Law School Outline- Civil Procedure

CIVIL PROCEDURE 1 OUTLINE I. INTRODUCTION TO ADJUDICATION Elements of Traditional Adjudication 1. Bipolar Proceeding brought by 2. party presentation based on 3. a claim of right before a 4. passive, neutral decision maker 5. proceeding under rule of law Two Concepts of Civil Procedure: 1) constitutional law of due process 2) internal operating command of courts A. The Due Process Revolution Goldberg v Kelly Facts: welfare recipients are cut off from their benefits without an evidentiary hearing. They argue that this violates the 14th amendment right of due process Due process: entitles someone to life, liberty, and property Taking someone‟s welfare away is like depriving someone of property Current NY system: case worker look over case, higher official makes final decision. You can make written statement but no oral testimony or confrontation of witnesses Issue: how much process is due and why? Holding: a) Due process clause requires state to give welfare recipients a hearing BEFORE they take away welfare requirements b) Having opportunity to respond in writing is not sufficient c) each welfare recipient has right to legal counsel d) decision must be made by neutral decision maker e) decision must be based on evidence and facts presented in the case Two concerns: a) fairness: some people might be cut off when they need to be on welfare b) other people might be continued on welfare roles even if they have no business being on welfare there should be a procedure for something even though welfare is not a constitutional right  Value of equality- need regularity in the way poor people are treated  Guarantee against arbitrariness  State creates a welfare system- entitlement- it creates property  Procedural system enables a legitimating function System of civil procedure is part of an entire system by democratic governance by which citizens accept things that the state does 1 But welfare is not a statutory entitlement, so why is it treated like a property right? Result of holding: every fraudulent welfare person gets pre-termination hearing, even if they do not deserve welfare Dissent: we are wasting state funds to have these hearings since most people are frauds (But ultimately the livelihood of the people overrides the fiscal funds of the state) people will starve longer- b/c courts will be slower to have the hearing state will have to pay more hearing officers- less money for welfare B. Brief Overview of a Civil Action Goldberg v Kelly Wyer sues NY state in federal court “this is an action for injunctive and declaratory relief authorized by Title 42 USC 1983 to secure rights, privileges and immunities established by the 14 th amendment Rule 8- general rules for pleading; must have short and plain statement establishing grounds for jurisdiction. If you do not have proper jurisdiction, case will be dismissed 1) lawyers must establish their right to bring case to federal court. If it is later determined that federal court does not have subject matter jurisdiction, it will get dismissed no matter what 42-1983- any person, who under color of any statute, ordinance, customs, or usage of any state or territory…causes deprivation of any rights, privileges or immunities secured by constitution and laws, shall be liable to the injured party only applies to allowing redress/relief in federal court when an actor, who is acting under color of state law, is violating constitutional rights what if you are actor of federal govt and violate constitutional rights? No relief… 28-1331- district court has original jurisdiction of all civil actions arising under constitution, laws, or treaties of the USA Rule 12-B: if you do not have right, the defense can bring motion to dismiss 28.2201 – creation of a remedy 28.2202 – further relief these statutes say that US court can declare the right of any party in Goldberg v Kelly- plaintiffs are asking for declaratory relief that their rights have been violated 2) amount in controversy- at the time of the court case, the amount in controversy had to be at least $10,000 in order to be heard in federal court issue about how much the claim is- each person was only asking for about $100 but it is a class action why bring it to federal court in the first place? a) if in federal court, you may have better chance of getting to the Supreme Court b) public nature of the case; Supreme Court can make a decision that will effect welfare recipients in each and every state, not just NY c) a decision by the Supreme Court will have a much broader effect 2 lawyers consider where they will win the case federal judges: appointed for life, often out of touch with reality, not subject to political changes state judges: perhaps more in touch with society but susceptible to corruption and politics RELIEF the plaintiffs are seeking Injunction: order by a judge to tell someone to stop doing something that they want to do Preliminary injunction (R 65): ask court to give welfare back to recipients even before it makes a decision because the people may starve to death (matter of necessity) Notice is required – must notify the other party Temporary restraining order: court can make welfare be reinstated for ten days maximum. no notice is required - attorney shows up in court and asks for one must prove that there would be irreparable harm (starving to death) wants state to refrain from taking away welfare from future recipients w/o a hearing wants state to reinstate the funds can the federal court determine that a state procedure is unconstitutional and order an injunction? Yes, but it requires a three judge panel – 28-2284 Important to frame exactly what you are asking for A party who is unhappy with the decision of a three judge panel can have their case heard immediately by the US Supreme Court, with no writ certiori STEPS Goldberg‟s Complaint Rule 3- file complaint with court Rule 4- service of summons 120 days to serve summons- give notice if you do not give notice in that time, court dismisses complaint w/o prejudice if there is good reason fro delay- time may be extended without prejudice – you an bring the complaint again. Court has not even looked at facts Rule 23- class action- must meet all four prerequisites a) Numerous joinders of all member is impracticable b) Common question of law and fact c) Claims and defenses of the representative parties are typical of the claims or defenses of the class Plaintiffs = workers who were not given pre termination hearing Includes Kelly, and those cut off with notice, or those with post-termination hearing Kelly must be a representative party d) Representative parties will fairly and adequately protect the interests of the class once you meet 23(a) you must meet one of many options in 23(b) some people may not want to be represented in the class action 1) varying degrees on how they are treated; different facts 2) large groups- hard to classify what is constitutional or not 3) if Kelly loses, the people cannot bring another case DEFENDANT‟S ARGUMENT 3 NY has adopted new procedures since the law suit was filed which are constitutional 1) Rule 12(B)- motion to dismiss- even if everything you say is true, there is no claim for legal relief State law is giving local agencies a choice: OPTION A: streamlined, advanced notice, pre-termination OPTION B: post termination hearing that is very extensive- you do not get it until after you are cut off Option B: which NY state adopts- 7 day notice of termination, opportunity to write back, some indication of your right to be represented by counsel, a post- termination hearing w/in 10 days, can confront witnesses in the post-termination hearing, get answer in 12 days SC says that option B is unconstitutional 2) court rejects motion to dismiss because there are legal claims that need to be investigated: must determine what NY‟s policy is 3) defense writes motion for summary judgment: wants court to make decision based on facts already presented. factual issues that are relevant to case- goes into affidavits summary judgment adjudicates without a trial- judge determines if there is an actual dispute based on facts presented 4) plaintiffs bring intervenors in- they experience lack of due process even under new regulations C. The Evolution: From Matthews V Eldridge to terrorism Matthews v Eldridge is new law about due process- is it inconsistent with Goldberg v Kelly? Facts: P = Eldridge, who is cut off from disability benefits D = state; accused of violating due process on how they revoked his benefits Matthews is placed on disability benefits b/c he has problem with back that makes him unable to work. A few years later, after review by state agency and physican‟s documentation, the state revokes benefits and gives him two months notice The procedure: continuing eligibility is determined by team of physician and non-medical person to be reviewed each year a) questionnaire b) doctor‟s testimony- ask a second opinion too c) state agency makes determination, which is reviewed by examiner in the SSA Bureau of Disability Insurance d) when SSA accepts termination, termination occurs two months later e) recipient may seek reconsideration by the state agency f) has a right to evidentiary hearing if state agency denies benefits too g) may go to SSA Appeals Council; then goes to judicial review Issue: P sues D for not allowing a pre-termination hearing before taking away his benefits. He challenges the state procedure How does this differ from Goldberg v Kelly? a) welfare = illiterate; unable to take advantage of a written testimony before termination 4 disabled = less likely to be illiterate; able to fill out questionnaire b) P has two months notice and in that time my write testimony, submit an appeal c) P argues that you cannot cut off money if there is some possibility that the disabled will starve to death. D argues that disabled are more likely to have other means of income even if P will starve to death if the benefits are cut off: he can apply for welfare he can take advantage of written testimony, which welfare people can‟t the determination is based on objective medical evidence, not hearsay of case workers Holding: Supreme court says that current procedures are acceptable and do not violate constitution Reasoning: Rogers v Elliot Due process is flexible; must have opportunity to be heard in reasonable time and reasonable manner. Three factor balancing test 1) deprivation of private interest- will the person starve to death if money is cut off? 2) Risk of error- is the state depriving someone of funds that they actually need? 3) Government interest- wants to avoid excess cost, time, effort, etc Goldberg v Kelly: Private interest = high govt interest = low Risk of error = high Eldridge v Kelly: Private interest = less high govt interest = high Risk of error = low b/c the procedures in place are very good Cost to govt is high since there will be very little reduction in error Professor Maschau- Dissent when you shuffle someone b/w welfare and disability, there is a certain cost to the person which you have to understand in different terms- a dignity interest, demoralization cost it is demoralizing to go through a process and get something that you are already entitled to a) state says it is just a termination based on medical determination; is P disabled or not? b) Maschau says that it is also a moral judgment by the state State says if you are not disabled you have to go back to work the next day Lassiter v Dept of Social Services Facts P = Lassiter, mother D = state of NC (a private party in a civil suit) Lassiter, mother of son William, is put in jail for several months on murder charges. While in jail the state is attempting to revoke her parental rights b/c she proves to be a bad parent. The state has a hearing but does not provide Lassiter with counsel. Lassiter appeals the decision on grounds that it violated constitutional due process of right to counsel Issue Did the court err in ruling that it did not violate due process to not provide Lassiter with counsel? How much process is due when people are proceeding in a court of law? 5 Lassiter claims she is being deprived of a parental right without due process- due process requires that there be notice and opportunity when life, liberty, or property is being revoked Parental right = a form of liberty. Different from welfare rights, which are “property” Precedent = in criminal law, a person is given counsel before he is locked up in jail b/c jail is a revocation of physical liberty Lassiter wants to show how her liberty as a parent is similar to a criminal‟s physical liberyt Holding/Reasoning Court rules that there are some situations in which due process is necessary and some situations in which it is not; must look at the circumstances of the event Majority rules: no due process for Lassiter Why? Applies three part test from Matthews v Eldridge a) personal interest- how serious is the risk of deprivation? b) Risk of error- does the current procedure produce errors in decisions? c) Govt interest- they want to protect the child as much as possible. They will have a hearing anyway so the only extra cost is a state appointed attorney Majority and minority both agree that private interest is strong but majority thinks that risk of error is low since the court is given documented evidence of Lassiter‟s poor parenting skills Minority says: risk of error is high b/c Lassiter does not have counsel The holding of this case is very narrow sometimes the parent should have an attorney appointed and sometimes it is because the M v E factors will look different based on the individual case what if state is trying to deprive a mother of parental right b/c she is mentally infirm? a) private interest- may be higher than Lassiter‟s (Lassiter is in jail- cannot parent effectively anyway) tailored balancing test- now we will think about it on case by case basis to make sure we get a fairest possible result for the individual- COURT = POWER Fuentes v Shevin, 1972 (before Matthews v Eldridge) Facts P, Fuentes, buys a stereo and stove system from Firestone (Shevin) for installment payments of up to $600; a dispute arises and P stops paying the money so Fireston ordes a writ of replevin to seize the property back from her. The goods are taken without her being able to complain, state her case Writ of replevin: court order that allows officer to seize property, give it back to owner Procedure under FL law: a) must state affirmatively that another person has unlawful possession of property b) state issues writ of replevin- sheriff will go take it away c) Firestone must post a bond d) Fuentes only gets a hearing after the property is being taken away Procedure under PA law (more problematic): same as above but P has three day to issue bond that is twice the amount of property in order to get it back. And P has the burden of instituting a repossession action, not D (Firestone). D must pond a bond when ordering the writ P (Fuentes) has three options: post a bond to get property back, issue her own action of repossession, or do nothing. 