Civil Procedure Outline Fall 2006 – Ogden Overview I. Where can a suit be brought? a) Subject Matter Jurisdiction ―General Jurisdiction‖ – Court can hear any claim ―Limited Jurisdiction‖ – Court can hear only cases that are particularly authorized (all Federal Courts) b) Diversity Jurisdiction If there is diverse citizenship amongst the parties, federal court has SMJ Burden rests on P to prove DJ ―Complete Diversity‖ – all Ps and all Ds are from differing states Hawkins v. Master Farms, Inc. P’s estate brought suit in Fed court contending that there was diversity jurisdiction. Creal lived most of his life in MO with his mother, and had only lived in KS with his new wife for a short time. Was P a citizen of MO or KS? Rule: Citizenship is determined by domicile – physical presence/actual residence and intent to remain in that location. Creal was domiciled in KS: he was married, made a home in KS, moved his belongings from his mother’s home in MO; contributed financially to his household in KS c) Personal Jurisdiction Physical presence/sufficient contact with the state in order to be subject to that particular court d) Venue Place of trial – district selection Consider: D’s residence; where claim took place e) Service of process P must draft a complaint and file it with the court: D must be served with the complaint and forms 1A and 1B (D mails signed 1B) If D does not cooperate, lawyer must draft a ―summons‖ – clerk of the court will sign and seal and deliver to D by official means Stating the Case a) The Lawyer’s Responsibility A complaint asks the formal legal system to use governmental power to grant P relief; those invoking the system also bear special responsibility not to invoke it for improper purposes Bridges v. Diesel Service, Inc. P’s lawyer failed to file a charge with the EEOC as he should have done prior to bringing suit Rule: Rule 11 is violated only if the signing of the document files was objectively unreasonable under the circumstances; the prime goal of Rule 11 sanctions is deterrence of improper conduct. P’s counsel immediately recognized its error and attempted to rectify the situation by filing a charge with the EEOC. II. b) The Complaint Bell v. Novick Transfer Co. Infant P was killed by D in an auto accident; P’s declaration alleged that the injury was a ―direct result of the negligence on the part of the Ds.‖ D moved to dismiss the claim, argued that P failed to allege specific acts of negligence. Court held that the complaint was sufficient Rule: Rule 8 requires only a “short and plain statement of the claim showing that the pleader is entitled to relief.” c) d) e) The Response 1) Motions Attacking the summons and complaint (D may request the case be dismissed for lack of SMJ; P has no right to relief; the complaint is vague – request a ―more definite statement‖) Note: these responses do not speak to the validity of the complaint 2) Answer Responsive pleadings deny the truth of one or more allegations; assert additional matters that will defeat the P’s claim Counterclaims/cross claims/third party claims Amendment of Pleadings FRCP reflect a liberal policy toward changes to the pleadings upon discovery Permissive and Compulsory Joinder FRCP 20; P has a choice of whom to join as a coplaintiff as well as a codefendant 1) Permissive: parties determine whether or not to bring a third party into the lawsuit 2) Compulsory: party is brought into the lawsuit by order of the court Bridgeport Music, Inc. v. 11C Music P sued over 770 entertainment companies for ―sampling‖ music in which P claimed an ownership interest; D moved to dismiss because Ds were not properly joined. Court held for D – each alleged claim was distinct. Rule: FRCP 20(a) allows the broadest possible scope of action consistent with fairness to the parties; permissive joinder is circumscribed by the dual requirements of a common question and transactional relatedness III. Intervention If P and D choose not to include additional parties in their lawsuit, the absent party can still seek to come into the suit: intervention as of right and permissive intervention -Party has the right to intervene when a lawsuit conducted without him has the potential to inflict real hardship g) Class actions Allowing one/some parties to stand in for the entire group/class; FRCP 23 Discovery Factual Development a) Five primary means of discovery 1) Disclosures – parties must reveal basic information supporting their claim – names of witnesses, existence of documents, bases for damage calculation, etc (Rule 26(a)(1)) 2) Production of Documents (Rule 34 and 45(a)(1)(C)) f) 3) 4) 5) Conduct Oral Depositions – questioning a witness under oath before trial (Rule 30, 45) Written Interrogatories – written questions to be answered by the opposing parties (Rule 33) Physical and mental examinations – must demonstrate good cause for requested exam (Rule 35) Butler v. Rigby AMG and MHC provided medical treatment to P following an auto accident. D filed notices of depositions requesting documents and information. (D suspected ties between medical group and P’s counsel). AMG and MHC moved the court for protective order prohibiting D from discovering certain info on the grounds that it is irrelevant to the lawsuit. Court held that the info was discoverable. There was a plausible connection as the D suspected. Rule: Relevance (Rule 26(b)(1)): information must prove or disprove a material fact that is an issue in the lawsuit Privilege (Rule 26(b)(1)): information that is protected from discovery IV. Pretrial Disposition – Summary Judgment FRCP have adopted the device of “summary judgment” to provide a mechanism for deciding cases for which a trial is not necessary and would serve no purpose (Rule 56) a) Summary Judgment is granted if: 1) No Genuine Issue as to Material Fact 2) Moving party is entitled to Judgment as a matter of law Houchens v. American Home Assurance Co. P’s husband was presumed dead after going missing for 7 years; P sued D insurance company for refusing to pay out on her husband’s accidental death policy. Court granted D’s motion for SJ, as there was not proof that P’s husband’s death was accidental. (No genuine issue as to material fact) V. Trial 1) Select a jury; peremptory challenges (dismiss jurors); opening statement – provides jury with an overview of the case; witnesses are called – examined and cross-examined 2) D may make a motion for ―judgment as a matter of law‖ or a ―directed verdict‖ – even if all of the evidence is true and legitimate inferences are correct, there is no right to relief 3) Closing arguments; judge charges the jury; verdict is read in an open court 4) Within ten days, the loser may again move for a ―judgment as a matter of law‖ at this stage also called a ―judgment not withstanding the verdict (JNOV) or they may move for a new trial or appeal the decision. Norton v. Snapper Power Equipment P utilized a riding lawn mover manufactured by D when his hand was caught in the blade amputating four fingers. Court left the strict liability defect claim to a jury, who returned a verdict for P. Immediately after, the district court indicated it would enter a JNOV. P appealed. Court held that the lower court erred. P needed to show 1) product defect, and 2) the product defect caused the injury Expert testimony proved that the absence of the dead man device did cause the injury *There was enough evidence of causation to convict D Note: it is rare for judges to grant this motion of JNOV; prefer to leave the verdict to the jury PLEADING Pleadings are statements of the factual allegations that constitute P’s cause of action and D’s ground for defense I. Stating a claim Drafting a Complaint -Cognizant about the substantive law being raised Complaint should invoke a body of substantive law -Must establish elements of the substantive law claim Sketch a factual scenario that if shown to be true, falls within that body of law Current system – Notice Pleading: basic components of fact and law set forth the claim FRCP 8 General Rules of Pleading a) Claims for Relife A pleading which sets forth a claim for relief…shall contain: 1) A short and plain statement upon which the court’s jurisdiction depends 2) A short and plain statement showing that the pleader is entitled to relief (Prima Facie Case invoking body of law under which the pleader can recover) 3) A demand for judgment for the relief the pleader seeks b) Defenses – Forms of Denial 1) Pleader may make specific denials of designated averments/paragraphs (May make denials for lack of information or belief) 2) ―General Denial‖ – deny all claims, including averments of the grounds upon which the court’s jurisdiction depends (subject to FRCP 11) c) Affirmative Defenses If the defense will rest upon some fact not included in the complaint, it must be raised as affirmative defense in the answer Pleader shall set forth affirmatively: Assumption of risk; contributory negligence; failure of consideration; fraud; illegality; res judicata; statute of limitations; waiver, etc d) Failure to Deny Averments in the pleading are admitted when not denied in the responsive pleading e) Pleading to be Concise and Direct; Consistency 1) Pleading should be simple, concise, direct 2) Pleader may set forth two or more statements of a claim or defense alternatively or hypothetically, either in one count/defense or separate counts/defenses (Discovery could reveal unknown facts that give rise to alternative claims/defenses – allege every charge or defense that could plausibly fit) ***Multiple claims/defenses may be stated, regardless of consistency, but must be made in good faith All of the proper elements of the law must be invokedEx: Negligence: 1) Duty of Care; 2) Breach of duty; 3) Injury sustained 4) Causation 5) Damages Note: If the elements are established, D cannot file a 12(b)(6) motion to dismiss Haddle v. Garrison P claimed conspiracy under the Fed Statute 1985 after testifying against his employer and subsequently being terminated; Injury element (to person or property) of the claim was in question; SC ruled that loss of at-will employment is sufficient to constitute an ―injury‖ Rule: The gist of the wrong at which sec 1985 is directed is not deprivation of property, but intimidation or retaliation against witnesses in federal court proceedings The fact that employment at will is not ―property‖ for the purposes of the Due Process clause, does not mean that loss of at-will employment may not, ―injure petitioner in his person or property‖ for the purposes of Section 1985 --Injury element was satisfied Note: Not only does a proper body of law have to be invoked, but all the proper elements must be covered. Dura Pharmaceuticals v. Broudo P claimed fraud for inflated stock price; loss causation in question (between misrepresentation and economic loss); SC dismissed claim at the pleading stage – injury, causation, and damages were not alleged Rule: Private Securities Litigation Reform Act 1995 – the statute insists that securities fraud complaints “specify” each misleading statement; that they set forth the facts “on which a belief” that a statement is misleading was “formed”; and that they “state with particularity facts giving rise to a strong inference that the D acted with the required state of mind.” The statute strictly imposes on Ps “the burden of proving” that the D’s misrepresentations “cause the loss for which the P seeks to recover.” An inflated purchase price will not itself constitute or proximately cause the relevant economic loss. When the purchaser resells shares, even at a lower price, the price may reflect not he earlier misrepresentation, but changed economic circumstances, conditions, etc. which taken separately or together account for some or all of that lowered price. FRCP 9 Pleading Special Matters b) Fraud, Mistake, Condition of the Mind -When a complaint charges fraud, the circumstances constituting fraud or mistake shall be stated with particularity -Malice, intent, knowledge and other condition of mind of a person may be averred generally Stradford v. Zurich Insurance Co. P sued for collection under his insurance policy; D counterclaimed for fraud; although D did not state the claim with particularity, the court granted leave to amend his claim to conform to Rule 9(b) Rule: Fraud claims require particularity of time, place, and nature of alleged misrepresentations Although the counterclaims do not satisfy Rule 9(b) which requires the ―time, place, and nature of the alleged misrepresentations‖ be disclosed to the party accused of fraud, it is the usual practice of the circuit to grant a litigant leave to amend so that he may conform his pleadings to the rule. II. Ethical Limitations Rule 11 regulates the way lawyers and clients conduct themselves with pleadings, motions, and other paper, establishing standards for investigation of law and facts FRCP 11 Signing of Pleadings, Motions, and Other Papers a) Signature Attorney must sign all pleadings, motions, and other papers b) Representations to Court Signature constitutes a certification that, based on reasonable research/inquire, the pleading or motion is: 1) Not being presented for any improper purpose (harass, cause delay, increase cost of litigation, etc) 2) Warranted by existing law or by a nonfrivolous argument for a modification of the law or the establishment of a new law; legal merit 3) Factual contentions are based on evidentiary support 4) Denials of factual contentions are warranted on the evidence c) Sanctions Court may impose sanctions for violations of (b) 1) How Initiated (Safe Harbor Provision) a) By Motion -Made as a separate motion describing conduct that is in violation; served to opposing counsel; opposing counsel is given 21 days to correct or withdraw challenged paper, claim, defense, etc. -The court may award expenses and attorney’s fees incurred in bringing the prevailing motion b) On the Court’s initiative -Court may enter an order describing conduct that violates (b) 2) Nature of Sanctions; Limitations -Sanctions shall be limited to what is necessary to deter repetition of conduct -Sanctions may be paid to court or for attorney’s fees 3) Order -Court will explain the basis for the sanction imposed d) Inapplicability to Discovery – this rule does not apply to discovery (Rules 26-37) Walker v. Norwest Corp P’s attorney filed claim for diversity jurisdiction without proper investigation of D’s residency. The claim stated that jurisdiction was based on diversity since ―the Ps and some of the Ds are citizens of different states.