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									Judge Wood – Spring 09



           a. In Personam Jurisdiction  Permits a court to enter judgment that is personally binding
              on the defendant either ordering equitable remedies or allowing plaintiff to collect
              damages from D.
           b. In Rem Jurisdiction  Permits a court to adjudicate the rights of all possible claimants
              to a specific piece of property, as in a condemnation proceeding.
           c. Quasi in Rem Jurisdiction  TWO TYPES:
                    i. Individual disputes related to property under the court’s control  actions for
                       specific performance of a contract to purchase land.
                   ii. Personal disputes where the court could not assert personal jurisdiction over
                       the D, but where court had jurisdiction over property belonging to the D.  that
                       property could be seized by P and used to satisfy claim if P prevailed!
    2) Pennoyer v. Neff:
           a. Court found that for the state to exercise power over individuals or property, there must
                    i. Valid service of process on individual (in in personam cases)
                   ii. OR
                  iii. Attachment of property in the state (in rem actions).
           b. Court made it clear that due process would apply the same limitations on exercise of
              jurisdiction in future cases.
                    i. State cannot serve an individual domiciled in another state with process and
                       summon that person to respond to lawsuit against him.
                    i. Service within the state  if D in state, P can serve him.
                   ii. Seizure of D’s property  Prejudgment seizure was sufficient to permit a state
                       to dispose of that property to satisfy claims not related to the property.
                            1. D is expected to know what is up with his property, and therefore this is
                                sufficient to bring D under jurisdiction of the state.
           a. International Shoe Co. v. Washington
                    i. Court shifted away from Pennoyer’s insistence on service within the state to
                       support in personam jurisdiction.
                   ii. Held that to subject a defendant to a judgment in personam, due process
                       requires only that he have “certain minimum contacts with the forum such
                       that the maintenance of the suit does not offend ‘traditional notions of fair
                       play and substantial justice.’
                  iii. SO WHAT THE FUCK DOES THAT MEAN?
                            1. SYSTEMATIC AND CONTINUOUS ACTIVITY:
                                    a. Court upholds in personam jurisdiction over nonresident D
                                         based on systematic and contihuous contacts with the state.

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                                          i. International Shoe  D was Delaware corporation
                                             employing 11-13 salesmen in Washington. Court
                                             upheld Washington’s jurisdiction given the volume and
                                             systematic and continuous nature of contacts.
                           2. SINGLE CONTACT:
                                 a. McGee v. International Life Insurance  Sending a K to
                                     California from Texas allowd California court to get jurisdiction
                                     over D.
                                 b. EXTENDS STATE JURISDICTION!
                                 a. Hanson v. Deckla  Court said that there must be some act by
                                     which the D PURPOSEFULLY AVAILS itself of the privilege of
                                     conducting activities within the forum state, thus invoking the
                                     benefits and protections of its laws.


   1) Territory
   2) Consent
   3) Citizenship


How to bring an out-of-state party under your jurisdiction…
           a. Purposeful Availment – Established by Hanson v. Deckla.
                    i. Meaning?
                           1. Voluntary action by D establishing a relationship with the forum.
                           2. D usually gets a benefit!
                   ii. WHY?
                           1. Burger King Corp. v. Rudzewicz – This requirement gives defendants
                               “fair warning that a particular activity may subject [them] to the
                               jurisdiction of a foreign sovereign.”
                           2. Instills a degree of predictability to the legal system that allows
                               potential Ds to structure primary conduct with minimum assurance as
                               to where conduct will and will not render them liable.
                  iii. ELEMENTS: What is a minimum contact?
                           1. INSUFFICIENT - UNILATERAL ACTS BY P:
                                    1. World-Wide Volkswagen Corp. v. Woodson  “The defendant’s
                                        conduct and connection with the forum State are such that he
                                        should reasonably anticipate being haled into court there.”

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                                 2. Unilateral act by Plaintiff of driving a car from New York to
                                     Oklahoma, where they were in an accident, did not establish
                                     contact between NY retailer and Oklahoma!
                                 1. Burger King Corp. v. Rudzewicz  Burger King (Florida Corp)
                                     entered into 20-year franchsie agreement with Michigan
                                     defendant. Jurisdiction valid because D “ reached out beyond
                                     Michigan and negotiated with a Florida corporation for
                                     purchase of a long-term franchise and manifold benefits that
                                     would derive from that affiliation.”
                         3.   SEEKING TO SERVE:
                                 1. World-Wide Volkswagen v. Woodson  Court notes that iof the
                                     retailer was seeking to serve the Oklahoma market, that would
                                     allow Oklahoma jurisdiction.
                                           i. McGee v. International Life Insurace  Even ONE
                                              ATTEMPT to seek to serve forum market has been held
                                              sufficient to support jurisdiction in action asserting
                                              claim growing out of that act.
                                 2. Keeton v. Hustler  Publishers of Hustler able to be sued in
                                     New Hampshire because they targeted magazine sales to that
                                     state. EVEN THOUGH P HAD NO CONNECTION TO STATE!
                         4.   STREAM OF COMMERCE:
                                 1. Forum state may assert in personam jurisdiction over
                                     corporations that deliver its products into the stream of
                                     commerce with expectation they will be purchased by
                                     consumers in that state.
                                 2. RETAIL SELLERS:
                                           i. World-Wide Volkswagen – Stream of commerce ends
                                              with RETAIL SALE OF PRODUCT, even if foreseeable that
                                              purchaser will take it to another state. (NOTE  If sells
                                              a lot to other state, might be liable under “seek to
                                              serve” standard)
                                 3. MANUFACTURERS/COMPONENT SUPPLIERS – 2 VIEWS!
                                           i. Gray v. Radiator & Standard Sanitary Corp.  Upheld
                                              jurisdiction over component supplier whose product
                                              was sent into forum state as part of product
                                              manufactured by customer.
                                                   1. GRAY STANDARD  Wherever stream of
                                                       commerce ends….
                                          ii. HOWEVER, NARROWED!
                                         iii. Asahi Metal Industry Co. v. Superior Court  PLURALITY
                                              – O’Conner says that placing a product in the stream of
                                              commerce is not sufficient!
                                                   1. P MUST SHOW
                                                   2. Additional conduct by which the defendant
                                                       indicates an intent or purpose to serve the
                                                       forum state!
                         5.   TARGETING OR INTENDING EFFECTS IN FORUM:

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                                   1. For intentional torts, jurisdiction can be obtained over a
                                      nonresident D if D intended that his actions could an effect in
                                      that forum.
                                            i. LIMITED TO WRONGFUL OR COMMERCIAL ACTIVITY!
                                                    1. Kulko v. Superior Court – Effects test was
                                                        “intended to reach wrongful activity outside of
                                                        the State causing injury within the State or
                                                        commercial activity affecting State residents.”
                                                             a. Husband derived no BENEFIT from his
                                                                 actions in buying plane ticket to
                                                                 California nor was his action wrongful!
                                                    2. Helicopteros v. Hall  Purchases of equipment
                                                        and training of personnel may be insufficient to
                                                        confer personal jurisdiction.
                  i. “Fair play and substantial justice” from International Shoe.
                         1. The State must be reasonably exercising jurisdiction!
                         2. Burger King  “Where a D who purposefully has directed his activities
                              at forum residents seeks to defeat jurisdiction, he must present a
                              compelling case that the presence of some other considerations would
                              render jurisdiction unreasonable.”
                         3. BALANCING FACTORS TO CONSIDER:
                                   1. Burden of the defendant to defend litigation in forum.
                                            i. Asahi Metal Industry  Supreme Court recognized that
                                               there are “unique burdens placed upon one who must
                                               defend oneself in a foreign legal system.”
                                   2. Forum state’s interest in adjudicating the dispute.
                                   3. Plaintiff’s interest in obtaining convenient and effective relief.
                                   4. Interstate judicial system’s interest in obtaining the most
                                      efficient resolution of the dispute.
                                   5. Shared interest of the several states in furthering fundamental
                                      substantive social policies.
                  i. INTERNET
                                   1. Contracts  Entering into a contract via internet
                                      communications usually will suffice to support jurisdiction at
                                      the forum for either party.
                                   2. Causing effects in Forum  Might allow for jurisdiction!
                                   1. Ability of Forum Residents to Access Internet Site Not Sufficient:
                                            i. Pebble Beach Co. v. Caddy  Did not find the fact that a
                                               California resident could access the website
                                   2. Level of Interaction and Nature of Web Page Relevant:
                                            i. Pebble Beach Co. v. Caddy  Website was “passive”
                                               (merely providing information).
                                           ii. Zippo Manufacturing Co. v. Dippo Dot Com, Inc. 

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                                             iii. Active websites (sites that business use to carry out
                                                  transactions with residents of a forum state) almost
                                                  always provide for an exercise of personal jurisdiction.
                  ii. PROPERTY IN FORUM STATE:
                               CONFER JURISDICTION!
                                    1. Shaffer v. Heitner  Presence of property in a State may bear
                                         on the existence of jurisdiction by providing contacts among the
                                         forum State, defendant and litigation, BUT:
                                               i. MUST SATISFY MINIMUM CONTACTS TEST UNDER
                                                  INTERNATIONAL SHOE!!
   3) OR (Instead of 1 + 2)
   4) CONSENT:
          a. EXPRESS CONSENT:
                   i. Can be made either before or after suit is filed, and suffices to support
                      jurisdiction without reference to other contacts with the forum.
          b. IMPLIED CONSENT:
                   i. By filing suit, the P is deemed to have consented to the jurisdiction of the forum
                      for the purpose of a counterclaim by the defendant.
                           1. EXCEPTION  This does not extent to counterclaim unrelated to the
                               subject matter of P’s claims against D.
          c. THROUGH CONTRACT:
                   i. M/S Bremen v. Zapata Off-Shore  Upholds forum selection clause for
                      adjudication in London because “we cannot have trade and commerce in world
                      markets and international waters exclusively on our terms, governed by our
                      laws, and resolved in our courts.”
                  ii. Carnival Cruise Lines, Inc. v. Shute  Forum-selection clause expanded for policy
                           1. Cruise line has special interest in limiting the for a in which it potentially
                               could be subject to suit (many passengers from different countries,
                               many different potential jurisdictional suits).
                           2. Ex ante forum decision has salutary effect of dispelling confusion about
                               where shuits must be brought and defended.
                           3. Passengers enjoy the economic benefits that stem from such a clause
                               (lower ticket prices because of less litigation costs).
                   i. A party’s voluntary appearance (when D appears to defend his litigation on the
                      merits) in an action is sufficient by itself to support jurisdiction.
                  ii. STATE COURTS:
                           1. LIMITATION  A defendant who wishes to preserve objections to
                               person jurisdiction must often make a special appearance raising only
                               jurisdictional issues.
                                    1. Raising any other matters subjects the defendant to the risk of
                                         having made a general appearance and thereby consenting to
                 iii. FEDERAL COURTS:

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                           1. A defendant need not make a special appearance; all grounds of
                              defense, including lack of personal jurisdiction, can be asserted in a
                              motion or answer.
                                  1. WAIVER  FRCP 12(h)(1) – If D fails to raise personal
                                     jurisdiction in her initial motion, that objection is waived.
                                  2. CONSENT TO JURISDICTION TO DECIDE JURISDICTION  By
                                     moving to dismiss for lack of personal jurisdiction, D consents to
                                     the power of the court to decide that question, including the
                                     power to order discovery pertinent to the jurisdictional
   5) OR
         a. Under Pennoyer, service of process within the jurisdiction was presumptively sufficient
             to support jurisdiction!
         b. Burnham v. Superior Court  Supreme Court upheld in a plurality decision the
             constitutionality of “transient jurisdiction,” obtained by service on a nonresident
             temporarily within the state, even though the suit was unrelated to D’s activities in the
                  i. CAUTION – This ground for jurisdiction may not suffice, according to some
                     Justices’ opinions, if D’s presence in the state was not INTENTIONAL or
         a. FRCP 4(k)(1)(A):
                  i. Federal court may “piggy-back” on the long-arm statute of the state in which it
                 ii. Minimum contacts necessary!
         b. FRCP 4(k)(1)(B):
                  i. Allows parties joined under Rules 14 and 19 to service process “100 miles from
                     where the summons was issued.”
         c. FRCP 4(k)(1)(C):
                  i. Establishes personal jurisdiction authorized by a federal statute.
         d. FRCP 4(k)(2):
                  i. Limited federal long-arm provision that establishes personal jurisdiction “for a
                     claim that arises under federal law” if the D is not subject to jurisdiction in any
                     one of the fifty states and jurisdiction is “consistent with the US Constitution
                     and laws.”
                 ii. If defendant does not want this, burden is on him to show another state where
                     the claim could proceed.
                  i. At common law, can make special appearance!
                           1. This has mostly been discarded, but making a special appearance gives
                              you immunity from being served with any other process while you’re in
                              the jurisdiction.
                 ii. WAIVER  Remember, according to Rule 12, you MUST raise this issue in your
                     first written motion.

