SUBJECT MATTER JURISDICTION
- Power of a court to hear a certain kind of case. Particularly the power of the
- Two types of s.m.j.:
o General s.m.j. broadly defined means that almost any sort of case can be
heard by that particular trial court.
o Limited s.m.j. means only particular generic classes of cases can be heard
by that particular trial level court.
For example, Traffic Court has limited s.m.j. – doesn‟t hear murder
cases, patent cases, etc.
Federal courts have limited s.m.j. over
Federal question jurisdiction.
Diversity jurisdiction. Under 28 USC §1332(a):
o Amount in controversy >$75K.
o Citizens of different states.
- Type of law.
o State law
Mostly private law.
State SC is the ultimate arbiter of state law issues.
o Federal law.
Comes from Constitution by statute (federal common law).
- US SC is the ultimate arbiter on federal law questions through exercise of
- In order for a federal court to take jurisdiction over a particular case, two things
must always be met:
o Sufficient grant of Constitutional authority for the exercise of that
jurisdiction (under Art. III)
o There also has to be statutory grounding for federal jurisdiction.
- Article III
o Section 1 sets up US SC, leaves the rest up to Congress. “During good
behavior” gives federal judges a degree of independence b/c, unlike state
judges, the federal judges serve for life and don‟t have to pander for votes.
o Section 2 extends judicial power of federal courts to nine categories such
as “between citizens of different states,” cases where US is a party, cases
btw two state, and those affecting Ambassadors. (see p.260 for Art. III)
- Under 28 USC §1332(a), need to have:
o Amount in controversy >$75K.
This amt. in controversy can change at any time b/c Congress has
the power to dictate the limitations.
o Citizens of different states.
- Strategic views on diversity jurisdiction:
o It‟s good.
Eliminates prejudices against out of state litigants that otherwise
would exist in favor of in-state parties.
State court judges are elected.
Elected incentive not to disappoint local litigants.
Parties have a preference for using FRCP.
FRCP = thoughtful and comprehensive.
May not be available historically in every state.
Federal courts less congested.
Historical: Outgrowth of post-colonial America where lenders
wouldn‟t extend credit to parts of the country that didn‟t have a
federal forum. Diversity jurisdiction gave lenders the opportunity
to sue in federal courts, where things would be uniform.
o It‟s bad.
This is a modern, mobile society, and it‟s silly to think there are
meaningful geographic biases.
Diversity jurisdiction is wasteful and ends up clogging up the
Inappropriate for federal courts to encroach on state law.
Erie doctrine – substantive state law doctrines in cases at
federal courts, federal courts required to apply the state
No expertise that federal court will offer beyond what a
state court would offer.
- Two areas considered to be those “in equity” in which federal courts won‟t act
even if diversity is present:
o probate matters
o domestic relations
- THREE QUESTIONS:
o What does it mean to satisfy that there are citizens of different states?
o How do we assess citizenship for diversity purposes?
o How do courts assess allegations by parties concerning the amount in
- QUESTION ONE: What does it mean to satisfy that there are citizens of different
o There needs to be complete diversity btw parties. “No diversity
jurisdiction if any π is a citizen of the same state as any ∆, no matter how
many parties are involved in the litigation.” Strawbridge v. Curtiss CFMS
o Proceedings must allege all parties to have diversity. Parties can‟t create
diversity jurisdiction through consent/waiver. Capron v. Van Noorden, US
SC p.21 where US SC destroys judgment for ∆ as if case hadn‟t occurred
at all; π didn‟t allege π to be an alien/out of state.
o Constitutional Issue:
Strawbridge NOT mandated by the Constitution.
Interpleader statute USC §1335:
Enacted by Congress under authority of Art. III §2.
So long as there are two or more adverse claimants of
diverse citizenship, then that interpleader suit can proceed
in federal courts.
US SC has yet to rule if minimal diversity such that §1335
provides for is allowed by Art III. §2.
- QUESTION TWO: How to assess citizenship?
o Citizenship of persons
Citizenship at time of filing suit.
To be a citizen:
Citizen of the US.
Need to be a domiciliary of a particular state.
o Domicile is NOT residence.
o Domicile is:
“true, fixed, and permanent home and
intention of returning to this domicile
o Can change domicile:
take up residence in a different domicile
intend to remain there
Mas v. Perry p.265 where wife‟s being domiciliary of Mississippi
is not disturbed by her attending college in Louisiana b/c
She didn‟t have intention of returning to Louisiana.
Even though she was unsure of intent to go back to MS,
until you make up your mind, then domicile is where home
WAS until you decide otherwise.
o Citizenship of corporations
Can be a citizen of more than one state.
A corporation is a citizen of: White v. Halstead Industries, Inc.
State in which it is incorporated.
o Businesses decide which state in which to
incorporate usually for tax purposes.
o Many are incorporated in Delaware.
State in which it has its principal place of business.
o “nerve center” test = where the center of corporate
decision making takes place
o “muscle/operating assets” test = location of
corporation‟s actual place of operation
easier when corporations actually produce
where they had forklifts, factories, etc.
o “total activity” test = both tests put together
Strategy point: Reason why citizenship isn‟t just place of
incorporation is b/c it has little to do w/the realities of where a
corporation actually does things. Otherwise, we could have huge
national corporations being sued only in state courts.
o What doesn’t have citizenship?
unincorporated association = not a citizen for purposes of federal
jurisdiction but instead consider the citizenship of each of its
limited partnership = not a citizen of the state under whose laws
it was created but citizenship determined by the citizenship of each
of its partners
o Sometimes, parties try to create diversity to get their suit heard in a
federal court. Congress has answered this problem w/28 USC §1359,
which says district court has no jurisdiction if the diversity was
“improperly or collusively made…to invoke the jurisdiction of such
court.” Kramer v. Caribbean Mills, Inc. p.269 where π reassigned recovery
to a foreign company in attempt to create diversity of citizenship.
o 28 USC §1332(c) = prevents appointment of administrators to create
(or destroy) diversity.
legal representatives of decedents = citizens of state of decedent
legal representatives of infants/incompetents = citizens only of the
state of the infant/incompetent.
o Sometimes, parties try to destroy diversity.
Distinction made btw real party and formal or nominal party
where we can disregard the formal/nominal party for purposes of
finding diversity of citizenship. Rose v. Giamatti p.270
Real party = Party who has the duty sought to be
Formal/nominal party = In legal sense, no interest in the
result of the suit.
Name fictitious defendants.
π try to name as ∆ “Does 1 through 10” (as in John/Jane
Doe). Abels v. State Farm Fire & Cas. Co. p.270.
28 USC §1441(a) = “The citizenship of ∆s sued under
fictitious names shall be disregarded.”
- QUESTION THREE: How to assess allegations and amount in controversy?
o The sum claimed by π controls as long as it‟s made in good faith. It must
be a legal certainty that it is less than that claimed in order for the actual
damages NOT to be as much as the actual damages claimed. A.F.A.
Tours, Inc. v. Whitchurch p.271 where appellate court reverses dismissal
of complaint in a case where tour operator profits are hard to determine
and the amount in controversy claimed is actually possible considering
many different nuances of the industry.
o Multiple claims/Multiple parties
General rule – each π‟s total claim must exceed amt. in controversy
requirement for each ∆.
Aggregating: Zahn v. International Paper Co. p.275
Each π can aggregate multiple claims against same ∆.
CANNOT aggregate counterclaims.
If two πs sue jointly, seeking $80K in damages, this is okay b/c
same underlying nucleus.
o To determine amount in controversy for cases seeking injunctive relief,
use the value to the π to determine the jurisdictional amount. McCarty v.
