CONSTITUTIONAL FRAMEWORK FOR U.S. LITIGATION
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INTRODUCTION A. U.S. Legal System 1. 51 Legal systems in US. 1 Federal and 1 in each State. a. Constitution gives the framework for the judicial branch - Congress can make those laws that are necessary and proper to carry out the laws in existence. A case filed in State Court will only go as high as the State Supreme Court unless the U.S. Supreme Court takes it due to a constitution issue in question. b. Article IV of the Constitution - each State has to respect the judgments of other states c. Judicial Jurisdiction - the power of a court to render a judgment that the other courts and government agencies will recognize and enforce. d. Supremacy Clause - Article VI - the Constitution and Federal Laws shall be the supreme law of the land. 2. Subject Matter Jurisdiction a. Whether a court can hear a particular kind of suit b. State Courts have general subject matter jurisdiction, Federal Courts have limited subject matter jurisdiction. c. General Jurisdiction - They can hear any kind of claim between persons unless there is a legal authority saying that they cannot hear a particular kind of case d. Limited Jurisdiction - Courts can only hear cases that are specifically authorized by the statutes that set up the particular court e. If one federal court has subject matter jurisdiction, all have it. 3. Personal Jurisdiction a. Court must have power to render a judgment against the defendant in a case. b. Types of Personal Jurisdiction
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In Personam - Jurisdiction over individual or corporation due to their ties to the forum state 2. In Rem - Jurisdiction over property in the state 3. Quasi In Rem - Alternative to personal jurisdiction, where property located within the forum state can be attached to secure jurisdiction over D. c. RULE: Test of Citizenship to determine diversity jurisdiction is where is the citizen domiciled? (Look at physical presence and the state of mind to remain indefinitely. Hawkins v. Masters Farms, Inc. 4. Venue - the place of the trial. D may challenge the suit unless the court has subject matter jurisdiction, personal jurisdiction and venue. Pleadings Overview 1. Stating the Case a. Rule 11 - pg. 31 - Bridges v. Diesel Service, Inc. 1. Primary goal of Rule 11 is deterrence of improper conduct. If lawyer doesn't gather all the facts prior and send in the appropriate forms prior to filing then sanctions are allowed against the lawyer. Here attorney filed action for wrongful termination under Americans with Disabilities Act without filing the charge with the Equal Employment Opportunity Commission first. b. Rule 8 - Bell v. Novick - State and Federal Courts have different requirements for how specific a pleading must be. Fed 8(e) - Each averment of a pleading should be simple, concise and direct 2. Response a. Motion - attacks the summons and complaint 1. Pre-Answer Motions (Rule 12) - offers possibility of getting an immediate dismissal of P's claim. a. 12(b)(1)-(5) - Not here, Court Lacks SMJ, PJ
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(b)(6) so what? Even if everything in the complaint is true, it fails to state a claim upon which relief can be granted. (e) D unsure of what's being asserted, wants a more definite statement of the complaint Discovery Process to get Details (f) You didn't have to say it that way - motion to strike because it contains inflammatory language
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a. Answer - responsive pleading - responds to allegations of complaint, takes a position as to the truth of P's allegations. 1. Answer - Rule 8 and 13) a. Rule 8(b) - That's a lie, deny (D is w/o sufficient information to determine the truth or falsity) b. Rule 8(c) Yes, but affirmative defense (i.e. contributory negligence) c. Rule 13 - I've got a claim too * Counterclaim - D asserts his own claims against P * Cross-claim - D asserts his own claims against another D. * Third Party claim - D asserts his own claim against a new party. C. Joinder & Discovery Overview PERSONAL JURISDICTION A. RULE: A State has exclusive jurisdiction over people and property within its borders; No State can exercise jurisdiction over people and property in other states. Judgments in personam require personal service of process; Judgments in rem may use constructive service of process. (Pennoyer's conceptual scheme = three elements - power, consent, notice) 1. Pennoyer v. Neff a. Suit #1 - Mitchell v. Neff - breach of contract for unpaid legal fees, filed in Oregon State Court. Neff served by constructive notice, won a default judgment. Mitchell found out that Neff had just acquired property in the state, so
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he attached it and got a writ of execution from the court. Sheriff auctions property off and gave the deed of title to the buyer (Pennoyer) and the money to Mitchell. Judgment invalid because it lacked personal jurisdiction. b. Suit #2 - Neff returned to Oregon, realized what had happened and sued Pennoyer to regain control of his property. Filed in Federal District Court in Oregon. He collaterally attacks, saying the whole first suit is invalid because OR court lacked PJ over him. Court held that suit was invalid because of a technicality on the affidavit upon which the order of publication was obtained. Judgment for Neff, Pennoyer appeals. United States Supreme Court affirms District Court but for a different reason. Constitution provides a right of due process, and taking Neff's land without notifying him was a violation of that right. c. Long-Arm Statute - Court obtains personal jurisdiction by: 1. D's Appearance in Court "Consent" 2. D is found within the State "Present" 3. D is a resident "Domiciled" 4. D owns property in the State that was attached at the time of jurisdiction d. Collateral Attack - Can only use it to fight jurisdiction. Risky because if you lose the collateral attack, you cannot litigate the case on its merits. A defendant can make a "special appearance" to fight personal jurisdiction without consenting to it by appearing in court. RULE: Domicile in the State is alone sufficient to bring an absent defendant within the reach of the State's jurisdiction for purposes of a personal judgment by means of appropriate substitute service (i.e. other than personal service in the forum state.) To be adequate, service must be reasonably calculated to give Defendant actual notice of the proceedings and an opportunity to be heard. 1. Milliken v. Meyer - Supreme Court upheld Wyoming Judgment because a State doesn't lose authority over a citizen of the state just because the citizen leaves.