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                   i. If you make a special appearance but your jurisdictional challenge is denied,
                      then you lose all rights to bring attack against jurisdiction, even if you don’t
                      plead anything else and thereby lose by default judgment (Baldwin v. Iowa State
                      Traveling Men’s Association)
                  ii. REMEMBER  if you don’t appear AT ALL, then you can still challenge
                   i. Allows a D in an action commenced on a quasi-in-rem basis to appear for the
                      limited purpose of defending his interest in the attached property without
                      submitting to full in personam jurisdiction.

          a. Constitutional Basis:
                   i. Article III, Section 2 of the Constitution provides that the judicial power ot the
                      US may extend to controversies between 2 or more states, between a state and
                      a citizen of another state, between citizens of different states, or between a
                      state and foreign states, citizens or subjects.
                   i. Complete Diversity Requirement:
                           1. In 1806, SC interpreted diversity statute to require that there be no
                                defendant having the same citizenship as any plaintiff. (Strawbridge v.
                           2. Statutory Exceptions to Complete Diversity:
                                     a. Interpleader  The federal interpleader act permits a federal
                                         court to exercise jurisdiction in interpleader actions whenever
                                         any two or more adverse parties are of diverse citizenship.
                                     b. Class Action Fairness Act (28 USC §1332(d)(2))  Provides
                                         federal district courts with original jurisdiction over certain class
                                         actions in which there is minimal diversity between the class
                                         members and the named defendants.
                                     c. Multiparty, Multiforum Jurisdiction – 28 USC §1369  This act
                                         confers jurisdiction on the federal district courts for actions
                                         arising from accidents that involve the deaths of at least 75
                                         people so long as there is minimal diversity between adverse
                  ii. Alienage Diversity Jurisdiction:
                           1. 1332(a)(2) confers federal subject matter jurisdiction over cases
                                involving a citizen of the US and a citizen of a freign country, and (a)(3)
                                confers federal SM jurisdiction over cases involving completely diverse
                                citizens of American states in which aliens are additional parties.
                 iii. How is citizenship determined?
                           1. Burden of pleading diverse citizenship is upon the party invoking federal
                           2. NATURAL PERSONS:

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                                  a. For US Nationals, “citizenship” has the same meaning as
                                     DOMICILE (and not mere residence):
                                           i. Mas v. Perry  “For diversity purposes, citizenship
                                              means domicile; mere residence in the State is not
                                          ii. DOMICLE =” true, fixed and permanent home and
                                              principal establishment, and to which he has the
                                              intention of returning whenever he is absent
                                  b. ELEMENTS OF ESTABLISHING DOMICILE:
                                           i. Physical presence in the state.
                                          ii. AND
                                         iii. Intention to remain there.
                                         iv. Until you positively establish a new domicile, you
                                              remain a domiciliary of your previous domicile.
                         3. ALIENS:
                                  a. Alein admitted to the US for permanent residence shall be
                                     deemed a citizen of the State in which such alien is domiciled.
                                  b. HOWEVER – There may not be minimal diversity between two
                                           i. Saadeh v. Farouki  Held that 1332(a) should not be
                                              interpreted to authorize a suit between aliens even if
                                              one were domiciled in an American state.
                         4. CORPORATIONS:
                                  a. ELEMENTS: A corporation is deemed to be a citizen of EVERY
                                     state in which it is incorporated and of the state in which it has
                                     its principal place of business.
                                           i. “Principal Place of Business”
                                                  1. Where executive office and its other activities
                                                       are in the same stat,e the concept causes no
                                                  2. TESTS:
                                                           a. Nerve-center Test: Some courts
                                                                consider the executive offices as the
                                                                NERVE CENTER of the corporation and
                                                                thus principal place of business.
                                                           b. Operating Assets Test  Other courts
                                                                hold that the MAIN PHYSICAL PLANT is
                                                                the principal place of business.
                                                           c. Total Activity Test Hybrid of both,
                                                                testing them both to consider the
                                                                circumstances to discover its principal
                                                                place of business.
                  iv. Time For Determination
                         1. GENERAL RULE: Diversity need only exist at the commencement of the
                         2. Change before filing  IT is immaterial that the parties had the same
                             citizenship when the claim arose, and a party may even more to another

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                             state to create diversity as long as there is a genuine change of
                        3. Change after filing  A change in either party’s citizenship after filing
                             does not deprive court of jurisdiction.
                        4. PARTIAL EXCEPTION – removal
                                  a. When an action is removed to federal court from state court on
                                       grounds of diversity, diversity must exist at the time of filing of
                                       the suit AND on the date of filing of the notice of removal.
                 v. Parties’ Efforts to Create or Defeat Diversity:
                        1. CREATE:
                                  a. GENERAL RULE = 28 USC 1359 provides that there shall be no
                                       jurisdiction when a paerson has collusively or improperly been
                                       made a party or joined in order to invoke federal jurisdiction.
                                  b. A GENUINE change of citizenship can create diversity!
                        2. DEFEAT:
                                  a. Joinder of Nondiverse Defendants:
                                             i. A P can bring a single action against a number of
                                                defendants, as long as the claims against the defendans
                                                arise out of the same series of occurrences or
                                                transactions and there is a question of law or fact
                                                common to parties.
                                            ii. Often, P may add claims against nondiverse defendants
                                                and thereby defeat diversity.
                                           iii. LIMITATIONS:
                                                    1. Valid Claims/Parties in Interest  P must have
                                                         valid claim against nondiverse D or presence of
                                                         D will be disregarded in making diversity
                                                             a. Rose v. Giamatti  Because real
                                                                  parties in interest were diverse,
                                                                  addition of non-diverse additional
                                                                  defendants did not defeat diversity.
                  i. GENERAL RULE: Limits federal diversity jurisdiction to cases involving MORE
                     THAN $75’0000!
                        1. Not greater than or equal too! Must be at least $75,000.01.
                 ii. Time for Computing:
                        1. Date of commencement of the action.
                iii. Legal Certainty Test:
                        1. RULE ARTICULATED: “The rule is that the sum claimed by the P controls
                             if the claim is apparently made in good faith. It must appear to a legal
                             certainty that the claim is really for less than the jurisdictional amount
                             to justify dismissal.” (St. Paul Mercury Indemnity Co. v. Red. Cab Co.)
                                  a. If there is SOME legal possibility that the damages could be
                                       more than minimum jurisdictional amount, then it is OK!
                        2. No need for plaintiff to itemize how she arrived at the amount of
                             damages claimed in complaint.

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                                a. REMEMBER – early in most cases, Federal Rules require that
                                     certain disclosures be made, including a computation of
                        3. LIMITATION – Good Faith:
                                a. This only goes for damages claims made in good faith; where
                                     there need be only some legal possibility of recovering that
                                     minimum amount.
                                b. AFA Tours, Inc. v. Whitchurch  “The court must afford the
                                     plaintiff the ‘appropriate and reasonable opportunity to show
                                     good faith in believing that a recovery in excess of the
                                     jurisdictional amount is reasonably possible.”
               iv. Aggregation of Claims to Satisfy Requirement:
                        1. Single Plaintiff/Single Defendant:
                                a. All claims of the P against the D, whether or not related, can be
                        2. Single Plaintiff/Several Defendants:
                                a. Only claims for which all defendants are JOINTLY LIABLE to the P
                                     may be combined.
                        3. Several Plaintiffs/One Defendant:
                                a. Aggregated only if they have a common undivided ownership
                                     interest in the claims.
         a. Constitutional Grant:
                 i. Constitutional Provisions  Article II, Section 2 provides that federal judicial
                    power shall extend to:
                        1. Cases in law and equity arising under the Constitution, the laws of the
                            US, and treaties;
                        2. Cases affecting ambassadors, consuls, etc.
                        3. Cases involving admiralty and maritime jurisdiction
                        4. Cases to which the US is a party.
                ii. Broad View of Federal Question Power:
                        1. Osborn v. Bank of the United States  Supreme Court upheld statute
                            that it read to grant federal courts jurisdiction over any case to which
                            the Bank of the United States was a party.
                                a. WHY? Even if the suit were about a state law debt, the bank
                                     was a FEDERAL CREATION, and in every case there would be a
                                     question about whether it could legally sue – a federal question.
                                          i. Federal court had jurisdiction merely because a federal
                                              issue was an “ingredient” in the case!
                                b. CRITICISM –Some have criticized this broad view as including
                                     too many cases in which the background federal question would
                                     not really be a viable issue in the case AT ALL.
               iii. Claim based on Federal Substantive Law:
                        1. Congress may be able to assign to the federal courts jurisdiction over
                            claims it creates only by promulgating or providing for a body of federal
                            substantive law to govern the claims or delegating authority to create
                            such substantive law to the courts.