6 Issue: who gets to the keep the disputed property while the dispute is actually going on? Did the state violate due process by seizing property without giving P adequate hearing? Holding/Reasoning holding: even a temporary, disputed interest in property deserves protection by the constitution Rule: a temporary, non-final deprivation of property is still a deprivation under 14 th A Must safeguard even disputed ownership Even if P does not have right to stoves, right to hearing does not depend on this Two people have possessory interests- if the state gets involved and rules in favor of A, B is hurt, and vice versa  There are certain possessory interests that are more important  Having legal title (which D has) is not determinative Posting the bond: majority says this is not adequate enough to deter wrongful seizure of property; the dissent says that requiring the person to post a bond is enough to deter him from doing so unless he has good cause to establish that it is his property We don‟t know who owns the property but state is doing something to alter the status quo Anyone who wants something can fire a writ of replevin and then impose a burden on other party in order to get back what is rightfully there State participates in what looks like a battle b/w private parties Connecticut v Doehr, 1991 Facts: DiGiovanni sues Doehr for assault and files attachment of his house worth $75,000 Wants the attachment to secure his funds, should he win the lawsuit and get compensation Doehr gets notified of attachment after the decision is made Decision to grant reattachment is based on probable cause that plaintiff‟s claims are valid P‟s affidavit: he swears that the things he is telling is true Doehr complains that issuing an attachment on his house without opportunity to be heard or without probable cause is against due process Issue: How much process must be given to a person, whose property is being taken by a prejudgment attachment? Holding: Supreme court says due process is required ** the seriousness of deprivation does not necessarily have to rise to a life threatening situation in order for due process to be required Looks at three issues from Matthews v Eldridge: a) private interest: even though Doehr is not being deprived of place to live, he will be unable to get loans, sell his house, have bad credit history b) risk of error: is high due to fact that court only has evidence from P‟s affidavit. CT statute says you can issue an attachment as long as you prove “probable cause” but it is unclear that this has been established or what it is. But why isn‟t the post termination hearing enough to cover it? c) govt interest- court says there is none. It says the interest to DiGiovanni is minimal II. CHOOSING THE PROPER COURT 7 A. PERSONAL JURISDICTION 1) Power: Jurisdiction over Parties Pennoyer v Neff- US Supreme Court, 1877 Black letter law: state does not have personal jurisdiction (in personam) on people who do not live in the state Facts: Two lawsuits occur here: 1) Mitchell v Neff: Mitchell is an attorney who works in Oregon; he does work for Neff. Neff does not pay his legal fees to Mitchell sues him. But Neff does not live in Oregon and is out of the state when he is served with lawsuit. b/c he does not know about the lawsuit, judgment is given to Michell in his default. Neff buys land from federal govt- Mitchell tells sheriff to seize the land in order to get his money from attorneys fees- so sheriff seizes land and sells it in auction to Pennoyer. Mitchell gets the money and Pennoyer gets the land that Neff bought Land is seized before Mitchell gets attachment on it 2) Pennoyer v Neff: Neff sues Pennoyer for his land. He claims that Mitchell invalidly took his land and that Pennoyer has no right to it Procedural History Mitchell sues Neff- Neff does not live in Oregon and notice of service is made through a newspaper publication. Neff does not show up to lawsuit so judgment is made for Mitchell in default. Neff has land from govt- sheriff seizes land and sells it to Pennoyer, gives proceeds to Mitchell. Neff sues Pennoyer to get his land back Issue: can Oregon sue Neff, who is a non resident of the state? Does it have jurisdiction in personam or only in rem? Can Oregon sell Neff‟s property before it was attached? BUT states has jurisdiction in rem over property owned in the state Oregon statute says: “the code of Oregon provides for such service when an action is brought against a non-resident and absent defendant, who has property within the state.”  Statute says that someone who is out of state but owns property in the state, that person can be served not personally but by publication  Limitation: court can only exercise power over the value of the property Mitchell, who wants $300 in legal fees cannot serve process to Neff by a publication for personal liability and then attach land. He must attach the land first  If he attached land and then sued Neff- no problem  State has a right to in rem jurisdiction (land problems that arise) Holding: the first lawsuit in which Mitchell sued Neff is invalid b/c Neff was not served personally and states does not have in personam jurisdiction over a non-resident. Therefore, if is still Neff‟s land and not Pennoyer‟s. Reasoning: When it comes to state sovereignty- you can exercise power over people and property within territory Statute: when it comes to property, all that is necessary is service by publication 8 If person is away and does not care enough about property that their property is being proceeded against, it is legitimate for state to go ahead and proceed against the property It is not fair to sue and then attach property: you cannot sue for personal liability who does not live in the state but still get money just because that person happens to have property in the state Only after court attaches land can you then go after personal liability Rules: 1. A state has exclusive jurisdiction over people and property within its borders. 2. No state can exercise jurisdiction over people or property in other states. 3. Judgments in personam without personal service of process shall not be upheld. 4. Judgments in rem with only constructive service may be upheld. 5. The “Full Faith and Credit” clause of the Constitution only applies “when the court rendering the judgment had jurisdiction of the parties and of the subject-matter”. Full faith and credit clause: as long as first judgment in NY was valid, it can be brought into NJ to enforce judgment against B‟s property. A judgment rendered in NY will have weight on someone in NJ Juxtapose this to idea of Pennoyer v Neff (each state is its own sovereign) Law of Pennoyer: If you just try to get a judgment with regard to a person‟s personal liability, it does not matter whether person owns land in state or not. States has to be able to exercise power over the person, regardless of whether property exists If we are talking about property- then property must be attached first- then sue for personal liability. If lawsuit is just about personal liability, state must have personal jurisdiction PENNOYER: REQUIRES A PERSON‟S PHYSICAL PRESENCE IN THE STATE IN ORDER TO SUE In 1800s it was hard to travel and not many people left state- therefore, a problem in which P wants to sue D, who lives far away, is very rare This means, that you have to follow D to his state in order to sue Puts a huge burden on P; makes lawsuits unreasonable Another problem is that states must protect their own citizens- and they cannot tell non-citizens to stay out Hess v Pawloski, 1927 – how Pennoyer framework is changed as people move in and out of states more often Now we are in a world where transportation is more common and people come and go What do you do when an out of state resident causes an accident in another state? Pennoyer sets personal service as standard (must be present to be served) BUT it is harder to uphold this standard Rule: a state must have some sort of relationship with the D in order to sue him what is this relationship?  Pennoyer = presence. Does not matter about owning property, making contracts, etc  Pennoyer says presence is necessary but is mere presence enough to make the service of process legitimate? 9 Facts P = Hess, an out of state motorist who injures D. P is from PA; accident happens in MA D = injured resident of MA who serves MA registrar with lawsuit against D Statute: by coming on roads, you are implicitly agreeing to this fiction by which this state official is your agent and if P serves agent personally for the purpose of any accident or liability arising from your use of the MA roads, it is as if you got served personally within the boundaries of the state.  As long as P serves the registrar in MA personally, it is as if P serve the out of state D personally P serves papers to registrar and mails copy of the papers to D in PA Issue Does this violate ruling of Pennoyer- can you serve someone process who is not physically present in the state? D argues it is consistent with Pennoyer- he was not present in state Procedural History D sues P for personal damages arising from injury; P files motion to dismiss on grounds that serving process on his violates due process of constitution Superior court and supreme court reject motion to dismiss/uphold P‟s claim Holding: statute of implied consent does not violate the constitution  balance that individual‟s right against right of citizen in MA, then that individual‟s rights to be personally served seems to be outweighed due to public policy concerns  there is an important state interest that has gotten a lot stronger since PEnnoyer was decided: protect P from torts and other liabilities committed by out of state residents Reasoning No longer a world in which people stay in one state Notice is not an issue b/c the motorist is mailed papers by the injured party Factors court considers: a) dangerousness of activity b) had the driver previously been in the state? c) Plaintiff‟s interest- P wants to sue in the state that he lives in d) Convenience of litigation Previously, Pennoyer court made presence a rule in order to be fair to D But now the state must be fair to its citizens and protect them for tortuous accidents; “implied consent” is enough to serve process on an out of state resident International Shoe Company v Washington, 1947 Differ from Pennoyer/Hess b/c former cases = private lawsuits b/w two private parties This lawsuit = issued by state against a corporation (a legal fiction), the cause of action is public ** what does it mean to say that a corporation is present in a state? ** is presence really a helpful way of determining who can be served with process? Facts P, which is based in Missouri but hires salesmen who work in Washington, did not pay unemployment taxes to the state of WA. WA sued P for money and P said that it was not a corporation present in the 10 state and was therefore not liable. WA serves the employees with process and then mails the same process papers to the company P objects on grounds that statute says you must serve the employer personally or mail it out of state- the employees do not count (but since WA mailed it also, this is not very problematic) Issue What kind of activity is required on a company in order for a state to sue it? What constitutes a corporation‟s “presence”? According to Pennoyer, you can only serve someone who is present in the state P argues the company is not present in WA: did not enter into contracts, did not own real estate, the salesmen were not allowed to make transactions in WA  Employees were not “agents” that were able to receive service of process D argues the employees benefited by being in WA and if you benefit from protection of a state you must submit to the state‟s taxes Procedural History: at first state sues P, then P files motion to dismiss which is ignored, then P appeals Holding: WA did not violate constitutional due process Reasoning: now the idea of presence is defined much more broadly Like holding of Hess, there is a statute says that as a legal matter, serving someone as an appointment as an agent is as good as physical service Why is presence a standard? Notice- must be notified of getting served process. If you care about your property enough, you should be in the state to look after it Presence is a way of ensuring notice and fairness (opportunity to be heard, defend yourself) OLD STANDARD: presence = notice + fairness NEW STANDARD: minimal contacts- state can exercise jurisdiction over out of state party if that party has minimal contacts with it such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice?” What is fair play? (unfair to escape tax liability if you enjoy protection under WA state) Two part test: what constitutes presence 1) relationship is systematic and continuous 2) cause of action arises from these contacts Pennoyer: #1 and #2 satisfied Hess: #2 satisfied (specific) International Shoe: #1 and #2 is satisfied (general and specific) Since Hess is good law, it looks like only fulfilling #2 will give court personal jurisdiction So why does systematic and continuous relationship matter? General v specific jurisdiction: a) general = systematic and continuous relationship b) specific = cause of action arises from contact is #1 enough to establish personal jurisdiction? If you have s/c contact with state for a long time, does that mean you can