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RULE: One can obtain quasi in rem jurisdiction by attaching a debt in addition to tangible property 1. Harris v. Balk (1905) - Harris owed Balk money, Balk owed Epstein money; Balk lived in North Carolina, Epstein lived in Maryland. While Harris was in Maryland, Epstein served him with process, and Maryland acquired jurisdiction over Harris by attaching the debt. RULE: To subject a defendant to a judgment in personam, Due Process requires that, if he be not present within the state, he have certain minimum contacts with the forum state such that the suit does not offend traditional notions of fair play and substantial justice. 1. International Shoe v. Washington - Corporation incorporated in DE, has its headquarters in St. Louis. Conducts limited business in Washington, has a salesman there. Washington wanted to collect taxes for a State Program from Intl. Shoe, notice was served upon the salesman and also mailed to the address in St. Louis. Minimum contacts defines what "Presence" really means. a. Quality and Nature of the Contacts - The reason they're being sued is for an isolated/casual contact but related to the reason for being sued. They took advantage of the laws of Washington in doing business there, so they should have to pay taxes. If the contact is isolated and the claim is unrelated, that won't be enough to establish minimum contacts. If a D has such minimum contacts with the state then it would be fair to require him to return and defend a lawsuit there. b. Justice Black - separate from majority said this standard is too elastic and subject to emotion in words like fair play and substantial justice. In Rem Jurisdiction 1. RULE: It is sufficient for due process that the suit is based on a contract which has substantial connections with the forum state a. McGee v. International Life Insurance Co. - McGee lived in TX and bought a life insurance policy there, then moved to CA. Insurance Co. was bought by another, who sent him a renewal contract in CA. When McGee dies, his
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mother (P) files suit in CA to collect, also serves D by mail, D doesn't respond. P collects judgment and takes it to CA. Court held that sending contract to CA and collecting premiums sent by D in CA = minimum contacts. Even though they weren't that extensive, the whole suit arose out of this, so the quality of the contacts is great. The State has an interest in providing redress against Insurance companies to its citizens. Regulatory interest in controlling insurance companies is also taken into consideration. Insurance co. had to pay the claim. RULE: Unilateral activity of Plaintiff cannot satisfy minimum requirements of Defendant in another state a. Hanson v. Denckla - Mother lived in PA, established a trust in DE, so trustee is a citizen of DE. Mother then moved to FL. Daughters in Florida want to obtain personal jurisdiction over the trustee in Florida. Contacts - Trustee occasionally sent payments to Florida. Unilateral activity of the plaintiff doesn't imply that the Defendant purposefully availed himself of the privilege of conducting business in the state. Even though trustee sent payments to FL, it was acting mechanically and not further profiting from the agreement. RULE: All assertions of State Court Jurisdiction must be evaluated according to standards set forth in International Shoe and its progeny. Minimum Contacts should apply to in rem and in personam. Must be sufficient connections between the Defendant, the State and the action. Seized property should have sufficient contacts with a state in order for the Court to assert jurisdiction over the owners of that property. No more quasi in rem. Property is now a contact. It is one piece of the puzzle in obtaining PJ. Property can still be attached but it does not provide personal jurisdiction on its own, it can only be collateral. a. Shaffer v. Heitner - P owned one share of stock in Greyhound and he sued 28 former or present officers or directors for breaching fiduciary duties. Greyhound incorporated in DE,
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but directors had no real ties to the state, so Heitner used the Del. Sequestration statute to attach stock or options of 21 defendants. Suit was brought as a quasi in rem proceeding. 1. Majority (Marshall) says that DE does not have PJ because the basis of jurisdiction is ownership of this property and that's not fair because the property is completely unrelated to the cause of action. Just because they owned stock in a company incorporated in DE doesn't mean they expected to be sued there. 2. Powell concurs - In the case of real property, keeping quasi in rem could avoid the uncertainty of the general Intl. Shoe standard without significant cost to the traditional notions of fair play and substantial justice 3. Brennan concurs and dissents - Agrees that Intl. Shoe is better than Pennoyer for determining personal jurisdiction. But, Delaware has a strong state interest as a chartering state in ensuring that there is a convenient forum for litigating claims relating to management of the domestic corporation. Sufficient for minimum contacts test, Corporation knows they are affiliating themselves with DE laws by incorporating there. 4. In rem is more likely to satisfy the Intl. Shoe standard than in personam because if someone owns property in the state then they are probably purposefully availing themselves of the state's laws by owning property there. Specific Jurisdiction 1. RULE: Foreseeability alone does not establish personal jurisdiction. Defendant's conduct and connection with the forum state should be such that he reasonably anticipates being haled into court there. a. World-Wide Volkswagen Corp. v. Woodson - Audi bought from dealer in NY was driven by family when they were moving to Arizona. In