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              USC §1331, because the Constitution does not confer subject matter jurisdiction on
              the LOWER FEDERAL COURTS, that was done via this statute!
           c. Federal Question Statute – 28 USC §1331 (
                   i. Statute – “The district courts shall have original jurisdiction of all civil
                      actions arising under the Constitution, laws, or treaties of the United
                  ii. QUESTIONS YOU MUST ASK:
                          1. Is this case one which constitutionally may be granted to the federal
                              courts because the power for them to hear it is granted in Article III, s. 2
                              of the Constitution?
                          2. IF SO, has Congress actually conveyed jurisdiction over this type of case
                              in a federal statute?
                 iii. Standards for Determining Whether a Federal Questions is Raised:
                          1. Federal Law Creates Claim:
                                   a. Justice Holmes – “A suit arises under the law that creates the
                                       cause of action.”
                                   b. If federal law creates the claim sued upon, there is generally no
                                       problem in finding that the federal courts have subject matter
                                   c. Test Underinclusive:
                                             i. The Court has since recognized that this description is
                                                “more useful for describing the vast majority of cases
                                                that come within the district courts’ original
                                                jurisdiction” than for distinguishing among cases in
                                                which jurisdiction is doubtful.
                                   d. Implied Claims  Federal claims include claims implied by the
                                       courts in addition to private rights of action explicitly created by
                          2. Nonfederal Claim That Turns On Construction of Federal Law:
                                   a. If the claim being sued upon is not one created by federal law
                                       but resolution of the suit turns on construction of federal law,
                                       application of the federal question statute is more difficult.
                                   b. The Supreme Court has confirmed that federal question
                                       jurisdiction can be proper “where the vindication of a right
                                       under state law necessarily turned on some construction of
                                       federal law.” – Merrell Dow Pharmaceuticals, Inc. v. Thompson.
                                   c. HOWEVER, if it looks like Congress would not want this to be a
                                       Federally adjudicable issue, then no go!
                                   d. ELEMENTS:
                                   e. Substantial bearing on Outcome
                                             i. Where federal law is an element of a state law claim, it
                                                suffices to support federal question jurisdiction only
                                                where it is important to the outcome of the case.
                                            ii. Gully v. First National Bank  “The right or immunity
                                                must be such that it will be supported if the
                                                Constitution or laws of the US are given one

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                                                construction or effect, and defeated if they receive
                                   f. Nature of the Federal Interest:
                                             i. In Merrell Dow, the Court suggested that it would be
                                                helpful to focus on the nature of the federal issues at
                                                stake and that this approach could reconcile the
                                                inconsistent results in earlier cases.
                                                    1. Smith  Jurisdiction was proper because the
                                                         validity of an act of Congress was directly drawn
                                                         into question, and there was substantial federal
                                                         interest in the question.
                                                    2. Moore  Federal issue related to the
                                                         employer’s compliance at one place and time
                                                         with one federal safety standard, and there was
                                                         little federal interest in such an isolated
                                            ii. Grable & Sons  A federal right of action is not
                                                necessary for federal question jurisdiction over a state
                                                law claim under Merrell Dow. The federal interest
                                                may have the nature and importance required by that
                                                decision in other ways.
                                   g. BUT - Absence of Implied Federal Claim?
                                             i. Merrell Dow  Court held there was no federal
                                                question jurisdiction over a state court claim, even
                                                though the claim relied on D’s violation of federal act,
                                                because the Court found that it would “flout” the will of
                                                congress to allow federal jurisdiction over a state law
                                                    1. HOWEVER – Grable & Sons Metal Products Inc.
                                                         v. Darue Engineering & Manufacturing Co. 
                                                         Cautions that Merrell Dow should be read as
                                                         treating the absence of a federal private right
                                                         of action as evidence relevant to, but not
                                                         dispositive of, the determination whether
                                                         there is federal question jurisdiction.
                  iv. Well-Pleaded Complaint Rule:
                         1. RULE: A federal court will not have federal question subject matter
                              jurisdiction unless the federal question appears in the plaintiff’s “well-
                              pleaded complaint.”
                         2. ELEMENTS:
                                   a. The federal issue must be an
                                   b. Element of the state-law claim
                                   c. That is required to be included in the complaint to state a
                         3. Anticipation of defense insufficient basis for federal question
                                   a. Under well-pleaded complaint rule, allegations going to an
                                       anticipated defense are NOT REQUIRED to be in a complaint.

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                                  b. Louisville & Nashville RR v. Mottley  Mottley’s complaint
                                      raised the federal issue as a response to a possible defense on
                                      the RR’s part (that they were only following federal statute),
                                      while their action was solely state CL breach of contract
                                      claims…therefore, no federal subject matter jurisdiction.
                         4. Federal Counterclaim insufficient  Like a federal defense to a state
                             law claim, a counterclaim based on federal law, even if compulsory,
                             does NOT create a federal question jurisdiction under §1331.
                         5. Removed Cases  A case cannot be removed on the basis of federal
                             question jurisdiction unless the federal question appears on the face of
                             the PLAINTIFF’s well-pleaded complaint.
                                  a. That a D has raised a federal defense is irrelevant.
                                  b. To prevent a D from removing a case, a P might “Artfully plead”
                                      her case to avoid a federal question.
                v. Plausible assertion of federal right sufficient:
                         1. A federal claim or question is sufficient to vest the court with
                             jurisdiction unless it “clearly appears to be immaterial or made solely
                             for the purpose of obtaining jurisdiction, or where the claim is wholly
                             insubstantial and frivolous.”
                         2. P need not show that he will prevail on the merits of the claim; it need
                             only be arguable.
         a. GOAL: Promote judicial economy and consistency of decision by removing obstacles to
            having all related controversies decided in one proceeding.
                 i. United Mine Workers v. Gibbs  “Under the FRCP, the impulse is toward
                    entering the broadest possible scope of action consistent with fairness to the
         b. TYPES:
                 i. Pendant  Plaintiff has both federal and non-federal claims in the same
                ii. Ancillary  Assertion of a claim by a party other than the plaintiff that was
                    related to the claim made by the plaintiff.
         c. Supplemental Jurisdiction Statute – 28 U.S.C. §1367
                 i. Grants federal courts that have original jurisdiction over a claim supplemental
                    jurisdiction over all other claims that form part of the same case or controversy
                    under Article II.
                ii. QUESTION IS: Do the claims sought to be added to those within federal
                    jurisdiction make up one constitutional case?
               iii. THREE PART TEST (FROM GIBBS):
                         1. Substantial Federal Claim:
                                  a. The federal claim must be sufficiently substantital to support
                                      federal question jurisdiction.
                         2. Common Nucleus of Operative Fact:
                                  a. The federal and nonfederal claim must derive from a common
                                      nucleus of operative fact.
                         3. One Judicial Proceeding:

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                                   a. The federal and nonfederal claims must be such that the P
                                        “would ordinarily be expected to try them in one judicial
                           4. (This test may apply to determine the outer constitutional limits of
                               diversity jurisdiction)
                 iv. Pendent Party Jurisdiction  1367(a) explicitly grants supplemental jurisdiction
                      over claims that involve the joinder or intervention of additional parties.
                  v. TIME OF DECISION  At the pleadings!
                 vi. Mandatory Exercise  It has been held that federal courts should exercise
                      supplementary jurisdiction unless a ground for declining jurisdiction exists under
           d. Exception for Diversity Cases:
                   i. When federal subject matter jurisdiction is founded solely on diversity of
                      citizenship, supplemental jurisdiction is limited.
                  ii. Claims by Plaintiffs:
                           1. In diversity-only cases, there is no supplemental jurisdiction over claims
                               by plaintiffs against persons made parties under:
                                   a. Rule 14 (interpleader),
                                   b. Rule 19 (necessary party joinder),
                                   c. Rule 20 (Permissive party joinder), or
                                   d. Rule 24 (intervention).
                 iii. Claims by Parties Joined as Plaintiffs Under Rule 19 or 24:
                           1. There is no supplemental jurisdiction over claims by persons proposed
                               to be joined pursuant to Rule 19 or 24.
                 iv. Rule 20 Joinder of Plaintiffs:
                           1. Exxon Mobil Corp. v. Allapattah Services Inc.  SC upholds
                               supplemental jurisdiction in suit by injured trial who claimed more thatn
                               $75,000, over related claims of family members who were diverse from
                               D but did not meet amount requirement.
                                   a. RULE: Claims by completely diverse plaintiffs in a diversity case
                                        when one plaintiff has a claim satisfying the amount
                                        requirement, but others with related claims do not, come
                                        within supplemental jurisdiction.
                                   b. Incomplete diversity would still destroy jurisdiction as to all
                           2. DISTINGUISH – Rule 20 Joinder of Defendants:
                                   a. 1367(b) explicitly excludes supplemental jurisdiction over claims
                                        against Ds joined under Rule 20.
                                   b. Ps can solve this problem and may seek to consolidate these
                                        separate suits for combined treatment in FRCP 42(a).
           e. Discretionary Decline of Jurisdiction:
                   i. Grounds to Decline: Executive Software North America v. District Court – A
                      federal court may decline to exercise supplemental jurisdiction ONLY on the
                      basis of one of the four following grounds:
                           1. Novel Or Complex Issue of State Law
                                   a. If the law to be applied to the nonfederal claim is uncertain, the
                                        district court may decline to entertain that claim so that the

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                                       parties can get a “surer-footed reading of applicable law” from
                                       state court.
                           2. Nonfederal Claim Substantially Predominates
                                   a. If the DC concludes that the nonfederal claim is the real body of
                                       the case.
                                   b. The court should not “tolerate a litigant’s effort to impose upon
                                       it what is in effect only a state law case.” Gibbs.
                           3. All Original Jurisdiction Claims Dismissed
                                   a. If all claims over which the federal court had original jurisdiction
                                       are dismissed, the court may dismiss the nonfederal claims.
                                   b. In deciding whether to do so, court should consider amount of
                                       time invested in the case by the court.
                           4. Extraordinary Circumstances:
                                   a. Situations in which the DC finds that exceptional circumstances
                                       exist in the case and that these provide compelling reasons for
                                       decline of jurisdiction.
   4) REMOVAL:
         a. WHAT? Allows D to shift a case from state court to federal court when P has chosen to
            sue in state court.
         b. RATIONALE:
                 i. Serves as a necessary device to ensure that Ps alone do not decide which cases
                     federal courts should hear.
                ii. Critique – Allows a D the right to elect a forum of its own choosing.
                 i. In General  When plaintiff files an action in state court but could originally
                     have filed in federal court.
                         1. NO.
                         2. Shamrock Oil & Gas Corp. v. Sheets:
                                  a. RULE: The plaintiff, having originally submitted himself to the
                                      jurisdiction of state court jurisdiction was not entitled to avail
                                      himself of a right of removal conferred only on a defendant who
                                      has not submitted himself for jurisdiction.
               iii. FEDERAL QUESTION:
                         1. The well-pleaded complaint rule works here, so D can not base removal
                             on a federal defense that he has raised.
                         2. No basis when D has interposed a counterclaim asserting a federal
                         3. If P chooses not to assert a possible federal claim  no removal.
                                  a. If P originally files in state court and amends with federal claim,
                                      then D can remove.
                                            i. If P does not amend, res judicata may bar assertion of
                                               that federal claim later.
                                  b. EXCEPTION – If federal law completely preempts state law on
                                      the matter and converts P’s claim to federal law, that satisfies
                                      well-pleaded complaint rule and makes case removable.
                         4. Effect of supplemental jurisdiction  allows for a case to be removed
                             even if it includes D against whom only state law claims are asserted so

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                             long as the claims against those Ds forms part of the same
                             constitutional “case.”
                  iv. DIVERSITY OF CITIZENSHIP – 28 USC §1441(b):
                         1. GENERAL: If P could have filed in federal court using diversity of
                             citizenship, D may remove the case to federal court.
                                  a. COMPLETE DIVERSITY REQUIREMENT!
                         2. IMPORTANT - NOT ALLOWED if any D is a citizen of the state in which
                             the action is brought.
                                  a. RATIONALE: Since diversity is designed to protect defendants
                                      against local prejudice, there is no need to invoke it on behalf of
                                      a local party.
                                  b. EXCEPTION – Class Action Fairness act- §1453(b)  in class
                                      actions, D who is a citizen of a state in which action is filed may
                                      remove it.
                         3. Fraudulent Joinder: If p joins a D from the state in order to defeat
                             diversity removal and there is really no basis for the claim against that
                             nondiverse party, then that presence will not defeat removal.
                         4. Jurisdictional amount requirement remains!
                   v. SEPARATE AND INDEPENDENT FEDERAL CLAIM - §1441(C)
                         1. A D sued on a “separate and independent claim or cause of action”
                             within federal question jurisdiction may remove, even if P has joined
                             nonremovable claims.
                                  a. EXAMPLE: D sued for breach of contract and an unrelated
                                      violation of federal antidiscrimination laws can remove the case
                                      to federal court.
                                  b. RATIONALE: Such removal protects D’s right of removal of a
                                      federal claim so that plaintiff cannot prevent removal by joining
                                      a wholly unrelated claim.
                         2. ENTIRE ACTION REMOVED:
                                  a. Where separate and independent claim requirement is satisfied,
                                      the federal corut may :
                                            i. Retain jurisdiction over otherwise nonremovable claims
                                           ii. Or
                                          iii. Remand them to state court.
                         3. LIMITATION:
                                  a. Prior to 1990, section 1441(c) allowed removal of separate and
                                      independent claims in diversity cases as well as in federal
                                      question cases.
                                  b. In 1990, Congress amended this statute to limit removal of
                                      cases with separate and independent claims to those involving
                                      federal question.
                                                   1. Borough of West Mifflin v. Lancaster 
                                                       Discretion to remand under §1441(c) applies
                                                       only to claims based on state law.
                                                   2. When the same event is relied on for all counts
                                                       of the complaint, the federal claim is not
                                                       “separate and independent” under 1441(c) and

