Complex Litigation - ILLINOIS LLSA

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Complex Litigation - ILLINOIS LLSA Powered By Docstoc
					                                     Complex Litigation Outline
                                                 Updated: 4 May 2005

I.    Introduction: The Nature of Complex Litigation
      a. Examples of complex litigation
                i. Vioxx case
               ii. Wal-mart sexual harassment case
              iii. Asbestos litigation
              iv. Trademark and patent infringement
      b. What makes Complex Litigation so ―complex‖:
                i. Many parties (plaintiffs and/or defendants)
               ii. A great deal of money at stake
                         1. Parties will fight fiercely
              iii. Factual issues are difficult and complicated and potentially very technical
                         1. Extensive factual and expert discovery will be required
              iv. Many related cases may be pending in other jurisdictions, call for coordination
      c. Why is modern litigation so much more complex than in the past?
                i. Technology
                         1. Developments have permanently changed the way litigation is done
                                 a. Ease of computerized support, databases, photocopying, etc. expands discovery
                                            i. E.g. it’s easier to write 15 drafts of a 100-page brief than it used to be
               ii. Inherent Nature of the FRCP
                         1. FRCP are modeled on the rules of equity procedure
                                 a. Embraces liberal joinder of parties, claims and issues
                                 b. Allows for expansion of the scope of litigation by making it easier to join parties and
                                      claims
                         2. Many states have also adopted the FRCP
      d. Active Judicial Supervision
                i. The hallmark of complex lit
               ii. Judges are actively involved in the coordination and facilitation of pre-trial procedures, the trial and
                    settlement
      e. Aggregation
                i. In general, complex lit largely entails the aggregation of claims and parties
               ii. Two goals of aggregation
                         1. Consistency of Result
                                 a. Like cases have like results, but this may not occur under different judges/juries
                                 b. Issue: Is consistency good?
                                            i. Consistency is only good if it’s accurate, and one consistent result may not
                                                be correct, whereas several conflicting results might root out the error
                                 c. Issue: does aggregation promote consistency and accuracy?
                                            i. More claims/parties means more information, but too much information
                                                could be too difficult to process and thus reduce accuracy.
                         2. Efficiency in Handling
                                 a. Allows for consolidated discovery, litigation, etc. which may be more efficient for
                                      both the court and the parties
                                 b. Issue: Should efficiency have primary importance?
                                            i. For better or worse, it does. Efficiency is the primary goal of procedure.
                                                     1. E.g. FRCP 1, all rules construed to allow a just, speedy and
                                                         inexpensive result.
                                           ii. Efficiency may be important to the extent that it promotes justness
                                          iii. But efficiency may deplete litigant dignity and autonomy.

II.   Joinder
      a. Introduction
              i. FRCP in context
                      1. FRCP 20(a) provides for party joinder; very broad—any party with relation to the action has
                         the option to join the party if the test is met
                              a. Parties have the discretion
                      2. FRCP 18 provides for claim joinder; very broad—the party can join as many claims as exist
                              a. Parties have the discretion
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                  3.   FRCP 20(b), 21, and 42(b) provide for the court to sever claims for separate trials against
                       parties who were joined under 20(a); severance is allowable if it will be more efficient, just,
                       etc., and a court has the option of dismissing a party that was joined under 20(a).
                             a. Judges have the discretion
                  4. FRCP 42(a) gives the court power to consolidate separate cases for any or all purposes of trial,
                       so that cases will remain separate but be treated in a consolidated manner
                             a. Judges have the discretion
         ii. Plaintiffs get the first shot of deciding who the parties in a lawsuit will be, but the FRCP give the court
             the power to override those decisions via severance, compulsory joinder, intervention, etc.
b.   Permissive Joinder of Parties, FRCP 20
          i. Application
                  1. Two-Part Test for Allowing Permissive Joinder, FRCP 20(a):
                             a. Does the right to relief arise out of the same transaction or occurrence or series
                                 of transactions or occurrences?
                                        i. Same transaction means some kind of reasonable, substantial and logical
                                            relationship must exist between the claims
                                       ii. Plaintiff can plead against multiple defendants in the alternative, but each
                                            potential claim must still arise out of the same transaction (and have
                                            common questions of law/fact)
                                      iii. The injury to the plaintiff CANNOT count as the same transaction.
                                                 1. Otherwise substantive law may be compromised (e.g. allowance of
                                                      joint tortfeasor status, see Standford v. TVA).
                             b. Is there a question of law or fact common to all parties?