always be sued there? This goes to intuitions about whether it matters that D is a person or corporation or whether s/c contact is enough 11 1) state has interest in protecting P 2) P has interest in bringing suit in particular forum the statutes in Hess and International Shoe are the precursors to long arm statutes: states declare they have personal jurisdiction over out of state defendants in a variety of circumstances  Supreme court says there is no due process problem as long as D has minimum contact with state so as not to offend minimum standard of conduct and fair play Leaves open question: what kind of relationship does the state have with an out of state defendant? McGee v International Life Insurance Co, 1957 Facts Franklin dies and his beneficiary, P, sues D for life insurance benefits. D will not pay because Franklin committed suicide. Franklin and P = residents of CA; D = Texas corporation D did not business in CA other than the one contract with Franklin. Franklin originally was covered by another insurance company but D took it over. D conducted business by mail only- D sent yearly premiums to the company P gets judgment in CA and tries to enforce it in TX but TX court will not allow it Issue: does CA have personal jurisdiction over a Texas company? D argues it has gone outside the parameters of the 14 th amendment It cites precedent of International Shoe- two factors to consider a) systematic and continuous contact = NO there are no agents in CA; company is not soliciting business there, it does not own any rental space there, it has no employees there, etc b) cause of action arose from the state = YES Holding: sufficient minimal contacts consistent with fair play and substantial justice have been met- CA has jurisdiction There is specific jurisdiction b/c dispute arises out contact with the state a) P has an interest to bring suit in CA b/c she lives there b) CA has an interest to protect P (just like Hess wants to protect its MA residents) CA understands that many people have contracts with insurance companies outside of the state Even if P were living in AZ, made K with D, and then retired to CA- CA would still have an interest in protecting its citizens Issue: what about the due process rights of the defendant? What is fair for D? this is what Hanson v Denkla addresses. Hanson holds that Defendant is not liable to another state‟s jurisdiction if it did not voluntarily participate, or “purposefully avail itself of the privilege of conducting business in the forum state” Instead, the bank trustee was forced into the situation simply b/c Dora moved to FL It was done by a unilateral act of the third party- trustee has duty to protect D‟s money McGee: there is no unilateral act- the insurance company participates in the business Hanson: trustee has no choice but to conduct small business in FL by the unilateral act of Dora Hanson v Denkla, 1958  12 Facts: three sisters are arguing over the will of their mother, Dora, who set up a trust in Delaware and appointed the Delaware Bank as a trustee. She then moved to FL, where she changed will to make granddaughters beneficiaries. The sisters sue and say FL does not have jurisdiction to make granddaughters beneficiaries. Meanwhile, they also sue in Delaware. The issue comes to SC on which state has jurisdiction over the matter since both states come up with different conclusions 1) FL proceeding: daughters sue; FL rules that granddaughters have right to the trust 2) Delaware proceeding: daughter sue here too- sisters want a declaratory judgment about whether the FL judgment is valid 3) Supreme Court: P argues the original daughters have right to money, while D says that by res judicata the FL court decision stands firm and Delaware cannot change the holding under res judicata, you cannot try the same case in several different tcourts outcome- SC says that FL did not have personal jurisdiction over the Delaware bank and therefore the judgment is invalid. The sisters, not the granddaughters, get the money Holding: FL court does not have personal jurisdiction over the defendant (Delaware bank trustee) b/c the D was forced into situation and did not voluntarily avail himself into FL‟s protection/regulations: Hanson: [696, The] Court found minimum contacts absent: "The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." How does Hanson differ from McGee: a) in both cases there is no issue of systematic and continuous presence b) in both cases, the issue is that cause of action arises from contact in state Hanson: D was forced into it by unilateral activity of Dora It does not matter that P has an interest to bring suit in FL; minimal contact must be made McGee: D voluntarily went into contract with CA resident; it voluntarily availed itself of CA‟s jurisdiction Differing ways courts interpret what minimal contact means: Gray v American Radiator, 1960 Facts: Gray sues P for defective radiator. American Radiator had sent product to Titan, to retail to consumer. D countersues Titan, who is a co-D in the suit, but Titan wins Statute: if you have committed a tortuous act in Illinois, you are liable to personal jurisdiction there Issue: did American Raditor commit a tortuous act in Illinois? Is the way Illinois defines tortuous act consistent with due process clause? Holding: yes Reasoning: it can be inferred that American Radiator purposefully availed itself of Illinois benefits and protections by putting goods out in the market and wanting people to buy them. It is not unjust to hold a person answerable to defective products that make its way into the state of Illinois.  Consistent w/ Hanson that you must purposely do something to be subject to jurisdiction World Wide Volkswagen v Wilson, 1980- comes to different conclusion of Gray Facts: P buys care in NY and drives across country, gets injured in Oklahoma. P sues D in Oklahoma court but D says O lacks personal jurisdiction. There are 4 D‟s- 2 settle and the other 2 contest (the distributor and dealer) 13 Procedural History: trial court rules in favor of P, D appeals O Supreme Court affirms, but US Supreme Court says O does not have jurisdiction over World wide. Holding: Oklahoma does not have jurisdiction over World wide and seaway  Rejects foreseebility standard: just b/c it is foreseeable that person will drive its car through other states, D did not purposely avail itself to O‟s protection and benefits  Sovereignty important: NY state sovereignty will be violated if O hears the case  Trial and appeals court weighed too heavily the P‟s interest Rule: if you do not do anything to get benefits of a state, that state does not have legitimate authority over you. 1) Establish whether D has purposely availed itself of the forum state‟s benefits 2) If purposeful availment has been established, then question convenience of the parties  Court rejects foreseeability of injury argument; does not make purposeful availment  Geographical proximity has nothing to do w/ outcome  D must have notice that he might be haled into the forum state’s jurisdiction Brennan‟s dissent: weighs competing interests a) P‟s interest- high b) D‟s interest- not high c) Forum state‟s interest- wants to protect its citizens In truth: the majority is not even interested in weighing the interests. It is not using a balancing test- you do not even think about these questions of interests until after you have established the minimal contacts SUMMARY 1) International Shoe: a) systematic and continuous relationship b) cause of action arises from state 2) McGee: cause of action arises from state 3) Hanson: cause of action arising from state is not enough to have personal jurisdiction party must purposefully avail itself of the benefits and protection state‟s laws 3) World Wide Volkswagen: purposeful availment does not mean foreseeability of injury What meets the definition of purposeful availment? Burger King v Rudzewicz Facts: D opens BK franchise in MI. signs contract with BK which has headquarters in FL, and contract says that all litigation will arise from FL law. Choice of forum is not discussed. D falls behind on monthly payments and P sues in FL court; D argues there is no personal jursidiciton issue: is a contract which mentions specifically FL law enough to say that D purposely availed himself of FL? Holding: (Justice Brennan) yes Reasoning: first ask question of personal availment, then you go into factors such as P‟s interest and D‟s interest. If there is no personal availment, then there can be no discussion of other issues  World wide says that purposeful availment is not the foreseeability of injury but it is the foreseeability of being availed in the forum state  Under this definition, P argues that signing contract means D should have forseen it 14 But D argues he had no reason to believe that he would ever have to go to FL since he dealt only with the MI offices PROCESS OF FINDING JURISIDCTION  purposeful availment is necessary, but purposeful availment is not sufficient 1) is there purposeful availment? YES- look at other factors too NO- case closed 2) if there is purposeful availment, then you balance other factors: a) P‟s interest b) D‟s interest c) Interest of judicial system coming up with a fair resolution d) Social policies once you establish purposeful availment, that is not the end of the inquiry look at other factors- by weighing factors differently you get different law ex. World wide Volkswagen, Brannon dissented, but in Burger Ming, Brannon leads the majority Burger King dissent: D had no reason to believe he would ever have to go to FL for jurisdiction Dissent is not objecting to balancing test, but to what purposeful availment means Brannon likes purposeful availment to be at a low threshold (forseeability of injury) whereas dissent wants to make the threshold higher  There are all different ways to think about what it means to purposefully avail yourself- it goes to whether or not a party is agreeing to having a state have jurisdiction over it a) tempting to make contract with choice of law provision as way of submitting yourself to state b) but contract is taken as a way of a person getting some kind of privilege from doing business with the state. What if there is no forums selection clause but BK was headquartered in FL and everyone knew that- if you are contracting with someone that you know to be headquartered in a particular state- is this enough to establish jurisdiction? How might the standard be changed as new kinds of problem arise? Ex. If contract said choice of law is Montana  it is not just about contract- it has more to do with the relationship of both parties; D got himself into FL jurisdiction b/c he got involved with FL company and signed contract with a company based in FL GENERAL JURISDICTION: when can a state have personal jurisdiction when the cause of action does not arise from it? Ex. Washington resident buys shoes in St. Louis and sues in Washington a) sovereignty- it should not matter that cause of action did not arise from state; once you do enough activity in state, you have come within its power. A state can only exercise power once someone has agreed to state‟s benefits and protection b) convenience- state can exercise jurisdiction as long as it is not unduly burdensome c) balancing- combo of convenience and sovereignty- balance all competing interests involved Helicopteros v Hall, 1984 15 Facts: a contract is negotiated between Helicol and Consortio in Texas, but the K says all disputes shall be litigated in Peru P = decedent‟s estate who sue D for wrongful death D = Helicol, a Peruvian company that signed contract with Consortio, a company in Texas A plane which Helicol had leased to Consortio crashes in Peru and four TX residents die Specific jurisidiction: did Helicol purposefully avail itself of laws and benefits of TX? This depends on Helicol‟s contacts in TX:  It sends employees to be trained, it buys several million dollars worth of helicopters  No agents, no employees actually live in TX  mere purchases and brief training trips…are not enough to warrant jurisdiction Issue: does TX have personal jurisdiction over Helicol?  