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Oklahoma, they were rear-ended which caused a fire that severely burned mother and children. P brought national importer and international company into the suit. 1. Brennan dissents - majority accords too little weight to the strength of the forum State's interest in the case and doesn't explore whether there is any actual inconvenience to the defendant. Intl. Shoe standard may be outdated because it focuses too much on the rights of defendant. RULE: Agreed no personal jurisdiction, couldn't agree why. O'Connor - Entering a product into the stream of commerce doesn't establish minimum contacts. Defendant must purposefully direct products or services toward the forum state to establish minimum contacts for personal jurisdiction. Brennan - Stream of commerce does establish minimum contacts. All except Scalia - it would be unreasonable to exercise jurisdiction. a. Asahi Metal Industry Co. v. Superior Court - Man injured in motorcycle accident sues tire maker because his tire blew up, causing the accident. Tire manufacturer, Cheng Shin files a cross-complaint, bringing Asahi into the suit because it manufactures the tube valve assembly component. 1. O'Connor - plurality - stream of commerce isn't enough, need purposeful direction. Even besides the contacts test, it's unreasonable to assert jurisdiction over this international company. Burden would be severe and the state doesn't have an interest in deciding it since P isn't a citizen of CA. No m/c, jurisdiction wouldn't be consistent with fair play and substantial justice. 2. Justice Brennan, White, Marshall and Blackmun say the stream of commerce theory does establish minimum contacts. 3. White, Blackmun and Stevens say that if jurisdiction is unfair than there is no need to test for m/c; but in this case,
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there probably was minimum contacts, the plurality just misapplied the facts. 4. Scalia doesn't join in decision about the fairness of subjecting Asahi to jurisdiction; he just wants to say that if there are no minimum contacts, there is no personal jurisdiction. RULE: When a Defendant has purposefully directed his activities at forum residents, the fair-warning requirement is satisfied and he is subject to jurisdiction and must make a compelling case as to what other factors would make jurisdiction unreasonable. a. Burger King Corp. v. Rudzewicz - D signed a contract with P that contained a choice of law clause. Even though D primarily dealt with the office in Michigan, he knew that all the activity went through the headquarters in Miami. He had substantial and continuous dealings with the company headquartered in Florida. 1. Stevens dissents, saying the majority opinion is superficial analysis. Nothing in negotiations gave Defendant a reason to anticipate suit outside of Michigan, jurisdiction here would offend fundamental fairness. RULE: "Effects Test". Defendant can be subject to jurisdiction based on the effects of their conduct in the forum state. a. Calder v. Jones - D (National Enquirer) wrote an article about an actress in Hollywood. D knew the potentially devastating impact it would have on Jones (in CA) and that the brunt of the injury would be felt there, so D is subject to personal jurisdiction. RULE: Knowledge that tortious conduct may harm industries centered in forum state may support a finding of personal jurisdiction, but knowledge alone is insufficient to establish express aiming at the forum state as is required by the effects test. a. Pavlovich v. Superior Court - D while in college created a website that gave instructions on de-coding data from DVDs. The company that created the code sued him in CA
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court, saying that he should have known that the harm from his conduct would occur in CA and he should be subject to personal jurisdiction there. The website is passive, it only posts information and has no interactive features. No evidence that any CA resident ever visited the site, much less downloaded the code from it. 1. Baxter dissents - By acting with the broad intent to harm industries he knew were centered or substantially present in CA, D forced sufficient minimum contacts with the state and should reasonably anticipate being haled into court there. General Jurisdiction 1. RULE: Minimum contacts between Defendant and forum state must be fairly extensive and the continuous corporate operation within a state must be so substantial and of such a nature as to justify suit against it on causes of action arising from dealings entirely distinct from those activities. The most reliable indicator of the nature and extent of internet contacts is the amount of sales generated in the state by or through the interactive website. a. Coastal Video Communications Corp. v. The Staywell Corp. - Coastal filed in VA, seeking a declaration that their product did not infringe on the copyright of D. D has minimum contacts in Va, but can't establish specific jurisdiction because this action does not arise directly out of those contacts, so P tries to prove that D is subject to general jurisdiction. since Coastal doesn't know the figures of D's sales in VA, Court grants motion for discovery. When court looks at evidence of contacts, they will determine the reasonableness of general jurisdiction by looking at 7 factors: 1. Extent of purposeful interjection 2. The burden on the defendant to defend suit in the chosen forum 3. The extent of conflict with the sovereignty of D's state 4. The forum state's interest in the dispute
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The most efficient forum for judicial resolution of the dispute 6. The importance of the chosen forum to the Plaintiff's interest in convenience and effective relief. 7. The existence of an alternative forum. 2. RULE: Tag jurisdiction is constitutional - physical presence alone can constitute due process Pennoyer lives. a. Burnham v. Superior Court - Husband and wife lived in NJ, then decided to get divorced. Wife moved to CA with children. Husband was supposed to file under "irreconcilable differences" but instead claimed abandonment and did not attempt to serve process on his wife. When he was in CA on business and visited his children, she served him with process. The Constitutional Requirement of Notice 1. RULE: Notice must be reasonably likely to inform the defendant that he is being sued. Constructive notice is generally unconstitutional, but sometimes it is the only option available, in which case it is ok. a. Mullane v. Central Hanover Bank & Trust Co. (1950)- Mullane was a guardian designated to protect income beneficiaries of trusts. He objects to NY law that pools interests of a bunch of small trusts into a common fund investment scheme because he says it would cut off property rights and the right to sue. Mullane can't do his job of representing the beneficiaries because he doesn't even know who they all are or where they are located. NY law only required constructive notice. Now, if the party is not reasonably going to be reached, it should be shown that the method chosen was not substantially less likely to bring home notice than other feasible and customary substitutes. Publication is not a reliable means of notice, but impractical and extended searches are not required for due process. b. Walker v. Hutchinson (1956) - personal notice must be given to a landowner whose