                  2. Interplay between the two parts:
                             a. The same transaction can cause different unrelated causes of action to different
                                 parties.
         ii. The alternative: Consolidation, FRCP 42(a)
                  1. Even if claims/parties cannot be joined by 20(a), courts still have the power to consolidate
                       cases for pre-trial or trial purposes
                  2. Requirement for consolidation:
                             a. Common question of law or fact
                  3. Differences between Consolidation and Joinder:
                             a. Separate complaints and pleadings
                             b. Separate motion practices
                             c. Separate verdicts
                                        i. May help force the jury to consider the defendants separately
                             d. Separate judgments
                             e. Each side will have a full set of preemptory challenge of jurors
                             f. Discovery between the defendants won’t be as widely available if the case isn’t
                                 consolidated for pre-trial as well as the trial
                                        i. Discovery also may not completely overlap for each defendant
                             g. Greater degree of autonomy for defense attorneys
        iii. Strategy
                  1. Multiple Defendants: Argue against joinder and/or consolidation
                             a. Each defendant wants to be able to blame the other, but they won’t do that if both are
                                 present in the action (easier to point a finger at an empty chair)
                             b. Defendants fear prejudice, since jury may find liability, but fail to distinguish between
                                 the defendants and assume that if one is liable the other is as well.
                             c. Less discovery may happen in a separate lawsuit
                             d. The single trial would probably be less complicated
                             e. Separate trials for each defendant may cause litigation to be too burdensome for
                                 plaintiff, and plaintiff may choose to only pursue one or a few of the cases.
                             f. Severance of the claims forces the plaintiff to show causation by preponderance of the
                                 injury against each defendant rather.
                                        i. If tried together, the jury is less likely to consider the preponderance of the
                                            evidence for each defendant
                             g. If worse comes to worse and consolidation is allowed, argue for separate trials
        iv. Cases
                  1. Mosley v. General Motors
                  2. Stanford v. Tennessee Valley Authority
c.   Compulsory Joinder, FRCP 19
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  i. Introduction
          1. Compulsory joinder recognizes that there may be parties that the plaintiff didn’t join, but that
              are so closely connected to the suit that a) it would be very beneficial to have them or b) the
              suit should not proceed without them.
                   a. The absence of the party would harm either their own interests or the interests of the
                        existing parties to the suit.
 ii. Terms
          1. Indispensable Party: Used if the absentee to the controversy is so close that the claim should
              be dismissed unless the absent party is joined.
          2. Necessary Party: The absentee’s connection to the controversy is not has close as the
              indispensable party, but the absentee’s participation in the suit is highly desirable and the
              parties ought to be joined if it is possible to do so without destroying jurisdiction
          3. Proper Party: Absentee can be joined or not at the plaintiff’s option (see FRCP 20(a))
iii. Application
          1. Analysis
                   a. First decide if joinder is feasible under 19(a).
                              i. If yes, then absentee party should be joined.
                             ii. If no, move to next question.
                   b. If joinder is not feasible under 19(a), decide if the case can go forward without the
                        absentee party using the factors listed in 19(b).
          2. Necessary Parties: Joinder if Feasible, FRCP 19(a)
                   a. Three kinds of parties that should be joined if feasible
                              i. 19(a)(1): In the absentee’s absence, complete relief cannot be accorded
                                  among the existing parties
                             ii. 19(a)(2)(i): The absentee claims an interest relating to the subject of the
                                  action and is so situated that the disposition of the action in the absentee’s
                                  absence may as a practical matter impair or impede the absentee’s ability to
                                  protect that interest
                            iii. 19(a)(2)(ii): the absentee claims an interest relating to the subject of the
                                  action and is so situated that the disposition of the action in the absentee’s
                                  absence may leave any of the existing parties subject to a substantial risk of
                                  incurring double, multiple, or otherwise inconsistent obligations by reason of
                                  the claimed interest.
                                       1. Inconsistent obligations: a real/substantial risk that it will confront
                                            inconsistent judicial orders; Judge 1 in one case will order
                                            something that Judge 2 in another case will forbid the defendant
                                            from doing
                                       2. Multiple Obligations: a real/substantial risk that it will have to pay
                                            more than once for the same injury
                   b. If the absentee is determined to be necessary (i.e. fits in one of the categories above),
                        then the court shall order that party to be joined if the party is subject to service of
                        process and joinder does not destroy jurisdiction or venue.
                              i. If the party is not subject to service of process or the joinder destroys
                                  venue/jurisdiction, then the court should proceed to the next inquiry under
                                  FRCP 19(b)
                   c. If the absentee is determine to NOT be necessary, then the analysis ends.
                   d. Once a necessary party is joined, that party is a full-fledged party to the case.
          3. Indispensable Parties: When Joinder is Not Feasible, FRCP 19(b)
                   a. The court must determine whether equity and good conscience would permit the
                        action to proceed without the absentee.