Amoco Pipeline Co. p.276.
o If damages end up being <$75K, then the district court can deny costs (of
going to court) to π and actually can impose such costs upon the π. Sort of
like a penalty for being such a crappy estimator of how much the amount
in controversy really was for π.
FEDERAL QUESTION JURISDICTION
- Marbury v. Madison said that there needs to be a Constitutional basis for every
- 28 USC §1331 – “The district courts shall have original jurisdiction of all civil
actions arising under the Constitution, laws, or treaties of the United States.”
o original jurisdiction = district courts are the place where these question
have to be raised in the first instance
o arising under = most interpretation comes up here
- Constitutional basis for §1331 is US Const. Art III §2 – “The judicial power shall
extend to all cases, in law and equity, arising under this Constitution, the laws of
the US, and treaties made, or which shall be made, under their authority.”
- Marshall states that if there is some “federal ingredient” then Article III is
satisfied. Osborn v. Bank of the US p.278 in dicta that later became law.
o For purposes of Art. III §2, the “arising under” language is interpreted
o The “Osborn” ingredient test says that jurisdiction exists when it‟s an
ingredient to the resolution of the suit.
- Need a well pleaded complaint to show the federal question. Cannot depend on
possible defenses the other party might raise in order to show that there‟s a federal
question. Louisville & Nashville R. Co. v. Mottley p.280
- Even though Osborn‟s “federal ingredient” is enough for Art. III purposes, it‟s not
enough under §1331.
o A suit “arises under” a law if that is its cause of action.
o Grey area? Then it goes to the state courts absent congressional speaking
to the contrary.
- Typically NO amt. in controversy at play in federal question jurisdiction.
JOINDER OF CLAIMS AND PARTIES
- Trend that permits and actually encourages larger suits w/ multiple claims and
o Idea is increased efficiency.
o Idea is that we can avoid multiple start-up costs associated w/piecemeal
o Avoid determining issues several times.
- Joinder of claims:
o Reversing joinder: Under FRCP 42(b), trial courts can sever other
properly joined suits into separate trials for reasons of fairness and
o Compulsory counterclaim (FRCP 13a) – Any claim that the recipient of
the complaint (usually ∆) has against the π.
arises out of the same transaction that is the subject matter
of π‟s complaint
doesn‟t require inclusion of third parties that the
jurisdiction does not have authority over
Penalty = waiver
Not compulsory if at the time the action was commenced the claim
was brought somewhere else.
o Permissive counterclaim (FRCP 13b) – Similar to FRCP 13a, but
situation NOT related to the original suit.
No penalty for not bringing this counterclaim.
o Crossclaim against co-party (FRCP 13g)
Co-party is a party who is on the same side of the “v.” that you‟re
Arises under same transaction.
Ex: ∆1 sues ∆2. A cross claim under FRCP 13g comes when
there‟s a “v” in the case already. It comes btw the defendants, ∆1
suing/being sued by ∆2. So π v. ∆1, ∆2 π v. ∆1, ∆2 AND ∆1 v.
o Joinder claims (FRCP 18)
Anyone who has asserted a claim against a party can join as many
claims as he or she has against that party, even if they‟re unrelated
It‟s not just enough to have a hook under FRCP to properly put any
and all claims into the case.
Must have Const. basis.
BUT, once you do have that claim, you‟re able to join
unrelated claims. (Different from FRCP 13b b/c 13b
addresses counterclaims, not claims that original π brings
- Joinder of parties
o Mandatory joinder (FRCP 19)
These parties “shall be joined.” If not feasible, then court uses
“indispensability” test in FRCP 19b.
Ask three questions:
Availability (19a) – Is the party available?
Necessity (19a) – Is the interest related to the subject matter
such that it cannot be resolved w/o this party?
Indispensability (19b) – The party is indispensable if
without the individual, the party itself will be dismissed.
If Availability and Necessity are satisfied, then party will be
joined. If only Indispensability and not Availability, then the court
cannot go on adjudicating.
o Permissive joinder (Rule 20)
Rule 20a – π can join together or join multiple ∆
common question of law or fact
claims arise out of same transaction
Reversing joinder. Rule 20b – Court can separate them into
separate trials to prevent prejudice or delay.
o Interpleader (Rule 22) – Avoids double or multiple liability.
Okay if claim doesn‟t have common origin.
Okay if the claims aren‟t identical but are adverse to and
independent of one another.
o Class Actions (Rule 23)
Used when joinder is impossible.
Must be common issue of law.
o Intervening Parties (Rule 24)
Intervention of rights
Statute says so or practical matters dictate.
Discretionary intervention – Court has discretion:
Statute says so conditionally or
There is a common question of law or fact
- One way to join BOTH claim and party
o Impleading a Third Party (Rule 14)
o This is both a new party and a new claim.
o “Arising out of the same transaction or occurrence” test.
o Both π and ∆ can implead.
∆ brings a new party.
In the event of a counterclaim, π can implead.
o Combined w/Rule 18 – once one claim passes the “arising out of” test you
can add others.
- Interpleader, revisited.
o A technique where a party is faced w/multiple claimants to a thing or fund.
o Various potential claimants resolve w/in themselves who really owns the
thing so that the claimants get their appropriate share.
Stakeholder = who holds/owns the thing or fund.
o Strategic GOOD things:
Avoid multiple related suits cost effective and time efficient
Avoid conflicting judgments concerning a property at issue.
Interesting twist: When properly invoked, it forces all the
claimants t litigate in the interpleader forum.
o Two types of interpleader:
Rule Interpleader (FRCP 22) – A stakeholder can invoke
inerpleader when there are competing claims and the stakeholder
there described as the π is or may be exposed to the multiple
$75K or more in value.
It‟s not a ground for objection that the source of claim
doesn‟t have common origin/aren‟t identical.
Statutory Interpleader (28 USC §1335) – Broader scope.
$500 or more in value.
If there are two or more adverse claimants of diverse
o Rule interpleader requires complete diversity btw
stakeholder and putative πs.
o Statutory requires only minimal diversity.
The monetary minimum.
Rule interpleader‟s service of process limited to the state in
which the district court sits (accord. to FRCP 4) unless state
law provides for out of state service.
o It‟s constitutional for statutory interpleader to require only minimal
diversity. Strawbridge teaches us that minimal diversity IS sufficient. Idea
that under Art. III, Congress has adopted complete, but that‟s not enough
to REQUIRE complete. State Farm Fire & Cas. Co. v. Tashire p.671
where US SC rejects idea that interpleader is an all purpose “bill of peace”
through which to “solve all the vexing problems of multiparty litigation
arising out of a mass tort.”
FEDERAL SUPPLEMENTAL JURISDICTION 28 USC §1367
- When courts can use joinder rules even though they don‟t have jurisdiction for all
- Broad point: We‟ve got a broad notion of supplemental jurisdiction that‟s
consistent w/FRCP to the extent of trying whole cases in one action/trial.
- BEFORE supplemental jurisdiction was available, people who wanted to bring
both a federal. Q and state law suit either had to
o bring the two suits separately in separate courts
o bring them both in state court
state courts have concurrent jurisdiction over federal claims unless
Congress makes federal jurisdiction exclusive
This would run against the primary purpose of federal courts,
which is to expound and develop federal law.
- Two types
o Pendent jurisdiction – (The claim!) π appends a claim that doesn‟t have a
basis for federal subject matter jurisdiction (e.g. a state law claim) into a
claim that DOES have a basis for federal subject matter jurisdiction (as
long as the claim arises from the same event).
o Ancillary jurisdiction – (The party!) Jurisdiction allowing federal courts
the power to hear claims brought by parties other than the original π
related to the original π‟s original claim.
o Cases leading up to §1367:
Even though there‟s no independent basis for s.m.j. over the non-
federal s.m.j. claim, US SC says that Article III grants jurisdiction
over entire cases and not just particular claims or issues in a case.