‖ D replied to P’s attorney, informing him that unless he dismissed the case for lack of diversity jurisdiction, he would seek sanctions. P’s attorney failed to reply. Court awarded sanctions; attorney violated legal merit portion of Rule 11 P’s attorney did not allege citizenship for many of the Ds and did not identify which of the Ds should be dismissed to create diversity jurisdiction. The court is not obliged to do counsel’s research for him. Determining the Ds’ citizenship before filing the complaint does not constitute complicated, in depth, and possibly impossible inquiry, which is not required under Rule 11. Christian v. Mattell, Inc P’s attorney filed a claim for patent infringement, D moved for SJ on the grounds that there was a lack of factual merit. Lower court granted Mattel’s motion for summary judgment and Rule 11 sanctions, stating that, ―A reasonable investigation by P’s attorney would have revealed that there was not factual foundation for Christian’s copyright claim.‖ The court found other items of misconduct in litigating against Mattel, such as Hicks’ behavior during an early meeting with Counsel, misrepresentations during oral arguments, etc. Rule: SC ruled that Rule 11 sanctions are limited to “paper” signed in violation of the rule, other conduct cannot be considered. Only applies to pleadings, motions, and other paper. P’s attorney’s conduct in depositions, discovery meetings of counsel, oral representations at hearings, and behavior in prior proceedings do not fall within the ambit of Rule 11. III. Responding to the Complaint 1) Pre-Answer Motions -Permits D to raise certain types of objections at the earliest stage of the lawsuit -See motions to dismiss in Rule 12(b) -Saves time and money; allows 10 more days after motion is answered to file the answer; motion allows you to get a ruling on your defense 2) Answer See Rule 12(a) -Responds to the allegations of the complaint -Asserts any additional information or affirmative claims against the P FRCP 12 Defenses and Objections – When and How Presented – by pleading or motion – motion for judgment on the Pleadings a) When Presented 1) Unless a different time is prescribed, D shall serve an answer A) 20 days after being served the summons and complaint B) If service of summons is waived, 60 days after the request for waiver or 90 days after that date if D is outside US b) How Presented Every Defense shall be made in a responsive pleading, except that the following defenses may be made by motion: 1) Lack of jurisdiction over subject matter 2) Lack of jurisdiction over the person 3) Improper venue 4) Insufficiency of Process 5) Insufficiency of Service of Process 6) Failure to state a claim upon which relief can be granted 7) Failure to Join a party c) Motion for Judgment on the Pleadings After pleadings are closed either party may move for judgment on the pleadings (also called Summary Judgment); no material issue of fact exists, one party is entitled to judgment as a matter of law d) Preliminary Hearings Defenses in (b)1-7 and (c) shall be heard and determined before trial e) Motion for a More definite Statement The motion shall point out the defects of the pleading; if the motion is granted, the statement must be clarified within 10 days f) Motion to Strike Within 20 days of service of the pleading, upon the party or court’s initiative, insufficient defense or any redundant, immaterial, impertinent, or scandalous matter may be stricken from the pleading g) Consolidation of Defenses in Motion When a party makes a 12(b) motion, they must add any other 12(b) motions with it, or all other motions will be waived (exceptions provided in 12(h)(2) h) Waiver or Preservation of Certain Defenses 1) Defense of lack of jurisdiction, improper venue, insufficiency of process, or insufficiency of service of process is waived if omitted from first response 2) Defense of failure to state a claim upon which relief can be granted (12(b)(6)), failure to join a party, failure to state a legal defense to a claim may be made in any pleadings, motion for judgment, or at the trial on the merits 3) Whenever it appears that the court lacks subject matter jurisdiction, court shall dismiss the action Allocating the Burdens: -The Burden of Pleading:  P must establish a prima facie case for the claim they are asserting (must allege facts that if proven, would establish each element of the claim)  D is responsible for affirmative defenses Gomez v. Toledo Gomez brought action against the superintendent of the Police of Commonwealth of Puerto Rico. Petitioner was employed as an agent with the police, and was subpoenaed to give testimony in a criminal case in which the P assertive two other agents had offered false evidence. P was charged with wiretapping and was discharged from the police force. Gomez was later found to be innocent. P brought suit contending that his discharge violated his right to procedural due process. D moved to dismiss the claim for failure to allege bad faith; Court ruled that the burden to plead bad faith did not rest on the P – good faith is an affirmative defense (rests on the D) *Identify elements of the law that the P must claim for relief – are there missing elements? If so, D may move for dismissal under 12(b)(6) Since qualified immunity is a defense, the burden of pleading it rests with the D. It is for the official to claim that his conduct was justified by an objectively reasonable belief that it was lawful. Whether such immunity has been established depends on facts peculiarly within the knowledge and control of the D. Section 1983: 1) every plaintiff (Gomez) 2) whose federal constitutional rights are violated (right of due process – wrongful termination) 3) by defendant state official acting under color of state authority (fired by police chief) 4) can recover damages (loss of income; loss of reputation) Note: Good faith is an affirmative defense; it is not part of the prima facie case Zeielinski v. Philadelphia Piers, Inc P sued the wrong D (confusion as to who the owner was of forklifts operating on the pier); D entered a general denial in his answer to the negligence claim; Court ruled that D should have entered a more specific answer under Rule 8(b) to flag P that they were the incorrect D Compliance with Rule 8(b) requires that D make a more specific answer than a general denial. A specific denial of parts of the complaint and specific admission of other parts would have warned P that he had sued the wrong D Note: P should have broken up the complaint with a separate paragraph addressing responsibility for ownership for the forklift for D to respond to; D should have identified why they were entering a denial. Layman v. Southwestern Bell Telephone Co P sued D for trespass; D argued in court that they had an easement to enter property; court ruled for new trial because D had failed to assert this affirmative defense in the answer Rule: Affirmative Defenses must be included in the answer as to give the P fair notice If the D has a defense in the nature of a confession to the facts but avers the P’s theory of liability because of additional facts which place D in a position to avoid legal responsibility for its action, then such defense must be set forth in his answer FRCP 7 Pleadings Allowed; Form of Motions a) Pleadings  Complaint and answer  Reply to counter-claim  Answer to cross-claim (if the answer contains a cross-claim)  Third party complaint (if a person who is not an original party is summoned)  Third party answer (if third party complaint is served)  Court may order a reply to an answer or a third-party answer  No other pleading shall be allowed IV. Amendments to Pleading FRCP 15 Amended and Supplemental Pleadings a) Amendments (pre-trial)  Parties may amend at any time before a responsive pleading is served (if there is not responsive pleading, parties may amend within 20 days after complaint is served)  Otherwise, parties may amend by leave of the court or written consent of adverse party  ―Leave shall be freely given‖ when justice so requires Party will respond to amended pleading within time remaining for response to original pleading, or 10 days, whichever is longer b) Amendments to conform to the Evidence (trial amendments)  When issues not raised in the pleadings are litigated by express or implied consent, those issues are treated as if raised in the pleadings  If opposing party objects to admission of evidence because it is not related to issues raised in the pleadings, evidence can be admitted if: o The merits of the action are benefited o There is no substantial prejudice to the opposing party (Court may grant continuance of trial to give opposing party time to respond to the new evidence) c) Relation Back of Amendments (amendments when there is SOL) (The running of the SOL on a claim bars P from suing D on that claim – 15(c) provides a way around this bar) *When D has notice of the original pleading before the SOL runs, P may amend the pleading to add new facts, theories, claims, defenses, etc. if the allegations arise out of the same conduct, transaction, or occurrence as the original pleading *Amendments changing party defendants: o Same conduct, transaction, or occurrence as the original pleading o Notice of claim for relief received by D before SOL ran; no prejudice to D in maintaining defense on the merits o D knew or should have known that but for a mistake concerning the identity of the proper party, the action would have been brought against him d) Supplemental Pleadings (additional facts)  Parties may file a supplemental pleading with court permission and reasonable notice to opposing party  Parties may use supplemental pleadings to set forth transactions, occurrences or events which have happened since the date of the pleading sought to be supplemented Beeck v. Aquaslide N Dive Corp 15(a) P sued for injury; D admitted to being manufacturer of waterslide and later moved to amend answer to deny manufacture after running of SOL; court granted D’s motion to amend – mistake has been made in good faith although P had been harmed. Court considers whether to allow an amendment based on: Undue delay, Cost and expense, prejudice, good/bad faith, reason for initial mistake, dilatory motive (delay the suit) The D had relied upon 3 insurance companies’ inspections in concluding that the slide in question was an Aquaslide; The D did not act in such bad faith as to be precluded from contesting the issue of manufacturer at trial Moore v. Baker 15(c) P sued doctor (D) for lack of informed consent alleging D failed to inform P of alternative therapy to surgery for blockage of her carotid artery; P later moved to amend claim to include negligenced in performance of the surgery and post-operative care after running of SOL; court denied P’s motion – new claim did not ―relate back‖ (arise out of the same ―CTO‖ – conduct, transaction, or occurrence) the new claim occurred within a different time fram (during and after the surgery; original claim of lack of informed consent was pre-surgical)  An amendment relates back to the original filing “whenever the claim or defense asserted in the amended pleading arose out of the conduct, transaction, or occurrence set forth or attempted to be set forth in the original pleading” (rule 15(c)) There is nothing in P’s original complaint which makes reference to any acts of alleged negligence by D either during or after surgery; the proposed new claims are barred by the applicable statute of limitations Bonerb v. Richard J Caron Foundation 15(c) P sued drug rehab center for negligence in maintaining their sports facilities; P later moved to amend claim to include counseling malpractice; court granted P’s motion to amend The original and amended complaints derive from the same nucleus of operative facts. Original complaint alleged that D negligently took care of their b-ball court; amendment alleged that counseling was negligent because it forced rehab patients to play on the courts. There was no showing of undue delay or bad faith, and D could have anticipated this action from the original complaint. ALTERNATIVES TO ADJUDICATION Court applies pressure to move forward with adjudication, or seek resolution without trial on the merits I. Resolution without Trial FRCP 55 Default a) Entry  When party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend…clerk shall enter the party’s default (P must present affidavit) b) Judgment 1) By the Clerk  When P’s claim is for a certain sum or which can by computation be made certain, the clerk shall enter judgment for that amount against D who had been defaulted for failure to appear 2) By the court  In all other cases: court will conduct hearings or order references to determine judgment – if D has appeared, they will be notified 3 days prior to the hearing in order to ―prove up‖ the damages c) Setting aside Default  For good cause, court will set aside default in accordance with Rule 60(b); parties will then move forward with claim FRCP 60 Relief from Judgment or Order b) Mistakes, Inadvertence, Excusable Neglect, Newly Discovered Evidence, Fraud, etc.  