                              i. The court has more discretion under 19(b) than it did under 19(a)
                   b. Factors the court should consider (on a case-by-case basis):
                              i. To what extent a judgment rendered might be prejudicial to the absentee
                                  and/or existing parties now that joinder isn’t possible
                                       1. Is there prejudice?
                                       2. What is sufficient prejudice to dismiss?
                                                 a. Likely when the absentee and existing party’s interests are
                                                      mutually exclusively
                                                           i. Like rival claimants to a trust
                                                 b. More likely if there is no chance of intervention,
                                                 c. NOT if there is a party that is representing those interests
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                                      ii. To what extent the prejudice (above) can be lessened or avoided by
                                          protective provisions in the judgment, shaping of relief or other measures
                                               1. How much prejudice is there?
                                               2. Courts should be pragmatic when making this decision (committee
                                                   notes)
                                               3. Methods of lessening/avoiding:
                                                        a. Have plaintiffs limit the amount of claims
                                                        b. Granting of damages but not injunctive relief
                                                        c. Delaying relief until litigation elsewhere is complete
                                                        d. Writing a narrowly drawn opinion that makes clear which
                                                             issues aren’t being decided
                                                        e. Inviting parties to intervene
                                                        f. Join parties likely to protect the interest of the absent party
                                     iii. Whether a judgment would be adequate
                                               1. Will the judgment be adequate for existing parties?
                                                        a. Overlaps with ―complete relief‖ analysis
                                     iv. Whether the plaintiff will have an adequate remedy if the action is dismissed
                                          for non-joinder
                                               1. Court must look to see if there are other court where the suit can be
                                                   brought with all the parties joined.
                                                        a. E.g. if the action can be fully brought in state court (fed
                                                             can’t transfer to state), then it should be dismissed
                                               2. Since this factor would obviate the prejudice, this can be the most
                                                   influential of the factors
                           c.   If the absentee is determined to be indispensable, then the action will be dismissed
        iv. Strategy
                 1. Plaintiffs/Courts looking to join, but can’t get past FRCP 19(a), options:
                           a. Intervention
                           b. File for a defendant class action, so that one representative could represent all of the
                                absentee defendants and still bind them to the judgment
                           c. Transfer the case to another forum if the problem is service of process or venue
         v. Public Rights Exception to FRCP 19
                 1. Courts tend to be more flexible in allowing public rights cases to go forward without joining
                      all of the parties on account of strong public interest
                           a. Arises from the concern that a litigant asserting a public interest should be able to
                                vindicate the public rights despite the variety of absent people
                           b. Often comprised of governmental entities suing on behalf of the public.
        vi. Cases
                 1. Eldredge v. Carpenters 46 Northern California Counties JATC
d.   Supplemental Jurisdiction, 28 USC 1367
          i. Why SJ is important:
                 1. SJ can be a way over overcoming the jurisdictional bar of FRCP 19(a)
                           a. A necessary party cannot be joined if joinder would destroy jurisdiction or render
                                venue improper.
                                      i. How joinder destroys jurisdiction
                                               1. If fed SMJ is based on diversity, a necessary party could destroy
                                                   diversity and thus take away fed jurisdiction.
                                               2. If fed SMJ is based on diversity, a necessary party could destroy
                                                   jurisdiction by not meeting the $75K minimum.
                                               3. If fed SMJ is based on fed question, a necessary party could destroy
                                                   jurisdiction by having only state-law claims
         ii. SJ Codified: 28 USC 1367
                 1. 1367(a): Grants supplemental jurisdiction, allowing courts SJ over claims so long as they are
                      related to the claims already in the suit in such away that they form the same claim or
                      controversy.
                           a. Same claim or controversy: If the claims arise from the same nucleus of operative
                                fact then they form the same case or controversy
                                      i. I.e. when the claim arises from the same transaction/occurrence or series of
                                          transactions/occurrences
                 2. 1367(b): SJ will NOT be grated to certain claims brought by plaintiffs when fed jurisdiction is
                      based on diversity.
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                            a.   SJ not granted in these cases if it would be inconsistent with 28 USC 1322 (the
                                 complete diversity and $75K minimum requirements for fed SMJ).
                                       i. I.e. SJ only extends over these joined/intervening parties if they
                                          independently meet the diversity jurisdiction requirements
                            b. When SJ doesn’t apply
                                       i. Parties joined under FRCP 14, that’s third party defendants
                                      ii. Parties joined under FRCP 19, compulsory joinder
                                     iii. Parties under FRCP 20, permissive joinder
                                     iv. Parties under FRCP 24, intervention
                                      v. Parties joined as plaintiffs under FRCP 19
                                     vi. Parties that intervene under FRCP 24
                   3. 1367(c): SJ is not mandatory and while the court doesn’t have unfettered discretion to decline
                       SJ, it may decline under one of four circumstances:
                            a. The claim raises a novel or complex issue of state law
                            b. The SJ claim substantially predominates over the other claims
                            c. All of the other claims (except the SJ claim) have been dismissed
                            d. Exceptional circumstances with compelling reasons
e.   Intervention, FRCP 24
           i. Introduction
                   1. Two kinds of intervention:
                            a. Intervention of right, 24(a)
                                       i. Parties that have a right to intervene
                            b. Permissive intervention, 25(b)
                   2. Intervention is in many ways the counterpart to joinder, and the language used in FRCP 24(a)
                       will track FRCP 19, although it is not identical
                            a. The difference: 24(a) refers to a property interest.