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property was being taken by condemnation and whose name and address were listed in the city's land records. c. Wuchter v. Pizzutti (1928 - precursor to Mullane) - NJ non-resident motorist statute treated use of state's roads as consent to both jurisdiction and appt. of Secretary of State as agent for D for service of process… but it did not explicitly direct secretary to give notice to the nonresident driver. Even though defendant had in fact received notice, the Court struck down the statute. d. Tulsa Professional Collection Services, Inc. v. Pope (1985) - When settling a decedent's estate, published notice to creditors in general is insufficient when estate knew of a claim of a particular creditor. e. Federal Rule of Civil Procedure 4 - Waiver of Service - by waiving a formal service of summons, it allows it to be sent by first class mail, gives D extra time to answer the complaint, and still lets them to object to anything except the sufficiency of summons or the way in which it was served. Consent as a Substitute for Power 1. RULE: Forum selection clauses will be upheld in courts unless: * it was entered into fraudulently, * if it would deny remedy to one party, *if the service provided was essential or * if judicial scrutiny shows it is not reasonably fair (i.e. make a lawsuit too inaccessible.) a. Carnival Cruise Lines, Inc. v. Shute Plaintiff sued cruise line in their home state of Washington but it was dismissed for lack of personal jurisdiction because the contract had a forum selection clause, saying that all matters must be filed in Florida. b. In National Equipment Rental v. Szukhent (1964) - Michigan farmers signed a lease on equipment from a New York Company which had a clause stating that they appoint someone to be their agent in NY for the purpose of accepting service of process. -->
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Subject to PJ in NY and Michigan because this clause was consent to PJ. c. Bremen v. Zapata Off-Shore Co. (1972) forum selection clause was not freely bargained for, it creates added expense for one party and denies a party a remedy, so it is not enforceable. d. Jones v. John Hancock Mutual Life Ins. Co. (1968) - Cognovit gives consent to jurisdiction and an express confession of liability. Will be upheld where party signing the note understands its effects and receives something in exchange for consent. (May appear in a loan agreement or promissory note. Don't need service of process because you consented to it in advance.) Self-Imposed Restraints on Jurisdictional Power: Long-Arm Statutes, Venue, and Discretionary Refusal of Jurisdiction 1. Long-Arm Statutes - Constitution sets outer bounds of who a state can have PJ over; Long-arm statutes might limit that. a. RULE: Being engaged in an isolated cause/previous law suit in the state is not a substantial contact as defined by the long-arm statute. First ask whether exercise of PJ is consistent with state long-arm statute, then see if it conforms to the constitution (i.e. minimum contacts to comply with due process. 1. Gibbons v. Brown - Long-arm statute calls for minimum contacts plus substantial activity. 2. Ingraham v. Carroll - HMO in NY near VT border; physicians would often refer patients to a doctor in VT - doctor wasn't subject to PJ in NY b/c NY long-arm statute refers to "regularly doing business in the state". 3. BUT see Adam v. Saenger - filing a claim in a state, submitting to its jurisdiction, is sufficient activity for the court to have jurisdiction over him. 4. *Pendant Personal Jurisdiction* - If a federal long-arm statute is sufficient to bring a D into Federal Court in the state,
then the same P can bring a state claim against D even if the state long arm statute wouldn't have been sufficient on its own. 2. Venue a. RULE: 28 U.S.C. § 1391(a) and (b) - locates litigation in a particular federal judicial district within a state. Jurisdiction founded on diversity of citizenship: Civil action can be brought in judicial district where D resides, if all Ds reside in the same state, where the substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or where any D is subject to PJ at the time the action is commenced, if there is no district in which the action may otherwise be brought. Jurisdiction founded not solely on diversity: civil action may only be brought in judicial district where any D resides, if all Ds reside in the same state, a judicial district where events occurred, where the property is situated or where any D may be found, if there is no district in which the action may otherwise be brought. Action against a foreign state - § 1391 (f). Shall be brought in U.S. District court for the District of Columbia. a. Dee-K Enterprises, Inc., v. Heveafil Sdn. Bhd. - Venue must be proper with respect to all defendants. An alien can be sued in any district, but in this case there were also American defendants, which was a corporation. Since the case was brought on a federal claim, jurisdiction wasn't based solely on diversity, so venue would be proper in any district where the American defendants may be found. Since the corporations contacts were with the western district and not the eastern where the case was brought, the parties had to do more research before going forward with the suit there. Forum Non Conveniens 1. RULE: A plaintiff's choice of forum should rarely be disturbed. However, when an alternative forum has jurisdiction to hear the case, and when trial in the chosen forum would "establish oppressiveness and vexation to a D,