None of the parties raise matter of specific jurisdiction  P tries to prove general jurisdiction- Helicol had systematic and continuous contact with TX P relies on case law that you can still have jurisdiction even if cause of action does not arise Systematic and continuous: someone in D‟s party must actually live in the state- have employees reside there, have offices there Holding: since Helicol did not have systematic and continuous contact with the state, TX does not have jurisdiction Dissent (Brennan): TX has both general and specific jurisdiction  court is not considering “arising from” and “related to”  the fact that this came about from pilots going to TX to get trained should be enough  a 7 year relationship shows systematic and continuous Brennan sets lower bar for minimum contacts threshold  he dissented in world wide Volkswagen- thought foreseeability test was enough  should look at totality of things- mix and match. Should not be either/or  problem: this may expand personal jurisdiction too much How do we deal with fairness to foreign companies? Asahi Metal Industry Co v Superior Court, 1987 Facts: Asahi, Japanese Co, sells rubber valves to Cheng Shin, a Taiwanese company, which in turn sells tires to places in CA. Asahi knew that it sold parts that would eventually turn into tires that would be sold in the US market Zurcher is injured on motorcycle in CA and sues Cheng Shin in CA court Cheng Shin files motion to include Asahi as co-defendant Asahi, P, claims CA does not have jurisdiction to hear the case. Meanwhile, the original lawsuit b/w Zurcher and Cheng Shin had been resolved Issue: does CA have personal jurisdiction? Holding: Justices agree 9-0 that CA does not have jurisdiction Reasoning: no majority opinion on this PART I- Facts- all justices agree No general jurisdiction: no systematic and continuous contact Specific jurisdiction: Did Asahi purposefully avail itself of CA‟s benefits and privileges? Court must find minimum contacts that are consistent with fair play and substantial justice 16 1) PART II-A: stream of commerce plus: a group of justices believe that Asahi must do more than merely put rubber parts in market. It must target product in some way to CA, such as design features specifically for CA, market or advertise to CA, have agents or employees go into CA to sell its product. The mere awareness that product might end up in CA is not enough to purposefully avail yourself of its laws  stream of commerce period: all you need to do is put goods in the stream of commerce in order to establish personal jurisdiction- that is it 2) PART II-B: Once you establish personal availment, then you ask the balancing test a) burden to D- very high, not fair for Asahi to defend itself in a foreign legal system b) plaintiff‟s interest- not very high; not a CA citizen c) forum state‟s interest- not very high; not protecting rights of its citizen d) interstate judicial system‟s interest in reaching an efficient resolution- it may be easier to produce evidence in CA, where the accident occurred (aka convenience) e) overall social policy goals- courts have an interest in promoting trade and not having foreign companies fearful of lawsuits in America 1) FIRST FIND PURPOSEFUL AVAILMENT a) stream of commerce theory b) stream of commerce plus theory 2) SECOND- DO BALANCING Holding: although justices disagreed on whether to apply stream of commerce or stream of commerce plus theory, they all agreed on the balancing test and that it would offend notions of fair play and substantial justice for CA to try the court Part II-B is the controlling opinion b/c all justices agree on balancing test  Even if Asahi had purposefully availed itself to CA, it would not be right to exercise jurisdiction due to the balancing test  Part II-A: justices say there is NOT purposeful availment b/c they adopt the commerce plus theory, so balancing test operates like dicta  Part II-B: Brennan says there IS purposeful availment b/c he adopts the commerce period theory, but you do not have jurisdiction b/c of balancing test  Either theory you adopt, you get no jurisdiction due to balancing test Problem with balancing test: parties do not know what to think, it leaves everything open to the jury to decide. The test would change if Zurcher had not settled b/c his interests would be very high Justice Stevens: you do not need to choose b/w commerce plus or commerce period theory- once you figure out there is no jurisdiction based on balancing test, the case is settled Justice Scalia: does not believe in the balancing test. There is no point establishing purposeful availment if you do the balancing test afterward. He believes in stream of commerce plus theory Bright line rule: is there personal availment or not? If yes, exercise jurisdiction Other approach (majority): after you get purposeful availment, then you leave it to the judges to balance the competing interests  This increases discretion of the judges- they have to figure out how strong the interests are, burden of P and D, social policy 17   This could be good b/c all cases have highly specific circumstances Fairness has to be attributed as each case arises What Asahi tells us: 1) is there personal jurisdiction? 2) if so, balance the factors “what do you need to find personal jurisdiction?” a) stream of commerce b) stream of commerce plus final holding: until we have to decide b/w stream of commerce theories, lets use balancing test to find personal jurisdiction Balino v Simon, district court of LA 1999 Facts: P = resident of CA, Balino, is allegedly defamed by D, who lives in NY D runs a sports memorabilia business. He has website that solicits people to fill out form and he will contact him back. Mr. Aubert, resident of LA, contacted D about a certain baseball and P responded with defamatory remarks about Balino and his company, FDS D says bad things about P and his company, causing Aubert‟s relationship with P to be forever severed P brings lawsuit in LA b/c that is where the defamation occurred; he claims LA has both specific and general jurisdiction Spence is a co-D in the lawsuit- he lives in PA Issue: is there enough contact b/w D and forum state for LA to have jurisdiction? a) general jurisdiction: NO- no agents, no offices, no employees in the state, no physical presence there. No systematic and continuous (like Helicol decision) BUT…now that you have internet to establish those contacts for you, isn‟t that the same thing? If you can make business deals through internet w/o having agents in the state, you are reaping same benefit from the state c) specific jurisdiction: YES- even though Aubert makes the first phone call, D makes several phone calls and emails later in which he allegedly defames holding: court says LA has jurisdiction over Simon, but not Spence Simon: continuous emails and phone conversations with Aubert over one week period, even though Aubert initiated it. Simon also has a website that offers people to fill out a form so that he may help them  this counts as specific jurisdiction- too hard to argue for general jurisdiction  court adopts stream of commerce plus theory- Simon must do something extra to direct his activities to Aubert Spence: has one time conversation with Aubert, that Aubert initiates- this is not enough for specific jurisdiction; the website Spence works on is run by his business, not by him personally  court suggests if Spence were running the website himself, they would have general jurisdiction over him physical presence- when is it necessary and when is it sufficient for personal jurisdiction? 18 a) there is jurisdiction over something/someone that is physically present in the territory Pennoyer v Neff: Mitchell could only serve Neff if he was personally in the state of Oregon BUT he could attach property because it is quasi in rem proceeding Quasi in rem: attachment of land has nothing to do with the lawsuit being adjudicated. Mitchell attaches land to get money owed, even though money owed has nothing to do with property b) what about property that is not land, such as debts Harris v Balk Facts: Harris owes Balk $180 in debt- Balk owns the debt, it is his property Balk owes Epstein $344 in debt- that debt is Epstein‟s property, which Balk is carrying around Epstein sues Balk in Maryland for writ of attachment- Balk gives Epstein $180 Harris sues Balk in NC, demanding his money and saying Epstein‟s suit was invalid Issue: does Maryland have the jurisdiction to make Balk pay $180 to Epstein? Holding: yes; court treats it as quasi in rem action rather than in personam  Epstein tries to get money by attaching Balk‟s property, which is moving around because Harris is carrying it. Epstein does not need to serve Harris personally  Looks like personal action since E serves H personally  Case shows difficulty in distinguishing b/w quasi in rem and in personam actions Should there be a different approach in quasi in rem versus in personam cases? Shaffer v Heitner: it rules that the standards of International Shoe should apply to both quasi in rem and in personam cases; courts have jurisdiction according to minimum contacts that are in line with fair play and substantial justice Facts: shareholder in the Greyhound bus company sues 28 of its directors/officers in Delaware for anti-trust actions (directors behaved badly)  form of action = shareholder derivative = lawsuits against management of the corporation  all recovery goes back to the corporation 28 officers/directors live in 9 different states. Where to sue? a) states they live in b) company headquarters- this is option Shaffer chooses c) find out where the bad acts occurred d) look at places where they own lots of property: stock is located in Delaware statute: a stock resides in the place where the business is incorporated (which is Delaware)  P puts stop transfer order on stock  If D shows up to contest the order, he automatically submits to jurisdiction (according to DE law) DE claims to have jurisdiction b/c property (stock) was attached- this would be ok under Pennoyer but Supreme Court makes new rule Holding: apply minimum contacts test of International Shoe to quasi in rem proceedings a) no specific jurisdiction: action did not arise out of state b) general jurisdiction: P argues that directors voluntarily became officials of a company based in DE and benefited from protection and laws of the state; should expect to be sued in DE Court says there are not acts related to the lawsuit in DE, and DE does not have strong interest in trying the case  D not residents 19   If state really wanted to protect companies, they would have made laws to do so Even though it may be important for DE law to apply to the case, it does not mean that it has to be tried by DE courts Brennan‟s dissent: agrees with applying minimum contacts test, but in doing so he thinks that Delaware should have jurisdiction over the case  If you can articulate strong reasons why state law should apply, it should give rise to presumption that state‟s court should hear the case too  By becoming directors of a company, they have done something to purposefully avail themselves of state laws- it is enough to foresee being held in Delaware court Physical presence hypo: Gardiner hits tennis ball in NYC and injures a tourist who lives in IN. tourist gets surgery in IN and sues Gardiner when he is flying in a plane on his way to CA. does IN have jurisdiction? (IN would not be able to sue Gardiner in NYC b/c there would be no specific or general jurisdiction) a) according to physical presence theory, yes Burnham = “pennoyer lives!” = if you are personally served with process within territorial limits of the state, that will be sufficient to give rise to jurisdiction. Presence is not necessary, but it is sufficient Fair? Just b/c you happen to be flying over a state, why should that matter? Majority holding: because that is the traditional notion of comporting with fair play and substantial justice and everyone is aware of this law. If you follow Brennan‟s approach and apply balancing factors, no one will ever know when they may be subject to jurisdiction  all justices agree there should be jurisdiction over Mr. B but they have different views on why: this leaves the question open for lower courts on how to decide the matter facts: Mrs. B serves Mr. B with divorce files in CA, while Mr. B is going there for a business trip and to visit his kids. He is a resident of NJ Mr. B: says there is no specific jurisdiction, not enough contacts with CA (no general J)  uses Schaffer: jurisdiction is subject to minimum contacts- which Mr. B does not have holding: court rejects arguments and says CA does have jurisdiction over the case Reasoning: Int Shoe, Schaffer, etc, do not apply b/c all those defendants were physically not in the state where process was served  but here, Mr. B. is present, and presence is sufficient  even in an expanding universe, when transportation and technology has increased, the presence theory is still in tact (the same principles which have expanded J should also restrict it) Pennoyer: people did not move around a lot, so presence theory was fair Now: fact that people move around a lot, they should follow traditional standard b/c it is certain and known to all Brennan‟s theory: even going to CA for a single day is enough to purposefully avail yourselfone single incident of going into a state is enough to establish jurisdiction in that state- this is neither specific nor general jurisdiction  distinction b/w S and G jurisdiction is less important  just try to find purposeful availment in then apply balancing factors 20 HOW ARE COURTS MODIFYING RULES ABOUT PERSONAL JURISIDCTION W/O OVERRULING? International Shoe: court has jurisdiction over D b/c there is both a) systematic and continuous relations, and b) cause of action arises out of state McGee: court has jurisdiction b/c cause of action arises out of contact with state  is cause of action arising out of state sufficient? Hanson: no- just b/c lawsuit arises out of contact with the state, it does not guarantee that jurisdiction is consistent with due process  purposeful availment: party must purposefully avail itself of privileges and protections of the state  unilateral activity by a third party is not enough World Wide Volkswagen: purposeful availment is not merely by liability being foreseeable Burger King: an example of purposeful availment may someone entering into contract with forum state and doing business with a company whose headquarters are in that state Franchise relationship is established in FL and choice of law is FL Helicopteros: no systematic and continuous contact found Asahi: stream of commerce or stream of commerce plus theories- then do the balancing test Schaffer: apply minimum contacts test to quasi in rem proceedings as well as in personam- there is no such thing as attaching property without it effecting the property owner Burnham: follow traditional notion that physical presence is sufficient for jurisdictionotherwise judges have too much discretion and no one knows what to expect Principle of minimum contacts: HANSON V DENKLA: D must purposefully avail itself of privilege of conducting activities within the forum state BK: contracts must proximately result from actions by the defendant himself that create a „substantial connection‟ w/ the forum state WORLD WIDE V: court rejects personal jurisdiction b/c consumer unilaterally brought the defendant‟s product into the forum state. This is not sufficient personal jurisdiction It was argued that world wide could foresee that product would enter other states Court rejected foreseeability argument: insufficient basis for personal jurisdiction ASAHI: Some courts have said that a D is responsible by putting a product in stream of commerce/ others adopt world wide Volkswagen argument that D must do something purposefully directed to put himself in the forum state In this case, just b/c some justices believe minimum contacts have been established, doing the balancing test rules against CA having personal jurisdiction BURNHAM: physical presence is sufficient- follow traditional standard 3) Notice and Service of Process RULE 4- Service of Process- why is it important that D be served with summons and complaint?  