                                       i. That might imply a narrower scope for 24(a) than 19, but in reality, 24(a) is
                                          interpreted more broadly
                                               1. This is appropriate on account of the potential impact each of these
                                                    rules has:
                                                         a. If a 24(a) intervener is denied, the suit exists and will
                                                             continue
                                                         b. If a 19 indispensable party cannot be joined, the suit is
                                                             dismissed
                   3. So why allow intervention of right when those parties should have been joined as necessary
                       parties?
                            a. There may be parties that are necessary, but neither the existing parties nor the courts
                                 are aware of them
                            b. Grants a method of intervention for those parties that don’t fit into one of the three
                                 necessary party categories
                   4. Why ever deny an intervener if he is willing to go to the effort and expense of participating?
                            a. Standing Issues: might allow parties without standing to enter into cases they
                                 otherwise could not have brought themselves
                            b. Helps keep public policy out of the courts and in the legislature where it belongs
                   5. Timeliness of Intervention
                            a. Four factors of timeliness
                                       i. Time the intervener knew or should have known of its interest in the case
                                      ii. Prejudice to existing parties resulting in the delay in seeking intervention
                                     iii. Prejudice to the intervener if the intervention is denied
                                     iv. Unusual circumstances militating for or against a finding of timeliness
          ii. Intervention of Right, FRCP 24(a)
                   1. Grounds for Intervention of Right:
                            a. Unconditional statutory right to intervene (would be explicitly stated in statute)
                                       i. See 28 USC 2403, when fed laws are challenged, the US government is
                                          statutorily granted an explicit right to intervene
                            b. Applicant has an interest relating to the property or transaction which is subject to the
                                 action and disposition without the intervener would as a practical matter impair or
                                 impede the applicant’s ability to protect the interest and the interest is not adequately
                                 represented by existing parties.
                                       i. The requirements (broken down)
                                               1. Property interest
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                                                                   a. Must be a significantly protectable interest
                                                      2.      Impaired if intervener is not involved
                                                      3.      Not adequately represented by existing parties
                                                                   a. Significance: court need not let every single intervener in
                                                                        if his interests are already adequately represented by an
                                                                        existing party
                         2. What kinds of interests are grounds for intervention?
                                    a. The interest asserted must be a significantly protectable interest.
                                                i. According to the SC
                                    b. Moral/philosophical/religious interests are not sufficiently protectable.
                                                i. Law suits are not the proper forum for expressing public views
                         3. Requirements for intervening under 24(a)
                                    a. Timely application
                                                i. Motion stating grounds for intervention served to parties
                                               ii. Complain/Answer filed in the court setting forth a claim of right for which
                                                    intervention is sought
               iii. Permissive Intervention, FRCP 24(b)
                         1. Grounds for permissive intervention:
                                    a. Conditional statutory right to intervene
                                    b. Intervener’s claim or defense shares a common question of law/fact with existing
                                          parties
                         2. But even if grounds are satisfied, admission is still at the discretion of the court
                                    a. Court should consider whether the intervention will unduly delay or prejudice the
                                          adjudication of the rights of the original parties
                                                i. Potential factors:
                                                         1. How far into the case the parties have gotten
                                                         2. If the intervener injects more complex and/or peripheral issues that
                                                              would delay the proceedings or prejudice the jury
                                                         3. If the nature of the intervener itself may prejudice the jury (e.g. if
                                                              the intervener is the KKK).
                                    b. Court also has the option of ordering restraints on the intervening parties (see, e.g.,
                                          Reserve Mining Co.)
               iv. Alternatives to Intervention (in case the court won’t allow it)
                         1. Amicus Brief
                                    a. Non-parties can file amicus briefs for the court to consider the information they
                                          would like to provide without the privileges of being a full-fledged party
                v. Cases
                         1. Planned Parenthood v. Citizens for Community Action
                         2. United States v. Reserve Mining Co.
       f. Failure to Join
                 i. From Martin v. Wilks: the responsibility of joining a necessary party falls to the claimant rather than the
                    necessary party.
