as to make reasonable the inference that Congress left no room for States to supplement it? [field preemption]  See e.g. King v. Dupont Co. (1st. Cir. 1993) where the court held that if a plaintiff is able to recover on a state law claim for failure to warn and the manufacturer’s label is in compliance with federal law (FIFRA) which forbids a state from imposing additional labeling requirements, that such a claim effectively conflicts with federal law because although not required by state statute, the damages a manufacturer would incur due to the operation of state common law would motivate just as much as a statutory requirement. o Note: due the comprehensiveness of the federal scheme, King may be reasonably construed as a field preemption case as well. 24 4.2 CHOICE OF LAW FOR A FEDERAL COURT IN DIVERSITY 4.21 THE BACKGROUND OF ERIE § 34 Judiciary Act 1989 (Rules of Decision Act) o “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.” THE SWIFT RULE o If the state where the federal court sits has no statute on point, a federal court sitting in diversity may apply its own law (i.e., federal common law). Swift (US 1842) (holding that in the “ordinary use of language” the term "law" does not include the decisions of courts, and is usually understood to mean the rules promulgated by legislative authority). o Exceptions  1. State court interpretations of state statutes  2. Issues having permanent locality, "intra-territorial in their nature" (e.g., the rights and titles to real estate). o The court believes this is the correct interpretation because it is caught up in natural law thinking. If law is “out there” and each judge is trying to discover “the true law,” then each judicial opinion is just evidence or a reflection of that “general law.” Black &White Taxi v. Brown &Yellow Taxi (US 1928) (Holmes, J. dissenting) o “*T+here is no "transcendental body of law outside of any particular State". THE ERIE RULE o “Except in *federal question cases] the law to be applied in any case is the law of the state. . . . whether the law [is] declared by its legislature . . . or by its highest court . . . . There is no federal general common law.”  See Erie(US 1938) where the court rejects the Swift rule finding numerous defects in the rule:  1) It has not brought the uniformity that the Court thought it would (the idea is that if there is a common law “out there” then eventually courts would move toward that “true law”)  2) Scholarship showed that Congress inteded Section 34 of the Judiciary Act was to apply to both unwritten and written law  3) Vertical forum shopping: a plaintiff could choose federal law when the state law was not beneficial to them  4) Discrimination: if an out-of-state plaintiff sues he can choose federal law, but if an instater brings the exact same suit he cannot  5) Change in legal thinking to a realist/consequentialist view  Some Erie implications:  1) Separation of powers. If federal judges “make law;” does this not infringe on Congress’ territory?  2) Federalism. If judges “make law;” where in the Constitution does it permit a federal government of limited enumerated powers to “make law” regarding things like tort, contracts which have always been in the sole province of the States?  3) A new meaning of “law.” Implicates a different reading of the term “law” in the Rule of Decision Act. If judges are “make law” then a fair reading of “law” in the Rules of Decision Act includes state court opinions. 4.22 ERIE ANALYSIS 1. IS THIS A FEDERAL COURT SITTING IN DIVERSITY? o Y  Continue o N  No need to perform Erie analysis 2. FEDERAL RULE PROMULGATED PURSUANT TO THE RULES ENABLING ACT BEING IMPLICATED? (e.g., FRCP) o Y  Perform the Hanna analysis  Even in diversity cases, federal rules such as the federal rules of civil procedure or the federal rules of evidence may be implicated. o N  Continue 3. STATE CHOICE OF LAW RULE? 25 o o Y  Transfer Case?  Y  Apply choice of law rule of the state from which the case was transferred.  See Van Dusen (1964) which holds that transfer of venue in the federal system does not trigger a change in the applicable choice of law rules. If a party could secure a change in law along with a transfer of venue, it would lead to forum shopping . . .  N  Apply choice of law rule of state in which the federal court sits.  See Klaxon (US 1941) N  Perform the Unguided Erie choice analysis 4.222 UNGUIDED ERIE CHOICE ANALYSIS 1. IS THE STATE LAW BOUND UP WITH THE STATE-CREATED RIGHTS AND OBLIGATIONS? [Byrd (US 1958)] o Y  Apply state law o N  Continue  Consider the policy underlying the rule.  If it is mere custom or merely a form and mode of enforcement it is not likely to be considered “bound up” with state-created rights and obligations. o See e.g., Byrd (US 1958) where the court held that a state law which provided that the factual issue of immunity shall be decided by judges rather than a jury, was “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 greater the fundamentality of the rule, the more likely it is to be considered “bound up” with state-created rights and obligations. Evidence of fundamentality may come from where the rule is located in a state code. 2. IS THE RULE OUTCOME DETERMINATIVE? [Guaranty Trust Co. (US 1945)] [operates as a proxy for the twin aims of the Erie rule] o Y  Balance the interests in application of the state law against the federal interest in the integrity and “smooth functioning” of the federal judicial system. Ask the following questions: [1] What is the federal policy? [2] How much will the federal policy be offended?  