United Mine Workers of America v. Gibbs p.298.
Two step test in Gibbs:
Court has power to hear related claim if the related claim
arises out of the same “common nucleus of operative
facts.” (So long as first claim was proper under federal law,
diversity, or some other federal ground.
Discretionary: Once we‟ve determined court has power,
then ask the question whether it makes sense to exercise
Gibbs test refined in Finley v. United States p.306
Constitutional power under Art III §2 to hear the claims.
Is there a statutory grant of jurisdiction?
Distinction btw party and claim. US SC refuses to apply pendent
jurisdiction to an add‟l PARTY w/respect to whom no independent
basis of federal jurisdiction existed. Makes a distinction btw
adding a new party as opposed to a new claim. Aldinger v. Howard
§1332‟s complete diversity requirement still applies. Owen
Equipment & Erection Co. v. Kroger p.305 where it‟s later
discovered that impleaded ∆ corporation Owen is actually a citizen
of the same state as π.
- 28 USC §1367 – Statutory basis for supplemental jurisdiction in federal courts.
o There is presumptively supplemental jurisdiction whenever Art. III allows
Exception: You can‟t defeat complete diversity.
o 1367a – π brings a proper federal claim or diversity claim, then the federal
court may hear all claims that are part of the same “case or controversy
under Art. III.”
Interpreted to mean the Gibbs test i.e. “common nucleus of
o 1367b – Supplemental jurisdiction doesn‟t extend to πs in these certain
Rule 14 (made party by impleader when brought by π)
Rule 19 (necessary party joinder)
Rule 20 (permissive party joinder)
Rule 24 (intervention)
o §1367 essentially was the answer to Aldinger, Kroger, and Finley, wherein
the US SC emphasized that it was no enough for the court to have const.
power; the court must also have statutory power.
o The three-part test under §1367 is then:
Is there a Const. power to hear the supplemental claim? (This
cannot be changed by statute – it‟s in the Const.)
Substantial federal question.
Common nucleus of operative fact.
Is there a statutory grant of jurisdiction over the claim?
Such a grant is provided in most cases by §1367 itself.
§1367a grants jurisdiction over all related claims that are
part of the same “case.”
o Make sure the Gibbs const. test is met.
o Keep in mind that §1367b has some exceptions in
Discretionary: Even if 1 and 2 are met, the court must decide
whether or not to hear the case.
From second part of Gibbs test.
Factors to consider:
o Has/will the federal claim likely be dismissed?
o Are the claims tightly connected?
o Will there be jury confusion?
o Is this really a state law claim dressed up like a
federal statutory wolf in sheep‟s clothing?
- Removal allows the ∆, after the π has chosen a state court, to second-guess that
choice by removing some types of cases from state court to federal court.
o ∆ as well as π should have the option to choose federal court for cases
w/in federal jurisdiction.
o removal should be available only in cases that the π could have
commenced in federal court (true, but there are still further restrictions)
- 28 USC §1441
o 1441a – Unless Congress says otherwise, any civil suit brought in state
court that could have been brought by π in federal court can be removed to
federal court by ∆ or ∆s.
Only ∆ can remove.
ALL ∆s must agree to remove.
o 1441b – If federal Q case as framed by π, ∆ or ∆s can remove regardless
of diversity of parties.
But in diversity cases, if one of the ∆s was a resident of the state in
which the suit was brought, you can‟t remove.
Also, always remember the amt. in controversy requirement!
o 1441c – Discretion – Federal court can pick, choose, and remand based on
when it thinks state law is at the forefront.
- Removal is only available to the ∆. π picked this forum in the first place and π is
then stuck w/that forum. Shamrock Oil & Gas Corp. v. Sheets p.321 where ∆ files
a counterclaim that π doesn‟t want to litigate in federal court.
PERSONAL JURISDICTION & VENUE
- PJ = geographical limitation on the places where a π may choose to sue a ∆ for a
- PJ is a right/defense. It‟s waive-able. Contrast this w/smj, which is never waive-
- PJ deals with the relationship btw ∆ and state where suit is brought.
- Historical case Pennoyer v. Neff p.62 states
o two main principles about whether state can assert jurisdiction over
Each state has exclusive jurisdiction over persons and property
w/in its own borders.
By negative implication subject to a few caveats, NO state can
exercise any jurisdiction or authority over persons or property
located outside of its territory.
o Why? B/c states are of equal dignity and authority, so no state can try to
assert direct authority over any state and its people.
o Full faith and credit clause: This is a BIG DEAL b/c under full faith and
credit clause, every state must defer to and enforce the decisions of other
courts. That‟s why it‟s important to get this jurisdiction question RIGHT!
o Pennoyer based on robust view of state sovereignty. This may be a bit
outdated, though, considering modern realities of the world in which we
live. Other influential factors:
Fairness to ∆ and π.
rise of automobiles
rise of airplanes
corporations that have activities that span the nation and
affect the lives of individuals across the continent
MODERN PERSONAL JURISDICTION
- Three types of PJ:
o In personam – Authority based on person‟s presence w/in the state‟s
territory or citizenship there.
authority – over person in territory
notice – formal personal service required
o In rem – Authority over the property w/in that state, no matter who owns
authority – over property in territory
notice – attach and publish
o Quasi-in-rem – Jurisdiction over someone‟s property as a way of forcing
judgment over the ∆. Get jurisdiction over the property & satisfy the
judgment up to the value of the property.
authority – over property in territory
notice – attach and publish
- Nonresident use of highways – Hess v. Pawloski p.71 where statute is okay that
subjects nonresident motorist to local forum.
- Minimum Contacts: Changing nature of economic institution from agrarian to
incorporated model addressed in International Shoe Co. v. Washington p.75.
o In Int‟l Shoe, US SC discards Pennoyer framework.
o Test changed from Pennoyer‟s “Is the ∆ there in the state?” to “Is it fair
for this particular suit to move forward against this particular party in this
particular state?” New two-part test:
Minimum contacts w/the state that it would not offend “traditional
notions of fair play and substantial justice.”
fairness to ∆
forum state interest
where witnesses and evidence are
Nature and quality of the contacts w/that state.
fairness to ∆
compelling state interest
nexus test: level of related activity at time of action
o Rationale behind minimum contacts idea:
A corporation that chooses to conduct activities w/in a particular
state accepts a duty to answer for its in-state activities in the local
∆ chooses to take advantage of the “benefits and protections of the
laws” of that state.
o Specific v. general jurisdiction under Int‟l Shoe.
“casual” or “isolated” contacts
Specific in personam jurisdiction where ∆ is subject to jurisdiction
for claims arising out of those minimum contacts
single act (their quality and nature)
continuous but limited activity (Burger King)
General in personam jurisdiction where ∆ can be sued in the state
for any claim, even one completely unrelated to its in-state
substantial and continuous contacts
“so substantial and continuous that ∆ would expect to be
subject tot suit there on any claim and would suffer no
inconvenience from defending there.” (Helicopteros,
- To get PJ, first need
o valid Const. basis
o statutory basis
At state level, those statutes are “longarm statutes”
comprehensive, enumerated longarm statute – list of factors
that the state says will be a sufficient basis for its state
courts to assert jurisdiction over a ∆
comprehensive, unenumerated longarm statute (broader) –
statutes that say they‟ll allow their state boards to assert PJ
whenever and wherever. Doing so is permissible under 14 th
Amend. due process. Lots of litigation that turns into due
process analysis under this statute.
o Cause of action must arise out of or relate to ∆‟s contacts w/the forum
o Minimum contacts
purposeful availment (Hanson v. Denckla p.93) by ∆ concerning
putative forum state.