Rule 4 is strictly construed; if D is not served properly, the case is dismissed without prejudice (meaning the P can sue again)  Even when D has notice of service, court may dismiss for insufficient services- which means P will have to expend more resources to serve again 21 Rule 4(D) Waiver of Service; Duty to Save Costs of Service; Request to Waive.     1993 Revision strongly encourages waiver of service in person. P sends a request to the D, who returns a form granting a waiver. This gives notice to the D and assures the P that notice was received. If the D decides not to waive, he must pay the costs of personal service. If he does opt to waive he is rewarded by getting 60 days to respond rather than customary 20. Maryland State Firemen’s Association v Chaves Facts: P sues D for illegal solicitation of charitable contributions which P claims they are entitled to Cause of action is tort- which may be effected by statute of limitations Complaint filed Jan 2, 1969 P files motion for default March 4, 1969- more than 30 days have elapsed Rule 4M: P has 120 days to serve D We infer that D had copy of complaint since his lawyers met with P‟s lawyer Issue: did P properly serve D? Holding: no- the court rejects motion for default due to fact that service was not sufficient Reasoning: whether P applied or new rule, it did not sufficiently serve summons a) Old rule: mail copy of summons and complaint by first class mail as well as two copies with return envelope. D has twenty days to send receipt of service back b) New rule 4d: P sends D notice of service requesting waiver The new rule frames it as a waiver of service- any D has right to be informed of claims, by way of personal service or some way that gives him sufficient notice of the claims Incentives for sending back waiver: a) Rule 4d(3)- D has 60 days to serve an answer to complaint, as opposed to 30 b) D will have to pay P to personally serve him if D does not send back waiver why doesn‟t Chaves waive? a) maybe wants to wait for statute of limitations to go out- but risks that P will go after and serve you personally if you do not send waiver back and then D has to pay for that P‟s alternatives: 1) 4(e) allows federal court to follow law of the state in which district court is located Maryland rule: process by first class mail. P uses certified mail- not allowed Service is allowed by posting or publication for in rem or quasi in rem actions only 2) P may serve D is a state other than Maryland: Rule 4(e): service upon an individual from whom as waiver has not been obtained may be affected in any judicial district of the United States 1. pursuant to the law of the state in which the district court is located 2. by delivering a copy of the summons and the complaint to the individual personally or by leaving copies thereof… 3) P may serve D personally 4) P may leave it at “dwelling house or usual place of abode with some person of suitable age and discretion then residing therein” “or by delivering a copy of the summons and of the complaint to an agent authorized by appointment or by law to receive service of process” 22 4(e)1- b/c you must do it pursuant to law of state, must check state law‟ case importance: actual notice is not the standard for service of process- not sufficient  if you follow distinct rules, then you can be certain you will have lawsuit  but if you rely on D‟s notice, trial court goes through evidentiary nightmares deciding if D had notice or not (expend resources)  D must reimburse P to serve him personally if D does not return waiver; this ensures that P will not take on steep costs just to sue someone but it also means P will not make a frivolous suitcourts want to make it hard for P to a certain degree to avoid too many lawsuits Rules are designed to protect D‟s due process rights:  you create opportunities through your procedural rules for certain kinds of behaviors that will impose costs to adversaries- with hope that cost of litigation outweigh benefit of bringing the lawsuit in the first place Wyman v Newhouse Holding: If service is effected by fraudulent means in which D is lured into a foreign jurisdiction, that is not a valid service of process. Must think what are the kinds of actions that constitutes “luring” someone into jurisdiction Mullane v Central Hanover Bank- Reasonable calculation standard facts: there are several small trust funds that are pooled together into one large fund. The trustee sends notice through publication in a newspaper for four weeks. It is a settlement arrangement for a trust  but there are many beneficiaries with different interests in how the money is getting invested  grandmas are interested in interest, the grandkids are interested in principal  NY law: trustee distributes income that is generated to all beneficiaries; once everyone shows up, it is decided who gets what. Once everything is decided, you can‟t bring suit again Issue: did the trustee notify all the beneficiaries in a constitutionally sufficient way?  Was service by publication once a week for 4 weeks sufficient? Holding: a) not sufficient for known people- those whose addresses are known $ is already being sent to them by mail so we know where they live b) it is sufficient for unknown people- those not receiving money/interest c) you do not have to go out of your way to find someone‟s address in order to mail service  If you don’t know an address, it is unreasonable to require you to go through too much trouble to figure out how to reach the people  Reasonably Calculated Standard- based on practicality and expense HYPO: send process to someone via email to their last known email address but they never check it. Is this constitutional? P must prove that it was reasonably likely that D would get notice According to Mullane standard, email service is sufficient b/c it is last known address. But if P did know D‟s address, that might make a difference  Actual notice is not required- it just must be reasonably calculated  More serious a deprivation of D‟s rights- the more stringent the reasonable calculation standard  P should not have to go through too much trouble- or else D will avoid lawsuits  14th amendment = reasonableness standard = take into account all circumstances B. SUBJECT MATTER JURISDICTION 23 1) Federal Question: Article 3 gives judicial power to all cases arising under federal constitution, laws and treaties. Supreme Court hears limited cases; other cases Congress must give inferior courts the power to hear. Article 3 lists scope of Congress‟s power but it does not meant Congress has to use all of it Any federal case can be heard in either state or federal court. State = general jurisdiction Statute 42 US 1983: every person who under any color or statute…any citizen of US shall be liable to a person in lawsuit, there is jurisdiction over this cause of action b/c Congress also passed 1331 Once there is 1983, if you look at 1331 (Federal question jurisdiction)… What does arising under mean according to: a) Article 3, section 2 b) Statute 1331 Osborn v United States Bank Facts: States tried to collect taxes from national bank, which was not allowed. Ohio officials raided US bank and seized $120,000. Ohio gives back $100,000 and US Bank sues Osborn for the remaining $20,000 Ohio argues: 1) Fed district court did not have right to adjudicate the case 2) Congress did not give Fed court the right But there is a clear statute in which Congress gives Bank right to sue and be sued, etc  Case is not about whether this statute is constitutional  Congress cannot pass statute that gives federal courts original jurisdiction over all intentional court cases…  There is difference in these cases b/c Article 3 establishes ceiling for bank. Ceiling – all cases must “Arise under federal law”- but what does arising under mean? Holding: federal court has jurisdiction over case b/c anything Bank does arises under federal law since Congress created existence of the Bank Ingredient theory: fed court have jurisdiction over any federal issue that is an ingredient in the cause of action. Cause of action itself does not have to arise from federal issue  since Congress has power to create Bank, bank exists b/c of federal action  Bank can sue someone over contract case and that will be heard in federal court  Bank is created by federal law so everything the bank does comes within scope of Article 3 Question that comes up in dissent: dissent says this suggests that Congress can pass a statute that all naturalized citizens may sue or be sued in federal court b/c there is no such thing as a naturalized congress without an act of congress. Naturalized citizen: you are a person before a naturalized citizen- Congress does not create you Bank: bank does not exist without act of Congress  Gives Congress lots of power to bring certain cases into federal court Article 3: constitution gives federal courts authority to hear federal question cases (broader view) 24 Statute 1331: Congress gives original jurisdiction over federal question cases to all civil actions arising under the constitution, laws, or treaties of the US Test: a) federal law creates the cause of action: Osborn v Bank of USA b) plaintiff‟s right to relief necessarily depends on resolution of a substantial question of federal law: Smith v Kansas City Title & Trust Missouri state law forbids investment in unauthorized securities/ federal law needed to determine if securities are unlawful the cause that arises from state law depends on resolution of federal law Fed and State are inextricably linked- cannot draft the complaint w/o federal law FQJ = when resolution of a state claim requires construction of federal law Moore v Chesapeake: state law may adopt aspects of federal law but a claim arising from this state claim is still a state claim (no FQJ) Reconcile: the importance of the federal issue at stake is determinative (substance/ nature) state created claims: a) claim being asserted is created by state law but it requires interpretation of a federal law issue b) weight is given to the substance and nature of the federal law at issue Smith: cause of action arises form state law that bank shall not invest in illegal securities… Problem concerns constitutionality of a federal statute- deemed important Moore: no federal jurisdiction b/c violation of a federal statute is just an element of the state law claim Federal standard is just an element of state tort recovery- less important Merrel Dow v Pharmaceuticals: Ps bring a state court product liability suit against D for injuries sustained when they took a drug produced by D. the complaint alleges that D violated the FDCA (federal statute) by mislabeling the drug and such mislabeling created rebuttable presumption of negligence. D removes to federal court under statute 1441 (If you have state case in which D is citizen of the state, you cannot go to federal court unless it arises under federal question: Holding: does not arise under federal law b/c Congress did not give private right of action for violations of FDCA when it made the statute. Federal courts should not provide federal remedies for violation of law  it is not a cause of action that necessarily depends on federal law- it is just an element of the negligence claim. P could bring lawsuit without reference to statute  Congress did not give an explicit statutory remedy for private cause of action arising from the FDCA statute (unlike 1983 when private remedy is stated)  Even if FDCA violation was a necessary part of the torts claim it does not want to give federal jurisdiction because there is no federal private remedy Issue: Congress makes a norm- who do we want interpreting it? Federal court or state court? Brennan‟s dissent: just b/c there is no federal private remedy, it does not mean federal court should be barred from jurisdiction. Federal courts should do more than just provide remedies; it should give meaning to the norms that Congress makes, even if private remedy is not available. Prefers using federal courts: a) federal court knows federal law better and what Congress intends b) will do a better job interpreting statutes and regulations c) make uniform decision that will clarify issues in the future d) federal question is not necessary for plaintiff‟s cause of action; it only comes about in defendant‟s anticipated defense: 25 Louisville & Nashville v Motley: P claims in a federal suit that D has breached its agreement to give P free passes in return for their release of tort claims against it. A federal statute was passed which prohibits giving such passes, and P anticipates that D will raise federal statute as defense Holding: federal Q must be part of P‟s well pleaded complaint- not enough that Defendant‟s answer raises a federal question Grable & Sons Metal Products, Inc.v. Darue Engineering & Manufacturing Issue: should this case be heard in federal court? Facts: IRS took property from Grable b/c it was late on tax payments and sold it to Darue. Grable argues that IRS did not properly serve it with notice (mailed complaint rather than serve personally) therefore seizure was invalid and Darue did not validly get title to property  Darue tries to remove case to federal court  Grable insists it is a state court matter- state court cause of action for quiet title  Issue: determination of a state law claim depends on interpretation of a federal issue Holding: all courts agree there is federal jurisdiction; end up ruling for Darue in that IRS does not have to follow service process to the dot. Grable‟s basis for state court: there is no federal cause of action, the statute provides for no remedy. It is a state cause of action that happens to have federal issue (cites Merrell Dow)  But there does not have to be a federal cause of action- Smith  Grable says federal issue is not as important as it is in Smith- substance, nature, etc.  