Permits the reopening of cases even after judgment is entered on a default FRCP 41 Dismissal of Actions a) Voluntary dismissal 1) By P; By Stipulation  Action may be dismissed by the P at any time before service of answer or motion for summary judgment by the adverse party  Action may be dismissed if agreed to by all parties  Note: 1st dismissal is without prejudice – P can refile 2nd dismissal is adjudication on the merits – P cannot refile 2) By order of the court  Must make a showing as to why you wish to dismiss; dismissal is without prejudice b) Involuntary Dismissal  If P does not move claim forward, D may move to dismiss; dismissal is adjudication on the merits with exception of lack of jurisdiction, improper venue, and failure to join party Peralta v. Heights Medical Center Default judgment was entered against the D for failure to appear or answer, but D had never been served. When judgment was entered, a lien was placed on D’s property, and it was promptly sold. Lower court ruled that default must stand absent a meritorious defense to the action; SC reversed: notice is a right – default should be set aside for insufficient service of process alone Where a person has been deprived of property in a manner contrary to the most basic tenants of due process, it is no answer to say that in his particular case due process of law would have led to the same result because he had no adequate defense upon the merits Notice/Opportunity to be heard was not granted, and this is every person’s right, therefore default is set aside; this is all you must prove. If D had been given notice of the suit, he may have acted differently Community Dental Services v. Tani D’s attorney failed to comply with numerous pre-trial orders, meanwhile misleading D that trial was proceeding smoothly. Default judgment was entered against the D, D moved for relief under Rule 60(b); court ruled that D’s attorney’s incompetent behavior constituted ―extraordinary circumstances upon which the motion for default judgment must be set aside An unknowing client should not be held liable on the basis of a default judgment resulting from an attorney’s grossly negligent conduct, and that in such cases sanctions should be imposed on the lawyer, rather than on the faultless client. II. Avoiding Adjudication a) Contracting to Dismiss  Contract/Release – P agrees not to bring suit or to drop one that has already been filed (usually in agreement for money); simplest form of settlement b) Third party participation in settlement  Mediation: court ordered or independent Matsushita Elec. Industrial Co v. Epstein P acquired MCA, 2 sets of lawsuits were filed – one state, one federal; state claims were negotiated – decided a ―global release‖ of all claims arising from the dispute; court ruled that the fed court may not disregard state – court negotiated judgment Note: impact of settlement – scope of settlement can be broader than the scope of jurisdiction over claims Fed courts may not employ their own rules in determining the effect of state judgments, but must accept the rules chosen by the state from which the judgment is taken c) Confidentiality  Fact of the dispute/outcome must be kept from becoming public  Settlement goal is often shared by P and D Kalinauskas v. Wong P sued former employer for sexual discrimination; P sought to depose another former employee (Thomas) who filed a similar suit, but that employee had settled pursuant to a confidential agreement. Court ruled that deposition was permitted to an extent, and restricted to an extent. Details of the confidential settlement agreement itself must be kept confidential as to protect these types of settlements; Deposition must be permitted to the extent that information of public concern should not be concealed To allow full discovery into all aspects of Thomas’ case could discourage similar settlements. Ds often desire confidentiality for public image, and to prevent other individuals from taking advantage of their ―deep pockets‖ through a particular tactic of litigation that worked in that particular case to receive a settlement Preventing the deposition of Thomas entirely, on the other hand, would condone the practice of buying the silence of a witness with a settlement agreement. Confidentiality can hide issues that should be publicly known; public accountability d) Arbitration  Resolves private disputes (conflicts between non-governmental parties)  Decision on the merits (similar to adjudication; unlike mediation)  Parties design procedures  Cheaper, quicker, more efficient than civil litigation  Private, not public in nature o Eras in Arbitration:  1900s – arbitration is rarely enforced  1950 – arbitration is routinely enforced  2000 – arbitration is regarded skeptically – era of procedural fairness Procedural Fairness In arbitration  Neutral arbitrator  Adequate discovery  Written decision allowing judicial review – arbitrator must explain why they ruled the way they did  Limitation on the cost – employer must bear the burden Armendariz v. Foundation Health P brought a wrongful termination suit against their former employer alleging violation of CA Fair Employment and Housing Act. D moved to compel arbitration under a provision of a signed employment application. Court ruled that the arbitration agreement was unconscionable and unenforceable – contrary to public policy and unilateral; adhesion contract; agreement did not specify arbitration of statutory antidiscrimination claims; limited damages Arbitration minimum requirements – neutrality of the arbitrator, provision of adequate discovery, limited form of judicial review, limitations on costs of arbitration The agreement was invalid in its entirety due to being one-sided, limiting damage to back-pay, and by precluding discovery Note: An employee cannot be compelled to arbitrate a statutory antidiscrimination claim unless the arbitration agreement expressly states that these claims are included Floss v. Ryan’s Family Steak Houses, Inc P brought action under ADA against former employer; D sought to compel arbitration but court ruled that the agreement lacked consideration and was thereby unenforceable EDSI (the third party arbitration services provider) did not create a binding obligation. Absent a mutuality of obligation, a contract based on reciprocal promises lacks consideration. Illusory promise – no consideration for the agreement; employer’s promise does not bind the employee Lyster v. Ryan’s family Steak Houses, Inc. P brought sexual harassment claim against former employer; D sought to compel arbitration and court granted D’s motion; P did not prove that the contract was unconscionable; P executed a valid arbitration agreement and her claim of sexual harassment falls within the scope of that agreement. Reconciling the Steak House cases: different circuit courts; Floss argued no mutuality of obligation and prevailed, whereas Lyster argued unconscionably and did not prevail Ferguson v. Writer’s Guild of America P contested screenwriting credits; D sought to compel arbitration through Guild’s credit determination process; P argued that the system was unfair. Court ruled that D’s system was just – arbitrators were more knowledgeable of the subject matter, and therefore more fit to make judgments on the merits Nature of arbitration system: 3 arbitrators; anonymous selection; voted separately; achieved impartiality There were no procedural irregularities; system is fair P consented to arbitration system e) Administrative Law  Public disputes (gov’t is a party – providing or regulating something)  Adjudication by the gov (―State action‖)  Administrative law occurs in agencies of the executive branch most often (dep. Of homeland security: dep of health and safety, etc)  Required procedures government agencies must follow in order to adjudicate: o Due Process of Law (Constitution is foundation) o Administrative Procedure Acts (Statutes similar to FRCP – sits on foundation) Requirements of fairness:  Oral Hearing  Right to Present evidence  Lawyer  Impartial Decision Maker o Financial Disqualifying Factors of the Decision Maker Standard:  Outcome Dependent Compensation:  Need Not prove actual influence, just that an average person would be swayed  Judge in your Own Case:  Lack of impartiality due to financial interest Goldberg v. Kelley Ps were cut off from welfare prior to evidentiary hearing; court ruled that due process was violated – gov must meet basic prerequisites of fairness Gov should look to 1) private interest; 2) risk of error in existing procedures; and 3)gov interest for proper hearing procedures Private Interest – impact on welfare recipient Risk of error of existing procedures – welfare recipients had to write a letter arguing why they still deserved benefits – many recipients were illiterate; lack familiarity with welfare code Governmental interest – public fisc Haas v. County of San Bernadino P was subject to a business license revocation hearing in which the hearing officers had a financial interest in the outcome – i.e. – their decisions impacted being re-hired as an officer by the county; court rule dthat due process was violated – gov is required to have fair adjudicators in courts and in administrative tribunals alike The decision maker in this case was disqualified by outcome – dependant compensation Of all the types of bias that can affect adjudication, pecuniary interest has long received the most unequivocal condemnation and the least forgiving scrutiny III. Curtailed Adjudication: Summary Judgment Alternative to trial for cases so one-sided that trial would be pointless FRCP 56 Summary Judgment a) for Claimant  Party seeking to recover may move for SJ after 20 days from start of the action b) For Defending Party  May move for SJ in party’s favor at any time c) Motion and proceedings thereon  Motion is served if there is 1) no genuine issue as to any material fact, and 2) the moving party is entitled to judgment as a matter of law d) Case not fully adjudicated on Motion  Court may send only parts of the case to trial, setting aside those that are not at issue e) Form of affidavits; further testimony; defense required Affidavits shall be made on personal knowledge, set forth facts that would be admissible evidence, and show that affiant is competent to testify as to the matters stated therein f) When Affidavits are Unavailable  Court may refuse SJ or grant continuance for affidavits to be obtained, depositions, or discovery, etc. as just g) Affidavits Made in Bad Faith  Sanctions – affidavit cost and attorney fees to opposing party  Judge guilty of contempt Celotex Corp v. Catrett D moved for SJ contending that P had not produced evidence to support her claim that D’s product containing asbestos had caused the death of her husband; Court granted SJ – moving party need only show absence of evidence, not make an affirmative case. Moving party always bears the initial responsibility of informing the court of the basis for its motion (ID pleadings, answers, affidavits, etc.) which demonstrated the absence of a genuine issue of material fact Rule 56 does not require that the moving party support its arguments with affidavits/materials negating the opponent’s claim (must simply point out absence of evidence) Note: Made Summary Judgment easier to obtain D informed the court of the basis for its motion for SJ: P had made no showing that her husband was exposed to D’s product in D.C. or elsewhere within the statutory period (absence of a genuine issue for trial) Bias v. Advantage International Inc. D moved for SJ contending