Are the federal interests greater than the state interests? OR Does the state law alter the essential character or function of the federal court?  Y  Apply federal law  N  Apply state law o N  Apply federal law  See Guaranty Trust Co. (US 1945) where the court holds that the proper inquiry is whether application of state law will “significantly affect the result of a litigation for a federal court to disregard a law of a State that would be controlling in an action upon the same claim by the same parties in a state court.”  See also Hanna (US 1965) (“The ‘outcome-determination’ test . . . cannot be read without reference to the twin aims of the Erie rule: [1] discouragement of forum-shopping and [2] avoidance of inequitable administration of laws. 4.221 HANNA ANALYSIS 1. READ THE FEDERAL RULE NARROWLY TO DETERMINE IF THERE IS TRULY A CONFLICT BETWEEN THE STATE AND FEDERAL RULE. o Unavoidable Clash?  Y  Continue  N  Analysis Complete  See Hanna (US 1965) where the court notes that in some cases, where the federal statute has been read more narrowly the conflict disappears and then, federal law being no longer applicable, Erie commands the application of federal law. 2. CAN THE RULE BE RATIONALLY CLASSIFIED AS PROCEDURAL? o Y  Apply federal law  See e.g., Hanna (US 1965) where the court relies upon reasoning from the Sibach line of cases (substance procedure distinctions in REA cases (i.e., non-Erie cases)) and holds that the court can only refuse to apply the federal rule if “the Advisory Committee, this Court, and Congress erred in their prima facie judgment that the Rule in question transgresses neither the terms of the Enabling Act nor constitutional restrictions.” 26 o N  Apply state law 5.0 RECOGNITION OF JUDGMENTS 5.1 FULL FAITH AND CREDIT AMONG THE STATES – CONSTITUTIONAL BASELINE RULE A court must give full (not partial) faith and credit to judgments rendered by courts in another state. FULL FAITH AND CREDIT CLAUSE [ARTICLE IV § 1] Full Faith and Credit shall be given in each State to the public Acts, Records, and judicial Proceedings of every other State. And the Congress may be general Laws prescribe the Manner in which such Acts, Records and Proceedings shall be proved, and the Effect thereof. 5.11 STATE COURT FULL FAITH AND CREDIT EXCEPTION ANALYSIS 1. PENAL JUDGMENT? o Baseline Rule:  States will not recognize (and execute) each other’s penal judgments o Exception:  States must recognize each other’s tax judgments 2. JURISDICTIONAL DEFECT? [Personal or Subject Matter] o 1. Did the litigant default in F-1?  Y  Jurisdiction may be collaterally attacked in F-2.  N  Continue o 2. Was the question of jurisdiction litigated in F-1?  Y  Jurisdiction CANNOT be collaterally attacked in F-2.  See Baldwin (US 1931) where the defendant appeared specially in F-1 to challenge jurisdiction and lost. The Court held that the question of personal jurisdiction shall not be litigated twice. *Seinfeld: “Legal error is legal error – you only get one bite at the apple.”+  See Durfee (US 1961) where the litigant “explicitly contested the court’s jurisdiction over the subject matter” in F-1 and the Court held that F-2 was precluded from relitigating the question of jurisdiction on the merits. *Seinfeld: “Legal error is legal error – you only get one bite at the apple.”+  N  Jurisdiction may be collaterally attacked in F-2 UNLESS there is implicit adjudication of the jurisdictional question in F-1. For instance, if personal jurisdiction is waivable in F-1, defendant’s failure to challenge personal jurisdiction in F-1 coupled with the court’s final judgment in F-1 may operate as an implicit adjudication of personal jurisdiction. 3. FRAUD? o 1. FRAUD ON THE COURT?  Y  Continue  N  Judgment of F-1 will not be set aside.  In the FFAC context, the concern is not with fraud as the substance of the suit in F1. The concern is only whether fraud tainted the litigation in F-1. o 2. EXTRINSIC FRAUD?  Y  Always sufficient. The judgment of F-1 may be set aside.  If the fraud actually prevents an adversarial trial it is considered extrinsic. Examples include: [1] keeping the opposing party away from the court; [2] an attorney intentionally losing his client’s case; [3] a plaintiff that keeps a defendant ignorant of a lawsuit, etc. o It’s helpful to consider whether the fraud could have been litigated/exposed via the litigation. If so the fraud is probably not extrinsic.  N  Continue o 3. INTRINSIC FRAUD  Y  Whether the judgment will be set aside depends on the jurisdiction.  Insufficient 27 - - See e.g., Schwartz (MD 1974) where the court held that a litigants perjury and suppression of material evidence was intrinsic fraud and is insufficient to disturb the judgment in F-1.  The court here is concerned about “endless litigation.”  Sufficient o See e.g. Shammas (NJ 1952) where the court held that “perjurious testimony alone and not accompanied or concealed by other and collateral acts of fraud may be a ground for relief as a fraud upon the court in a proper case.”  