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                                                         the district court has no authority to remand
                                                         the case under that section.
                   i. Only Defendant can remove.
                  ii. All defendants must join  All who have been served with process must joni in
                      the notice of removal.
                           1. EXCEPTION – When ground for removal is a separate and independent
                              claim, only the defendant against whom this claim is asserted need seek
                              the removal.
                 iii. TIMING:
                           1. Must be filed within 30 days after the time the case becomes removable
                              (begins running from the time process is served on D).
                                  a. LIMITED EXCEPTION – Some cases have found that the time for
                                       removal does not start running until D learns more about the
                                       claim so as to be able to determine that it is removable.
                   i. USC 1447  IF a case is removed erroneously, a federal court must remand it to
                      the state court.
          a. A lack of subject-matter jurisdiction may be asserted at any time by any interested
             party, either in the answer or in the form of a suggestion to the court prior to final
             judgment, or on appeal.
          b. May also be raised by the court sua sponte.
          c. What if D did not bring up SM jurisdiction? Can he use it as a defense in subsequent
             proceeding by P to enforce the earlier court’s decree?
                   i. Such attack allowed in Kalb v. Feuerstein.

   1) WHAT? A statutory limitation on where a suit may be brought. It may prevent a P from brinigng
       suit in a particular court even though the court has jurisdiction. Venue rules as designed to
       prevent P from suing where it would be burdensome for the D to appear and defend.
            a. Defendant’s Residence: Proper in judicial district where any D resides.
                      i. Residence of natural person  Analogous to citizenship, so it refers to where D
                         has his natural domicile.
                     ii. Corporation?  Resident of ANY judicial district in which it is subject to
                         personal jurisdiction.
                              1. Incorporation state.
                              2. Main place of business (remember, nerve center or center of production
            b. Location of Substantial Part of Events or Omissions or of Property – 1391(a)(2) and
                      i. Where a substantial portion of the event sgiving rise to the claim occurred, or
                         substantial part of the property that is subject of the action is situated.
                     ii. “Giving Rise”  Not clear whether Congress intended that the pertinent events
                         be only those on which liability is predicated under the relevant substantive law
                         (for example, where a product was SOLD in a products liability suit).

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                   iii. “Substantial Part”  Not clear how many events (or omissions) suffice as a
                        “substantial part.”
                   iv. “Property present”
                            1. Property must be the subject of the action for the venue provision to
                            2. DISTINGUISH – Local actions.
                                      a. In some actions, the local action rule may apply instead of the
                                          provisions of section 1391.
           c.   Where defendant is doing business.
           d.   Where defendant has an office or place of business, or an agent, or representative, or
                where an agent or officer of D resides.
           e.   Where P resides.
           f.   Where P is doing business.
           g.   Where D may be found.
                     i. This is probably a historical hangover, from old laws.
                    ii. Only for Federal Question, not allowed when subject matter jurisdiction is based
                        solely on diversity of citizenship.
           h.   Where D may be summoned or served.
           i.   Removed Cases:
                     i. Assigned to the federal district encompassing the state court in which the action
                        was pending, regardless of the residence of the parties.
           j.   Local Actions:
                     i. RULE: Cases involving title to property where venue is regarded as proper
                        ONLY in the district where the property is located.
                    ii. This is an unwritten limitation on the federal venue statutes, treating them as
                        applicable to “transitory” actions only.
                   iii. MAJORITY RULE FORMULATED IN Livingston v. Jefferson – Plaintiff charged
                        former president Jefferson with trespass to plaintiff’s land in Lousiana. The
                        court refused to proceed with the case because it was a “local action” that could
                        be brought only in Louisiana (where personal jurisdiction could not be obtained
                        over Jefferson).
                   iv. Reasons for justifying this rule rule (alone with a case’s reasons for rejecting it):
                            1. Courts are not in a position to pass upon the title to land outside their
                                      a. Reasor-Hill Corp v. Harrison Rejection of Rule  IF State can
                                          determine law of other state well enough to apply it to
                                          transitory actions, they can apply it as well to local actions.
                            2. Since tort must take place where land is situated, P must pursue his
                                 remedy before D leaves jurisdiction!
                                      a. Reasor-Hill Corp v. Harrison Rejection of Rule  Merit for
                                          nations since a nation can stop a party from leaving the country,
                                          but State’s cannot restrict the travel of parties between them.
                            3. State is reluctant to subject their own citizens to suits by residents of
                                 other states.
                                      a. Reasor-Hill Corp v. Harrison Rejection of Rule  Why should we
                                          let the state court protect one of their citizens who had
                                          destroyed property in another state and then sought refuge in

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          a. Venue or jurisdiction Improper in Original Court - §1406(a)
                   i. RULE: Where venue or jurisdiction is improper in the court selected by the
                      plaintiff and the D properly objects, the court may transfer the case to a proper
                      court rather than dismiss it.
                          1. HOWEVER – A court may dismiss instead of transferring.
                          2. Lower courts have upheld transfer from a district where venue is proper
                               but there is no personal jurisdiction.
          b. Transfer for Convenience - §1404(a)
                   i. GENERAL RULE: Where venue and jurisdiction are proper in the court selected
                      by the plaintiffs, the court can transfer the action “for the convenience of the
                      parties and witnesses, in the interests of justice.”
                  ii. LIMITATION – Hoffman v. Blaski  Statute authorizes transfer only to a district
                      in which the action “might have been brought.”
                          1. Transferee district must :
                                   a. Be proper venue.
                                   b. Have valid personal jurisdiction.
                                   c. (moving party’s willingness to waive objections to venue or
                                        personal jurisdiction does not satisfy this requirement).
                 iii. PROCEDURE:
                          1. Either P or D can move to transfer.
                          2. P’s initial choice of forum should be respected, and transfer is proper
                               only when the balance of conveniences strongly favors transfer.
                                   a. Factor in:
                                   b. Identity and location of witnesses.
                                   c. Access to items of real evidence.
                                   d. Any other factor that would make trial in transferee forum more
                                   e. Stewart Organization v. Ricoh Corp.  Supreme Court has
                                        found a forum selection clause should be a “significant factor”
                                        in determining whether to transfer the case to the forum
          c. Multidistrict Litigation - §1407
                   i. RULE: When cases pending in different districts raise a common question of law
                      or fact, they can be transferred to one district.

   1) Background: Even when jurisdiction and venue are proper, courts may decline to exercise
      jurisdiction on the ground that the location the plaintiff selected for the case is GROSSLY
           a. Federal Courts – When the invoncenience problem can be solved by transfer to another
               federal district, the court may not dismiss; but if the proper forum is in another country,
               the federal court can dismiss. Piper Aircraft Co. v. Reyno.
                    i. RATIONALE:
                            1. Court should not participate in lengthy and complex exercises in
                                 comparative law!

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                          2. Also, flood of litigation from foreign plaintiffs who think American
                              courts are very attractive!
                                   a. CAVEAT: This factor is not ALWAYS bad, so if the alternative
                                       forum is SO MUCH WORSE, it may be weighted by the courts!
                                        Here, Scotland is not that much worse!
                          3. Courts are not required to make their jurisdiction available to parties
                              who engage in unfair forum shopping and thereby impose substantial
                              inconvenience on other parties and expense and burden on the courts
                              of the forum selected by P.
           b. PROCEDURE:
                   i. D MUST make a motion to dismiss on grounds of inconvenience.
                  ii. SHOWING REQUIRED  D must show that P has selected a grossly inconvenient
                      location for the suit.
                 iii. FACTORS  Court is to consider a number of private and public factors in
                      amaking a decision whether to dismiss on forum non conveniencs grounds:
                          1. PRIVATE FACTORS:
                                   a. Relative ease of access to sources of proof (significantly easier
                                       in another forum?)
                                   b. Availability of compulsory process (will there be compulsory
                                       process to compel unwilling witnesses to attend trial in the
                                       other forum?)
                                   c. Cost of obtaining attendance of willing witnesses.
                                   d. Need to view premises (will having the jury view the premises
                                       involved in the litigation be important at trial?
                          2. PUBLIC FACTORS:
                                   a. Local interest in having localized controversies decided at home.
                                   b. Interest in having trial in forum familiar with the law to be
                                   c. Avoiding unnecessary problems with conflict of laws.
                                   d. Unfairness of burening citizens of an unrelated forum with jury
                 iv. Usually, substantial weight is given to P’s choice to sue in a forum where venue
                      and jurisdiction requirements are satisfied.
                          1. Piper Aircraft  When P is foreign, however, that deference is not
                  v. The fact that law in the more convenient forum is less favorable to plaintiffs
                      usually has no significant weight (Piper Aircraft).
                 vi. ADEQUATE ALTERNATIVE FORUM AVAILABLE  the court CANNOT dismiss
                      unless an adequate alternative forum is available.
                          1. Must offer adequate remedy (no possibility of foreign relief may let
                              American court conclude that forum is inadwquate).
                          2. HOWEVER – lesser or different remedy is not a bar to dismissal.
                          3. Court can stipulate D to submit to foreign jurisdiction.
                vii. CONDITIONS ON DISMISSAL:
                          1. Court can condition dismissal to protect against unfairness.
                          2. EXAMPLE  stipulation by D that the statute of limitations will be
                              deemed tolled as of the time suit was filed in the inconvenient foru so P

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                            does not risk limitations defense based on delay of filing in the new
           c. Remember, forum-selection clauses may be honored by the courts!