P (Who sought damages from D for failing to obtain life insurance for their basketball-star son before his death from a cocaine overdose) could not have obtained life insurance regardless of D’s action due to their son’s drug use. Court granted SJ – P made no case against D proving that there was an issue for trial In order to withstand a SJ motion once the moving party has made a prima facie showing to support its claims, the nonmoving party must come forward with specific facts showing that there is a genuine issue for trial P did not seek to impeach any of the testimony provided by D that Bias had been seen using cocaine on numerous occasions P failed to name a single insurance company or provide evidence that any company would have issued a jubo life insurance policy without inquiring about drug use *Did not show a genuine issue for trial  REMEDIES Remedies aim to cure a legal harm I. Types of Remedies a) Substitutionary Remedies – seek to provide P with a reasonable substitute of what D has taken 1) Compensatory Damages – put the P in the position he would have been if the wrong had not occurred US v. Hatahley Ps, Indians of the Navajo tribe, brought suit for the unlawful seizure and destruction of their horses and burros by a federal agency under the Utah ―abandoned horse statute‖; court found that Ps could recover three types of damages: 1) Fair market value of lost animals: evidence of fair market value and replacement cost for horses and burros; trial court erred in adopting a uniform market value per animal 2) Loss of use damages: damages for the loss of horses and burros, and herd animals for a reasonable replacement period; trial court erred in arbitrarily determining that 50% of the herd losses were attributable to D’s wrongful conduct 3) Emotional distress damages: Only recovered upon proof of physical injury (1950s); trial court erred in determining a flat award and dividing equally amongst the Ps – need individualized proof of loss Purpose of proper rules of damages is to measure P’s losses as precisely as possible under the circumstances Corrective Justice: compensate P fully for losses caused by D Carey v. Piphus P’s principal suspended him for allegedly smoking marijuana; a meeting was held a few days later to discuss the reason for suspension, but not whether he deserved to be suspended or not. P in a separate case was treated similarly for wearing an earring to school against the school policy. The cases were consolidated Court ruled that Ps had been denied due process, but in the absence of proof of actual injury, the students were entitled to recover only nominal damages Must prove that loss was caused by an unjustified deprivation of due process To recover more than nominal damages, P must show that they suffered actual losses Public schools – claim is under Section 1983; Ps had a claim because they were deprived of their due process right to be heard Actual loss – Ps would have had to prove that they got behind in class work, college options were stifled, missed final exams, etc. Causation: must show that the suspension for ten days was erroneous; if they had been given due process opportunity to explain, the situation would have been cleared up (Must show that denial of due process was the cause of suspension – rather than a true violation of school rules) II. Punitive Damages – meant to punish and deter; generally must show malice – D intended to cause injury to the P or the conduct is otherwise despicable a) Common Law factors for awarding punitive damages: 1) How bad was the D’s conduct? (reprehensibility) 2) D’s wealth? (requires greater damages to deter a wealthy D) 3) Amount of compensatory damages? (proportionality) 4) Amount needed to deter? (benchmark) b) Due Process of Law Factors in determining punitive damages (Constitutional Standard) 1) Procedural due process review (To ensure that punitive damages are not awarded arbitrarily)  Jury instructions  Post trial review of the size of the award  Appellate review 2) Substantive due process factors (To ensure that the size of an award is not an arbitrary deprivation of D’s rights)  How bad is conduct  Amount of compensatory damages – proportionality  Amount of civil penalties for same type of conduct State Farm Mutual Auto Ins. Co v. Campbell State Farm turned down settlement for $50K, preceded to trial and their insured was found liable for $185K (insured wanted to settle with State Farm’s coverage policy limit, but State Farm refused and when award was determined, SF expected insured to pay additional damages above the policy limit) P brought a tort cause of action for this behavior – bad faith refusal to settle P was awarded $1M in Compensatory Damages and $145M in Punitive Damages Court held that punitive damages were excessive In reviewing punitive damages, evaluate: 1) The degree of reprehensibility of the D’s misconduct 2) Disparity between the actual or potential harm suffered by the P and the punitive damage award 3) Difference between punitive damages awarded and civil penalties authorized in comparable cases To Determine Reprehesibility:  Harm cause was physical as opposed to economical  Conduct evinced an indifference to or a reckless disregard of the health or safety of others  Target of the conduct had financial vulnerability  Conduct involved repeated actions as opposed to an isolate incident  Conduct was intentional malice, trickery, or deceit, as opposed to mere accident The ratio between compensatory and punitive damages was excessive (1:145) Note: the wealth of the D cannot justify an excessive award – use a Single Digit Ratio (1:1 through 1:9) This is not a bright line test, but ratios higher than single digit will be suspect Lower court erred in taking into account the nationwide policies of D – can only consider actions against P c) Specific Remedies – seek to restore directly and specifically that which the D has taken from the P Court may order parties to do something specific, or refrain from something specific Legal Remedy (usually damages) v. Equitable Remedy (usually an injunction) 1) Injunctions TEST:  P must show that legal remedy is inadequate  Must make a strong showing of probable merit  Irreparable Harm must be immediate  Hardship on P if relief is denied as opposed to hardship on D if relief is granted Equitable Remedies are generally awarded for:  Unique items (P needs the very thing that he or she lost)  Repeated Acts (P would have to go to court every time act is committed)   D is insolvent (cannot pay damages; award is not collectible) Damages are Hard to measure Sigma Chemical Co. v. Harris D signed a non compete agreement with his employer, P, then violated his confidentiality agreement when he went to work for a competitor and disclosed trade secrets; Court held that injunctive relief should be granted Requirements of injunctions:  Substantive Merit – Sigma had non-compete agreements signed by their employees – had a valid claim for violation of this contract  Irreparable Harm – Sigma could lose competitive edge (#1 – unique item); former employee could repeatedly disclose new info that could harm Sigma (#2 – repeated acts); damages cannot be measured – profit loss, long term disadvantage (#3 – damages are harm to measure)  Balancing Hardships – if the injunction is not granted, Sigma loses all confidential business info (this is a large hardship); if the injunction is granted – former employee would simply not be allowed to divulge info (smaller hardship) 2) Declaratory Relief A judgment of the court to establish the rights of the parties or express the opinions of the court on a question of law without ordering anything to be done Ex: Movie Theater seeks declaratory relief to show a film that has been deemed obscene II. Financing Litigation a) American Rule – Each side pays their own attorney’s fees b) Types of fees 1) Flat Fee 2) Hourly billing rate (most widely used) 3) Contingent Fee  Low volume, high screening: take cases with high probability of recovery and apply substantial time  High volume, low screening: take all cases with any prospect of recovery and apply modest time c) Fee Shifting Awards attorney’s fees to prevailing parties; applies particularly to P as winning party. D only gets attorney’s fees if P’s claim is frivolous – intended to encourage litigation 1) Fees and Settlement Evans v. Jeff D Ps, a class of handicapped children sued Idaho seeking injunctive relief. The class’ attorney advised his clients to accept a settlement offer that offered all injunctive relief if Ps attorney would waive his right to attorney’s fees; Court found that this waiver of fees was not an abuse of discretion 42 USC Sec 1988 – Court may allow P attorney’s fees to be paid in prevailing civil rights actions. The fees Act does not prohibit settlements waiving fees – court can review settlements to appraise reasonableness on a case by case basis 2) Fees awarded to the prevailing party Buckhannon Board and Care Home, Inc v. West Virginia Dept of Health P operated a care home which ran afoul of a state regulation requiring residents to be capable of escaping a burning building; P sued the State seeking injunctive relief, as the regulation violated the Fair Housing Act. While the trial was pending, the State legislature eliminated the regulation, and the case was moot. P requested attorney’s fees as the ―prevailing party‖ under the catalyst theory – the lawsuit prompted the D to change their conduct or change the law and therefore the P “prevails” just as if they won the lawsuit. Court held that the party who achieves a desired result of the lawsuit through the voluntary act of D is not considered a ―prevailing party‖ and hence cannot obtain an award of attorney’s fees (rejected catalyst theory) 3) Determining Attorney’s Fees City of Riverside v. Rivera 8 Chicano individuals attended a party during which police officers acting without a warrant used tear gas and physical force. Many guests were arrested, but the party was not creating any disturbance and criminal charges were eventually dismissed. Ps sued the city of Riverside and received $33K; they also sought attorney’s fees in the amount of $245K Court held that the attorney’s fees do not have to be proportionate to the amount recovered in damages:  Large fee awards encourage lawyers to work on these types of cases (civil rights); legislative purpose behind sec. 1988  Deterrent Effect of large fee award paid by the city/state functions to deter violations such as this in order to avoid paying out on large attorney’s fees  Constitutional Tort litigation has a strong public interest and benefit; tends to correct abuses of civil rights Lodestar Test: what is an appropriate amount for attorney’s fees?  Look first to reasonable hours spent on the case  X  Reasonable Hourly Rate Factors in calculating reasonable attorney’s fees: 1) the time and labor required; 2) the novelty and difficulty of the questions; 3) the skill requisite to perform the legal service properly; 4) the preclusion of employment by the attorney due to acceptance of the case; 5) the customary fee 6) whether the fee is fixed or contingent; 7) time limitations imposed by the client or the circumstances; 8) the amount involved and the results obtained; 9) the experience, reputation, and ability of the attorneys; 10) the ―undesirability‖ of the case; 11) the nature and length of the professional relationship with the client; and 12) awards in similar cases III. Provisional Remedies Relief pending final adjudication of the dispute A) Coercive Remedies Compel action or inaction FRCP 65 Injunctions (a) Preliminary injunction 1) No injunction shall be issued without notice to the adverse party 2) Consolidating hearings with trial on the merits Any evidence received upon application for PI becomes part of the record of the trial on the merits (b) Temporary Restraining Order; Notice; Hearing; Duration Ex Parte TROs- ―only one party is heard from‖ Will be granted without notice to the adverse party only if 1) Shown by affidavit or complaint that immediate and irreparable injury, loss, or damage will result before the adverse party can be heard in opposition 2) Applicant’s attorney certifies in writing any efforts which have been made to give notice and reasons why the notice should not be required -Will expire after ten days; hearing will be held at earliest possible time -Adverse party can move for dissolution of the order on 2 days notice to the applicant party Noticed TROs- hearing with both sides; judge evaluates P and D testimony (c) Security No restraining order or preliminary injunction will be issued except upon security given by the applicant (in sum the court deems proper) for payment of costs/damages as may be incurred or suffered by any party who is found to have been wrongfully enjoined or restrained  Stages of Injunctions Triggered by irreparable harm 1) TRO- issued at the outset of a lawsuit; triggered by filing of the complaintsometimes with notice, sometimes not; litigant cannot wait even until the preliminary injunction hearing for relief (Routinely used in domestic violence cases- provides immediate protection) 2) Preliminary Injunctions 3) Permanent Injunctions- issued after trial on the merits (it is the trial remedy)  Preliminary Injunctions William Inglis & Sons Baking Co. v. ITT Continental Baking Co. P filed an antitrust action against competitors claiming they were guilty of discriminatory and below-cost pricing of their private label bread products. P moved for a preliminary injunction. Preliminary Injunction will be granted if: 1) P will suffer irreparable injury if injunction relief is not granted (Met the test that D would drive them out of business before trial if pricing is not adjusted) 2) P will probably prevail on the merits (District court rejected the injunction on this issue) 3) D will not be harmed more than the P is helped by the injunction (P will stay in business- D will simply have to raise its pricing, will not be harmed) 4) Granting the injunction is in the public interest (More competition if P stays in business) Court held that the trial court erred in failing to consider the alternative test: It is not necessary that the moving party be certain to succeed on the merits. If the harm that may occur to the P is sufficiently serious, it is only necessary that there be a fair chance of success on the merits. Note: P doesn’t have to make as strong of a case for probable prevailing if P can prove #3balancing equity *Must consider the case under both tests B) Seizure Remedies Involves the taking of D’s property 1) Attachment Sheriff goes out and seizes property 2) Garnishment Seizure of wages, assets, etc. 3) Replevin Return possession of an object Fuentes v. Shevin P purchased a stove and stereo from D. With $200 left on P’s payment, a dispute developed regarding the servicing of the stove. D sought to repossess the items. Before P had received a summons to answer its complaint, D issued a writ of replevin ordering a sheriff to seize the disputed goods. FL statute allowed for seizure without prior notice or hearing; there was also no requirement that the applicant even make a showing that the goods are wrongfully detained. Creditor needed to file a complaint (indicating the dispute); fill out replevin form requesting sheriff to seize the property; post a bond (in case there is wrongful seizure) *Relies heavily on creditor’s good faith Court held that this procedure violated due process: Notice and opportunity to be heard are fundamentals of due process Proper ProcedureCreditor must: 1) Issue a complaint 2) Fill out a replevin form/attachment application 3) Complete a notice form to the debtor, notifying them of the hearing date 4) Request hearing date (hearing must show why creditor has a valid claim against the debtor) 5) If the creditor has a valid claim, judge will issue a replevin order 6) Creditor will issue a bond 7) Order will be served by sheriff and property will be seized In most circumstances, due process requires pre-seizure notice Extraordinary situations must be unusual: 1) seizure is necessary to secure governmental or public interest; 2) special need for prompt action; 3) State has kept strict control over its monopoly of legitimate force Triggers for due process case: government action to take possession of property interests Court looks at: 1) Private interest 2) Risk of error in procedures 3) Governmental interest -Complying with due process while keeping costs low PERSONAL JURISDICTION Power to render judgment over a particular person Conditions of Validity of Judgments: a) Subject Matter jurisdiction (what courts; which claims?) b) Personal Jurisdiction (what states; which defendants?) c) Notice 1) History a) Art. III authorizes establishment of the federal court system; sets the limits of federal judicial authority (subject matter jurisdiction) b) Art. IV Sec 1- full faith and credit must be given in each state to judicial proceedings of every other state. c) Supremacy Clause- Constitution and federal laws are the ―supreme law of the land‖- judges in every state will be bound by them Pennoyer v. Neff P brings suit to claim his land back from Pennoyer, which was sold based on a default judgment in Mitchell v. Neff. P had been served by publication in OR, but was a resident of CA. (Neff acquired his land in OR after the default judgment); Court held no personal jurisdiction- P was not personally served and not present in forum state No person is subject to the jurisdiction of a state court unless he appear in the court, or be found within the state, or be a resident thereof, or have property therein- only to the extent of such property at the time the jurisdiction attached P’s property sold under the judgment rendered was not attached, nor in any way brought under the jurisdiction of the Court. To acquire jurisdiction by attachment, Oregon would have had to attach the property before the lawsuit- doing so afterward did not suffice to establish jurisdiction Note: Property Jurisdiction- “In Rem” Jurisdiction Property must be in forum state, P must properly attach the property and that has to be done at beginning of lawsuit (Neff did not have title to land until after the judgment) Personal Jurisdiction- “In Personam” Jurisdiction Personal Service of process in forum state OR Appearance (Mitchell did not properly serve Neff, therefore the property title that resulted from the judgment was invalid) Pennoyer constitutionalized 5 Traditional Bases for Personal Jurisdiction: 1) Presence of person 2) Consent (appearance, contract) 3) Domicile 4) Status (marriage) 5) Presence of property *Weakness of Pennoyer: authority was only within the state boundaries; after industrial revolution and the availability of mass transit, Pennoyer was reviewed b/c there was a greater need to broaden forum state authority: 2) Modern Constitutional Approach International Shoe Co. v. Washington D’s PPB was in MI, inc. in DE; only contact with forum state (WA) was salesmen who solicited orders; salesman was served in WA and a copy was mailed to HQ in MI Court held that there was personal jurisdiction Minimum Contacts Doctrine*** 1) D (nonresident in most cases) has purposeful activities in the forum state 2) P (who has filed a lawsuit in forum state) claim relates to the D’s purposeful activities in the forum state RULE APP: D’s purposeful activities in forum state: 11-13 employees; provided sample shoes; salaries of $31K plus commissions; facilitating sales- Shoe Co. was making money; providing an essential good; paying employees in forum state P’s claim was for unpaid unemployment taxes: tax is earned by paid employees in the statepurposeful activities of sales in WA relates to P’s claim for unemployment taxes Note: Specific Jurisdiction: Both elements of minimum contacts doctrine (D purposeful acts; P claim relates) General Jurisdiction: Only have 1 st element of minimum contacts doctrine (D purposeful acts) When the claim is not related to the purposeful acts (i.e. to establish general jurisdiction) the purposeful acts must be more substantial Perkins v. Benguet P sought dividends due her as a stockholder of a foreign corp. in forum state of OH; Court held there was general jurisdiction D’s mining business was located in the Philippines, however conditions were poor and president lived in Ohio trying to maintain his company during WWII (held board of directors meetings, etc. in Ohio) Wartime activities over several years was enough DPA even though claim didn’t relate directly to the acts in Ohio- establishes general jurisdiction ***Where claim does not relate to DPA, greater contacts between forum state and D are requiredcontinuous and systematic McGhee v. Int’l Life Ins. Co. P, a CA resident, sought payment on life insurance policy based in TX; Court held there was personal jurisdiction DPA: contract; communication with client P’s claim relates to the minimum contacts: P sued for breach of contracts- establishes specific jurisdiction *This case shows us how little we can have in terms of contacts are still have jurisdiction No Jurisdiction when courts determine D has no purposeful activities in forum state: Hanson v. Denkla Mother established trust in DE and moved to FL where she died; Court held that FL court did not have personal jurisdiction D’s only tie to FL was the mother moving there after establishing a trust; D must purposefully intend to do business in the state in order to establish ―purposeful acts‖ World Wide Volkswagen Corp. v. Woodson P purchased an Audi in NY and drove it to OK where they were in an accident. P brought suit in OK although D had no ties to the forum state; Court held that ―foreseeability‖ of an automobile accident in a state outside of where the retailer/ wholesaler does business is not sufficient contact to establish personal jurisdiction RULE APP: D purposeful acts: P argued that the stream of commerce/foreseeability/mobility should have made D aware of liability on a nationwide scale- Audi dealers all over the country, so Worldwide and Seaway should have been aware that their products would be used in OK SC rejected this argument: each corp. is a separate business entity- we must look to their contacts/sales separately No sales by SW in OK; no distribution by WW in OK- no minimum contacts P’s claim relates No claim relation Yes General (Shoe) Jurisdiction (Perkins) Specific No purposeful jurisdiction acts- No jurisdiction (Hanson) Lots of D purposeful activities Some D purposeful activities 3) Challenging Personal Jurisdiction a) See FRCP 12 Defenses and Objections b, g, h Must challenge Personal Jurisdiction is first response, or the defense is waived A, a resident of IL, sues B, resident of CA in IL. B believes she is not subject to personal jurisdiction- how does she proceed? 1) Do nothing Simplest but riskiest course of action Decline to appear; suffer a default judgment; collateral attack on the judgment when A seeks to enforce it (Risk: if jurisdictional challenge is denied- B has given up rights to adjudicate on the merits) 2) General Appearance B can raise her jurisdictional defense in the answer, or pre-answer motion If the defense is not raised in a pre answer motion that is submitted, the defense is waived 3) Special Appearance In a few states B can raise her jurisdictional defense by making a ―special appearance‖ Federal system- ―first appearance‖- file in court without waiving right to challenge jurisdiction b) 4) Jurisdiction over Property (In Rem Jurisdiction) a) b) c) d) Presence of Property: basis for In Rem jurisdiction Seizure: In Rem jurisdiction perfected by seizure of the land (attachment); post notice of attachment on land Primary alternative to in personam jurisdiction (In rem jurisdiction can be used as a ―gap filler‖ where personal jurisdiction is not available) Three types of in rem jurisdiction: 1) Pure In Rem a. There is an issue over property b. The disputed issue on the lawsuit is the title or ownership of the property c. All are bound by the judgment (not just the parties) -Example: In probate, the court decides who will take title to willed property 2) Quazi in rem #1 a. There is an issue over property b. The disputed issue on the lawsuit is the title or ownership of the property c. Some are bound by the judgment (only the parties) -Example: Court decides an action for ejectment or quiet title; almost always specific jurisdiction- claim relates to property 3) Quazi in rem #2 a. There is an issue over property b. The disputed issue on the lawsuit is attachment (no title contest as part of the claim; D’s ownership interest is not contested- it provides basis for attachment) c. Some are bound by the judgment (only the parties) -Example: Almost always general jurisdiction issue- since title is not an issue, claim does not relate to property; P is merely attaching D’s property to enforce jurisdiction Shaffer v. Heitner P filed shareholder’s derivative suit against D whose co. was inc. in DE. Stock was sequestered; Court held that neither the statutory presence of appellant’s stock in DE nor their positions as directors and officers of a DE corporation can provide sufficient contacts to support the DE court’s assertion of jurisdiction Can the seizure of stock be constitutional under due process, when the owner has no other contacts with the forum state? No- must have minimum contacts as in Int’l Shoe Quasi in rem jurisdiction #2- property in forum state AND min contacts to establish in personam jurisdiction RULE APP: Defendant’s purposeful acts- none; situs of stock is only contact, and this is fictional in nature More than owning property in a state is required for jurisdiction ***The principles established in Int’l Shoe are extended to govern assertions of in rem jurisdiction. 