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out of all proportion to P's convenience or when the chosen forum is inappropriate because of considerations affecting the court's own administrative and legal problems, the court may, in the exercise of its sound discretion, dismiss the case. The factors to consider are:
List of factors pertaining to the private interests of litigants include (Gilbert): 1.) the relative ease of access to evidence 2.) availability of forcing witness to testify 3.) the cost of obtaining willing witnesses 4.) possibility of view of the premises if that's appropriate for the case 5.) other practical problems that make trial of a case easy, expeditious and inexpensive Public factors bearing on question include: 1.) the administrative difficulties flowing from court congestion 2.) the local interest in having localized controversies decided at home 3.) the interest in having the trial of a diversity case in a forum that is at home with the law that must govern the action 4.) The avoidance of unnecessary problems in conflict of law or in the application of foreign law 5.) the unfairness of burdening citizens in an unrelated forum with jury duty
a. Piper Aircraft v. Reyno - the possibility of an unfavorable change in law could possibly be a relevant consideration in forum non conviens. Although the P established jurisdiction in the US, Scotland had a strong interest in litigating the case. Usually courts require that as a condition of dismissing a case for forum non conviens that the D will waive the SOL defense in the next case. i. § 1441 - a case brought in state court can be removed to a district court that would have had original jurisdiction. If a case is brought on a federal question, it can be removed to federal court without regard to the citizenship of the parties. iv. Transfer 1. 28 U.S.C. §§ 1404, 1406, and 1631 a. 1404 - Change of Venue - District court may transfer any case to another district or division
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where it might have been brought originally, for the convenience of the parties and witnesses and in the interests of justice. b. 1406 - Cure or Waiver of Defects - If a case is filed in the wrong district or division, in the interest of justice it can be transferred to the district or division in which it could have been brought. c. 1631 - Transfer to Cure want of jurisdiction - if a case is filed without jurisdiction, the court can transfer it to another court in which it could have been filed or noticed. SUBJECT MATTER JURISDICTION a. Article III of the Constitution limits the scope of the federal courts, what kinds of cases they can hear. The lifetime tenure of federal judges is an attempt to insulate them from political bias and pressure. Federal Jurisdiction is: i. General ii. Concurrent - most cases have jurisdiction in state and federal courts. iii. Limited iv. Exclusive - admiralty, bankruptcy, anti-trust. Federal courts don't have exclusive jurisdiction over federal question cases. b. Federal Question Jurisdiction i. RULE: § 1331 - Well pleaded complaint rule - to have federal subject matter jurisdiction, you must show in the complaint that the claim arises under a federal issue. It is not sufficient to anticipate that a federal claim will be used as a defense. 1. Louisville & Nashville Railroad v. Mottley - the railroad had taken back the lifetime pass they gave to the Mottleys to settle a tort case with them after Congress passed a law that prohibited railroads from doing that because of concerns of bribery. a. *** Supreme Court says that "arising under" in Article III is much broader than the same phrase in § 1331. so the Mottley case did not have subject matter jurisdiction in federal court but it was sufficient federal interest for the Supreme Court to hear and decide the case the second time after it passed through the state courts. b. Minority Approach - More expansive view of "arising under" seen in Smith v. Kansas City Title & Trust Co. - where P alleged D had violated state law by allowing it to invest only in
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legal securities, BUT the illegal securities were bonds issued by a Federal Agency under a federal law that P claimed was unconstitutional. Court said there was SMJ. Courts thought that the federal law interests were important. i.e. the federal interests in the case were likely to be strongly implicated. c. D seeking to dismiss a case b/c the complaint doesn't state a problem arising under federal law by invoking either Rule 12(b)(1) or 12(b)(6). d. Can generally collaterally attack on SMJ. Diversity Jurisdiction i. RULE: § 1332 - Diversity of Citizenship, Amount in Controversy - District court shall have jurisdiction in cases where the amount in controversy, exclusive of interest and costs, exceeds $75,000 and is between: 1. Citizens of different states 2. Citizens of a state and citizens or subjects of a foreign state 3. Citizens of different states and in which citizens or subjects of a foreign state are additional parties; and 4. A foreign state, defined in § 1603(a) of this title, as plaintiff and citizens of a state or of different states. 5. An Alien admitted to the U.S. for permanent residence shall be deemed a citizen of the state in which such alien is domiciled. 6. Corporation shall be deemed a citizen of any state by which it has been incorporated and of the state where it has its principal place of business 7. Legal representative of the estate of a decedent shall be deemed to be a citizen only of the same state as the decedent, and the legal representative of an infant or incompetent shall be a citizen only of the same state as the infant or incompetent. 8. Redner v. Sanders - P filed suit in federal district in NY on 1332… P was living in France at the time, but was a US citizen and D was a NY citizen. Court says residence in France is not the same as citizenship in France, which 1332 requires. So when 1332(a)(2) failed, P tried to go on 1332 (a)(1) by saying that he considered himself domiciled in CA. But this was just a hollow attempt to change his story to get into Court. No SMJ.