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          a. RULE: FRCP 18(a) abolishes all restrictions on the joinder of claims and provides that a
              party asserting a claim for relief may join as many claims as she has against an
              opposing party. (MK v. Tenet)
                   i. LIMITATION – There must be subject matter jurisdiction.
                  ii. LIMITATION – Multi-party cases  The rules on joinder of parties impose
                      limitations where there are several co-Ps or co-Ds.
                           1. When there are multiple parties, AT LEAST ONE of the claims by or
                                against each party must arise out of the “same transaction, occurrence
                                or series of transactions and aoccurrences and must involved “a
                                common question of law or fact” affecting each of the parties joined
                                (FRCP 20(a))
                           2. Thus limits the joinder of claims in multi-party cases to those among
                                which there is a subject matter relationship.
                 iii. Separate Trials:
                           1. FRCP 20(b) and 42(b)  Trial court may remedy any possible
                                inconvenience or prejudice caused by the joinder of claims by ordering
                                separate trials.
          a. Permissive Counterclaims:
                   i. If D’s claims against P are UNRELATED to the claims set forth in the complaint, it
                      is optional for the D to assert them by way of counterclaims.
                  ii. Alternatively, D could assert the claims in an independent action.
                 iii. There must be independent subject matter jurisdiction over the permissive
          b. Compulsory Counterclaims:
                   i. If D’s claim against P arises out of the same transaction as claim set forth in
                      complaint, then counterclaim is compulsory (13(a)).
                  ii. ELEMENTS:
                           1. Counterclaim is “compulsory” if:
                           2. It arises out of the transaction or occurrence that is the subject matter
                                of P’s claims.
                                    a. Scope of “transaction or occurrence” – 2 VIEWS!
                                               i. Broad View –US v. Heyward-Robinson Co.:
                                                      1. Jurisdiction in first Action: When question is
                                                         whether the counterclaim is within the court’s
                                                         supplemental jurisdiction, a broad definition of
                                                         “transaction “ is used – the object being to
                                                         permit the counterclaim and thereby avoid
                                                         multiplicity of suits.
                                              ii. NAROWER VIEW: Scope of preclusion in later action:
                                                      1. If the question is whether a D who failed to
                                                         interpose a counterclaim is barred from later
                                                         suing on it, a narrower definition may be used if
                                                         it would be inequitable to bar the later suit.
                           3. AND

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                          4. It does not require the presence of third parties over whom the court
                               has no jurisdiction.
                                    a. Invokes requirements of Rule 19.
                 iii. Usually, falls under supplemental jurisdiction and court does not need
                      independent subject matter jurisdiction over the counterclaim.
                 iv. Statute of Limitations Problem  Is a counterclaim barred by the statute of
                      limitations if it is filed after the statute has run but the action was filed before
                      the statute ran?
                          1. MAJORITY VIEW  If counterclaim arises from “same transaction,” it
                               will not be barred if the plaintiff’s complaint was filed before the
                               running of the statute.
                          2. MINORITY VIEW  Allows ANY counterclaim (same transaction or not)
                               to be used defensively even though the statute has run.
          a. GENERAL: In federal court actions, the D may set forth in the answer any claims that she
             has against a co-defendant that relate to the “transaction or occurrence” or to any
             property that is the subject of plaintiff’s complaint.
                   i. 13(g)  NEVER COMPULSORY!
          b. JURISDICTION:  LASA per L’Industria del MArmo Societa v. Alexander  Since cross-
             claim MUST relate to the transaction in the existing action, the better view is that it is
             within the supplemental jurisdiction of the court, and no independent ground for
             federal jurisdiction is required.
          c. PLEADING:
                   i. Form  Cross-claim should be set forth as part of the defendant’s answer
                      rather than as an independent pleading.
                  ii. Responsive Pleading  The co-defendant whom the claim is asserted must file
                      an ANSWER TO THE CROSS-CLAIM – FRCP 7(a)(4).
          d. PARTIES: Must be against a co-defendant, however the cross-claimant may ADD NEW
             parties against whom it has claims growing out of the same transaction. FRCP 13(h).

          a. EARLY APPROACH: Parties could only be joined if they each had “an interest” in both
             the subject of the action and the relief sought. Rules vocerning joinder of causes of
             action required that causes joined “Affect” all parties joined. These rules prevented
             joinder in many cases where need was obvious.
                  i. Ryder v. Jefferson Hotel Co.  Wife, injured by D’s negligence, sues for her
                      injuries. Husband attempts to join his claim for loss of her services. Joinder was
                      not proper under early approach because Husband had no “interest” in the
                      relief sought by Wife and vice versa.
          b. ELEMENTS – FRCP 20(a):
                  i. Parties may join or be joined in one action if:
                 ii. A right to relief is asserted by (or against) them jointly, severally, or in the
                           1. Separate or joint  Each P is not required to have an interest in every
                               cause of action or in all the relief prayed for. If there are several

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                            plaintiffs, they have the option to seek SEPARATE RELIEF OR JOINT
                            RELIEF. Likewise, if several defendants are joined, relief may be sought
                            against each separately or against them jointly.
                        2. “in the alternative” – P is “in doubt”
                                 a. If a P is in doubt as to which of several Ds is liable for his
                                     injuries, it is proper for P to set forth a claim against each D in
                                     the alternative, so that their respective liabilities can be
              iii. AND
               iv. The right to relief arises out of the same transaction or series of transactions.
                        1. Construed broadly; some causal relationship or interrelation among the
                            D’s conduct, or I the interest being asserted by multiple Ps, is sufficient.
                v. AND
               vi. There is at least one question of law or fact common to all parties sought to be
                        1. It is sufficient if there is a single question of law or fact common to all
                            parties joined. However, it is NOT necessary that the “common
                            question” be in dispute.
                        2. MK v. Tenet  Common legal right was being violated by the CIA’s
                            actions, namely the right to privacy.
              vii. There must be subject matter jurisdiction in regards to all parties.
                 i. So long as the requirements for joinder of parties are met, each of the parties
                    may assert as many claims as she has against the opposing party.
        d. 20(b)  The power ot he court to order separate trials:
                 i. To curb expense or delay or to avoid prejudice that might result from the
                    joinder of numerous parties asserting numerous separate claims against one
                    another, the court may order separate trials for various claims joined, or
                    otherwise regulate the proceedings to minimize the difficulties involved.
        e. Attacking Improper Jinder  A misjoined claim may be DISMISSED ON A MOTION of the
           party against whom it is asserted.
        a. RULE (FRCP 19): Joinder is required for any person who has a material interest in the
           case and whose absence would result in substantial prejudice to the absentee or to
           other parties before the court.
        b. TRADITIONAL APPROACH – “necessary” v. “indispensable” parties:
                 i. Necessary Parties:
                        1. Those who OUGHT to be joined if possible.
                        2. However, if their interests were “severable” and if one or more were
                            not joined (eg, could not be located), the court could still determine the
                            rights and liabilities of the parties before the court.
                ii. Indispensable Parties:
                        1. Those whose interests were so unavoidably involved (ie, nonseverable)
                            that the court could not proceed without them. Failure to join such
                            parties meant that the action had to be dismissed.
        c. MODERN APPROACH – practical considerations:

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                          1. 19(a) provides that any person with an interest in the subject matter of
                             a pending action shall be joined as a party if:
                                  a. In his absence, complete relief cannot be accorded those
                                      already parties.
                                  b. OR
                                  c. His interest is such that to proceed without him would be
                                      substantially prejudicial as a practical matter because it would:
                                            i. Impair his ability to protect his interest in later
                                           ii. OR
                                          iii. Expose the parties already before the court to the risk
                                               of double liability or inconsistent obligations.
                          1. If a person to be joined cannot be made a party, the court must
                             determine whether “in equity and in good conscience” the action can
                             proceed without him or whether it should be dismissed.
                          2. PRACTIAL CONSIDERATIONS (Provident Tradesmens Bank & Trust Co. v.
                                  a. Extent to which any judgment rendered in the action would be
                                      prejudicial to the interest of the absent party/parties before the
                                  b. Extent to which prejudicie could be lessened or avoided by
                                      appropriate court actions.
                                  c. Whether relief rendered without the absent party would be
                                  d. Whether P has any other adequate remedy if action is dismissed
                                      for nonjoinder of absent party.
                                  e. Interests of the court; efficiency.
                          1. Parties to Contract:
                                  a. Joint promisors under K should be joined as Ds wherever
                                  b. Court can still proceed if not though.
                          2. Tortfeasors:
                                  a. A joint tortfeasor is NOT CONSIDERED A NECESSARY PARTY!
                          3. Joint obligees  where persons are jointly owed a duty under a K, the
                             courts have usually held that they are not only necessary but also
                             indispensable parties and have dismissed for nonjoinder.
                          4. Partial assignees or subrogees  should be joined if possible.
                          5. Co-owners of property  necessary parties in situations where the
                             interests of all should be decided on a consistent basis.
                          1. Must name all necessary parties who have not been joined in the
                                  a. Failure to name all necessary parties may result in the D raising
                                      the matter in a motion to dismiss under Rule 12.
                          2. Joinder of Necessary Parties Ordered if Feasible

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                                 a. If P has failed to join necessary parties, the court will order that
                                     they be joined unless it is impossible to do so.
                                 b. If too numerous, case might become a class action.
                                 c. Venue considerations:
                                            i. If addition of party would make venue improper, the
                                                added party must be dismissed if she objects to venue.
                                                Then the court must decide whether to dismiss.
                           3. Dismissal if joinder not feasible.
                                 a. If it is not feasible to join necessary parties, then court must
                                     decide whether to dismiss or not.
         a. GENERALLY: Procedure that permits D to bring into the lawsuit a third person who is
            or may be liable for all or part of the P’s claim against D. FRCP 14.
                ii. Third party may plead ANY defense that the D might have against the plaintiff’s
                    claim and may participate fully in defending against the claim.
               iii. The court may grant a separate trial on any separate issues of the third-party
                    claim if needed to prevent undue confusion or prejudice.
                 i. Confined to situations where D has right to indemnity against (in whole or in
                    part) the impleaded 3rd party.
                ii. HOW RIGHT DETERMINED? Based on individual state laws in regards to
                    indemnity, generally.
                          1. No right to indemnification under state law  not available.
                                  a. Kohls  No indemnification allowed because the third-parties
                                       would not be allowed to be indemnified under NY State law.
                          2. If State law allows for indemnity from a third party after D pays
                             judgment  federal impleader may accelerate that state right into the
                             current trial.
                                  a. Jeub v. B/G Foods  This happens. Separate indemnity state
                                       action is joined into the current action.
                          3. Contribution among tortfeasors  D in a personal injury action cANNOT
                             implead other tortfeasors to seek contribution, because their liability
                             arises only after the P obtains judgment against all of them.
                 i. Rule 14 authorizes impleader of any person who is or MAY BE liable for any part
                    of P’s claim. Thus, it is proper before any loss actually has been paid by D.
                          1. Jeub v. B/G Foods  Allowed to adjudicate both indemnity along with
                             the claims on the merits.
         d. DISTINGUISH – alternative liability to P.
                 i. It is NOT sufficient for impleader that the 3rd-party defendant may be liable to
                    the plaintiff for the plaintiff’s injuries; only when the law gives the present D a
                    right to relif in the form of indemnity from the 3’rd party D is impleader
                 i. Leave of court is not required for impleader if the D files a third-party complaint
                    of impleader within 10 days after he serves his original answer. Thereafter,

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                         leave of court is required, and grant of the motion is at the discretion of the
                         court. (FRCP 14).
                  ii.    ANSWER  Impleaded party must file an answer to the third-party complaing
                         and the answer may raise whatever defenses could be asserted to the ORIGINAL
                         cause of action.
                  iii.   Counterclaim or cross-claim  Impleaded party may also file a counterclaim or
                         cross-claim against existing parties.
                  iv.    Trial court has discretion to order a separate trial of the impleaded claim to
                         avoid undue trial confusion or prejudice (FRCP 42(b)).
                   v.    Deemed ancillary to main claim and has no effect on jurisdictional and venue
         a. GENERAL: Device that enables a party against whom conflicting claims with respect to
             the same debt or property are asserted to join all the adverse claimants in the same
             action and require them to litigate amongst themselves to determine which, if any,
             has a valid claim to the debt or property involved.
                  i. Statutory Interpleader – 28 USC 1335:
                          1. Contains special provisions as to jurisdiction, venue and service of
                              process if:
                          2. 2 or more claimants of diverse citizenship are making adverse claims to
                              the same debt, instrument, or property owed or held by the P.
                          3. AND
                          4. The debt instrument or property has a value of at least $500.
                 ii. RULE 22 INTERPLEADER:
                          1. Permits interpleader in any action that meets the normal jurisdictional
                              requirements in federal court  sufficient amount in controversy and
                              proper diversity or federal question.
                   RULE 22 INTERPLEADER                   STATUTORY INTERPLEADER
                     Complete diversity between               Minimal Diversity - Only two
 DIVERSITY           plaintiff-stakeholder and all            claimants need be of diverse
 REQUIREMENTS        adverse plaintiffs.                      citizenship.
 AMOUNT              More than $75,000                        At least $500.
                     Process is limited to the terrotiorial
                     boundaries of the state in which
 PROCESS             the district court sits.                 Process is nationwide.