3 Exceptions to Shaffer rule: 1) Interstate Attachment If you sue a D where he has minimum contacts, you may seize his property in another state 2) Judgment being enforced Assumption that D was sued in a forum state that had minimum contacts; duty for other states to enforce the judgment 3) Jurisdiction by Necessity Only one forum where this D can be sued, court may permit jurisdiction on a lesser showing 5) Modern Cases of Personal Jurisdiction Asahi Metal Industry Co. v. Superior Court D, Japanese Corp., made tire valves used in Honda motorcycles; P was in an accident caused by a tire blowout and sued in CA; Court held that there were no minimum contacts RULE: See Reasonableness Test 1) P’s interest- weak; injured P’s interest has been settled- here Cheng Shin is seeking indemnification from Asahi (if injured P was part of the claim, the interest would be very strong) 2) Burden on D- heavy; Japanese D must defend themselves in a foreign legal system 3) Forum state interest- weak; CA is not involved in indemnification between two foreign companies (would be strong if P were resident) ***Split of authority as to whether Asahi met the power test; all agreed Asahi did not meet the reasonableness test A) What constitutes minimum contact? Two Approaches (apply both- split authority): 1) Pure stream of commerce test- product manufacturer ships good into the stream of commerce- if it ends up in the forum state and you are aware, you will be liable Note problem: it is unforeseeable exactly where the product will end up- lose effective control 2) Stream of commerce “plus” test (purposeful efforts) - greater degree of intentionality; purposeful sense of trying to target a particular market- designing, advertising, marketing, customer service *** Mere knowledge that the product would end up in a forum is not sufficient Note: harder to meet minimum contacts than under the pure test B) Reasonableness Test (Fair play and substantial justice test): (Asahi introduced this test to supplement the POWER TEST (minimum contacts)) 1) P’s interest (in the forum state) 2) Burden on D (to come to forum state and defend there) 3) Forum state interest in the case 4) Interest of interstate judicial system- procedural focus (does state law allow jurisdiction?) 5) Shared interests of the several states- substantive focus (are there other states that have an interest in the case?) Burger King Corp. v. Rudzewicz D established a BK franchise in MI; BK sued in FL where they were headquartered; Court held that there was personal jurisdiction RULE APP: Note: first consider power test, then supplement it with reasonableness test Power TestD purposeful act: contract- substantial, long term, associated directly with FL P claim relates: breach of that contract *Specific jurisdiction Reasonableness Test is a plus factor in this case: 1) P interest- local forum/convenient- strong interest 2) Burden on D- substantial- but- b/c of 20 year contract and affiliated himself with FL business, he is bound 3) Forum state- strong interest; headquarters are domiciled in FL Note: Forum Selection Strategy- wants the law from the chosen forum to apply-1) Favorable law factor (FL judges will possibly better interpret FL law in P’s favor) 2) Convenience (FL lawyers; close to headquarters; familiar with judges, etc.) 3) FL jury will probably be more sympathetic to P Why federal court? In some states, federal judiciary is of a higher quality; more efficient Coastal Video Communications Corp. v. The Staywell Corp. P, a VA corp. sought a declaration against D that P’s employee safety handbook did not infringe on D’s copyrighted ―safety zone‖ handbook. D sold and distributed products in VA, mailed catalogs, and operated an interactive website there. Court granted motion for discovery on the issue of general jurisdiction. A court may exercise general personal jurisdiction in which the requisite minimum contacts between the D and the forum state are ―fairly extensive‖- only when the continuous corporate operation within a state is so substantial to justify causes of from those activities. action arising from dealings entirely distinct Burnham v. Superior Court D is served with divorce lawsuit while visiting his children in CA; Court held that presence in the forum state was sufficient for personal jurisdiction Jurisdiction based on physical presence alone constitutes due process (―Transient presence rule‖) 6) Personal Jurisdiction in cases of Intellectual Property A) Effects Test 1) Used when D has no purposeful acts in the forum state, but injury was sustained there 2) Jurisdiction exists when intentional tortuous actions are expressly aimed at the forum state and cause P foreseeable harm Pavlovich v. Superior Court D posted a computer program that allowed users to circumvent technology that encrypted DVD software. P held rights to the program and was based in CA; Court held there was no jurisdiction because D did not target P in the forum state ―Effects test‖- jurisdiction is appropriate in state where the impact of the wrongful conduct had its greatest effect; this test was not satisfied in this case b/c D did not ―expressly aim‖— 1) D had no profit motive 2) D knowledge was vague 3) Website was information only (passive website)- initiative comes from the third party- this is not a purposeful act Note: Business based websites do show purposeful acts- purchase and sale of goods; initiates interaction with the consumer; interactive- D is reaching out to customers in that state; *Need a virtual act equivalent to the plus test in the Asahi case Calder v. Jones D, a magazine based in FL, wrote an article libeling P who is a resident of CA. Court held that there was personal jurisdiction in CA by way of the effects test. Magazine story was centered on CA resident actress and her activities in CA; P’s career was centered in CA; article was drawn from CA sources; injury was suffered in CA 7) Consent as a Substitute for Power A) Generally a. Non resident P consents to jurisdiction by filing a lawsuit b. D consents to jurisdiction by making an appearance and filing an answer c. Appt. of a local agent for service of process d. Forum selection clauses e. Waiver- when court order is violated Carnival Cruise Lines, Inc. v. Shute P bought cruise line tickets that had a forum selection clause requiring suit to be brought in FL; P brought suit in WA where they bought the tickets; Court held that the forum selection clause was valid Forum selection clauses are valid if D gives notice, there is no finding of fraud, D is not seeking to discourage legitimate claims on the part of P There was notice, no fraud or overreaching 8) Notice In order to have personal jurisdiction, a forum state must either satisfy power test or have D’s consent (through prelitigation agmt or by waiver); must also have notice and opportunity to be heard Mullane v. Central Hanover Bank & Trust Co. Bank holding a common trust sought to settle the trust, giving notice to the beneficiaries by publication. Court held that the notice given was insufficient Must use a method of notice that is reasonably likely to inform under the circumstances For beneficiaries whose whereabouts were known, publication was not sufficient- mail notice was more likely to inform For unknown beneficiaries, publication is sufficient b/c there is no more reasonable method available FRCP 4 Summons a) Summons is separate from the complaint; summons is official court document that gives notice; must include: -ID court and party names; name and address of P attorney; time D shall appear and defend; failure to show may result in default b) Issuance: authorizes court clerk to sign and seal summons to issue to P for delivery on the D c) Service with Complaint: serve summons with complaint within 120 days (part m); can be served by any person not involved in the lawsuit over age of 18; service by U.S. Marshal when court appointed upon P’s request d) Waiver of service, Duty to save costs of Service, Request to Waive: D who waives does not waive jurisdiction or venue defenses; P may notify D and request that D waive service: must be in writing, first class mail, with copy of complaint, inform D of consequences of waiver, D must be given reasonable time to return waiver (at least 30 days in USA; 60 days Int’l D), provide D with prepaid means of waiving service -If D refuses to waive- court will impose costs of effecting service on D unless good cause is shown -If service is waived, D has more time to answer; traditional service of process- only 20 days to answer; if waives- 60 days in U.S. /90 days outside U.S. e) Service on Individuals with the U.S.: deliver summons personally or by leaving copy at place of usual abode with resident of age and discretion f) Service on Foreign individuals: internationally agreed means; if none- by the manner prescribed by law or as directed by foreign authority in response to your letter of request g) Service on infants and incompetents: state law service methods (no waiver of service) h) Service on Corporations: state law; delivery to officer or management agent i) Service on U.S.: delivery to US attorney general’s office; certified mail to civil process clerk j) Service on Foreign, State or Local Gov’t: state law; delivery to CEO k) Territorial Limits of Effective Service 1) Service of summons is effective to establish jurisdiction over the person of a D: (a) Who is subject to general jurisdiction in that state where the federal district court is located; most frequently used- exercise federal jurisdiction where there is jurisdiction in the state (b) Bulge provision- allows jurisdiction over a party joined under R14 or R19; they can be served within 100 miles of the courthouse (extraterritorial service of process) (c) Who is subject to federal Interpleader jurisdiction- nation wide service of process (application of the Pennoyer principle to the entire nation) *Under USC Sec 1335 (d) When authorized by a statute of the US 2) National minimum contacts provision that applies primarily to foreign entities who are sued in the US when the claims are brought against them in the district court. Foreign companies who do sufficient business to satisfy minimum contacts, but not enough in one state: this Rule provides a merging of the contacts so that jurisdiction over the company can be acquired. l) Proof of Service: If service is not waived, P making service shall make proof to court by affidavit m) Time Limit for Service: must serve within 120 days of filing complaint; time extended for good cause (―safety valve‖) Note: In some jurisdictions, by filing the claim, you’ve stopped the statute from running – this is the rule for CA and for the federal system n) Seizure of Property; Service of Summons not Feasible: notice sent to claimants of property; if notice can’t be accomplished- court may assert jurisdiction over D’s assets consistent with state laws FRCP 5 (b)(2)(D)Service by electronic means is complete on transmission (b)(3) Electronic service is not effective if the server learns that the attempted service was not received (i.e. a kick back message that says the email didn’t go through) Rio Properties Inc. v. Rio International Interlink P sued foreign D for copyright infringement; P was unable to locate D in the U.S. to provide notice, so P requested alternate service of process through mail and e-mail; Court held that notice was valid RULE APP: Court ordered method of notice was most likely to reach D; Rule 4(f)(3) is an equal means of effecting service of process- permits service in a place not within any judicial district of the US; service must be directed by the court and not prohibited by international agreement. Dusenbery v. US D was imprisoned and his property was seized and was going to be destroyed FBI gave notice through certified mail to the prison, his home address, and published notice in a newspaper; Court held that notice was proper RULE APP: Certified mail was sufficiently likely to inform Reasonable notice is sufficient even if you cannot guarantee actual notice Self Imposed Restraints on Jurisdictional Power: 9) Long Arm Statutes Statutes that allow state courts to restrict their jurisdiction or to take as much power as the constitution will allow A) To satisfy personal jurisdiction, ask: 1) Is jurisdiction authorized under governing law of that court system- has P satisfied the requirements of the long arm statute for perfecting personal jurisdiction over D? 2) Are constitutional limits satisfied? B) Types of Long Arm Statutes 1) Full Reach Long Arm Statute i) Authorizes statutory jurisdiction on as broad of a basis as permitted by rulings of the Supreme Court (jurisdiction goes as far as constitutional limits) ii) Close to 2/3 states have full reach statutes 2) Specific Act Long Arm Statute i) ii) Stricter than constitutional limits; purposeful acts required are more stringent Two ways they can be tougher: a. Confer specific jurisdiction only- not general jurisdiction b. Stricter test for purposeful acts test (ex: doing business may require a local office or local employees) In rem jurisdiction can serve as a gap filler if the non-resident D also has property in the state and there are minimum contacts, but no statutory long arm jurisdiction iii) I Gibbons v. Brown Gibbons and Mr. and Mrs. Brown were in an accident; Gibbons sued Mr. Brown, the driver in FL although she was a TX resident. Two years later, Mrs. Brown brought suit against Gibbons in FL. She alleged that FL had jurisdiction b/c she was a resident, and b/c Gibbons had subjected herself to personal jurisdiction in FL by bringing the prior lawsuit. Court dismissed the suit- no personal jurisdiction RULE: To obtain personal jurisdiction in FL: 1) P must allege sufficient jurisdictional facts to bring the D within the coverage of the long arm statute 2) Must show sufficient minimum contacts to comply with the requirements of due process RULE APP: purposeful act Brown relied on: Gibbons had brought the first suit in FL; court says this is not a DPA b/c LAS requires D conduct be substantial and not isolated 10) Venue Further localization of jurisdiction within a state- i.e. which district? 