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**Measure citizenship for diversity purposes as of the date on which the complaint is filed with the court. RULE: Citizenship is determined at the time the complaint is filed. P's allowed to be sneaky and use it for a tactical advantage. 1. Smith v. Kennedy - P filed action in state court in 1997. In 2000, he moved from Kansas to Oklahoma and then dismissed his state suit and filed the federal claim. This is ok to get diversity jurisdiction over his claim. a. BUT - limited by § 1359 - can't name straw parties or develop diversity collusively. RULE: Diversity must be complete for the court to have jurisdiction under 1332. 1. Strawbridge v. Curtiss - Chief Justice Marshall. One party with the same citizenship as another on opposing sides of V kills diversity. RULE: Suits for divorce, alimony or child custody fall outside the scope of diversity jurisdiction, even if the spouses were citizens of different states when suit was brought. If the family issue is framed as an independent claim in tort or contract then the court will hear it. 1. Ankenbrandt v. Richards - Some "domestic" cases can invoke diversity. i.e. a former spouse could sue the other in tort for child abuse. RULE: Foreign nationals can't sue each other in the US system without a US citizen as a party. Although for diversity purposes, a permanent resident alien is a citizen of the state he lives in, this does not mean that he can be in a suit with an alien. 1. Saadeh v. Farouki - P is Greek, D is Jordanian citizen living in MD, has "permanent resident alien" status in US. Third circuit read the statute plainly and held that there was jurisdiction; Supreme Court reversed, but there is a split in the courts on this. RULE: To be dismissed for not meeting the amount in controversy requirement, it must appear to a legal certainty that the claim is really for less than the jurisdictional amount to justify the dismissal. RULE: Single Plaintiff can aggregate related or unrelated claims against a single defendant to meet the amount in controversy requirement. If there are two plaintiffs, neither of which has claims meeting the A/C requirement on their own, they can't aggregate, even if together they would equal over $75K. But if P1 has $76K and P2 has $20K, these claims
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can be combined if they're sufficiently related (i.e. not separate and distinct). viii. RULE: Compulsory counter claims have jurisdiction, regardless of the amount in controversy, but permissive counterclaims require independent jurisdictional basis. ix. RULE: If P seeks an injunction instead of monetary damages, there are four approaches: 1. Determine the value of the injunction to the P 2. Determine the cost to the D of complying 3. Determine the cost or value to the party invoking federal jurisdiction (the P if P filed in Fed. Court or the D if they are removing to Fed.) 4. Allow jurisdiction if any of the tests above yields a figure of the statutory amount. Supplemental Jurisdiction i. RULE: § 1367 - a civil action of which the district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Article III of the Constitution, EXCEPT: 1. If Jurisdiction is founded solely on 1332, there is no Supp. Jur. Over claims by Ps against persons made parties under Rule 14, 19, 20 or 24. 2. District Court may decline to exercise supplemental jurisdiction over a claim if: a. The claim raises novel or complex issues of State law b. The claim substantially predominates over the claim or claims over which the district court has original jurisdiction c. The district court has dismissed all claims over which it has original jurisdiction d. In exceptional circumstances, there are other compelling reasons for declining jurisdiction. 3. Jin v. Ministry of State Security - Two part test for Supplemental Jurisdiction: a. Whether P's claim shares a common nucleus of operative facts with the other claims. b. Whether the interests of judicial economy, convenience, and fairness support the exercise of Supplemental Jurisdiction. c. *** GIBBS test - a plaintiff's claims must be such that he would ordinarily expect to try all in one judicial proceeding. If that's true, assuming
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the substantiality of the federal issues, the federal courts can hear all the claims. ii. RULE: In a class action law suit, if the claims are brought on diversity jurisdiction, the claims which don't meet the amount in controversy can be joined to the ones that do. 1. Exxon Mobile v. Allapattah Services, Inc. - CAFA class action fairness act doesn't require complete diversity in those cases. The rationale behind the amount in controversy requirement was to find the big cases, but obviously the total amount in a class action lawsuit is going to be huge, so that will qualify for diversity. Removal i. RULE: 1. § 1441 - (a) civil action brought in state court can be removed by D to the district court of U.S. where the case would have original jurisdiction. (b) Federal Question cases have original jurisdiction in federal courts and may be removed without regard to citizenship of the parties. (c) If a separate or independent claim within 1331 jurisdiction is joined by one or more otherwise non-removable claims, 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 (d) action against a foreign state may be removed to the district and division embracing the place where such action is pending. Upon removal the action shall be tried by the court without jury. (e) Notwithstanding subsection (b), a D may remove if: * the action could have been brought in U.S. District court under § 1369 2. § 1446 - Procedure for Removal - (a) D can remove a case from state court to federal by filing a notice of removal in the pending district and division in federal court, signed pursuant to Rule 11 and contain a short and plain statement of the grounds for removal, together with a copy of all process, pleadings and orders served upon such D or Ds in action. (b) The notice of removal has to be filed within 30 days after the receipt by D, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within 30 days after the service of summons upon D if such initial pleading has been filed in court and is not required to be served on D, whichever period is