                         1. The focus should be on FRCP 19 rather than FRCP 24
                         2. Plaintiffs know the nature of the relief they seek in a lawsuit and thus they are in a better
                              position to see who might be affected and how.
                ii. If a plaintiff fails to join a necessary party under FRCP 19, the should-be necessary part might be
                    permitted to make a collateral attack on the judgment or decree.
                         1. Some courts had formerly recognized the impermissible collateral attack doctrine which
                              prohibited parties that could have intervened but didn’t from later making a collateral attack on
                              a judgment or decree. The SC rejected this doctrine in Martin v. Wilks.
               iii. How to prevent consequences from a failure to join:
                         1. If you’re a plaintiff:
                                    a. Do the best job possible of affecting joinder on all potentially affected parties
                         2. If you’re a court:
                                    a. When choosing not to dismiss under FRCP 19(b), carefully structure the remedy so as
                                          not to affect the interests of the absent necessary parties.
               iv. Further Legislation: See Note 3 on P99, 1991 Civil Rights Act which cut off the rights of non-parties to
                    challenge decrees in employment discrimination suits
III.   Resolving Duplicative or Related Litigation
       a. Introduction
                 i. Three ways courts can deal with duplicative litigation if all cases are in the fed courts:
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                   1.   Stay their own proceedings, await the conclusion of an action in a different court and act
                        according to that judgment
                   2. Enter an injunction against the prosecution of the other litigation and continue its own
                        proceedings
                              a. Court don’t enjoin one another for the sake of comity, but they will enjoin parties
                   3. Consolidate cases
          ii. Major concerns when deciding how to deal with duplicative litigation:
                   1. Efficiency
                              a. Two of the same action in two courts wastes time and resources
                   2. Comity
                              a. Two judge/juries could come up with conflicting results
                              b. Neither court wants to step on the toes of the other court
                   3. Justice
                              a. Inconsistent results could occur, which undermines public confidence in the system
                                   and may allow for inconsistent obligations
         iii. If cases are scattered between the fed and the state system, much more complicated problems arise
         iv. Attorneys also have options:
                   1. Ask home court to stay and allow other proceeding
                   2. Ask court of other proceeding for a motion to stay and allow home court to continue
                   3. In the case of patent litigation and customers, if the motion for stay is not granted, defendant-
                        infringer can voluntarily dismiss in the second court and move to intervene in the customer
                        action (first action).
                   4. Move for transfer and consolidation.
          v. Types of duplicative litigation:
                   1. Repetitive suits—multiple suits on the same claim b/t the same parties
                   2. Reactive suits—separate suit filed by a defendant to the first action against the plaintiff of the
                        first action seeking a declaratory judgment that it is not liable under the conditions of the first
                        action or asserting an affirmative claim that arises out of the same transaction or occurrence as
                        the subject matter of the first action.
                   3. Repetitive Class Action/Overlapping Class Action—Separate actions by class members on the
                        same cause of action raised in the class action, seeking to represent the same or similar class.
b.   Injunctions Against Other Federal Suits
           i. Deciding which action should be enjoined:
                   1. First-filed Rule: the first-filed lawsuit has priority over subsequent suits, and thus should not
                        be enjoined
                              a. Discourages defendants from forum-shopping and duplicative litigation
                              b. Rewards a race to the courthouse, but it the easiest place to draw the line and
                                   discourage extra litigation
                   2. Exceptions to the First-filed Rule:
                              a. Balance of convenience favors later action
                              b. ―Special Circumstances‖ favor later action
                                         i. Forum shopping alone motivated the first lawsuit
                                                1. Faster docket
                                                2. Favorable judges/juries
                                                3. Favorable law
                                                4. Courts with lots of experience
                                                5. Competitive advantage (e.g. filing in your hometown)
                              c. Customer exception (in patent infringement)
                                         i. The first lawsuit is just against a customer of the alleged infringer while the
                                            second suit involves the infringer himself.
                                        ii. Reasons for the customer exception
                                                1. Judicial efficiency—no need to make the customer try to defend the
                                                      alleged infringer’s behavior, and the declaratory judgment case may
                                                      obviate the need for customer case entirely if the defendants wins.
                                                2. There is a competitive advantage to suing a customer that courts
                                                      don’t want to bestow on patent-holders.
                                                           a. See N1 P21 for the tactical reasons for suing a customer
                                                3. Justice—the alleged infringer has the most info about
                                                      manufacturing and whether or not the patent was infringed, so the
                                                      court will have more accurate information for making an
                                                      appropriate ruling.