Hanson: Contact btw ∆ and forum state has to be brought
about by the ∆ and not by a third party (like the deceased
woman in this case).
Rationale: Individual ∆ given ability/autonomy to structure
its own primary conduct in the world.
Mere placement in the stream of commerce is NOT enough.
(World-Wide Volkswagen p.97)
o Discretionary: Policy/Reasonableness
burden on ∆
forum state‟s interest in adjudicating the dispute
π‟s interest in obtaining effective relief
evidenciary issues (such as McGee, where the suicide makes it so
that maybe it‟s easier to obtain accurate evidence in the state of the
- McGee v. Int‟l Life Insurance Company (p.91) – High watermark to assertion of
PJ by a state. Insurance policy that moves from AZ to TX company by virtue of
corporate merger and transition. Could the CA courts validly assert personal
jurisdiction over the TX insurance company?
- World-Wide Volkswagen v. Woodson p.97 – Mere placement in stream of
commerce is not enough. Rejects foreseeability of car‟s being there – even though
it‟s foreseeable that the Audi would be driven in OK, ∆ had no way of foreseeing
getting haled into court there. Important foreseeability is whether or not it‟s
foreseeable ∆ will be haled to court there. No purposeful availment. (There might
be purposeful availment if, say, WWV were to advertise there or something like
- Burger King v. Rudzewicz p.111 – Global long arm statute (unenumerated).
o Contract itself isn‟t enough. (“Contract plus test” of contract plus other
things that shows purposeful availment.)
o ∆ knew that BK was a FL corporation, sought them out, purposely availed
himself of the business of contracting there.
- Asahi Metal Industry Co. v. Superior Court p.121 – Car part maker can‟t be
brought into CA courts by foreign company to which it sold parts.
o Even though claim arises/relates to contacts, reasonableness standard NOT
Large expense for Asahi.
Little value for CA
Diplomatic concerns, foreign companies retaliating against US
o Re: minimum contacts and stream of commerce
O‟Connor majority says that knowledge + stream of commerce =
Test: Did ∆ “purposefully direct” the product into stream of
Purposefully direct: advertising, special manufacturing
incentives, product service stations, etc.
Stream of commerce + knowledge it‟s being sold = Asahi
shouldn‟t find a lawsuit to be a surprise.
Test: Does ∆ benefit economically from the retail sale of
the final product in the state?
The key is volume – high volume of goods = purposeful
Test: What is the volume of products sold?
o Circuits are split btw the three tests.
- Jurisdiction over a particular person or entity that can be sued on any cause of
action. No relation to that person‟s contacts w/in a particular forum.
- Six ways to get general jurisdiction:
o sue in ∆‟s domicile
o sue in ∆ corporation‟s domicile (place of incorporation) – Delaware
popular for incorporation
o consent – indiv. consents to be sued there
Rule 12h2 – PJ is for benefit of ∆ ∆ can waive it.
Insurance Co of Ireland v. Bauxites p.177 where making a special
appearance sufficed to waive exemption from PJ
Forum selection clauses – only when suit is on the contract
NOT given full weight of consent, but still factored in.
M/X Bremen v. Zapata Off-Shore Co. & Carnival Cruise
Lines, Inc. v. Shute – FSC enough to get PJ in that forum.
o Bremen: No reason to think that London court isn‟t
a fair place to litigate.
o Carnival Cruise: There are reasons a cruise line
might want to keep this contractual right to insert a
o principle place of business Perkins v. Benguet p.131 where general
jurisdiction found b/c there were continuous and systematic contacts
w/forum state – usually preferred over place of incorporation
o ∆‟s presence within the state Burnham (Tag/transient jurisdiction:
Considered present when in CA for three hours on layover in the airport!)
o continuous/systematic contacts – controversial
- Helicopteros Nacionales De Colombia, S.A. v. Hall p.133
o ∆ Helicopteros a Colombian corporation hired by a S. American company
to provide helicopter services. A fatal crash and four Americans die.
o Perkins test: “Continuous and systematic contacts w/forum”
US SC finds no continuous and systematic contacts here
Possible contacts rejected:
CEO travels to TX for contract negotiation: Contract itself
was struck in Peru and was in Spanish with a FSC for
Houston bank: Bank on which checks are drawn are usually
of little consequence to the payee, so accepting checks from
the bank shouldn‟t matter.
Purchase of helicopter equip. from TX company: Purchases
alone don‟t warrant general jurisdiction.
Sending personnel to TX for training: Attached to purchase
of helicopters, same rationale.
JURISDICTION BASED ON POWER OVER PROPERTY
- in rem jurisdiction – right to adjudicate property located in the state
- quasi-in-rem jurisdiction – attach the property in the state and adjudicate up to the
value of the property
- Historical: Harris v. Balk 1905, p.152 = classic quasi-in-rem, US SC says that
debt follows a person anywhere, over state lines.
- Modern: quasi-in-rem is no more!
o Shaffer v. Heitner p.154 – Shareholder derivative suit against a
corporation by a shareholder of ONE share in the corporation. π attaches
sharea of stock in the corporation that belong to the directors and officers.
US SC says that b/c in personem and quasi-in-rem are alternatives ways at
getting to a person, should use same standards for in personem when
looking at QIR. Int‟l Shoe‟s “sufficient contatcts” must be satisfied.
o QIR by definition means that contacts are unrelated to the cause of action
Int‟l Shoe can never be satisfied.
JURISDICTION BASED ON PRESENCE
- Most, if not all, states currently allow tag jurisdiction and have done so for a very
o On the other hand, Int‟l Shoe and other cases have moved towards
minimum contacts & fair play/substantial justice idea.
- Burnham v. Superior Court p.167 where husband visits kids in CA for one
weekend and is served during that visit.
o Scalia majority
The courts of a state have jurisdiction over non-residents who are
physically present in that state at the time they are served.
B/c of historical understanding and practice, jurisdiction based on
presence alone in itself constitutes due process.
Historically understood to be law.
That‟s exactly what due process is – people are aware of
what the law is and have rec‟d due notice.
- Required to be reasonably calculated under all the circumstances, to apprise
interested parties of the pendency of the action and afford them an opportunity to
present their objections.
- Easier it is to give actual notice, the more likely actual notice will be required.
- Mullane v. Central Hanover Bank & Trust Co. p.191
o notice by publication in a journal/newspaper NOT sufficient b/c not
reasonably calculated to reach those who could easily be reached by other
reasonable to convey the required information
reasonable time for those interested to make an appearance p.194-
o What would have sufficed for the known parties = actual notice through
mail – certified mail.
o Notice by publication is okay if you don‟t know who the parties are.
o There‟s a “due diligence” requirement for notice.
o Notice is important b/c if you have rights you could possibly choose to
assert in litigation, those rights are meaningless unless you know about the
suit going on in the first place.
- π puts something somewhere but there IS the ability for transfers to go through.
- IDs geographic place where action will be litigated (more so than PJ)
- NOT a Const. area – statute or common law created.
- Venue IDs most convenient forum among those offered by SMJ and PJ.
- 28 USC…
1391a = diversity
1391b = non-diversity
1. district where ∆ resides (where resides = domicile
accord. to weight of authority)
2. district where claim arose
3. no district in which PJ exists and 1 & 2 are satisfied, then
you can get venue anywhere that you can exert PJ over ∆
1391c = corporation = resident anywhere there is PJ
o §1404 = venue transfers btw judicial districts w/in the federal system.