                     In the district where a D resides, if
                     all reside in the same state OR
                     where a substantial part of the acts
                     or omissions underlying the claim
                     occurred OR in which a substantial
                     part of the property involved is
 VENUE               located.                                 Where any claimant resides.

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                                                            P must deposit (or give security for)
                                                            the entire amount in his possession
                                                            that is claimed by the claimants, and
                     No requirement that stake be           may not hold back amounts that he
 "Stake?"            posted in court.                       claims.

                     Requires the THREAT of multiple
                     lawsuits before interpleader
 Multiple Suits?     moition is made.

         a. Procedure whereby a nonparty, upon timely application, may become a party in a
            lawsuit in order to protect her interests in that action.
         b. Based on balancing two conflicting policies:
                 i. That P should be allowed to be “master of his action” in the sense of joining
                     such parties with him or against him as he wishes.
                ii. That other interested parties and the court have an interest in avoiding
                     multiplicity of litigation or inconsistency of result, which may require overriding
                     P’s choice of parties.
                 i. Intervention of Right - Federal Statute:
                          1. Intervention is granted as a matter of right where a federal statute
                             confers an unconditional right to intervene.
                ii. Intervention of Right – To Protect Intervenor’s Interest:
                          1. Granted when applicant claims an interest relating to the property or
                             transaction that is the subject of the action and is so situatied that the
                             disposition of the action may, as a practical matter, impair or impede
                             the applicant’s ability to protet that interest.
                          2. ELEMENTS:
                          3. NATURE OF INTEREST?
                                  a. Only a “significantly protectable” interest suffices to support
                                        intervention of right.
                                  b. A direct, substantial and legally protectable interest is used to
                                        satisfy this standard.
                                  a. Intervenor MUST show that the resolution of the litigation
                                        would impair her interest.
                                  b. This is not limited to legally binding effects, such as res judicata,
                                        but also to the practical impact of resolution of the litigation on
                                        the intervernor’s interest.

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                                   a. If intervenor claims the right kind of interest and shows a threat
                                       of practical impairment, intervention could be denied on the
                                       ground that the intervenor’s interest is adequately represented
                                       by present parties.
                                   b. Minimal Burden  SC has said that the burden of
                                       demonstrating inadequacy of representation is “minimal”
                                   c. FACTORS:
                                              i. Amount at stake for intervenor and present parties.
                                             ii. Ability and resources of present parties to litigate
                                            iii. Existence of any conflicts of interest between present
                                                 party and intervenors.
                                   d. Smuck case  Former superintendent and board member not
                                       allowed because their interests served by the board of
                                       education, while parents are allowed to sue.
                  iii. PERMISSIVE INTERVENTION:
                           1. ELEMENTS:
                                   a. Court has discretion to permit a nonparty to intervene if:
                                   b. A federal statute confers a conditional right to intervene
                                   c. OR
                                   d. A question of law or fact in common with the main action is
                                       part of applicant’s claim or defense.
                                              i. Need not be a particular claim regarding this question
                                                 of law and fact.
                           2. The trial court has VERY broad discretion under FRCP 24(b) in granting
                               or denying permissive joinder; and a reversal on appeal is almost
                               impossible to obtain.
                                   a. COURT may limit the intervenor’s claims to those directly
                                       involvied in the pending action.
                    i. Subject Matter Jurisdiction:
                           1. If action in federal court solely on diversity grounds, there is no
                               supplemental jurisdiction over claims by intervenors or claims by the Ps
                               against persons who intervene.
                                   a. THEREFORE, there must be an independent basis for federal
                                       court jurisdiction to permit assertion of the claim.
                           2. If not based SOLELY on diversity, supplemental jurisdiction often
                   ii. VENUE:
                           1. Intervenor cannot question propriety of venue in the original action
                               since act of intervening is a submission to the court in question.

   1) Rules of Decision Act:
          a. The starting point for the applicability of state law in the federal courts.
          b. “The laws of the several states, except where the Constitution or treaties of the United
              States or Acts of Congress otherwise require or provide, shall be regarded as rules of
              decision in civil actions in the courts of the United States, in cases where they apply.”

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   2) FORMER RULE – Swift v. Tyson:
         a. WHAT?
                 i. Former rule was that the reference to state “laws” in the Act did not include
                    state common law of a general, as opposed to local nature.
                ii. Thus, the federal courts could and did follow their own view of what the
                    “general” common law was or should be.
               iii. Federal Courts’ decisions on this “general” common law, however, were not
                    binding precedent on the courts of the states; consequently different rules of
                    substantive law could apply to the same transaction, depending on whether
                    litigation took place in state or federal court.
                         1. NOTE – Federal courts were bound by applicable state statutes and
                             “local” common law )state common law regarding rights in real property
                             within the state).
                 i. Changing Attitudes toward law:
                         1. Many legal authorities moved away from the view that there was a
                             “True” common law that could be “found” by the courts. Instead, they
                             moved to an idea that each state could have its own internally
                             authoritative common law, and variations among states on the same
                             point did not mean that some had to be “wrong.”
                ii. Failure to Achieve Uniformity  failed to develop a uniform common law due to
                    disagreement of many state courts with the “general” common law established
                    by federal courts.
               iii. Practical Difficulties and unfairness  Swift led to forum shopping. Litigants
                    could manipulate federal jurisdiction to gain favorable substantive law.
         a. IN GENERAL: In the absence of an Act of Congress providing governing law, a federal
            court should follow applicable state common law principles rather than developing
            and applying its own “general” common law.
         b. RATIONALE:
                 i. Statutory interpretation  Rules of Decision Act was Not meant to exclude all
                    state “general” common laws and instead included state common law, general
                    and loca, along with “positive” law like state constitutions and stattues.
                ii. Lack of uniformity and resulting discrimination  forum shopping concerns.
               iii. Swift was unconstitutional  Not really explained why though.
            SUBSTANTIVE LAW!
         a. How do we determine what is federal procedural law and what is state substantive
         b. Guaranty Trust Co. v. York:
                 i. Specific Holding  State “statute of limitations” is a substantive law that should
                    be adhered to by Federal courts.
                ii. “Outcome determination” Test:
                         1. Will application of federal law instead of the state law significantly
                             affect the outcome of the litigation?
                         2. PROBLEMS WITH TEST:

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                                   a. Applied broadly, almost any procedural rule could wualify as
                                       substantive simply because it could effect the outcome of a
           c. Byrd v. Blue Ridge Electric Cooperative, Inc.
                   i. “Balancing” Approach  3 major factors that could bear on the choice between
                      state and federal rules.
                          1. Relation between state rule in question and underlying state right.
                                   a. Was the state practice “bound up with” the underlying state law
                                       rights and obligations beinf enforced?
                                   b. Aim is to determine whether the state procedural practice was
                                       an integral part of the state substantive right or if the state
                                       system followed it for some independent reason that might
                                       relate more to state court housekeeping and therefore have
                                       less call to be followed in federal court.
                          2. Countervailing interests of the federal judicial system
                                   a. Strength of federal policy  federal interests pertaiing to the
                                       courts’ interest in their own smooth functioning and uniformity
                                       and coherence of the decisional principles they have evolved to
                                       govern procedure.
                          3. Likelihood of effect on outcome.
                                   a. Here, the outcome determination test is only one factor.
           d. Hanna v. Plumer:
                   i. Specific Holding  Held that FRCP 4(e)(2)(b) allowing “substituted” service of
                      process on a D’s spouse at their home as valid and controlling even though the
                      “substituted” service would not have sufficed had the same state law action
                      been brought in Mass. State court.
                  ii. TWO PART APPROACH:
                          1. Scales back “outcome determination” test and suggests that it be
                               applied in modified form in light of the policies of Erie to discourage
                               forum shopping and avoidance of inequitable administration of the law.
                          2. Holding with respect to Validity of Federal Rules:
                                   a. Rules Enabling Act  Gives Supreme Court the power to adopt
                                       Federal Rules regarding practice, procedure and evidence in
                                       federal courts so long as they do not abridge, enlarge or
                                       modify any substantive right.
                                             i. Therefore, Federal Rules of Civil Procedure are to be
                                                 applied in federal courts unless they violate the
                                                 Constitution or the terms of the Enabling Act itself.
                                            ii. Constitutional Restrictions  Rules need to be
                                                 “arguably procedural”.
                                           iii. Enabling Act Limitation:
                                                     1. Practice and procedure requirement  The rule
                                                         must “really regulate procedure – the judicial
                                                         process for enforcing rights and dutires
                                                         recognized by substantive law and for justly
                                                         administering remedy and redress or infraction
                                                         to them.”

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                                                    2. Substantive Rights Limitation  Rule must not
                                                        “abridge, enlarge or modify any substantive
                                                        right” and to be valid a rule must not transgress
                                                        this proscription.
                                          iv. Strong Presumption of Validity  When there is a
                                               conflict between a federal rule and a state law, there is
                                               a very strong presumption in favor of the validity of the
                                               Fedeal Rule.
                                                    1. Federal Rule is to be applied unless it appears
                                                        that the Rules Advisory Committee, the
                                                        Supreme Court, and Acongress erred in their
                                                        initial judgment that the rule did not
                                                        transgress the Enabling Act or the Constitution.
   5) MODERN APPROACH UNDER Erie and Hanna:
        a. Conflict:
                i. Federal Rules should be given their plain meaning, and if that reading leads to a
                    direct collision with state law, Hanna analysis applies.
               ii. Sometimes there is no direct conflict:
                        1. Walker v. Armco Steel Corp.  Rule 3 (states that an action
                            “commences” upon filing of complaint) is limited to only govern the
                            various timing requirements of the FRCP, but does not affect the state
                            statute of limitations so there is no conflict.
                i. Is there a true conflict between a state and federal procedural rule?
                        1. NO  No choice of law approach is needed.
                        2. YES  Move on.
               ii. Is the source of the potentially applicable federal rule the Constitution?
                        1. YES  The Federal Rule governs because the Constitution is
                        2. NO  Move on.
              iii. Is the source of the potentially applicable federal rule an Act of Congress?
                        1. YES  The Federal Rule governs if it is arguably procedural.
                                  a. Rationale  Congress’ broad constitutional power over federal
                                      courts. If they pass a statute governing federal court procedure,
                                      that statute is valid and prevails over any contrary state law if it
                                      is “arguably procedural.”
                        2. NO  Move on.
              iv. Is the source of the potentially applicable federal rule a Federal Rule
                    promulgated under the Rules Enabling Act?
                        1. YES  The Federal Rule governs unless it violates the Rules Enabling
                            Act or constitution.
                                  a. What violations?
                                            i. “Incidental effects” that leave untouched the content of
                                               state substantive law, while providing a somewhat
                                               different manner or means to enforce it.
                        2. NO  If source of the potentially applicable federal rule is purely
                            decisional law of a procedural nature, the federal rule governs unless