28 USC Sec 1391 a) Jurisdiction based on Diversity of Citizenship 1) Venue is proper in any district where D resides if all Ds reside in the same state (Note: if Ds are from different states- this option does not apply) 2) As long as any one district is substantial enough, it is a permitted venue- substantial part of events or omissions (SPEO) related to the claim 3) Last choice option- district where any D is subject to personal jurisdiction (Note- 1 and 2 must be unavailable to use this option) b) Jurisdiction not based on Diversity of Citizenship (hybrid or federal question cases) 1) Venue is proper in any district where D resides if all Ds reside in the same state (Note: if Ds are from different states- this option does not apply) 2) As long as any one district is substantial enough, it is a permitted venue- substantial part of events or omissions (SPEO) related to the claim 3) Last choice option- district where any D is subject to personal jurisdiction (Note- 1 and 2 must be unavailable to use this option) c) Corporate Defendants Corporate Ds are deemed to reside in any judicial district in which the corp. is subject to PJ at the time the action is commenced (satisfies part 1 of the venue options- note this in analysis) d) Aliens Alien D may be sued in any district Dee-K Enterprises Inc. v. Heveafil Sdn. Bhd Ps, VA and NC corps, sue Asian and US corps in ED VA alleging conspiracy to restrain trade and fix prices; Court held that venue is proper for foreign Ds, but P must make additional showing that US corp. has minimum contacts with ED VA RULE APP: Aliens may be sued in any federal district, therefore venue is proper for foreign Ds; as for the American D’s, it is unclear whether venue is proper and if the action should be transferred to the WD based on contacts 11) Transfer and Forum Non Conveniens Declining Jurisdiction- Transfer is typically within a court system; FNC dismisses to a different court system A) Factors for Forum Non Conveniens (discretionary, no bright line rule) 1) Private Interests (litigation interests- where would case be more convenient?) Proof- access to sources Witnesses- availability/location Evidence- availability Trial- easy, expeditious, inexpensive 2) Public Interests (similar to reasonableness test factors; what court is most appropriate?) Court- administrative/court congestion Local- interest in solving local issues Law- interest in a forum that is familiar with law that must govern the action Choice of law- avoidance of problems with conflicts of law Unfairness- burden on citizens with issue not related to forum Note: If federal court dismisses on FNC, case will be tried in another country; if state court dismisses on FNC, the case can be transferred to another state B) Transfer- 28 USC Sec 1404, 1406, and 1631 1) Permits transfer for the convenience of parties and witnesses, in the interest of justice. 2) Gives federal courts the ability to move cases within the system without the necessity for dismissal and refilling, Which would be necessary under the doctrine of forum non conveniens 1404 Venue and Jurisdiction are proper for transferor court 1) DC may transfer to any other district or division in which the suit could have been brought 2) Law of transferor travels to new DC 1406 Improper Venue 1) DC where case is wrongfully filed may transfer to any district where it could have been brought 2) Law of the transferee district applies 1631 Improper Personal Jurisdiction 1) DC may transfer due to improper jurisdiction to any district where suit could have been brought 2) Law of transferee district applies Piper Aircraft v. Reyno An airplane manufactured by D in PA and OH crashed in Scotland. P brought suit in CA (D sold planes in CA- had PJ) to take advantage of US strict liability law. D removed case to federal court, then transferred to federal court in PA (under 1404a). D then moved to dismiss on grounds of forum non conveniens. Court granted the motion. RULE: Except in extreme cases where the alternative venue would not give a reasonable opportunity to be heard, dismissal on grounds of forum non conveniens is not improper; look to public and private interests affecting convenience of forum/convenience of litigants in evaluation RULE APP: both private and public interests favor trial in Scotland SUBJECT MATTER JURISDICTION What court; what claims? 1) Federal Question Jurisdiction a) U.S. Constitution Article III i) Section 1: Creates SC; gives power to Congress to create lower courts; federal judges are appointed for life ii) Section 2: Power of federal courts to hear specific types of cases: 1. between states 2. between citizens of different states 3. between citizens and aliens 4. cases involving foreign ministers and consuls 5. admiralty and maritime cases 6. cases arising under federal law b) 28 USC 1331: gives district courts original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the U.S. c) P must assert a federal law claim under 28 USC 1331, this is a harder standard than the Constitution which requires only assertion of a federal issue i) P must rely on federal law for their COA; possible federal law defenses are not sufficient Louisville & Nashville RR v. Mottley Ps were injured in a railway accident; RR gave them a lifetime pass for free transportation. Later Congress made it illegal to give passes; the RR then refused to honor their pass and Ps sued in federal court seeking specific performance. The complaint alleged that the act does not prohibit the giving of passes under circumstances of this case; and if it does, it is in conflict with the 5 th amendment. A suit arises under the Constitution only when P’s statement of the COA shows that it is based on the Constitution; it is not enough to allege an anticipated defense and asserts that the defense is invalidated by the Constitution Grable & Sons Metal Products Inc. v. Darue Engineering & Manufacturing Typically, there would not be federal jurisdiction in this case- no diversity; majority of governing law is state law—but there is SMJ for the following reasons: 1) In order to decide the case, fed tax statute had to be interpreted- if IRS erred, original owner would get property back (This is not sufficient alone, states interpret federal statutes all the time- see #2 and #3) 2) This case involved tax revenue 3) Infrequency or rarity of this issue arising Typically you must have a federal law claim, but here there is an exception- there is SMJ because it deals with an important federal issue Note important federal issues: antitrust; copyright claims; bankruptcy; Sec 1983*** d) Concurrent Jurisdiction- Choice between Federal or State Jurisdiction Ex: Jurisdiction over Sec 1983 claims; diversity statute Note: absent statutory language to confer exclusive jurisdiction, concurrent jurisdiction is conferred e) Exclusive Jurisdiction- Federal only Ex: bankruptcy; antitrust; securities; patent and copyright; admiralty f) Original jurisdiction- in trial courts where a case is initiated g) Appellate jurisdiction- statutes confer SMJ on appellate courts 2) Diversity of Citizenship Jurisdiction a) 28 USC 1332: must have COMPLETE diversity- No P can be a citizen of the same state of any D and vise versa (a) The district courts have original jurisdiction of all civil actions where the matter in controversy 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, as plaintiff and citizens of a State or of different States. Note: An alien admitted to the United States for permanent residence shall be deemed a citizen of the State in which such alien is domiciled. (b) Court will not dismiss a diversity case for lack of SMJ based on amount in controversy unless there is a legal certainty that they cannot recover over $75K (c) For the purposes of this section— (1) Corporations have dual citizenship: State of Inc. and principle place of business -Based on everyday business activities (bulk center of the company) -Based on where exec and admin function are controlled (nerve center of the company) (2) the 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 deemed to be a citizen only of the same State as the infant or incompetent (d)- Congress adopted this section later to deal with abuses of class actions- allowed for SMJ of class actions with national significance; ―class action fairness act‖; conferred jurisdiction on the same basis that the Constitution requires- minimal diversity; permits aggregation of claims (to equal amount in controversy) b) Article III- jurisdiction is satisfied if there is minimal diversity (CA P; CA D and NV D- this is sufficient- at least one citizen of a state different from the other parties) Redner v. Sanders Complaint alleges that P is a US citizen residing in France, and D were residents of NY. P invokes 28 USC Sec 1332(a)(2) which provides for diversity jurisdiction for citizens of a state and citizens of a foreign state. D moves to dismiss on the basis that P is a resident, not a ―citizen‖ of France as required by the statute. In response, P alleges that his connection is with the state of CA. (He shifted his argument to section (a)(1) ―citizens of different states.‖) Court dismissed the case under 12(b)(1)- lack of SMJ- must allege specific facts in complaint; there was no mention of CA Saadeh v. Farouki P, a Greek citizen brought suit against D, a Jordanian citizen residing in MD. When the lawsuit was filed, D had achieved permanent resident immigration status. 28 USC Sec 1332(a) states that ―an alien admitted to the US for permanent residence shall be deemed a citizen of the state in which such alien is domiciled.‖ A literal reading of this amendment would create diversity; however, the intention was only to eliminate SMJ of cases between a citizen and an alien living in the same state. c) FRCP 12(b)(1)- Motion to dismiss based on lack of SMJ; no ruling on the merits (P can re-file in state court); can be raised at any time during the trial d) FRCP 12(h)(3)- Anytime before entry of judgment including appeal for first time, the court shall dismiss for lack of SMJ 3) Supplemental Jurisdiction Broadens federal jurisdiction a) If P has original jurisdiction under Sec 1331 or 1332, what other claims can be included in the lawsuit? i) Common Law doctrine of pendant jurisdiction: If there is OJD over federal claim only, and state lawsuit is related (same CTO/CNOF) there is supplemental JD- more efficient to bring all claims in one case 1) Pendant claims (Gibbs case) One OJ claim-state law claim is joined- same CNOF 2) Pendant parties- (Finley case) P sues two Ds: D1- liability based on federal law D2- liability based on state law Sec 1367- include pendant parties 3) Ancillary jurisdiction Reflection of ability of D to bring in claims and parties (R 13, 14, 19; 3rd parties- R24) ii) Examples-1) P from CA sues D1 from NV in a diversity case for $125K; D1 seeks complete indemnity from D2 who is from AZ- D2 joins the lawsuit; indemnity claim between D1 and D2 has OJ- complete diversity 2) Suppose D2 is from NV- lack complete diversity- Ancillary JD will step in to allow indemnity claim in federal court (b/c D has not chosen fed court- they are there at the will of P; P has the option of amending complaint and suing D2 directly (complete diversity) 3) Suppose D2 is from CA- OJ as between D1 and D2; if P amends to bring suit directly against D2- SC in Owen case ruled that this was not within supplemental JDdestroys complete diversity (1367b) b) 28 USC 1367 a) Where there is OJ there is SJ over all other claims that are related so that they form part of the same case under Art. III (use CNOF/CTO test) Includes pendant claims/parties; ancillary JD (only excludes P bringing suit against new D which defeats diversity JD) b) Where there is OJ based solely on Sec 1332 (pure diversity only) there is no SJ under (a) when it destroys complete diversity (Does not include lack of amount in controversy- Exxon case; only includes lack of complete diversity when P brings suit against 2 nd D who is not diverse as against the P) c) Court may decline to exercise SJ (discretionary unlike OJ) under (a) if— i. Claim raises a novel or complex issue of state law ii. Claim predominates over those for which the court has OJ iii. Court has dismissed all claims over which it has OJ iv. Exceptional circumstances where there are other compelling reasons for declining JD d) Period of limitations for claim under (a) shall be tolled while claim is still pending and for 30 days after it is dismissed unless state law provides longer period Jin v. Ministry of State Security P sues under federal law and wants to add state law defamation claim; Court held that the claim could be added, as it arises out of the same CNOF/CTO as the federal law claim. 