1404a codifies forum non conveniens “For the convenience of the
parties and the witnesses and in the interest of justice, a district
court can transfer any civil litigation to any other district or
division where it might have been brought.”
Where it might have been brought
o Hoffman v. Blaski p.352 – where it might have
been brought by the π. Court in Hoffman rejects
transfer to a forum that requires ∆ to waive.
Burden on ∆ to show there‟s a more convenient forum.
Balance of conveniences must weigh strongly in favor of
transfer – inertia is with the π.
o Gulf Oil Corp. v. Gilbert p.359
relative ease of access to proof
costs assoc. w/preparing and willing to
travel witnesses to come to the trial
availability of compulsory process to get
unwilling witnesses to come to the trial
general practical problems – easy,
3 Factor substantive test:
o convenience of parties and witnesses
o access to proof
Van Dusen Rule ( Van Dusen v. Barrack p.356)
o State law: Substantive law that would have occurred
in the case travels w/the case to the new forum.
Ex: IL law, IL case transferred to FL IL
substantive law will travel w/the case to FL
o Federal law: Does NOT travel in transfer.
Ex: IL to FL the law that governs in FL is
the law as interpreted by the 11 th Cir. in FL
and NOT the 7th Cir. interpretation back in
o §1407 – Re: multi-district litigation. Consolidation of civil actions
involving common questions of fact in different districts.
o §1441 – Actions are generally removable from one fed. court to another.
This is covered under Federal Removal Jurisdiction above.
FORUM NON CONVENIENS
- Allows a court to dismiss a case b/c it is brought in an inconvenient venue.
- This is a common law thing!!!! That means you go through the twin aims, etc. if
you‟re trying to argue this is what matters.
- Burden on ∆ to show why an alternative forum would be better!
- Factors to consider in transferring from Gulf Oil Corp. v. Gilbert (p.359)
relative ease of access to proof
costs associated w/getting prepared and willing to travel witnesses to come to
availability of compulsory process to get unwilling witnesses to come to the
general practical problems that affect whether or not trial will be easy,
expeditious, and inexpensive
π should not be allowed to harrass or oppress the ∆ simply by putting the trial
in such an inconvenient place that the trial will be driven by vexation and
NOT the facts of the case
familiarity w/the law that applies
public interest factors
o don‟t want to impose jury duty on community w/o vested interest in it
o forum selection clauses
o judicial burden
o idea that, if the law is going to apply, there are interest in terms of
convenience, accuracy, and state autonomy
having the courts of that state making the state‟s decision
other courts will likely be clueless about other states‟ laws
- When is forum non conveniens used?
o When transfer is impossible under 1404 and a better venue exists
elsewhere, forum nonconveniens is used to drop the suit and π brings the
suit in the alternate forum.
1404 only works from one fed. court to another fed. court.
- Piper Aircraft Co. v. Reyno p.360
o Brutal forum shopping! – Is this an abuse of the system?
o US SC says differences in substantive law aren‟t relevant in forum non
conveniens unless they indicate that the entire claim will be extinguished.
GOVERNING LAW / ERIE ISSUES
PRE-ERIE / INTRO TO CHOICE OF LAW
- Two types of choice of law.
o Horizontal: Which state‟s law applies to this lawsuit?
o Vertical: The choice of law btw two judicial systems in the same territory.
- The forum you choose dictates the governing law to some extent:
o §1331 Federal question jurisdiction:
Federal law governs.
Federal law is the trump card over any conflicting state law.
o §1332 Diversity jurisdiction:
The law of the forum state governs.
Question of meaning Feds decide it.
o 28 USC §1652 – Federal Rules of Decision Act
The laws of the several states shall be regarded as rules of decision
in civil actions in the courts of the US in cases where they apply.
- Swift v. Tyson
o §1652‟s “laws of the several states” = statutes and constitutions, NOT
o Two philosophical ideas:
An overarching, transcendent body of common law that the courts
in the state and fed. systems are trying to divine and expose as
THE true common law.
Legislature makes the laws, not courts. Courts just discover the
- This philosophical idea is shown to be open to manipulation in Black & White
Taxicab Co. v. Brown & Yellow Taxicab Co. (supplement) where π pulls out of
KY and reincorporates in TN in order to create diversity and get into fed. court. In
state court, the state court would‟ve thrown out the monopoly contract for
exclusive pick up/drop off of passengers. In fed. court, however, the fed. court
had the authority under Swift to reach its own conclusion on the common law
issue of whether or not the contract should be enforced.
- Erie R.R. Co. v. Tompkins p.374:
- In diversity cases, federal courts must apply the law that would be applied by the
courts of the state in which they sit. Rather than create “general common law,”
their job in a diversity case is to apply substantive state common law.
o substantive = state court rules, state rules on contracts, everything that‟s a
matter of state law (can differ from state to state)
- Easy Erie: Overrules Swift, says Fed. courts will apply state common law. “There
is no federal general common law. Congress has no power to declare
substantive rules of common law applicable in a state whether they be local in
their nature or „general.‟” p.376-377
o Swift didn‟t work at creating a general common law – state judges went
off on their own and took their own views instead of following the course
set out by federal courts.
o Discrimination in the administration of justice under Swift rule – look at
the manipulation in Taxicabs case.
o MOST importantly: Federal judges aren‟t lawmakers – when it comes to
common law matters not within the delegated powers, the body with the
authority to make rules is the state, and the state speaks through BOTH
statute AND judicial decisions.
EVOLUTION OF ERIE
- Rules Enabling Act 28 USC §2072 – US SC shall have the power to proscribe
general rules of practice and procedure and rules of evidence for cases in the US
DCs and Cts. of Appeal. Such rules shall not abridge, enlarge, or modify any
substantive right. All laws in conflict w/such rules shall be of no further force or
effect after such rules have taken effect.
- Substantive / Procedural:
o Outcome-determinative test in Guaranty Trust Company v. York p.381
where court says if it would affect the outcome, then it is considered
leaves no room for anything procedural
York a case where state‟s statute of limitations would bar
proceedings but more lenient federal laches approach would allow
them. US SC says to go with the state‟s SOL b/c of the outcome-
o Balancing Test in Byrd v. Blue Ridge Electric Cooperative p.386 says
you may override the state rule w/the federal rule if there is a federal
interest in maintaining balance and uniformity in practice greater than the
In this situation, state courts don‟t control on Q of whether a
question is an issue of law (to the judge) or an issue of fact (to the
Policy reason for favoring the federal rule? The federal rule
says it‟s an issue of law – we‟ll listen to them!
Federal interests: uniformity in its decisions, consistency in
State‟s interests: sovereignty
Outcome-determinative test is still a factor, but Byrd just
introduces the balancing test to go with it.
- Hanna v. Plumer p.392 addresses what happens when fed. court has its own
o Measure any rule against the Rules Enabling Act and Constitution.
o Trying to invoke Erie to avoid FRCP in favor of state rule for serving
process. Court says NO. FRCP overrule state rules.
o Is it in direct conflict?
o Arguably procedural: Where matters fall roughly btw state substantive
and federal procedural law and are rationally capable of classification as
either, the Const. grants the fed. court system the power to regulate their
practice and procedure.
o Twin Aims of Erie (nonsubstantial/trivial variations in the law are not
likely to implicate either of these concerns)
discourage forum shopping
avoid inequitable administration of the law
o Modified Outcome Test
Could application of the federal rule lead to a different outcome?
If so, does this fact tend to increase the chances that the twin aims
of Erie will be routed?
If so, then state law should be applied. If not, then the federal rule
is procedural and can be applied in diversity case.