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shorter. (c) If the case stated by the initial pleading is not removable, a notice of removal may be filed within 30 days after receipt by D, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may be ascertained that the case is one which is or has become removable, except that a case may not be removed on the basis of jurisdiction conferred by 1332 more than 1 year after commencement of this action. (d) Promptly after the filling of such notice the D or Ds shall give written notice thereof to all adverse parties and shall file a copy of the notice with the clerk of such State court, which shall effect removal and the State court shall proceed no further unless and until the case is remanded. 3. D can't remove if a diversity case is brought in state court in his state. 4. Caterpillar, Inc. v. Lewis - Complete diversity requirement must be satisfied at the time of trial. In this case, D removed prematurely before there was complete diversity in order to get inside the 1 year requirement. The district court erred when it denied P's motion to remand to state court for lack of SMJ. But by the time judgment was entered, the jurisdictional defect had been cured. Thus, the overriding consideration of finality, efficiency and economy overwhelmed the procedural wrong. The Supreme Court let the judgment stand. Court says that Plaintiff's fear of abuse of procedure is unwarranted. RULE: P can't manipulate the amount in controversy once case is removed to federal court to seek a remand to state court… 1. Rogers v. Wal-Mart Stores, Inc. - P filed in state court seeking $950K, D removed, then P said they would ask for only $75,000 if the court would remand to state court. Court said that the removal petition should be judged by the apparent amount in controversy at the time removal is sought. RULE: Securities Litigation Uniform Standards Act RULE: A party's post-filing change in citizenship cannot cure a lack of subject-matter jurisdiction that existed at the time of filing in an action based on diversity of citizenship. 1. Grupo Dataflux v. Atlas Global Group, L.P. - Firm had a few Mexican partners, so there were aliens on both
sides of the case, so there would be no jurisdiction on the basis of 1332. But the firm said those partners were gone before trial began. IV. ERIE PROBLEM a. RULE: In diversity cases, federal courts must apply the law that would be applied by the courts of the state in which they sit. Rules of Decision Act - 28 U.S.C. § 1652 - the laws of the several states, except where the Constitution or treaties of the United States or Acts of Congress otherwise require or provide, shall be regarded as rules of decision in civil actions in the courts of the United States, in cases where they apply. Laws of the states include not only statutes but also common law. i. Erie Railroad v. Tompkins - Overturned Swift v. Tyson. No one doubts Federal power over procedure, but the laws of the states are considered substantive for the purpose of the Rules of Decision Act. 1. Procedure regulates the manner and the means by which a right to recover is recognized by the state and enforced. ii. Purpose of the Erie Doctrine = avoid the twin evils: forumshopping and inequitable administration of the laws. b. RULE: a federal court sitting in diversity must apply the conflicts principles of the forum state. i. Klaxon Co. v. Stentor Elec. Mfg. Co. c. Limits of State Power in Federal Courts i. RULE: Outcome Determinative Test - A state rule that was outcome-determinative was to be followed, whether it was labeled as procedural or substantive because Erie was trying to avoid people getting different outcomes just because they filed in federal court. 1. Guaranty Trust Co. v. York - A state statute of limitations is outcome determinative because state court would have barred the claim but Federal court will hear it. So the U.S. Supreme Court said that the state rule had to be followed. a. Ragan v. Merchants Transfer & Warehouse Co. - held that state law instead of federal law would determine when an action was commenced for purposes of satisfying the state statute of limitations. b. Cohen v. Beneficial Indus. Loan Corp. - Fed. Court must apply state statute allowing a corporation to require P to post a bond for the expenses of defense of a shareholder's derivative suit; the corporation could recover its