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                             that would counter the twin aims of discouraging forum shopping and
                             avoiding inequitable administration of the laws. (Hanna)
                                  a. SO – If applying the federal judge-made rule would COUNTER
                                      the aims of discouraging forum shopping and avoiding
                                      inequitable administration of the laws, the federal court should
                                      follow state law.
                                  b. REMEMBER – These aims might cut agaist applicability of state
                                      law in federal court, if state courts have a rule governing purely
                                      internal housekeeping matters – such as judicial attire or length
                                      of paper for court filings – and federal courts have nothing that
                                      amounts to a rule but do have practices different from that.
                                  c. LAWS OF EVIDENCE  Trend appears toward the federal
                                      standard because the question goes to whether judge or jury
                                      should evaluate the sufficiency of the evidence, not to the
                                      elements of the claim or the definition of the persuasion
                                           i. Standard for reviewing jury awards  State supplies the
                                               governing standard because it reflects state policy on
                                               how much of a check to place on excessive damages.
                                  d. THIS IS WHERE YOU DO THE BYRD BALANCING ACT APPROACH!
         a. Since Diversity cases – and most state law cases in federal courts ARE diversity cases –
            by definition involve parties from different states, federal courts must often decide
            WHICH state’s law is to govern.
         b. GENERAL RULE: The Federal court will apply the law of the state in which it sits.
            (Klaxon Co. v. Stentor Manufacturing Co.)
                  i. Includes state’s choice of law rules (the rules the state courts use to determine
                     what law to apply to cases such as those involving a nonresident party or
                     events that occurred out of state)  Thus, if state’s chocice of law rules
                     require application of another state’s law, the federal court is to do the same.
                         1. EXAMPLE: CA guy while driving through LA hits a man from NY. He
                             brings suit in NY. Court will use NY law, but if that law states that the
                             Court would apply law of the state where the accident occurred, then
                             court would be obliged to apply LA law.
                 ii. EXCEPTION – Sometimes federal legislation may provide a FEDERAL choice of
                     law rule.
         a. Erie refers to the law of a state as declared by the states’ “highest court.” Often
            because oa state statute or supreme court decision is on point, state substantive law to
            be followed by a federal court will be clear.
         b. HOWEVER – Sometimes, the state court system may never have faced a question, or
            only lower state courts may have ruled, or it may seem likely that the state supreme
            court would overrule an old precedent if given the opportunity.
         c. General Guideline – “proper regard” to state court rulings:
                  i. “Proper regard” must be given to state court precedents.
                 ii. In some cases ,a federal court will not be bound by the ruling of a state
                     intermediate appellate court on a point of state law.

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               iii. HOWEVER – Salve Regina College v. Russell  Federal appellate courts are NOT
                    to defer to the interpretation of state law by federal trial judges, but must
                    review district courts’ state law determinations de novo.
                 i. Discourage forum-shopping:
                        1. You don’t want to adopt a simplistic or rigid test that could encourage
                             forum shopping by making available in the federal system law that
                             would not ultimately govern in the state system (by adopting
                             intermediate appellate court holdings).
                ii. Avoid inequitable administration of the laws in mind!
               iii. Many lower federal courts look to ALL relevant sources, giving due regard to the
                    varying weights of different authorities within the state system, in an attempt to
                    discern how the state supreme court would decide the case.
                        1. Mason v. Emery Wheel Works Arguments:
                                  a. MacPherson changed the very nature of product liability law,
                                      and it would now be unwarranted to assume that the Supreme
                                      Court of MI would hold the same as it did in Ford Motor Co.
                                      when they bear in mind the readiness of other courts, to
                                      overrule their earlier holdings and to bring their jurisprudence
                                      into accord with what is now the overwhelming weight of
                                  b. Also, a decision may be overruled implicitly through an overload
                                      of illogical exceptions that erode the original decision so that it
                                      may lose its persuasive or binding force even in the inferior
                                      courts of the jurisdiction.
         e. CERTIFICATION:
                 i. Many states authorize their highest courts to answer questions of state law
                    certified by federal courts before which cases are pending.
                ii. Where this procedure is available, a federal court may seek an authoritative
                    answer to uncertain questions about state law rather than speculating on
         a. GENERAL RULE: The federal courts DO have the authority to create common law in
            particular areas of federal authority or interest, subject to overruling by Congress.
                 i. Borrowed State Law:
                        1. In some cases, federal statutes might be silent as to particular issues
                             arising under them.
                        2. In such cases, federal courts often fill the interstices in federal law by
                             borrowing the law of the federal state as long as that law does not
                             undermine the purposes of the underlying federal law.
                ii. Authorization by Congress:
                        1. In some areas, the Supreme Court has interpreted congressional
                             legislation as intending that the federal courts develop substantive law
                             to further national uniformity.
               iii. Sufficient Federal Interest:

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                          1. Sometimes, the court regards the federal government as having a
                              strong enough interest in a transaction that it should be coverened by
                              uniform federal common law to further that interest.
                                  a. Clearfield Trust Co. v. United States  federal common law
                                      governed on issue of delay in notification of forgery of federal
                                      government check.
                          2. HOWEVER – there must be a SIGNIFICANT federal interest.
                                  a. Bank of America v. Parnell  State law governed in suit
                                      between private parties on issue of good faith of holder of
                                      previously stolen government bonds; that federal government
                                      issued the paper involved in suit DOES NOT by itself suffice to
                                      require creation of uniform federal common law.
                  iv. Interstate disputes
                          1. In interstate disputes involving governments of, or in, different states, it
                              may be inappropriate for the law of one of the interested states to
                          2. The federal courts consequently may develop federal common law
                              when no congressional legislation deals with area.
                   v. US Foreign Relations
                          1. When questions of American foreign relations are involved, the need for
                              uniform federal common law may be especially clear.


                 i. Before any judgment can have claim preclusive effect, it must be:
                ii. Final
                        1. Whether a judgment on appeal is final for purposes of res judicate is
                            determined by the law of the jurisdiction in which judgment was
                                 a. FEDERAL PRACTICE  A judgment is valid,e ven when being
                                     appealed, until reversed or modified by an appellate court.
               iii. AND
               iv. “On the merits”
                        1. GENERAL RULE: Judgment is on the merits if the claim has been tried
                            and determined (if the court has ruled that P has or has not established
                            his claim).
                                 a. Includes a determination by summary judgment, judgment on
                                     the pleadings, nonsuit and directed verdict as well as a
                                     determination after the trial and verdict.
                        2. Other issues:
                                 a. Dismissals  if 12(b)(6) dismissal can be amended to state a
                                     valid claim earlier cases held that judgment was not on the
                                          i. Some courts view as a bar since P had a fair opportunity
                                              to get to the merits by amending his pleading,
                                              appealing, etc.)

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                                    b. Default and Consent Judgments  They terminate the cause of
                                       action and hence have claim preclusion effect.
                                            i. CONSENT JUDGMENTS  Seen as contracts, so for a
                                               claim to be reserved, it must be clear that BOTH parties
                                               have agreed to reserve an issue or claim AND it must
                                               be precisely stated what issues or claims are being
                                               reserved. (Hanover Logansport Inc. v. Robert C.
                                           ii. MAY BE LESS EFECTIVE ON ISSUE PRECLUSION!
                                    c. Punitive Dismissals  They have claim preclusion effect, but no
                                       issue preclusion since that regards issues going to the merits.
                  v. AND
                 vi. Valid.
                           1. A judgment is Valid UNLESS:
                                     a. The court lacked subject matter jurisdiction of the case.
                                     b. The notice given to the D failed to conform to due process
                                          requirements, or substantially departed from the requirements
                                          of statute or court rule concerning the form of notice.
                                     c. The court lacked personal jurisdiction over D.
                           2. If question of validity was litigated in original action, that determination
                               is itself res judicata!
           b. POLICY BASIS:
                   i. Litigants should be compelled to litigate their entire claim on the first occasion
                      they bring it before the courts.
                  ii. Judicial efficiency  resolving all claims in single lawsuit avoids waste of judicial
                      resources on repeated litigation.
                 iii. Avoids vexation of defendants  Allowing Ps to sue Ds repeatedly on the same
                      claim by changing legal theories would be oppressive to Ds.
                 iv. Consistency  Promotes public appearance of consistency.
           c. MEANING of Claim – breadth of preclusion:
                   i. MAJORITY RULE – Transactional test. (from Restatement 2nd of Judgments §24)
                           1. The critical issue is whether the two actions under consideration are
                               based on the same nucleus of operative facts.”
                           2. Claim preclusion applies to “all or any part of the transaction, or series
                               of connected transactions, out of which the action arose.”
                                     a. Rush v. City of Maple Heights  Whether or not injuries to both
                                          person and property resulting from the same wrongful act are
                                          to be treated as injuries to separate rights or as separate items
                                          of damage, a plaintiff may maintain only one lawsuit to enforce
                                          his rights existing at the time such action is commenced.
                                     b. To be determined pragmatically, giving weight to such
                                          considerations as:
                                                i. whether the facts are related in time, space, origin, or
                                               ii. whether they form a convenient trial unit,

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                                          iii.    whether their treatment as a unit conforms to the
                                                 parties’ expectations or business understanding or
                                    c. Jones v. Morris Plan Bank of Portsmouth  If a transaction is
                                        represented by a single and indivisible contract and the breach
                                        gives rise to a single cause of action, it cannot be split into
                                        distinct parts and separate actions.
                                             i. EVIDENCE OF THIS  If a claim would require the
                                                 exact same evidence to adjudicate as the other
                                                 possible claims.
                 ii. MINORITY RULE – “Rights Invaded” Test
                          1. In California!
                          2. Vasu Rule  Injuries to property and person as a result of one wrongful
                              act are infringements of different rights and therefore can be litigated
                iii. MINORITY RULE - If you need to use the same type of evidence to prove both
                     claims, then it is the same claim.
                          1. Line-drawing problems  what constitutes as different pieces of
         d. Claims by or against different parties usually not foreclosed:
                  i. Ordinarily a claim by one plaintiff is considered a different claim for preclusion
                     purposes from that of another plaintiff, and so is a claim against a different
                 ii. EXCEPTION - Mathews v. NY Racing Association, Inc.
                          1. The doctrine of res judicata operates as a bar to subsequent suits
                              involving the same parties, or those in privity with them, based on a
                              claim which has once reached a judgment on the merits.
                iii. Exception – Where second plaintiff is successor in interest.
         a. A D may not split his cause of action against a plaintiff using part of it as a defense to
            the first action and saving the remiainder for a separate affirmative suit!
                  i. Mitchell  Guy defends on a claim of fraud, and then tries to, in a separate
                     allowed by court.
                  i. Compulsory counterclaim rule requires that D set up any counterclaim she has
                     against the P arising out of the same transaction as P’s claim. FRCP 13(a).
                 ii. If she fails to do so, she is barred from thereafter asserting the counterclaim,
                     either as a defense or as the basis for addirmative relief in independent action.
                iii. Judgment in the former action is preclusive as to claims that were or should
                     have been asserted as compulsory counterclaims in that action.
         c. Where no compulsory counterclaim rule involved:
                  i. Claim preclusion does NOT prevent the D from asserting the same matter first
                     as a defense to the P’s action and later as a basis for independent relief
                     against former plaintiff.