- Really, there are four types of federal provisions that may conflict w/state law:
o Fed. Const. provision and state law: Federal const. provision might
mandate a fed. court procedure that differs from state law.
US Const. is the boss of everyone!!! It trumps anything and
everything. “Supreme law of the land” – US Const. Art. VI, ¶2.
o Fed. statute and state law: Federal statute may govern federal practice
but conflict with state law.
Fed. statute is usually the boss on this playground.
Q: Is the fed. statute valid/did Congress have the authority to enact
A: Arguably procedural test: From Hanna, Congress has
authority if it “falls in the uncertain area btw substance and
procedure and are rationally capable of classification as
Stewart Organization Inc. v. Ricoh Corp. p.408
o State practice that refuses to enforce forum
o §1404a (transfer) that says to look at it on a case-
Does Congress have power to enact 1404a? §1404a wins
here. It‟s “arguably procedural.”
o Federal rule and state law: Formal FRCP may conflict w/state law.
When FRCP conflicts w/state law, the FRCP applies if it is valid.
Valid, according to Hanna, if FRCP is “rationally capable of
classification” as a procedural regulation.
o Federal judicial practice and state law: There may be behavior or
practice that federal judges develop that aren‟t codified anywhere formal
(i.e. nowhere in the FRCP or statutes).
If the fed. judicial practice purports to est. rules of primary
behavior, then invalid against state law. (NO fed. const. power to
make this rule.)
If fed. judicial practice relates to the conduct of the litigation (and
there is thus fed. authority to make this separate rule), then
diversity court should apply modified outcome determinative test.
- Cases that avoid having to choose (and avoid having to find a “direct conflict”
btw federal versus state):
o Walker v. Armco Steel Corp. p.402 – FRCP 3 doesn‟t affect state statutes
of limitation, so we‟ll end our query here.
o Gasperini v. Center for Humanities, Inc. p.411 – Fed. court sitting in
diversity should apply different standard of review for jury awards if the
relevant state law dictates such.
Amend. VII doesn‟t preclude appellate review of a trial judge‟s
denial of a motion to set aside a jury verdict as excessive.
US SC ID‟s state interest in terms of policing size of verdicts – a
significant substantive overtone.
Gasperini shows us that the balancing approach and
accommodating federal v. state interests is NOT dead.
Gasperini renews Byrd!
INTERSTATE CHOICE OF LAW
- When you go into a courtroom, there‟s a body of rules that the state will have that
as a threshold matter they will use to decide what substantive law gets applied to
each matter in the case.
- Klaxon v. Stentor Electric Manuf. Co. – The choice of law rules a federal district
court will apply in a diversity case.
o choice of law rules are substantive for Erie purposes
- Van Dusen v. Barrack
o The choice of law rules, just like all of the other substantive stuff we
talked about in Van Dusen‟s PJ area, travels to each forum
o Dampens forum shopping.
- Effect that a judgment/decision in a prior case can have on future decisions.
CLAIM PRECLUSION / RES JUDICATA
- “One bite of the apple.”
- Big picture thing: Claims splitting. Courts want to discourage claims splitting
where πs try to bring lots of itsy bitsy claims to test the waters of what‟s gonna
win and what‟s not.
- Does case stem from same transaction? If a case concerns the same parties (or
parties that are in privity) and the same general fact pattern as a previous case,
then the previous case may preclude the new one.
- In a tort case, there may be multiple claims but there is still only ONE act, ONE
wrong, and those other claims are precluded once the wrong has been tried in
o Rush v. City of Maple Heights p.1225 where there‟s a motorcycle accident
and there‟s damage both to person and personal property.
Tries to bring two suits.
First suit: Damage to personal property.
Second suit: Injury to person.
Rule: Injuries to person and property need to be brought in the
prevents a multiplicity suit
lowers expenses (instead of having two trials, two lawyers,
o Federated Department Stores, Inc. v. Moitie p.1234 where two πs in a
group anti-trust case remove themselves from the group‟s appeal and refile
their claim in state court.
the appeal wins
the two πs in state court lose
Rule: US SC says we should apply res judicata! What‟s with the
exception the Cir. Ct. tried to make?? Its not simple justice to
apply res judicata here.
Res judicata serves “vital public interest.”
It offers a finality to litigation.
Res judicata is the heart of fairness and justice – the ∆
doesn‟t have to wonder what to expect next!
The litigants who lost can go through appeals process.
- EXCEPTIONS to res judicata:
o jury and/or judge bribery
o NO jurisdiction in that court at all
o judgment procured by fraud
- Five part test for claim preclusion (Where C1 = case 1 and C2 = case 2)
o C2 has same parties as in C1 or at least people in privity.
o C2 and C1 = same cause of action. (Transaction or occurrence test.)
o C1 judgment has to be final, valid, and on the merits.
finality – typically est‟d when trial court enters its judgment
even when an appeal is pending, unless and until that
appeal disturbs things, finality attaches w/the judgment
rendered by the trial court
merits – categorical level, not a merits determination if there is no
IS satisfied if there was a 12b6 motion granted
o If 1-3 satisfied, all legal claims that would have been or were raised in C1
“could have been raised” means whether or not, taken together, the
various claims/disputes would have been a convenient/sensible
relatedness in time, place, origin of injuries
o latent injuries that could only have been discovered
at a later, subsequent time
o issues that couldn‟t have been brought in C1 b/c of
jurisdictional bar (this is rare b/c there‟s usu.
ex: litigation in state tax board of appeals
wherein claims cannot be brought there
ex: immigration context – bureau of
immigration affairs precluded from hearing
global constitutional challenges
o If 1-3 satisfied, then all legal claims that could have been raised or were
raised in C1 are precluded from relitigation in C2 so long as the litigant
that would benefit from res judicata has executed it.
ISSUE PRECLUSION / COLLATERAL ESTOPPEL
- Issue preclusion justifications:
o lowered costs
o credibility and legitimacy in legal system
- Seven aspects of traditional definition of issue preclusion
o Look at whether it‟s a: issue of fact or law
o actually litigated and necessarily decided (i.e. essential to judgment) of C1
o in a judgment final, valid, and on the merits
o resolution of issue in C1 is conclusive in C2
and if C2 is btw same parties or parties in privity (mutuality – no
longer the law and now more discretionary)
even if C2 involves a different claim (not issue, obviously)
- Differences btw claim and issue preclusion
o ax (claim preclusion) versus scalpel (issue preclusion)
ax bars the entire damn thing!
claim preclusion is dispositive of the resolution in C2
scalpel addresses only certain issues
issue preclusion will resolve only part of the issue in C2
claim preclusion only applicable when there are the same parties or
those in privity from C1
issue preclusion = for some types of issue preclusion you don‟t
even need same parties or privity
o issues raised and necessarily decided
claim preclusion also covers issues that “could have been raised”
b/c a main thrust is prohibition of claims splitting
issue preclusion requires that issues were raised, decided, and
essential to the judgment
o defensive versus offensive use of the right
claim preclusion in practical terms can only be used defensively to
forestall the second suit
issue preclusion can sometimes be used offensively
o Frequently both are applicable. Look out for both preclusions when new
cases are presented.
- Issue preclusion NOT used as often as claim preclusion.
- Situations where issue preclusion just overlooked in favor of other stuff:
o Losing party in C1 allowed to relitigate where there‟s differences in the
available procedural or discovery options/avenues that will fairly allow
them to represent their cases.
o Proceedings in C1 were informal/perfunctory.
e.g. if the issue in C1 was litigated in small claims court and then
in C2 the stakes are MUCH higher.
cases treated differently btw $10M at stake versus $100.
o Burden of proof materially different or shifted.
o Diff. parties in C2 than there were in C1.