1) Two part test for supplemental jurisdiction: i. Whether the P’s claim shares a common nucleus of operative facts with the other claims ii. Whether the interests of judicial economy, convenience, and fairness support the exercise of supplemental jurisdiction (complex issues of state law not appropriate for federal court?) The facts supporting all of the claims form a part of the overarching campaign to abridge and nullify P’s rights and liberties- same CTO; the defamation claim does not raise complex issues of state law that outweigh the court’s interest in promoting judicial economy. United Mine Workers v. Gibbs P sued United Mine Workers for attempting to cut off his business b/c he was using competing union workers. P sued under federal labor law- prohibited unfair labor practices or illegal boycotts; rights to sue individuals who adversely affected business; also brought claim under TN common law intentional tort OJ based on federal question for 1st claim 2nd claim: state law- diversity? No (union workers in TN); SJ-Common nucleus of operative facts? Yes *There was supplemental JD over the state law claim Exxon Mobil Corp. v. Allapattah Services, Inc Exxon dealers filed a class-action suit against the Exxon Corp. in the US District Court- Northern District of FL invoking diversity jurisdiction for a claim based on state law; Can a P whose claims do not satisfy the min amount in controversy be joined under SJ (Sec 1367)? Yes-Must have at least one P satisfying the amount in controversy requirement 1st claim was over $75K Same CTO- 2nd claim $25K; 3rd claim $50K- can come under Supplemental Jurisdiction Note: Aggregation rules sometimes allow P to add claims to equal min- apply primarily to single P with different claims 4) Removal Jurisdiction Congress has given Ds power to second guess Ps who choose a state court where there is concurrent jurisdiction a) 28 USC 1441: Actions Removable Generally (a) Where there is OJ, D may remove to federal court (b) Constitutional claim can be removed without regard to diversity; otherwise, there must be diversity JD among the parties- cannot be removed if the state action is brought where D resides (no home state disadvantage to the D, so there is no need for removal) (c) Where claims are joined under 1331 the entire case may be removed (d) Foreign D may remove from state court (e) (1) notwithstanding (b) may remove to fed court if— a. Action could have been brought under 1369 b. Action arises under same CTO as claim that could have been brought under 1369 (2) if there are further proceedings required as to damages, action will be remanded to state court unless a reason is found to keep the action in fed court (3) any remand under (2) is effective 60 days after fed court has determined liability- parties may appeal during this time (4) Decision concerning remand for damages not subject to appeal after 60 day period (5) action removed under this subsection shall be deemed an action under 1369 (6) Fed court is not restricted in transfer or dismissal on the ground of inconvenient forum (f) Fed court is not precluded from hearing and determining any claim b/c state court did not have JD (removal is permitted) b) 28 USC 1446: Procedure for Removal a) File a notice of removal (satisfy R11); short and plain statement for grounds for removal; include in notice, a copy of all process pleadings, process, and orders served upon such D in such action b) Timing- 30 days after being served; if initial pleading is not removable- notice may be filed 30 days after receiving amendment that permits removal- but it cannot be removed after 1 year of initial filing regardless c) 28 USC 1447: Procedure after Removal P can file a motion to remand within 30 days if removal is based on anything other than SMJ (can bring motion to remand based on SMJ at any time); Court has discretion as to whether parties can be joined Caterpillar, Inc. v. Lewis Lewis, A KY resident, filed his claim in KY state court against Caterpillar (a DE Corp) and Whayne Supply Co. (a KY Corp). Lewis reached settlement agmt with Whayne, and Caterpillar filed a notice of removal one day before the statutory term ended to remove for diversity JD. Lewis argued that the case could not be removed because Liberty, who had intervened in the lawsuit as a P, had not yet settled with Whayne. Note: Is settlement enough to solve lack of complete diversity? Must have dismissal of that D based on the settlement- this dismissal did not occur until after removal; Judge removed the casetechnicality of the actual dismissal was overlooked Time of filing (this is when SMJ is assessed)-- Caterpillar dismissal of a nondiverse party exception- joining or dropping a party cured the defect by the time judgment was entered, so judgment will not be void Grupo DataFlux v. Atlas Global Group LP D filed suit against P, a Mexican corp. in federal court invoking diversity jurisdiction; after a trial on the merits P moved to dismiss for lack of SMJ, as two of the D’s company partners were Mexican citizens. D argued Mexican partners had left the corp. the month before trial began, and b/c diversity existed when the jury rendered its verdict the judgment was valid Court held that the judgment should be dismissed- no new exception to time of filing rule Diversity SMJ 1) Time of Filing 2) Dismissal of Non Diverse Party Exception (Caterpillar) This court went with time of filing Caterpillar- party was actually dismissed; in this case- there was a change in composition in the parties (Atlas was still a named party in the lawsuit- dropped non diverse partners) Court did not want to extend exception to time of filing this far- could create an avenue for lawyers to negate valid judgments ERIE PROBLEM- CHOICE OF LAW IN FEDERAL COURTS When a federal court sits in diversity jurisdiction, what law does it apply? 1) Historical Background & Modern Erie Application a) Federal Question JD- federal law will be applied; Diversity JD- parties are in federal court not because of nature of claims, but b/c of citizenship of parties, so what law is applied? Federal or state or some combination thereof? b) 28 USC Sec 1652 “Rules of Decision Act” State laws should be applied to decisions in civil actions in federal courts in cases where they apply, except where the Constitution or Legislative acts otherwise require or provide (federal question cases) c) Pre-Erie, Swift v. Tyson held that common law of state courts was not included in the word ―laws‖ in the Rules of Decision Act. i) The Swift court reached a decision (filed in federal court in NY based on diversity) contrary to decisions made prior by NY courts ii) Gave federal courts authority to chose law to apply- did not have to follow state precedent; this leads to forum shopping- lawyers will look at which law is more favorable- state or federal b/c they will most probably lead to a different result) d) Forum Shopping i) 2 forum selection strategies: 1) Which state? ―Horizontal choice of law‖- litigants will pick between state forums 2) Federal vs. State court? ―Vertical choice of law‖- choice of federal law or state law Erie Railroad v. Tompkins Tompkins was walking along the RR tracks, keeping several feet between himself and the tracks. A train passed, and an open door on a refrigerator car struck him and knocked him partially under the train. His right arm was severed. Tompkins brought suit in federal district court for the SD of NY. RR relied on PA law which would classify Tompkins as a trespasser, and the RR would therefore be liable only for wanton negligence. The judge, relying on Swift, instructed the jury according to ―general law‖- Court held that Swift was unconstitutional Must apply law of state where federal court is located in diversity cases; must eliminate vertical choice of law forum shopping- in this case PA law was unfavorable to P, so they sought a different result in federal court. This is improper. e) When do we use state law vs. federal law? 1) What is substantive (defines the rights of the parties) for Erie purposes? Use state law 2) What is procedural for Erie purposes? Use federal law (Note: FRCP was adopted same time as Erie) f) Outcome Determinative Test- if there is a strong possibility of a different outcome if federal or state law/rule is applied- must use state law Guaranty Trust v. York P sued a bond trustee in a federal diversity action in NY. D invoked the NY SOL as a defense. P argued that the NY SOL did not bar the action b/c the federal courts of equity had traditionally not been bound by SOL; Court held that SOL did apply A state rule that is outcome determinative is to be followed in federal court State rule- SOL (procedural- but Court did not treat it as procedural under Erie in this case) Federal rule- equity actions- timing defense is doctrine of laches (no set cut off- 2 part test for timing) *Different outcomes- still viable under federal law, but time barred under state law Because it makes a different outcome, must use state law; we want to eliminate forum shopping between fed and state law Byrd v. Blue Ridge Rural Electric Cooperative According to South Carolina common law, the employers’ immunity from tort action under the WC act should be decided by the judge and not the jury. Court held that the federal court could employ its procedural rule of trial by jury, and disregard state CL. There is no certainty as to whether not following the state rule would create a different result in federal court; the federal practice of jury determination of disputed factual issues outweighs the need to yield to the state rule. (Constitutional procedure wins out over state common law) g) Erie Approach: 1) Is the issue arguably procedural? 2) Is there a conflict between state and federal law? 3) If yes to 1 and 2- then ask what is the nature of the federal procedural law? If the issue is CL- follow Guaranty trust case- follow state law If the issue involves Constitution- follow Byrd case- follow federal law h) Rules Enabling Act- 28 USC 2072 SC has the power to prescribe the forms of process, writs, pleadings, and motions, and the practice and procedure of the district courts of the US in civil actions; does not affect substantive rights Hanna v. Plummer MA law requires personal service of process on the executor of the estate; instead summons was served according to FRCP 4 which allows service on a competent adult at the D’s residence. ***FRCP applies When FRCP applies to decide an issue, analyze under Rules Enabling Act (2 part test- see below) and not under Erie Guaranty trust case modified— Look to Erie cases where there will be a substantial difference in ruling; case law based federal rule of decision Substantial difference in outcome (time barred in state court- SOL issue)- this case was different than Hanna in this way Erie twin aims: 1) Prevent forum shopping; 2) Unequal administration of law Test for determining whether to use FRCP: Part A: Is this rule procedural for rule enabling act purposes? Part B: Does this affect or impact substantive rights? Burlington Northern RR v. Woods Fed Rules of Appellate Procedure 38- discretion in sanctions vs. State rule- mandatory 10% penalty when there is no change in appeal decision (prevents frivolous appeal) Federal Appellate procedure rule- use federal rule*** Note: Case law and SOL rules- still use case law Stewart Organization v. Ricoh State rule- forum selection clause not enforced vs. federal rule- forum selection clause may be enforceable; Issue is governed by change of venue statute- 1404(a) - venue transfer for convenience; not under state law policy which denies forum selection clause Is this arguably procedural? Yes- deals with location of trial, not the substance of the party’s claims or defenses Conflict between state and federal law? Yes- federal rule says it may be transferred under forum selection clause Source of law? Federal statute Federal law is controlling in cases dealing with federal procedural statutes*** (In this case 28 USC 1404a) Gasperini v, Center for Humanities, Inc. Two aspects to the NY state statute at issue: One is the substantive standard for review of jury awards. The second is the reviewing body designated under the state statute. The Supreme court required that the state review standard be followed, and that the federal district court would decide those questions. 1) Diversity court must follow state statute of damage award reviews (potential difference in outcome- could encourage forum shopping) Guaranty modified by Hanna 2) Decision maker- followed Byrd- distribution of decision making between appellate court review (state law) or district court review (7th amendment); follow federal decision maker under 7 th amendment