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c.   Stay Orders from Federal Courts
           i. Stay orders refer to when attorneys approach the court and ask the court to stay its own proceedings
                   1. No specific rule for stay; emerges from the court’s inherent authority discretion to control and
                        manage its cases
          ii. First-filed rule applies, so attorneys would be wise to ask the second court to stay its own proceedings
         iii. Strategy:
                   1. Attorney’s argument for a stay from the 2d court
                             a. First to file rule
                             b. Efficiency: by staying its hand until the first proceeding has finished, the second court
                                 will save itself a lot of time and money
                             c. Balance of convenience factors
                             d. Why exceptions do not apply
                             e. Accuse other side of forum-shopping
                   2. Attorney’s argument against a stay from the 1st court
                             a. All of the arguments above in reverse
                             b. Every exception to the first-filed rule
                             c. Race to the courthouse (if available)
                                        i. Can be very compelling if the first party to sue was well aware that the 2d
                                            party was definitely going to sue
                                       ii. Most courts don’t see it as good policy to grant advantages to fast runners.
         iv. Why a stay order is better than an injunction:
                   1. It’s easier to get a court to stay itself because it saves them work and shortens their dockets
                   2. Stay motions are directed at the judge’s discretion, so there is no threat of appeal. Injunctions,
                        on the other hand, are immediately appealable.
d.   Consolidation, FRCP 42 & 28 USC 1404(b)
           i. Introduction
                   1. Sometimes it’s more sensible to consolidate for all or limited purposes than to proceed alone
                             a. But keep in mind that consolidation might increase complexity or unintentionally
                                 merge the rights of one party with another
                                        i. Courts try to say that consolidation merge rights, but in reality juries may
                                            have a hard time keep defendants separate in their minds
          ii. Conditions for consolidation
                   1. All suits in the same division of the same federal court
                   2. Common question of law or fact
         iii. How limited consolidation is still helpful
                   1. Consolidated complaint (see Katz):
                             a. Judicially economic by reducing paperwork
                             b. Simplifies issues for the sake of discovery
                             c. Process of getting plaintiffs together to make the complaint forces the lawyer to refine
                                 their claims and improve overall preparation of the suit.
         iv. How limited consolidation can be hurtful:
                   1. Consolidated complaint (see Katz)
                             a. Draws bystander plaintiffs into litigation that they weren’t initially supposed to be a
                                 part of
                             b. Bystanders are forced to partake in massive discovery and they constantly have to
                                 make the decision to participate and pay the expense or pass and risk valuable info.
                                        i. The prejudice arises in the pre-trial stages, in part because these cases don’t
                                            usually go to trial
                                       ii. Decisions by-standers have to make
                                                 1. Which depositions to attend
                                                          a. Cost of going to all v. risk of missing important info or not
                                                                being able to cross-examine
                                                 2. Which documents to request
                                                          a. Printing, sifting, and storing documents all costs $$
                                                          b. BUT info important to the defense might be in them
                                      iii. Court attempts to minimize the risk of prejudice
                                                 1. Call-back procedures: allow attorneys to read transcripts and call
                                                     back the witness for further questioning or follow up
                                                          a. Practical problem: hard to schedule with witnesses
                                                          b. Clients are still paying for the physical transcript, the time
                                                                to read it and the time to call back
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                                             2.    Courts may insist on the consolidated complaint but allow parties to
                                                   go back to original complaints for trial
                                                        a. May not help since defendants will want more discovery
                                                            tailored to their claims after trial has started
                                                        b. This is very unusual—most pre-trial orders supercede the
                                                            pleadings
                           c. Defendants probably suffer more from consolidation that plaintiffs because there is
                                usually some economy of scale for plaintiff
                                      i. Courts don’t address problems of bystanders (other than through call-backs)
                  2. Once pre-trial has consolidated, the court may choose to consolidate for trial as well, unless
                      barred by jurisdiction or statute
                           a. Cases may never effectively come apart after pre-trial consolidation
          v. Extra-Judicial Consolidation
                  1. May be possible for parties to privately agree to consolidation if
                           a. Parties on both sides agree that
                                      i. Consolidated trials are bad
                                     ii. Consolidated discovery is good
                  2. But doesn’t usually happen
                  3. Case: The MER/29 Story
         vi. Cases
                  1. Katz v. Realty
e.   Transfer, 28 USC 1404(a), 1391, 1406
          i. SEE HANDOUT DATED 2.16.05
         ii. Three statutes under which to transfer:
                  1. 1406: Transfer allowed when case filed in a court with improper venue. Case can be moved to
                      a forum where venue would have been proper.