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                  ii. EXCEPTION – Where D seeks relief based on a claim that could have been
                      asserted as a counterclaim, and that relief would nullify judgment of earlier suit,
                      the later action nis barred even if there was no applicable compulsory
                      counterclaim rule in earlier action.
   3) ISSUE PRECLUSION / Collateral Estoppel:
          a. GENERAL RULE: If the second lawsuit involves a different claim, the first judgment may
             be invoked as to all matters:
                   i. Actually litigated
                          1. Default Judgments  Split of authority:
                                   a. Some view them as conclusive as to all issues that were
                                       necessarily involved in the first suit.
                                   b. Others view them as not conclusive because “actually” litigated
                                       requires evidence present to, and a decision by, a trier of fact
                                       (Restatement of Judgments)
                                             i. RATIONALE: Why this is a better rule = A person
                                                defaulting to a complaint may not have foreseen that
                                                the admissions created thereby would remain to haunt
                                                him in a subsequent, unrelated lawsuit!
                          2. Consent Judgment  There is a likewise split.
                          3. Jury Trail v. Nonjury trial = Doesn’t matter!
                                   a. Davis v. Rios  It is the judgment and not the jury verdict or
                                       conclusions of fact, filed by a trial court which constitutes the
                                       collateral estoppel, and a finding of fact by the jury or a court
                                       which does not become the basis or one of the grounds for the
                                       judgment rendered is not conclusive against either party to the
                  ii. AND
                 iii. Determined in the first action.
                 iv. AND
                  v. Essential to the judgment.
                          1. Applies to issues that were essential to the court’s determination
                              (essential to cause of action or defense established by judgment
                          2. TEST: An issue is “essential” to the court’s determination in the
                              former action only if it appears that the judgment could not have been
                              reached without determining the issue.
                          3. “Identical issue”  The issue decided in the prior adjudication MUST BE
                              identical to the one presented in the instant action. Mere similarity is
                              not enough.
                                   a. Cromwell v. County of Sac  Mere determination that another
                                       party was not the holder of the bonds was not dispositive of the
                                       issue of whether Smith had the bonds (or something).
                                   b. Sunnen  Where two cases involve taxes in different taxable
                                       years, collateral estoppel will be confined to situations where
                                       the matter raised in the second suit is identical in all respects
                                       with that decided in the first proceeding and where the
                                       controlling facts and applicable legal rules remain unchanged.

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Judge Wood – Spring 09

                                            i. Tax issue in 1965. Same tax issue in 1966 is not issue
                                               precluded, because the issue is relegated ONLY to the
                                               issue of the taxes in 1965.
                                           ii. POLICY RATIONALE:
                                                   1. UNFAIR to other taxpayers,
                                                   2. causing inequalities in the administration of
                                                   3. discriminatory distinctions in tax liability and
                                                   4. a fertile basis for litigious confusion!
         b. EXCEPTIONS:
                 i. When the 2 actions involve the same parties, the loser may be allowed to
                    relitigate an action in a subsequent action if:
                         1. As a matter of law, appellate review of the initial action was unavailable.
                         2. Even if review was available, the nature of the proceedings in the court
                             handling the first action was informal or expedited, as in a small-claims
                         3. Stakes involved in the second suit are MUCH larger, as when the first
                             acion was in small-claims court and second involves major personal
                             injury claim.
                         4. The issue is one of law and the claims in the two actions are
                             substantially unrelated.
                         5. The burden of proof is materially different or has shifted.
                         6. There is a clear and convincing need for a new determination because
                             the party who lost on the issue COULD NOT HAVE BEEN EXPECTED TO
                             FORESEE that the issue could arise in a later action.
                ii. When the second action involves a different party, all these exceptions apply
                    and, in addition, the loser may relitigate if there are other factors that justify
                    allowing her to do so.
                 i. Parties  A party to a judgment is bound by claim preclusion and issue
                ii. PRIVIES  A person in privity with a party is bound to the same extent as the
                    party (privity meaning a legal conclusion indicating that the person in question
                    has a relationship to the party such that she should be bound).
                         1. Procedural Privity:
                                 a. If the party acted in the first action as the REPRESENTATIVE of
                                      the nonparty, the judgment therein binds the nonparty.
                         2. Substantive Privity:
                                 a. Bailment  Action by bailee or bailor precludes an action by
                                      the other.
                                 b. Successor in interest  Bound by judgment regarding the
                                      interest to which his predecessor was a party.
                                 c. Beneficiary of Estate  Bound by an action litigated on behalf
                                      of the estate of the trustee.
                                 d. Public official authorized by law to act on person’s behalf 
                                      Person is bound by the official’s litigation on his behalf.

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Judge Wood – Spring 09

                                   e. “Virtual” Representation  In unusual circumstances, courts
                                      may say that even if there is no formal representatilnal role, an
                                      earlier litigant was the “virtual” representative of the later
                                      litigant and the later litigant is therefore bound.
                                   f. JUST BECAUSE YOU ARE A FAMILY MEMBER DOES NOT MEAN
                                      YOU HAVE PRIVITY!
           b. NONPARTIES:
                  i. Nonparty not bound:
                         1. A nonparty is generally not bound by judgment.
                         2. Such a person has not had his day in court and, as a matter of due
                             process, he cannot be denied a valuable interest (his right of action)
                             without one!
                                 a. Martin v. Wilks  Even though a party in interest could have
                                     intervened, that is permissive, and a failure to do so should not
                                     result in those nonparties being barred.
                         3. EXCEPTION - For cases involving federal employment discrimination,
                             binding effect is given to a litigated or consent judgment or order when
                             the nonparty had adequate notice and opportunity to present
                             objections, or when the nonparty’s specific interests had been
                             adequately represented by another.
                 ii. Nonparty may benefit  a nonparty may benefit from the judgment in an
                     action to which he was not a party.
                         1. Claim preclusion: If 2 potential Ds have a relationship such tha tone is
                             responsible for the conduct of the other, then a judgment exonerating
                             either potential defendants precludes an action on the same claim
                             against the other.
                                 a. Not applicable to joint or concurrent liability. (only vicarious
                         2. Issue Preclusion:
                                 a. BASIC RULE: A party who litigates an issue against one party
                                     and loses may not relitigate that issue with another party.
                                 b. Defensive collateral estoppel:
                                           i. Bernhard v. Bank of America  If a party has had a full
                                               and fair opportunity to litigate an issue in one action,
                                               there is no reason to waste the time of the court and
                                               other persons in relitigating that issue.
                                                    1. Therefore: A party not bound by prior
                                                         judgment can raise res judicata defense
                                                         against someone who is bound.
                                 c. Offensive Collateral Estoppel:
                                           i. Supreme Court has found that issue preclusion can be
                                               used against a defendant to block defendant’s attempt
                                               to relitigate issues on which he had lost in an earlier
                                                    1. Parklane Hosiery Co v. Shore  SEC files suit
                                                         against PArklane for false statements and
                                                         judgment rendered against Parklance. In
                                                         subsequent action, nonparties to original suit

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Judge Wood – Spring 09

                                                       seek damages as a result of the same proxy
                                                       solicitation and it was found that judgment
                                                       against Parklane in SEC action may be held to
                                                       bar corporation from relitigating the issue of
                                                       whether solicitation was false and misleading.
                                 d. LIMITATIONS:
                                          i. Issue would not be conclusive between parties:
                                                  1. IF the issue would not be treated as conclusive
                                                      between the parties to the first action, it cannot
                                                      be conclusive in favor of a third person not a
                                                      party to that first action.
                                         ii. Unjust under circumstances  Factors to be
                                                  1. Could person seeking benefit of preclusion have
                                                      joined in the prior action but instead decided to
                                                      “sit it out?”
                                                  2. Was prior determination inconsistent with an
                                                      earlier determination of the same issue?
                                                  3. Are the consequences in the second action
                                                      much more serious than those in first action?
                                                  4. Does the party to be estopped have procedural
                                                      opportunities in the second action that were
                                                      not available in the earlier action?
                                                           a. Broader discovery.
                                                           b. Ability to compel live testimony of
                                                                important witnesses.
                                                  5. Was earlier finding a compromise verdict?
                                                  6. Is this an issue of law whose reconsideration
                                                      should not be foreclosed?
                                                  7. Other compelling circumstances justigying
         a. PROBLEM: What happens when the second case is brought in a different court system?
         b. BASIC RULE: The preclusion principles of the court system that rendered the judgment
             should be used to determine its preclusive effect.
                        1. State court judgments are constitutionally entitled to effect in other
                            state courts (Full Faith and Credit clause).
                        1. The Full Faith and Credit statute (USC §1738) directs that federal courts
                            and courts of other states give effect to state court judgments, and also
                            directs that the preclusion principles of the rendering jurisdiction be
                iii. FEDERAL COURT JUDGMENTS:
                        1. IT is accepted generally that federal court judgments are entitled to
                            preclusive effect and that effect is determined according to the federal
                            common law of preclusion.
         c. Prohibition against giving broader preclusive effect than required:

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Judge Wood – Spring 09

                   i. Supreme Court has interpreted the Full Faith and Credit Statute to forbid a
                       federal court to give more effect to a state court judgment than is called for bny
                       the preclusion rules of that state.
           d. Preclusion regarding claims within exclusive federal jurisdiction  WHEN a state court
              has heard something, and the guy tries to bring to federal court on a claim exclusively
              federal in jurisdiction.
                   i. Rule of Jurisdictional “competence” for claim preclusion:
                           1. The law of most states is that claim preclusion is not availale with
                                respect to a claim over which the court does not have subject matter
                           2. Therefore, if the court cannot entertain the claim, it should not be able
                                by its judgment to extinguish the claim.


    1) Arose out of equity jurisdprudence
    2) Almost ALWAYS settle  Therefore, the current rules are geared almost entirely towards the
         rules governing settlements.
    3) CRITICISM!!! So let’s walk through the rules…
Plaintiff Class OR Defendant Class in theory! (D classes are VERY rare).

          a. Smith, on behalf of herself and all others similarly situated v. UofC
                   i. “Similarly situated”  words of limitation.
                  ii. Proposed class action…does not become
          b. Plaintiff Class – what must be asserted? P MUST ASSERT:
                   i. All criteria of R. 23(a)
                           1. Numerosity
                                    a. Must be impractical for individual suits.
                           2. Typicality
                                    a. Is this person in the same position as someone who is currently
                                         working as instructer there, but is being paid less than male
                                         counterparts? (ARGUABLY NO)
                           3. Common question of law or fact
                                    a. “was there sex discrimination in hiring?”
                           4. Adequacy of representation.
                                    a. What’s difference between this and typicality?
                                              i. How good a lawyer does the plaintiff have? Does she
                                                 have resources to carry out the case?
                  ii. One subpart of R. 23(b):

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Judge Wood – Spring 09

                          1. Necessity – There is an absolute necessity that the claim be adjudicated
                             AS A CLASS!
                                 a. 23(b)(1)(A)  Conflicting adjudication if this does not happen.
                                 b. 23(b)(1)(B)  When limited fund to be given out!
                          2. Injunctions
                                 a. 23(b)(2)  Often used for Civil Rights Actions!
                          3. Money – 23(b)(3)
                                 a. QUESTIONS:
                                           i. Existing litigation regarding this issue?
                                          ii. Desireability or undesirability of combining this class?
                                         iii. Difficulties of litigating.
                                         iv. Class members interest in controlling the act.
                                 b. Small Class Class Action  Where aggregate of offense can =
                                     millions of dollars! Small claims for each member of class.
         a. Plaintiff will present a motion for certification as a class which would go through each
             step in the previous section of my notes.
         b. It is important to take this thing out…
         a. 23(c)(2)(B)  “Best notice under the circumstances to each member who can be
             identified through reasonable effort.”
         b. “If you somehow get their information, then you HAVE to give them individual notice.”
         c. Some classes  YOU ARE IN UNLESS YOU CHOOSE TO OPT OUT!
                   i. Is this right? Or just?
                  ii. E-mail?
                 iii. Seems standards change with advancing technology!
   4) Appointment of “Class Counsel”
         a. BLARGH.

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