If federal interest were really that strong, Congress would have made private cause of action Grable differs from Merrell b/c the only issue in dispute has to do with interpretation of federal law. Unlike Merrell in which there were several torts claims that did not rely as much on federal statute Court‟s basis for federal court: weigh the interest in federal court interpreting federal law. EASY: Congress creates private right of action and P invokes it (statute 1983) HARD: state cause of action that involves interpretation of federal law  Harder: when there is no private remedy (Moore, Merrell) “arising under”- state cause of action Smith – substance and nature of fed issue Constitutional issue makes it important Grable- there are very few cases in which a State quiet title claim involves a federal Statute, so courts will not have to let in too Many other cases. Any case with federal private remedy will Always be tried in federal court Federal govt‟s exercise of authority such as Collecting taxes or issuing bonds “not arising under”- state cause of action Moore- fed issue is just an element that is not crucial to adjudication Merrel Dow- can try negligence claims w/o Having fed court interpret federal statute If you let in all negligence claims simply b/c There is fed statute, court will let in too Many cases Not having private cause of action does not Necessarily bar federal court Garden variety tort claims- less likely to be Heard in federal court Souter’s Analogy: Door key: state cause of action with existence of a federal issue  this will get you in the door for federal jurisdiction but does not guarantee it 26 Welcome mat: private federal remedy- this guarantees entry into federal court Door key + welcome mat: guaranteed entry  door key but no welcome mat: not necessarily go in b/c you might bring in too many other cases that do not have a welcome mat (Such as numerous state contracts and torts claims- like Merrell)  just b/c no welcome mat does not bar entry into federal court- you still have door key (possibility to get into federal court) How do we determine which ones go into federal court? a) Smith and Grable: there is fed govt‟s money and legitimate exercise of its function as a govt at stake larger interests are at stake- (e.g. can fed collect taxes from people who owe govt money?) b) Moore and Merrel: federal norms at stake do not require federal court interpretation These deal with safety norms- does not NEED interpretation by federal court As opposed to govt tax collecting/federal bonds- these require federal court interpretation 2) Diversity Capron v Noorden, 1804 Facts: P sues D for trespass on the case; D wins and P appeals on grounds that federal court in NC does not have jurisdiction over him. The suit gets dismissed on appeal because the court never establishes P‟s citizenship. D is citizen of NC but we do not know where P is a citizen. Holding: in order for federal court to hear case, citizens must be diverse- P has burden of proving diversity. Fact that both parties consent to jurisdiction is not enough. Since P wins appeal, he can bring suit again once his citizenship has been established  Constitutional basis for personal jurisdiction: 14 th amendment guarantees that life, liberty, and property will not be deprived. A court may not exercise authority if you do not have proper relationship  Subject matter jurisdiction: Article 3 tells you when federal judicial power shall apply  10th amendment: federal courts cannot exercise authority w/o proper jurisdiction Mas v Perry Facts: Mr. and Mrs. Mas married in MS, do graduate work in LA, move to IL, then back to MS. Have not established place where they intend to remain. They sue D in LA for tortuous action. D argues there is no diversity of citizenship since Mrs. Mas is citizen of LA.  D invokes complete diversity rule: no P may be of same domicile as D  Since Mrs M is French citizen, it is crucial that Mrs. M be from MS Holding: Mr. M is citizen of France, Mrs. M is citizen of MS b/c that is where she is from originally and until she establishes new domicile, it will be her domicile for purposes of diversity jurisdiction  Even though Mrs. M has no intention of going back to MS, MS is still her state of citizenship until she establishes a new place where she intends to remain  Evidence of intent: drivers license, place of marriage, etc AFA Tours v Whitchurch- amount in controversy Facts: D used to work for P and allegedly stole trade secrets from P in order to set up his own business and steal P‟s customers. Issue: can this case be heard in federal court b/c amt in controversy may be under $50,000? (now the rule is amt must be $75,000) 27 Procedural history: trial court dismisses case b/c they claim amt in controversy is not met Holding: appellate court reverses- P should have opportunity to show that its claim is worth $50,000  P must make allegations in good faith  As long as P can provide some good faith theory for why claims will be $50,000, it should go to jury since D cannot prove with legal certainty that claims are definitely below $50,000  It does not matter if P loses case and is not awarded any damages whatsoever. Rose v Giammati facts: Pete Ross sues commissioner of MLB, Giamatti, in state court. P is citizen of Ohio, Giammati is citizen of NY. It is a general common law cause of action- P is trying to get an injunction against D to stop an investigation regarding P‟s gambling  P brings it in state court of Ohio; general common law cause of action  D tries to move it into federal court, even though it will be located in Ohio 3 defendants: MLB, Cincinnati Reds, Giammati  Since Giammati is citizen of NY, he says all other Ds do not matter  D is the only party who is allegedly the biased decisionmaker  D tries to refute the complete diversity rule: all P‟s must be different citizens than all Ds Issue: does D have a valid claim to have case tried in federal court or is he improperly/collusively joining the parties in order to invoke jurisdiction? (1359)  You may not add parties for purpose of trying to stay in state court State v federal court: 1) federal court located in same state as state court- Ohio law applies no matter what 2) federal v state judges: judges in federal court cannot be fired unless they do something criminal; they are in there for life and salaries are not cut- gives them protection against politics  General view that federal judges are better, more prestigious, smarter, and fairer  Main fear is that out of state citizen fears discrimination from state court  Federal courts want to hear matters only of national importance- things that affect large populations. Should not be trivial Reasons against diversity jurisdiction: 1) large percentage of federal docket is devoted to diversity cases (23%) 2) federal judges are applying state law- using state law to apply to case they are given 3) convenience is not an issue- federal court is located in state where cause of action arises 4) federal courts are hearing too many trivial cases: a) congress raises amount in controversy b) large steps to repeal 1332 (diversity jurisdiction): is this constitutional? Article says judicial power shall extend to all cases, in law and equity, arising under this constitution…controversies b/w citizens of different states Congress has discretion- that is why it enacted amount in controversy If it is not included in Article 3, congress does not have power to pass statutes that gives courts power to hear cases that are not in list of Article 3 (ceiling theory) But Congress has the power to take away some jurisdiction (diversity J) that is listed in Article 3- it does not have to establish district courts if it does not want to 28 3) Supplemental Jurisdiction: When may separate claims and parties be brought in with a federal claim even though federal court would not originally have subject matter jurisdiction? Ex. Title 7 employment discrimination suit + contract dispute Options: join both claims in federal court, state court, or bring each one in separate court Hypo: P1 sues D1, D1 impleads D2 but D2 is not diverse from P. can federal court hear case? Rule of Joinder- what it permits You can join various claims and parties but only if there will be federal jurisdiction over the parties that you join Rule 18: joinder of claims- P can join many claims over D that may be unrelated Rule 20: joinder of parties- you can keep adding parties but they must be related  Assert claim for relief jointly/must arise out of same transaction Rule 19: compulsory joinder rule- cases when you MUST join parties together b/c it is necessary for adjudication  Sometimes join party but in doing so you defeat diversity J  Sometimes there is some reason why you can‟t join a necessary party (jurisdiction)- but if this situation exists, courts have to decide whether party is indispensable (will dismiss case) or if the party is necessary but not so necessary that they have to dismiss case. Court will continue to hear case even if necessary party cannot be joined Rule 14: impleader- When D1 brings action against D2. D1 is third party P against D2 Rule 24: intervention- someone who is not a party may join if he has an interest affected by legislation Joinder/Supplemental Jurisdiction: turns on FACTS. Everything boils down to whether claims are a common nucleus of operative facts United Mine Workers v. Gibbs Facts: two claims of action a) federal claim: P sues D for violation of Labor Management Relations Act, a federal statute which bars against secondary boycott. P alleges D engaged in a secondary boycott b) state law claim: unlawful injury and tortuous interference with contract. D puts pressure on a third party company not to do business with Gibbs. Issue: may the federal court hear both claims? The court hears both claims but sets aside federal claim because facts do not amount to a real secondary boycott. D loses on that count. But there is a constitutional question as to whether federal court can hear the state claim too Procedural history: D appeals to Supreme Court, alleging that federal court does not have power to hear state claim Holding: federal court may hear the state claim Why is pendant jurisdiction consistent with constitution? Article 3: district courts have original jurisdiction over “all cases”  Federal claim + state claim = one case under Article 3, so it meets the ceiling requirement  Case/controversy = common nucleus of operative fact. This is what Article 3 defines as a case  Cannot join random claims that are not related; depends on court‟s parsing of factual claims to determine if they are really part of the same case Reasoning: 29 You have to ask the same questions to solve the answer of federal and state claim- this leads to common nucleus of operative fact/ claims that are so related that they form part of the same case or controversy under Article 3 Problem: if court dismissed federal claim, can it still hear state claim? Court does not dismiss b/c the trial has already commenced and it would be inconvenient to start over and drop case RULE OF GIBBS: if you have federal + state questions and a common nucleus of operative fact, then you have supplementary J over a state claim, even though that state claim would never be able to go into federal court on its own Owen Equipment v. Kroger, 1978 Facts: wife files wrongful death for husband who was killed by crane at work. Sues OPPD, D1, for negligent maintenance of crane. D1 impleads D2, Owen, b/c Owen operates the crane Kroger v. OPPD (Iowa) (Nebraska) OPPD v. Owen (wants to implead Owen) (Neb) (they think Nebraska at first, but it is really Iowa) why is D1 allowed to implead D2- they are not diverse?  There is supplemental jurisdiction due to reasoning of Gibbs b/c federal court may hear a state claim that arises under the same transaction of a federal claim and has common nucleus of operative fact Procedural history: P brings her own claim against D2, D1 moves for summary judgment. Three days into trial, it becomes clear that D2 is really from Iowa and therefore there is no diversity citizenship District + circuit court say it is too late to dismiss claim and say there is supplemental Jurisdiction according to Gibbs reasoning. D2 appeals to Supreme Court Holding: SC says there is no supplemental jurisdiction b/c there is no complete diversity- you cannot disregard rule 1332 simply because there seems to be a common nucleus of operative fact. P would not be able to sue D2 originally in federal court, so why should she be able to manipulate situation by impleader rule and then get to do so? Dissent: court should not throw out supplemental jurisdiction because: a) convenience/judicial economy. Evidence is already in federal court b) the court is treating a judge made rule in Strawbridge v Curtis that is a statutory command c) all you should need is common nucleus of operative fact b/w state and federal claim How the SC interprets diversity statute and federal question statute article 3- „case or controversy‟- as long as they arise from same case, it is fine diversity- fact that claims are part of the same „case or controversy‟ does not seem to matter if the parties are not diverse. Rule of Owen gets codified in statute 1367(b) when it is modified in 1990  if 1332 (diversity) is the only basis for federal courts original J, there is no SJ over claims by plaintiffs against persons made parties under Rule 14, 19, 20, or 24, or over claims by persons proposed to be joined as plaintiffs under Rule 24, when exercising SJ over such claims would be inconsistent with the jurisdictional requirements of 1332  b/c it does not mention claims by defendant…we assume that claim by D against a third party D is fine under 1367b 30 4) Removal Jurisdiction 1367: way for Congress to codify what state claims may be heard in federal court a) district courts will have SJ over all claims that are so related to the claims of the action within such original Jurisdiction that they form part of the same case or controversy under Article 3 (Gibbs) b) no SJ if diversity J is the only basis for the federal court‟s original jurisdiction and allowing supplemental jurisdiction would be inconsistent with 1332 c) district court may decline to exercise jurisdiction over a claim over which the district court has original jurisdiction if: 1. it raises a novel or complex issue of state law 2. it substantially predominates over the claim over which district court as original FJ 3. district court has dismissed all claims over which it has original J 4. there are compelling reasons for declining J Gibbs: you do not necessarily have to dismiss a state claim if you have already dismissed a