- Cromwell v. County of Sac p.1244 – π wants to offer evidence in C2 on validity
of the bond and that π is a BFP even though in C1 π had failed to give such proof.
o US SC says π‟s allowed to give such proof in C2 b/c that was NOT the
issue decided in C1.
o Key point: You have to examine VERY carefully btw C1 and C2 what
was actually litigated in C1.
Concession: If one party concedes an issue, then it‟s typically NOT
viewed as being adjudicated on the merits.
- Russell v. Place p.250
o C1 = patent infringement w/2 bases for claim:
use of fat liquor in the treatment of liquor
process of treating skin by means of a compound composed and
applied in a particular manner
o ∆ in C2 wants to litigate the same defenses that it litigated in C1.
o What we‟d need for issue preclusion:
must appear, either upon the face of the record or be shown by
extrinsic evidence, that the precise Q for the issue preclusion has to
have been raised and determined in the prior lawsuit
o US SC says to go ahead and litigate those defenses.
Each infringement litigated (i.e. C2, C3, C18, etc.) is a separate
action and issue was NOT “actually litigated.”
Ruling must be necessary to the judgment – dicta doesn‟t count!
PRIVITY AND NONMUTUALIITY
- Claim preclusion requirement that the two parties be the same or in privity.
- Different parties? two questions re: privity
o Who can potentially be bound by a prior judgment?
o Who can take advantage of a prior judgment?
o required in claim preclusion
o NOT required in issue preclusion
- Non-mutual collateral estoppel – A party that took place in (or is in privity w/a
party that took place in) n litigation is bound by it.
- Defensive non-mutual collateral estoppel
o Raised by winning ∆ party to try to say that the party NOW bringing suit
should have brought it along w/the now losing π in C1 b/c party is in
o If at first you don‟t succeed, quit!
o Encourages joinder.
o Bernhard v. Bank of America p.1284 – Grandma transfers money. C1
finds that ∆ didn‟t take the money; it was a gift. In C2, new π is precluded
from relitigating the issue. Traynor makes the point that the ∆ in C1π‟s
OWN chosen forum actually won.
o Blonder-Tongue Labs v. University of Illinois p.1288 – Patent
infringement. C1 = UI lost patent declared invalid. C2 = UI wins.
US SC reverses.
Court says that defensive nonmutual collateral estoppel WILL
it‟s costly for ∆ to relitigate issues that π already had a
chance to litigate
patent specific reason: costs associated w/patent litigation
are high, particularly for ∆
- Offensive non-mutual collateral estoppel
o highly litigated
o very controversial
o Courts have a lot of discretion re: allowing offensive nonmutual collateral
o Parklane Hosiery v. Shore p.1291
C1 resolves ∆ had issued materially false and misleading statement
(which is a violation of fed. law)
C2 has SAME allegations as C1 and π in C2 wants to use offensive
nonmutual collateral estoppel to keep the findings of C1. US SC
says ∆ is precluded from relitigating same facts.
Court IDs several reasons why offensive and defensive nonmutual
collateral estoppel should be treated differently:
judicial economy – offensive does NOT promote judicial
economy in the way defensive use does
fairness to ∆ -- offensive nonmutual collateral estoppel
might be unfair to ∆
o e.g.: if sued the first time for $100, they might not
litigate vigorously. Then if they‟re sued in C2 for
$10K, they‟re in the cahoots! If they realized that
the suit was an issue that implicated a lot of people,
then hey might have litigated more vigorously.
Second action might afford the ∆ procedural opportunities
unavailable in C1 that could cause a different result.
o e.g.: Discovery opportunities Esp. in arbitration – in
arbitration, usu. allowed 3 depositions whereas in
fed. case they‟ll allow up to 25.
Did C2π have opportunity to join in the first action?
o Martin v. Wilks p.1307
C1 resolved with consent judgment by City to promote goals to
hire more black firefighters.
C2 raised against City where white firefighters allege they‟re being
denied promotions illegally in favor of less qualified black
Principle of Anglo-American jurisprudence = one is not
bound by an in personam judgment in a litigation in which
he is not designated a party
BUT there‟s a vein that‟s been developing where if you
could have been a party to C1 then you can‟t bring C2.
US SC rejects new development, says that the law doesn‟t require
the parties in C2 to join in C1.
The two parties are different and the white firefighters
cannot be held a party to a judgment they weren‟t a part of.
DISSENT (which Congress soon after adopts): If you‟re on the
sidelines (like the white firefighters here) and you know what‟s
going on and have a right to participate, then the advantage you
gain from being a sideline sitter outweighs not knowing at all.
- Two things:
o Academic: Academic debate usually has a big disconnection w/the actual
occurrences of real life legal cases.
o Real world: Oftentimes biggest event in a class action case is whether or
not a class is certified.
- Certification FRCP 23
o Potential damages can change a LOT.
Litigation is unpredictable.
o Once certified, the case will almost always be settled.
o NOT certified such that it‟s a $10K or $100K case
If case is objectively meritless it will likely go away.
If case is meritorious still might not be litigated b/c stakes too
low for litigants and lawyers to take on the case.
o Huge effect on the lawyers and the incentives under which the lawyers are
operating, part. if they‟re operating under a contingency basis.
o π or π‟s attorney does NOT need permission from potential class
members in order to get certified.
o Discovery for class certification is NOT a mini-trial.
focuses on whether or not the claims of the people of the class can
fairly be adjudicated on the basis of class-wide proof
Should each indiv. go forward? Maybe there should be 10 different
NOT whether a suit can go forward (but look back at the practical
reality of whether people can really go forward with indiv. $3
- FRCP 23
Defined/definable class w/boundaries that are reasonably
Standing: Proposed class representative has to be a member of
the proposed class.
Numbers: FRCP 23a1 – Class has to be large enough that joinder
Basic rubric – 40+ qualifies, <25 people doesn‟t qualify.
Commonality: FRCP 23a2 – Litigant has to raise at least one issue
of common law or fact that runs throughout all the class members.
Typicality: FRCP 23a3 – Claims or defenses of the named parties
have to be typical of the claims or defenses of the class members.
Adequacy: FRCP 23a4 – Representative parties and attorneys will
fairly and adequately represent interests of the proposed class.
Also ensure that there is no strife w/in the proposed class such that
subclasses might make more sense.
Constitutionality: Hansberry v. Lee p.718 where class
actions are okay as long as class members are adequately
o adequacy issue! US SC finds that white
landowners who signed the covenant to keep black
homeowners away were NOT representative of all
future potential property owners (who would
include black landowners, too).
o Due process issue! Granting res judicata effect to
class action (where it doesn‟t satisfy prereqs and
procedure of class action to insure protection of
absent parties) violates due process. US SC finds
that covenant signing landowners are NOT
members of the same class as the future property
o Three kinds of class actions (once FRCP 23a considerations are
FRCP 23b1 – class action allowed where doing it separately would
create risk of
23b1a inconsistent judgments
23b1b individual litigation unfair to absentees
o seen in big payouts from a limited fund
FRCP 23b2 – Actions by ∆ affect entire class and we‟re looking
for injunctive relief here
employment discrimination, consumer, env. .cases, civil
∆‟s conduct need only be “generally applicable” to the
FRCP 23b3 – When damages are at stake (i.e. monetary claims).