                           a. Determination under proper venue can be found at 28 USC 1391
                           b. Transferee court must have:
                                      i. SMJ over case
                                     ii. PJ over parties
                                    iii. Proper venue under 1391
                  2. 1404(a): Transfer allowed to another court where case could have been brought, even if venue
                      was proper in the first court
                           a. Requirements party must meet to have 1404(a) transfer:
                                      i. Identify a proposed transferee court
                                     ii. Demonstrate that whatever transfer court is identified could have taken the
                                         case originally
                                    iii. Demonstrate that the transfer to transferee court was in the interests of
                                         justice and would be for the convenience of the parties and witnesses
                                              1. For this determination, factors must be balanced: SEE HANDOUT
                           b. Choice of Law under 1404(a) transfers: Transferee court must apply the law that the
                                transferor court would have applied
                                      i. See the Erie doctrine and the Van Dusen and Ferens decisions
                                     ii. Allows the plaintiff a great deal of incentive to forum shop
                                    iii. Ways for courts to deal with this:
                                              1. Sua sponte transfer under 1406 instead
                                              2. Dismiss the case without prejudice
        iii. Cases
                  1. Ginsey Industries, Inc., v. ITK Plastics
f.   Forum non conveniens,
          i. Introduction
                  1. Not a statutory power of the court, but rather an authority rising from the inherent discretion of
                      the court
                  2. Main question: should the case be dismissed from the federal court system altogether?
         ii. Balancing test, Gulf Oil v. Gilbert
                  1. SEE HANDOUT
                           a. Basic factors:
                                      i. Identify Alternative Forum
                                     ii. Demonstrate that alternative forum would be adequate
                                              1. Two views:
                                                        a. Presumption against adequacy (De Melo dissent)
                                                                                                                     9
                                                       b.      At the court’s discretion, and review only upon showing of
                                                               abuse of that discretion
                                       iii. Demonstrate that litigating in the foreign court would be more convenient
                                            and/or more appropriate
        iii. What makes American courts more favorable:
                   1. Favorable substantive law
                   2. Jury trials
                   3. Contingency cases (plaintiffs don’t have to pay until they win)
                   4. Notoriously large jury awards
                   5. US courts are faster than foreign courts
                   6. Not as much fee shifting, losers don’t pay winner’s fees
                   7. Better enforceability of judgments in American courts
                   8. Potentially more fair courts in the US
                   9. Procedural advantages, i.e. more liberal discovery
                   10. Ability to serve process on an American defendant
        iv. Cases
                   1. De Melo v. Lederele
g.   Multi-district Litigation, 28 USC 1407
          i. Introduction
                   1. Cases can’t be consolidated unless they’re in the same court
                             a. ―In re‖ is often an indication of an MDL transferred case
                   2. MDL panel has the power to pull federal cases out of their original federal district courts and
                        deposit them all under the same judge for consolidated pre-trial proceedings
                   3. Major questions for MDL panel to decide:
                             a. Whether to transfer cases
                             b. Where to transfer cases
                   4. Nature of the MDL Panel
                             a. Seven federal judges, some from district court level and some from appeals courts
                                         i. Very experienced and savvy judges
                                        ii. Judges must keep up with their home dockets as well as MDL cases
                             b. No official courtroom or courthouse, but a clerk in DC with whom filing is done
                             c. Judges hold Panel six times a year at federal courthouses around the country
                                         i. Panels are where they decide which cases to transfer
                   5. MDL transfer Requirements for pending cases:
                             a. One or more common questions of fact
                                         i. NOT law, since consolidation will only be for pre-trial, which is about facts
                                        ii. Doesn’t matter if there are non-common questions than common ones, so
                                            long as there is one common question of fact
                             b. That transfer is appropriate for convenience of parties and witnesses
                             c. That transfer will promote just and efficient conduct of the actions
                                         i. Efficiency is almost as important of a consideration as justice
                   6. Differences between the requirements for 1404(a) transfer and 1407 MDL transfer:
                             a. 1404(a) must transfer to a court where case could have been brought, but MDL
                                  transfers can go to any designated federal district court, regardless of PJ and venue
                             b. 1404(a) no need a to show question of a common question of fact (see below)
                                         i. Unnecessary even if there is other litigation pending in transferee court
                                                 1. Prove common fact for consolidation rather than transfer
                             c. 1404(a) is a transfer for ―justice‖ and not necessarily efficiency like 1407
                             d. 1404(a) transfers case for all purposes while MDL is only for pre-trial
                             e. Factors given a lot of weight in 1404(a) [like first-filing, pro-plaintiff factors] don’t
                                  get much weight in 1407 consideration
                             f. 1404(a) is an order of transfer to another district court while MDL is transfer and
                                  consolidation
                             g. 1407 transfers cases to a particular hand-picked judge while 1404(a) transfers to a
                                  court, and the court decides which judge will preside
                             h. 1404(a) transferee courts decide if there will be consolidation, while the Panel makes