federal claim. But you should probably dismiss state claim if you dismiss federal claim before trial starts 1441- actions removable generally a) any civil act brought in a state court of which the district court of the US have original J, may be removed by the defendant or defendants, to the district court of the US for the district and division embracing the place where such action is pending. Hypo: woman sues for breach of employment contract + sexual harassments claim (federal) Can D remove this to federal court? a) are these claims under the same case or controversy? (“common nucleus of operative fact”) b) D can remove only if they are related and fall within one case- must read 1441a and 1367a together hypo: contract guarantees a harassment free environment. This makes the claims more related and D would be allowed to remove under 1441a. two causes of action arise out of the same occurence 1441(c): whenever a separate and independent claim or cause of action within the jurisdiction conferred by section 1331 of this title is joined with one or more otherwise non-removable claims or causes of action, the entire case may be removed and the district court may determine all issues therein, or, in its discretion, may remand all matters in which state law predominates Two scenarios: a) two claims are related- if they are part of the same case or controversy- then they are removable b) if not related- state claim is not removable. So why should D be able to remove and federal court may remand? What is a separate or independent claim? Borough of West Mifflin v Lancaster Facts: P brings federal and state tort claims against police officers and county a) violation of federal civil rights - 1983 b) malicious abuse- state tort action there are two causes of action for same events- classically considered to be related P brings it to state court/ D tries to remove to federal court. it is removable under 1441(a) Problem: D removed claim to federal court, P wanted to remand it back. Magistrate judge allowed the remand and sent the whole case back to state court, citing 1441(c). on appeal the third circuit says this was not allowed and it should be in federal court 31 Why remand? 1441(c): district court may determine all issues therein, or, in its discretion, may remand all matters in which state law predominates. Magistrate sends it back b/c it looks like state law claim predominates and federal issue is very minor Holding: circuit court says case should NOT have been remanded on basis of 1441(c). Only on basis of 1367(c)2: district court can decline to exercise SJ if claim substantially predominates over the claim over which the district court had original J   if you are going to send back a claim b/c state law predominates, you can only send back a state claim under 1367(c)(2) and if you do that, you better have a good reason. What happens as a result of sending something back is that you have bifurcated litigation (inefficient) 1441(c) was not property invoked- it is clear we have related claims- no separate and independent C. CHOICE OF FORUM 1) State and Federal Courts 2) Venue: different from PJ and SJ b/c it is determined mostly by statutes  how a judicial system allocates judicial business  court efficiency: where the action occurred- witnesses, evidence  fairness to parties: particularly fair to Defendant since P is the one who chooses initial forum  states interest in adjudication- promoting certain policies  PJ and venue seems like same test of factors 1391: statute about venue Rule 12: D can object to venue but if he does not do it within certain time period, he waives it just like PJ is waived Hypo:P sues two companies- D1 resident of NY, D2 resident of NJ. P claims space heater burned down P‟s house in NY 1391(A): federal jurisdiction based on DIVERSITY 1. any district where D resides, if all Ds reside in the same state 2. substantial part of the events or omissions giving rise to the claim occurred, or where substantial part of property that is subject of the action is situated 3. where any D is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may be otherwise brought what if P brings space heater back to Canada and her house burns down there?P can bring suit in CT or NJ- or any place that D does business- any place where there is personal Jurisdiction over the Defendants  1391(a)3 = FALL BACK OPTIONS- you must try A(1) and A(2) first  A(3) only applies if there is no other district in which the action may be brought  Try to imagine a set of facts in which there would be PJ problem: no PJ over the D BUT there would be proper venue (EXAM question)- usually if there is PJ, there is also venue 1391(c): when dealing with corporate Defendants, you define RESIDE very broadly  Reside = any place where there is personal jurisdiction over the corporation at time the action is commenced 1391(b): federal jurisdiction not founded on diversity (“arising under”) 32  identical language except for 1391(B)(3): a judicial district in which any D may be found, if there is no district in which the action may otherwise be brought Bates v. C & S Adjusters Facts: P says that there was some abuse in a way that the tax collection agency behaved (violation of Fair Debt Collection Practices). P lived in PA but moved to NY- before he moved, the creditor assigned his debt over to the collection agency (a PA agency), which sent him a bill in PA, which was forwarded to P‟s new address in NY. P brought suit in federal court in NY under federal statute, challenging this bill as a violation of federal law Procedural history: district court dismissed for improper venue/ second circuit reversed Why would venue be improper: substantial part of the vents giving rise to claim occurred in PA, not NY  what events give rise to claim? Must look at facts… P incurred debt in PA, collection agency wrote up bill in PA, sent bill in PA The claim is that the bill is fraudulent Why is venue proper? P argues what matters is where he received the letter  D would had nothing to do with sending the letter in NY  ordinarily there would be no personal jurisdiction over D but D waives it holding: there is proper venue in NY. substantial events or omissions = broader standard than PJ‟s purposeful availment test  venue may be valid, where PJ is not  even if there is venue, D may raise objections about PJ  rule 12H treats venue/PJ in same way- D must raise objections to it within a certain period of time or else is waived. Subject matter jurisdiction is never waived 3) Transfer- when there is a problem with venue (inconvenience)  1406(a): district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought 1406(b): nothing in this chapter shall impair the jurisdiction of a district court of any matter involving a party who does not interpose timely and sufficient objection to the venue read Rule 12 and 1406 together- PURPOSE of VENUE: 1) protect the defendant – give him choice of dismissing or transfer 2) judicial housekeeping- the district court may dismiss or transfer if it sees fit Ferens v John Deere Facts: P. PA resident, loses hand in combine harvester. Sues D, incorporated in Delaware and primary place of business in Illinois. P brings contract/warranty claims in PA and tort claims in Mississippi, where D also does business. MI statute of limitations is longer than that of PA Issue: if P transfers tort claim from MI to PA court, does MI law still apply?  In diversity cases of federal courts, state substantive law applies  In MI, MI choice of law rule says PA substantive law control personal injury claim, but MI law governs the statute of limitations period 1404(a): for the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought (P lives in PA, the contract/warranty claim is being tried there, witnesses are there) 33 P contests fact that the transferee court is using PA statute of limitations and not MI Precedent = Van Dusen = when a D motions to transfer to another court, the transferror‟s state law applies (This prevents D from forum shopping and eliminating P‟s choice of forum) Why discourage forum shopping among plaintiffs?  P is going to forum shop anyway  Use transfer rules as a matter of convenience- it should not change outcome  Court has discretion not to grant the transfer Holding: majority thinks transferring is ok/ dissent thinks it is just a way to get case in a court that would otherwise not be brought there Factors to consider: cost of litigation, efficiency, which law will apply. Courts worried about dockets getting too full (foreigners will bring claims in US courts b/c of more favorable law) 4) Forum Non Conveniens Venue is valid but party wants to dismiss for inconvenience or unjustness If a foreign forum is more convenient- you must move to dismiss Piper Aircraft Co. v. Reyno Facts: five Scottish people die in a plane crash. D = Reyno, secretary to an attorney based in CA who takes up the case. P = Piper and Hartzell. Piper = manufacturer or airplane, located in PA. Hartzell = propeller company located in Ohio. Procedural history: D sues P in CA state court b/c law is more favorable to tort law- strict liability  P moves to bring court to federal district court of CA (SJ = diversity)  Then P moves to transfer to PA since it is more convenient for them 1441(b): D may remove a case as long as none of the Ds are citizens of the state in which the action is pending (none of the Ds are residents of CA) Hartzell moves to dismiss, as there is no PF over him in CA. Hartzell is served again in PA As a result there are two lawsuits in PA- one against Piper, the other against Hartzell Piper = transfer = transferor state law applies. CA choice of law applies and CA law says that PA law must apply since PA has the strongest govt interest in tort actions Hartzell = new case = PA choice of law applies and PA says that Scottish law applies b/c Scotland has significant contacts with the claim *** two of the same cases are being tried in PA with different sources of law issue: can P move to dismiss for forum inconveniens? Holding: YES- weigh public + private interests (will the court be overfilled, is it too burdensome to understand Scottish law, where are the witnesses and evidence, where did cause of action happen)  District court said yes: weighs public interest more so than plaintiff‟s interest  Third circuit says no: says it is not fair for case to be removed where choice of law is clearly unfavorable to plaintiff  Supreme court: agrees with district court- PA forum is not convenient because there is another forum that is more convenient. If there were no other forum whatsoever, then PA would suffice  to figure out which law applies takes up too many resources- time/effort research Scottish law purpose of forum non conveniens: convenience- does it really make sense for court to hear the case? III. THE LAW APPLIED Swift v. Tyson- what law should apply in federal court diversity cases? 34 Facts: Norton, land speculators in Maine, sell Tyson land that they do not actually own (Norton was planning on using the money to pay for the land). Tyson pays for the land using a negotiable instrument (promissory note to pay in six months). Norton gives Tyson‟s bill to Swift (NY resident) to cover a preexisting debt Norton owed to Swift. Swift sues Tyson to get the money Tyson: argues that he never got the title to land he thought he was paying for and that because the sale was fraudulent, it invalidates the bill (negotiable instrument) Swift: does not matter that he did not know about Fraud- if a person has a negotiable instrument in good faith, as Swift does, can he still recover even though it was based on fraud? Substantive law: is the bill valid even though it was sold fraudulently, but Swift holds it in good faith and does not know about the fraud? This is the legal question the jury must decide  28 16 USC 1652: Rules of Decision Act: “laws of several states shall be regarded as rules of civil action…in cases where they apply” – what does this mean? Issue: in diversity cases, does state law apply?  NY law: case law of the Supreme Court- it says that a negotiable instrument may be assigned to X as long as it is taken w/ valuable consideration w/o notice of Fraud  Tyson wants to apply NY law, but it looks like Swift would win  Has to do with relationship b/w law and the Decision of Courts- there are exceptions to the general rule: “negotiable instrument must be taken in usual course of trade and for good consideration”. Tyson argues that the bill was not exchanged in usual course of trade, so applying NY law would work in Tyson‟s favor Holding: in a D case heard by federal court, federal court is to apply state statutes and local rules but not the common law of the state‟s courts. Rather, if there is a question unanswered- the federal courts should engage in common law reasoning to come up with the best and most truthful answer to the legal question at hand. Story wants to form own opinion on the truth of NY law  SC applies same rule of NY but evaluates the facts differently so it rules in favor of Swift (it says the NY exception just matters less)  In later cases, SC applies general federal common law to torts, contracts, property, etc 1) Erie and its Progeny Erie Co. v. Tompkins Facts: Tompkins sues Erie railroad company (resident of NY) b/c he gets his arm is hit by protruding object while standing parallel to the train tracks. NY/common federal law: railroad owes duty or ordinary care PA law: common law which comes from the decisions of PA Supreme Court says a railroad only owes duty to avoid recklessness; does not owe duty of ordinary care  D‟s lawyer, Kindell, wants the court to apply PA law Issue: should the trial court be told they need to find negligence or that railroad did something reckless? Procedural history: both district court of NY and court of appeals rule in favor of P according to general federal rule that railroad owes ordinary care  There was no serious question presented as to whether they should apply PA law versus the general law Kindell/Erie‟s lawyer: wanted to bring case to Supreme Court to challenge that federal common law should apply to these facts. He wants to apply PA law that is consistent with established precedent of Swift. Just wants to interpret Swift much narrower  Reads facts to be outside the scope of Swift 35 a) the body of cases in supreme court of PA is so clearly established that there is no question of the status of someone like Tompkins. It equal to the local rule. You should only apply Swift when state law is not as established b) the nature of the problem is local – PA‟s rule is a local rule which Swift acknowledges the federal courts should follow holding: Supreme Court applies common law of the states as rules of decision. It overrules Swift by saying that cases decided by Supreme Courts count as laws. Reasoning: why was Swift problematic? 