The court here addresses the “endless litigation” concern by arguing that the plaintiff’s required showing of [1] “clear and convincing evidence” of [2] material and [3] intentional fraud that [4] could not have been reasonably discovered in F-1 should alleviate such concerns.  N  If there’s fraud on the court, it must be either intrinsic or extrinsic 4. VIOLATES PUBLIC POLICY? o Public policy exception reflected in a state statute?  Y  More likely to be a sufficient basis for disturbing the judgment in F-1.  See e.g., Gabler (MI 1995) where although a Nevada court entered judgment against defendant for a gambling debt, the Michigan court invoked its public policy exception statute and refused to enforce the judgment as contrary to the public policy of Michigan. It is, however, not clear from the decision that the statute is necessary to its holding.  N  Less likely to be a sufficient basis for disturbing the judgment in F-1.  See Faunterloy (1908) an example of the “Iron Law of FFAC.” In Faunterloy, although a Missouri judge misinterpreted Mississippi law and entered judgment against defendant for breach of futures contract considered illegal under Mississippi law. The Court held that this was legal error and not subject to collateral attack. *Seinfeld: “Legal error is legal error – you only get one bite at the apple.”+ The Court’s reasoning, however, suggests that the Court the presence of a statute is not determinative. 5. MULTIPLE CONFLICTING JUDGMENTS? o Which court was the last to render judgment?  The judgment of the court which was last to render judgment is entitled to FFAC. This is known as the “last in time” rule.  See e.g., Treinies (US 1939) where two parties (A and B) sought to recover the proceeds from a will in separate courts. F-1 entered judgment for A before F-2 entered judgment for B. The Court held that F-3 must enforce the judgment of F-2 because it was well aware that the F-1 judgment was out there and still decided to enter judgment for B. The Court held that “legal error,” even relating to a question of FFAC is not a sufficient basis for collateral attack. 5.2 FULL FAITH AND CREDIT IN THE FEDERAL COURTS - STATUTORY o PRELIMINARY POINTS 1. The FFAC clause of the constitution places restrictions on states, it does no speak to the federal court obligations. 2. The FFAC statute provides that federal courts must respect the judgments of state courts. 3. There is no text, statutory or constitutional, that requires state courts to respect the judgments of federal courts, but no one contends that this is not the case. 28 USC §1738—THE FULL FAITH AND CREDIT STATUTE “*The Acts, records and judicial proceedings of any State or State court+ shall have the same full faith and credit in every court within the United States and its Territories and Possessions as they have by law or usage in the courts of such State, Territory or Possession from which they are taken.” 28 5.21 FEDERAL COURT FULL FAITH AND CREDIT ANALYSIS BASELINE RULE o Federal courts must respect the judgments of state courts even if made in “legal error.”  See e.g., Parsons (US 1986) where the plaintiff sued a bank simultaneously in both federal court (F-1) and state court (F-2). The federal action was decided first and the bank won. The Bank went to F-2 claiming that the judgment in F-1 should be given preclusive effect, but F-2 rejected it and entered judgment for the plaintiff. Then the bank goes to F-3 (same federal court) and seeks relief from judgment in F-2. The Court held that F-3 could not give preclusive effect to the judgment in F-1. F-2’s judgment was “legal error” and as such is not subject to collateral attack. This is another example of the “last in time” rule. EXCEPTIONS TO THE BASELINE RULE? o 1. Collateral Attack of Federal Court’s Subject Matter Jurisdiction?  Rule – A federal court’s finding of federal subject matter jurisdiction cannot be collaterally attacked even if a defendant defaults.  See e.g., Dowell (US 1894) where a state court (F-2) refused to give preclusive effect to a judgment in federal court (F-1) because it claimed the court lacked subject matter jurisdiction over the suit. The Court held even if F-1 was wrong its judgment of jurisdiction (legal error), the fact that the federal court heard the case at all is an implicit holding that it’s subject matter jurisdiction is proper and, thus, is not subject to collateral attack. This case strongly suggests that the subject matter jurisdiction of federal courts is never subject to collateral attack. o 2. Exclusive Federal Jurisdiction?  Rule – A federal court that must decide the preclusive effect of state court judgments on matters within the exclusive jurisdiction of the federal courts must perform the following analysis:  1. Does the law of the rendering state give preclusive effect to such claims in state courts? o Y  Continue o N  The federal law claim is not precluded  The answer to this question will almost always be no.  2. The court must decide whether, as an exception to § 1738, it should refuse to give preclusive effect to the state court judgment. o See Marrese (US 1984). 29