When it‟s an “opt-out” class action, have to meet:
Predominance – common Q of law or fact predominate
over indiv. issues that have to be analyzed on a π – by – π
Superiority – whether or not a class action is superior to
other available methods to handle a case
o interests of member in indiv. litigating
o extent nature of any pending litigation concerning
the controversy involving the members
o desirability of concentrating litigation in part. forum
Manageability – whether a class is manageable or not
(tends to feed back into a predominance analysis)
- Two sides:
Fairness to ∆ and similarly situated πs b/c gives equal outcomes to
The little guy: Allow small wrongs to be righted b/c of ability to
aggregate π‟s claims.
Oftentimes no client attorneys sell out their “client.”
Named π might not be a faithful agent of all class members.
Different members of the class Erie problems in terms of how
state law issues will be handled.
Not a sensible way to resolve billion dollar Qs.
Real people w/real life issues – retirement funds,
employment, etc. that are v. important to them.
Allocation of big chunks of society‟s assets.
o Both are right at different times.
JURISDICTION / PRECLUSIVE EFFECT OF JUDGMENTS
- VENUE – residences of named π only
o Federal cause of action: People try to get federal cause of action. If the
named πs are invoking a fed. statute, SMJ is easy. We have SMJ b/c it‟s a
federal question/federal cause of action and for the class so long as it‟s
One way people try to do it is to say what might more naturally be
a state law claim is actually a federal cause of action (i.e. a state
fraud claim becomes a RICO violation).
o State law causes of action / Diversity jurisdiction
Two main issues
o §1332 US SC says in Supreme Tribe of Ben-Hur v.
Cauble p.735 that diversity of citizenship in class
actions based on citizenship of named parties only.
Amount in controversy – each of the members or only main
o Zahn v. Int‟l Paper (squib case p.735) – EACH of
the members must satisfy amt in controversy.
o What do we look at for amt in controversy?
Split in the circuits.
In re Abbott Laboratories p.737 says
include the aggregate attorney fees.
Sometimes can monetize the value of
Legislative history for §1367 supp.
jurisdiction says §1367 is NOT intended to
tinker w/the Zahn rule.
o Phillips Petroleum Co. v. Shutts p.738 – π a class of royalty owners, 97%
of whom don‟t have any ties to forums state, who want to recover royalty
rights from ∆ gas company.
∆ wants to establish whether or not the π class will be bound by the
KS court‟s decree. ∆ concerned about res judicata effect (b/c ∆ will
be bound by the decision) and that, should π NOT be bound by PJ,
π would be able to sue individually and use res judicata to bind ∆
without having π be bound by res judicata themselves.
∆ wants to ensure that the resolution in the KS court IS the
resolution and not just the opening bid in a 33K person indiv.
PJ: KS court rightfully asserted PJ over the class. US SC
determines this for absent class members b/c:
consent and notice:
o If the class members get notice and they don‟t opt
out of the proceeding going forward, then they are
presumed to consent.
o Under Mullane, best practical notice under the
o opt-out option
doesn‟t violate due process
gives opportunity to pursue the issue
o adequacy of representation – interests of parties
speaking must be aligned w/the interests of the
FRCP 23c – How this all works re:notice question
Choice of Law: KS court applying KS law in this case.
∆ arguing that KS law shouldn‟t apply b/c no meaningful
attachment btw most of the class members and the forum
US SC says that due process and full faith and credit
requirements require that there has to be a significant
contact or aggregation of contacts to claims asserted by
EACH member of the π class that creates state interests
such that application of KS law is not arbitrary or
o threshold issue: Are there differences in state law?
o If there are meaningful differences, for a state to
apply its own law there has to be a meaningful
connection btw out of state litigants and the forum
o on a π by π analysis (to ALL of the members of the
- PRIOR JUDGMENTS
o Cooper v. Federal Reserve Bank of Richmond p.747 – A successful
defense of a class-action discrimination suit doesn‟t bar individual suits by
members OR potential members of the class.
Res judicata DOES apply in a class action setting – sure, why not?
BUT you have to be careful and thoughtful as to what‟s actually
In these C1 and C2, they‟re different!
Class action is re: pattern of discrimination in this case.
Individual suit is re: discrimination against that individual
MASS TORTS / SETTLEMENT
- Tradeoff of fairness v. efficiency
- Two views:
only efficient way to resolve these issues
vindication of the rights of the little guy!
enormous legal fees
inflated product prices reflect the high cost of litigation
mass torts prompt corporate bankruptcies
- Castano v. American Tobacco Co. p.754
o Proposed class = all nicotine dependent persons, possibly largest class
o π‟s theory of liability = ∆ fraudulently didn‟t inform people that nicotine is
addictive and manipulated that information so as to keep smokers addicted
o Class actions need to meet predominance and superiority in order to be
certified. That‟s A-okay.
o US SC reverses this certification, though, b/c
Castano hasn‟t considered how variations in state law
might have effect
The district court didn‟t adequately address predominance
and superiority – they just assumed that b/c common issues
would be involved in every trial, they would be significant.
Immature mass tort (one w/few prior verdicts) should be
litigated in indiv. actions first so that we can get the lay of
judicial blackmail – damages SO big that the uncertainty of
winning or losing incentives to settle (blackmailing the
single company ∆ with the minute possibility that the suit
might turn out against them)
- Argument for an intermediate spot btw one giant mass tort case and a million
separate little cases:
o Use subclasses by state – 50 separate trials then.
o Or just do 50 different class actions.
o Fifth Circuit thinks smaller proceedings ensuing w/o nationwide class very
probable b/c the amt. of money for each individual case is REAL, not just
the nominal $3/person or anything.
- Asbestos Exposure Cases
o Effects of asbestos can take a long time to manifest itself. Also, a LOT of
money has gone to the attorneys in these cases, so transaction costs are
real and eat away at recovery.
o Amchem Products, Inc. v. Windsor p.760 – current and future claims
proposed class: people who have current or who would ever get
asbestos related injuries in the future (current sufferers in addition
to those who have had exposure to asbestos)
Multi-district litigation panel handles cases like this where
there‟s litigation in different parts of the country. The MDL
proceeding occurs in one day – just enter, file complaint, file
answer, and settlement determined.
Settlement is relevant here – it answers the question for everyone
in the π class. Even in settlement need to comply w/certification.
Agreement would bind the π class forever, the ∆ can opt out after
Settlement terms fair?
The individuals in the π class were different.
o Interclass conflict: There‟s a difference btw the
current sufferers and the “in the future” sufferers.
current sufferers will want immediate relief
in the future sufferers will probably want
some sort of trust fund or whatever from
which they can build long term
o Attorneys will have to address the two at the same
time (and it‟s hard to navigate btw the two)
o different counsel for the indiv. classes
o nationwide legislative answer
o Ortiz v. Fibreboard Corp. p.773
By the time this case rolls around, ∆ Fibreboard had settled 45K
Limited fund case (FRCP 23b1b) – They‟re putting up a certain
amt for the claimants to pick from. This is all that ∆ is willing to
pay out, period!
Limitations on the π claimants
The people in the settlement can‟t come back and relitigate
They can only go through a mediation process
If that doesn‟t work, then they have to face a $500K cap on
what they can recover from the fund
They can‟t recover punitive damages
Punitive damages – whether or not you can invoke punitive
damages is a big deal in terms of what kind of coverage/leverage
you can expect
Usu. NO opt-out rights in a limited fund setting.
US SC says “no way are we allowing this to go through!”
adequacy issues – the future claims are different from the
Using Rule 23 as a corporate reorganization under the
bankruptcy principle where the ∆ corp. gets to keep a lot of
its equity and the limited fund is used to satisfy the
undersecured tort creditors. Usually there are limits to
shareholder‟s takings in the bankruptcy setting but when
Rule 23 used for the same purposes, the shareholders are
actually taking FIRST b/c they have kept this equity out of
the hands of the claimants.