1. discrimination by non-citizens against citizens removal: a D may remove case to federal court as long as D is not a citizen in which the case sits. Corporate Ds can remove case to a different state by virtue of the fact that they are not citizens of the state and therefore benefit from “general federal common law” it is unfairness b/w Ds who are not able to remove and those who are  After Erie, even if you remove, state law applies. There is no general common law against which you can compare the outcome of which state law applies. If you cant compare, the incentives for removal are vastly different. 2. possibility of manipulation: D‟s can change citizenships to make use of diversity suits. It is not consistent with the whole point of diversity- to shield non citizens from possible discrimination. 3. no uniformity: Swift thought federal general law would create uniformity but in reality, each federal judge is proliferating different rules as the situations arises. No one is compelled to follow some legal truth. Instead, judges should be bound by the rules set by the sovereign (the state supreme courts) statutory holding: Erie says that court decisions are not part of the laws of several states. When a state SC decides a case, they are articulating a legal rule that has binding authority constitutional holding: 10th amendment- powers not delegated the US by the constitution are reserved to the states respectively or to the people. If it is not an enumerated power, the federal cannot pass laws of anything unless the constitution says it can. If the constitution is silent on the question, it means that congress cannot do much. If congress cannot regulate a certain area, the judiciary may not intervene  if Congress does not have an enumerated power, why should the court have it? Dissent (Reed): does not think it is unconstitutional- article 1 says congress has power to make all laws necessary and proper…reasonable that Congress can tell federal courts to create their own common law. 2) Federal Common Law Federal Common Law is NOT VALID Illegitimate b/c: a) fed courts exceed statutory authority under Rules of Decision Act b) unconstitutional Twin Aims of Erie: in cases of diversity in federal court, apply state substantive rules and federal procedural ones  discourage improper forum shopping (discrimination against citizen defendants)  discourage inequitable administration of federal law 36 Issue: a federal court is adjudicating a state-created claim and a dispute arises whether a potentially applicable federal rule is procedural and thus may be followed instead of the state law. Test: 1) is the federal statute broad enough to cover the issue in dispute 2) is the federal statute constitutional according to congress and supreme court‟s limits under the constitution? No court has ever found a procedural statute to be unconstitutional if answer to both question is yes: federal law must be applied; trumps state law- Hanna v. Plumer 3) if federal rules were effected under authority of Rules Enabling Act- do they “abridge, enlarge, or modify any substantive right?” does the rule affect only the process of the enforcing P‟s rights or does it affect the rights themselves? the court has never found a Federal Rule of Civil Procedure to be invalid **however, it is often the case that a Federal Rule, which is constitutional, is too narrow to cover the issue in the case ex. Aramco 4) if rule is not mandated by congressional statute or promulgated under Rules Enabling Act (mere judge made rules)- will it negate or substantially interfere with some important state policy? RULE: problem in Erie is that federal law being invoked is not valid and not constitutional   If you do not have valid source of law that conflicts with state law, of course state law applies But if you have valid federal rule, then it MUST apply, even if there is conflict with state law because of the supremacy clause Guaranty Trust Co v. York Facts: P is a note holder. She thinks Guaranty Trust engaged in fraud and misrepresentation and breached fiduciary duties…seeks an equitable remedy issue: state law bars claim for equitable remedy b/c statute of limitations has run. But the Federal Rule of Civil Procedure says the suit may continue b/c statute of limitations has not run out. Procedural history: second circuit court of appeals holds that the suit should continue. There are separate actions- civil action and equitable actions- and federal law has its own equitable principle which stems from power of sovereign. Holding: SC says state statute of limitations should apply Reasoning: outcome determination test: someone b/c of his fortuity of being an out of state citizen will get a different outcome in federal court than a non-diverse defendant would get in state court.  There is a state created right, which comes from the state. The federal court is just enforcing that right (it is a state cause of action), so the federal court cannot give you a right that the state law has not already given you  Statute of limitations runs for year and then goes away- federal court cannot enforce it after that year is up Byrd v. Blue Ridge Electrical Cooperative Facts: P is injured while working for D; P wants to bring suit but D claims he is barred from suing employer under Workmen‟s Compensation Act. It is a factual question whether Byrd is an employee of D according to the act‟s definition 37 Issue: state law (S. Carolina) says judge decides factual issues concerning Workmen‟s Compensation act, whereas federal law (7th amendment) says juries must determine all factual issues Procedural history: trial court- jury awards damages to P (say he is not an employee) D appeals. Circuit court holds P is an employee and therefore may not recover. Jury says he is, judge says he is not Holding: SC says case should be remanded and heard by jury (introduce more factual evidence)  It is not certain the jury will make a different decision than judge- this is speculative Court uses Balancing Test 1) outcome determination (York): will case have substantially different outcomes? 2) What are federal interests at stake? 7 th Amendment right, FRCP 3) is the state law that is being invoked an important part of some state regulatory regime over which state law has authority for purposes of federalism? (i.e. how strong is state‟s interest) court says the state law is really more procedural- just assigns who should decide strength of federal interest is high risk that outcome will be substantially different is low Hanna v Plumer Facts: P resident of Ohio, files complaint in federal court in MA, for injury sustained by D‟s negligence. P files complaint and serves process to D‟s executor of estate according to Rule 4(d)  Rule 4(d) says you can just leave it a regular place of abode with person other than D Issue: MA statute says you must personally serve D‟s executor of the estate; it is a specific procedural rule targeting executors of estates  D argues he was not served properly according to MA state law and wants case dismissed  There is clear difference in outcomes  If you apply Byrd Balancing test, court may rule in favor of choosing state law Holding: state does not apply Balancing Test RULE: when federal and state law conflict with each other you must ask: a) is the Federal Rule constitutional? b) is it a legitimate exercise of the SC‟s authority under Rules Enabling Act?  Supremacy clause Article 6- laws of US are over state law  a legitimate federal law must take precedence over state law What does it mean to have state and federal rules conflicting? Walker v Armco = NON CONFLICT Facts: P brings suit against D in diversity suit for injuries, but he files complaint almost two years later and does not serve the D until after the statute of limitations has passed (according to state rule). But federal Rule 3 says an action is commenced when you file a complaint in court State rule: commenced when you file a complaint as long as D is served within 90 days issue: after Hanna v Plumer, shouldn‟t we apply federal rule b/c it is constitutional and w/in scope of REA? Holding: no- apply state rule b/c federal rule is too broad that it does not address the issue at hand If there is a conflict b/w rules, you must apply federal rule (Hanna) “commenced” does not meant tolling a state statute of limitations state rule is more substantive than procedural (A prong of the Byrd test) use balancing factor of Byrd to interpret Rule 3 narrowly statutory problem: if fed rule alters state substantive right, that violates 2072(b) 38 constitutional problem: courts cannot make rules that affect state substantive laws, according to 10 th amendment/federalism if you apply federal rule over state rule, must ask “how will it affect two aims of Erie?  you cannot have a Federal Procedural Rule that has such a substantial impact on the rights and remedies that you will get on state law. If it does, it cannot be a legitimate rule of federal civil procedure Stewart v Ricoh A federal and state statutes conflict Facts: P and D have choice of forum provision in their contract- all litigation should occur in Manhattan. P sues D in Alabama and D contests that litigation should occur in Manhattan but Alabama state law does not take into consideration choice of forum clauses. Federal statute 1404(A) gives courts discretion to transfer forum for convenience and justice of parties  federal court will take into account forum selection clause  state court will not- so litigation will definitely occur in Alabama federal court may or may not choose to transfer case to Manhattan issue: are these statutes in conflict? Yes. Is the federal statute valid? yes holding: apply 1404 how fair is it to enforce a forum selection clause when there are some states that decide it is not fair? 1404- does not violate due process, is constitutional and has statutory authority majority says there is a conflict b/w 1404(a) and AL state law b/c federal court has discretion to decide to transfer, whereas state court says no transfer available  but if D wanted to dismiss case for improper venue under 1406(a), that would not conflict with AL law  under 1406, you can dismiss for improper venue  but according to 1391, venue is proper: substantial amount of events occurred 1404(a) dictates change of venue: federal court does not have to change if it does not want to court has discretion: this poses problem b/c it may result in ignoring an important state law 1406(a) dismissal for improper venue- b/c it does not address forum selection clauses, you must apply state law majority: when applying 1404, they are saying that you must enforce the forum selection clause. That federal common law says to enforce the clauses Scalia (dissent): says 1404 and state law do not conflict b/c 1404 does not say anything about forum selection clauses- state law says do not address but federal law does not mention them at all Have to think about what is going to happen if you give effect to state law  Will there be increased forum shopping? Inequitable administration of the laws? Is there a conflict? Is it part of state substantive law? Will it affect outcome? How important is the federal policy? Gasperini 39 Facts: CBS journalist gives slides to D and D does not return them. P sues for $ The trial court (federal diversity suit) uses industry standard to compute that each slide is worth $1500, so P gets $450,000 D moves to have verdict set aside b/c award materially deviates from reasonable standards under NY law 5501. he does this under Federal rule 59  District court denies motion for a new trial  D appeals to second circuit- second circuit holds that P can accept a lower award or have a new trial. it applies NY civil law 5501, which says that court reviewing a verdict should reduce award if it deviates materially from reasonable standard Problem: 7th amendment re-examination clause says appeals court may not question a jury‟s fact finding it may not question issues of fact already determined by jury  When second circuit applies NY law, it is violating 7 th amendment by examining trial court‟s decision  But it is constitutional for the trial court to re-examine verdict of jury b/c the trial judge is there and listens to all the facts and is closer to the case. The appeals court is only reading lawyer‟s briefs Holding: the Supreme Court says that case must be remanded to trial judge, who may reconsider the ruling with NY provisions (take into account photographer‟s income generation, the value of the pictures). Trial judge should apply state substantive standards to figure out a reasonable award. The second circuit is not in the position to do this Why not affirm second circuit? Second circuit made right decision but was not allowed to do so under 7th Amendment Reasoning: is there a conflict b/w 7 th amendment and NY law?  NO- you can effectuate both by making the trial judge determine reasonable award while applying NY law  the second circuit should have remanded to trial judge- trial court should have read the two rules in concert at the stage where D asks trial judge for re-trail pursuant to Rule 59  when D asks trial judge for new trial, judge should re consider the verdict applying NY standards  if trial judge takes NY law into account and still finds that award is reasonable- then case is closed. Appellate court cannot reconsider is there a conflict = are there ways for the courts to effectuate both laws? The fact that district court denied new trial without considering NY law is what is wrong- it should have reconsidered trial verdict while applying state substantive law 40