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expenses if the plaintiff lost even though federal court didn't require this bond. c. Bernhardt v. Polygraphic Co. of America - Fed. Court had to apply state law concerning the enforceability of arbitration agreements when federal law conflicted. d. Woods v. Interstate Realty Co. - A state statute closing doors of the state courts to out-of-state corporations that had not qualified to do business (by paying taxes) in Mississippi would close the Mississippi federal courts to the same corporations. e. These cases represent the high water mark of Erie-compelled deference to the state courts. After Bernhardt, the Court began retreating from this position. RULE: If the conflicting state and federal rules would be outcome determinative, then you should ask whether the state law is bound up with the definition of the rights and obligations of the parties such that the practice furthers some substantive state policy; then that must be weighed against any countervailing federal interest. If the Federal practice promotes an important federal substantive policy interest that outweighs the significance of the state policy underlying the state practice, then the federal court should use the federal rule. 1. Byrd v. Blue Ridge Rural Electric Cooperative - the state practice of a judge hearing the case was simply a matter of convenience, not bound up with the rights and obligations of the parties, but was merely a mode and form of enforcing the compensation scheme. The countervailing federal interest was strong, given the right to a trial by jury and the 7th amendment. Thus, the courts should not defer to state law here. RULE: Test = 1. (a) "Unguided Erie" - modified outcome determinative test - whether a federal procedure is outcome determinative should be viewed in light of the policies underlying Erie, to prevent forum shopping and inequitable administration of the laws. If the conflict isn't outcome determinative, then the state rule doesn't have to be used instead of the federal one. 2. (b) If the federal Rule or statute is in direct conflict with the law of the state, then it must be determined whether the Rule really regulates procedure (the judicial process for enforcing rights and duties
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recognized by substantive law and for justly administering remedy and redress for disregard or infraction of them). If the statute regulates procedure, it should be applied. If the Rule regulates procedure, then it must be determined whether it's constitutional. This is basically asking whether the Supreme Court and Congress acted unconstitutionally by enacting / following the Rules Enabling Act. Presumably the answer is yes. But, the Rule of procedure may not abridge, enlarge or modify any substantive right. To determine if it abridges, enlarges, or modifies, look at the analysis in Byrd. RULES ENABLING ACT - 28 U.S.C. § 2072 a. The Supreme Court shall have the power to prescribe general rules of practice and procedure and rules of evidence for cases in the United States district courts (including proceedings before magistrates thereof) and courts of appeals. b. Such rules shall not abridge, enlarge, or modify any substantive right. All laws in conflict with such rules shall be of no further force or effect after such rules have taken effect. c. Such rules may define when a ruling of a district court is final for the purposes of appeal under § 1291. Hanna v. Plumer - First major Erie case where the conflict was between a state law and a formal Rule of Civil Procedure. If a rule affects a party's primary behavior, then it's substantive. a. RULE: As long as a judge can find a federal statute governing the situation, it prevails over the state practice and the Erie analysis is unnecessary. i. Burlington Northern Railroad v. Woods Federal Rule of Appellate Procedure saying that court may award just damages and single or double costs to an appellee for frivolous appeals prevailed over a state law saying that if D appealed on a money judgment and lost, the successful P should be awarded an additional 10% of judgment. There is a conflict, but the federal rule is constitutional and conformed with the
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Rules Enabling Act so it should be applied. ii. Stewart Organization v. Ricoh - 28 U.S.C. § 1404 prevailed over state law which had refused to enforce forum selection clauses RULE: In a diversity case, there is no federal interest in giving a state rule more effect than the state courts themselves would impose. 1. Semtek Intl. Inc. v. Lockheed Martin Corp. - A question of how a state court should understand a federal judgment in a diversity action. Specifically, whether the state court should give the federal diversity judgment broader scope than it would have given a state judgment, had the diversity case remained in state court. The Supreme Court held that it shouldn't. Federal Rule of Res Judicata didn't apply because if the case had remained in CA court, then the P could have refiled in MD state court. The Federal Court in CA dismissed the case saying it was on the merits, but really it was just on the statute of limitations, they had never heard the facts of the case. Certification - Federal Courts ask the State Supreme Court for an answer to a question about state law. 1. Many states do not have this procedure 2. Even when the procedure is available and is used, the results are not always satisfactory.
PROCESS OF LITIGATION I. PLEADING a. The Complaint i. Basic Standards - Notice Pleading 1. RULE: a. Haddle v. Garrison ii. Ethical Limits 1. RULE: a. Walker v. Norwest Corp. 2. RULE: a. Christian v. Mattel b. Burden of Pleading i. RULE: 1. Gomez v. Toledo c. Responding to the Complaint
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Pre-Answer Motions Answer Motions 1. Denials a. RULE: i. Zielinski v. Philadelphia Piers, Inc. 2. Affirmative Defenses a. RULE: i. Layman v. Southwestern Bell Telephone Co. 3. Reply 4. Amendments a. RULE: i. Beeck v. Aquaslide 'N' Dive Corp. b. RULE: i. Moore v. Baker c. RULE: i. Bonerb v. Richard J. Caron Foundation -