                                  that decision automatically for MDL transfers
         ii. Obtaining and MDL Transfer and Consolidation
                   1. Initiating Proceedings
                             a. Cases must meet the requirements for an MDL transfer
                                         i. Related or duplicative lawsuits
                                                                                                                      10
                          ii. Pending in more than one district court
                  b.Two ways for case to get to the MDL Panel
                           i. The Panel learns of the case and issues an order to show cause on their own
                              initiative to all of the lawyers in the case
                                   1. Panel may do this for outlying cases that aren’t quite as related as
                                        others, which can cause MDL cases to have a creeping effect
                                             a. See, e.g., In re Aviation Products Liability
                          ii. Parties can file a motion with the clerk of the Panel
                                   1. Motion identifies the cases and asks for transfer under 1407.
               c. If not on its own initiative, Panel makes an initial decision to consider the case or not
                           i. While the decision is being made, cases are carrying on in their home courts
                                   1. Strategy: Ask courts to stay proceedings pending Panel decision
                                             a. Argue efficiency and economy of staying the case
                                             b. Argue the case is likely to transfer and judge shouldn’t
                                                   waste his own very valuable time
                                             c. Argue the possibility of inconsistent rulings
                          ii. No statutory minimum number of cases for MDL transfer (beyond > 1)
        2. After acceptance for Consideration
               a. All parties are notified and given an opportunity to file objections if they have any
               b. If written objections are filed, Panel will set a hearing
               c. If no objections are filed, the cases are transferred without further process
        3. The MDL Panel Hearing
               a. Each side (those who object and those who don’t) selects spokesman to address Panel
               b. The supporters of transfer must show that the cases meet the requirements (see infra)
                           i. Supporters should argue:
                                   1. Efficiency, efficiency, efficiency
                                   2. Avoid inconsistent results
                                   3. Anything and the kitchen sink
               c. The objectors can object for a number a reasons
                           i. Some that have worked, In Re Aviation Products Liability
                                   1. Claims were too vague (remand for more decision before transfer)
                                   2. Discovery already complete
                                   3. Claims, while similar, do not lead to overlapping discovery
        4. Tag-along Cases
               a. Tag-alongs are cases that were filed or discovered after the Panel has already set up
                    the MDL proceedings
               b. Procedure is a little different from other cases
                           i. Any party to the proceeding who learns of a tag-along is obligated to tell the
                              Panel Clerk
                          ii. Clerk issues a conditional transfer order for the tag-along
                        iii. Clerk issues notice to the parties of the tag-along and to parties in all cases
                              pending in the MDL consolidated proceeding
                         iv. Clerk waits to see if any party objects
                                   1. Objectors must file motion to vacate the conditional transfer order
                          v. If there is an objection, Clerk sets up a hearing in front of the panel
                         vi. If there are no objections, clerk will automatically transfer the tag-along
        5. Appeals
               a. Denial of transfer is not reviewable at all
               b. Grant of transfer is only reviewable by writ of mandamus to the Court of Appeals
                    over the transferee court
                           i. The burden of proof is a gross abuse of discretion, which is a very high BOP
                          ii. Cannot appeal to the MDL Panel
iii. What MDL Panel Judges Can Do
        1. Bring in other cases
               a. If Panel is considering a group of cases, it can rope in other cases even less closely
                    related so long as there is some connection
        2. Sever claims
               a. If one claim is appropriate for 1407 and the other is not, Panel can rip them apart and
                    send each claim in a different direction, see In Re Aviation Product Liability
        3. Pick the transferee court and the transferee judge

                                                                                                         11
                            a. The chosen judge is not required to be on the bench in the chosen court, but rather can
                               be shipped there for the proceeding
                                     i. Although status hearings will probably be held at the judge’s home court
        iv. What MDL Transferee Judges Can (and Cannot) Do
                  1. Transferee judge has a wide range or discretion over his cases
                           a. Occasionally Panel gives suggestions but this is rare
                  2. FRCP 16 powers to pre-trial judges
                           a. Power to limit the number of expert witnesses (Blood Products Litigation), 16(c)(4)
                           b. Power to set limits on the time allowed for trial, 16(c)(15)
                           c. Power to order evidence at trial, 16(c)(14)
                           d. Power to make pretrial orders that supercede the pleadings, decide the issues, and
                               determine what is disputed or not, 16(e)
                                     i. MDL transferee judge puts together a little trial package for each trial judge.
                                        The trial judge has the authority to change the orders in the case of manifest
                                        justice
                           e. Power to simplify issues including motions to dismiss, 16(c)(1)
                                     i. Transferee judges decide motions to dismiss regularly
                  3. BUT NOT transfer for all purposes, 1404(a)
                           a. Supreme Court in Lexecon decided that 1404(a) transfer to an MDL court was
                               improper because the language of 1407(a) says that cases shall be remanded to their
                               home courts unless they terminate (read: settle) before they get there
                           b. Methods for courts to get around this ruling:
                                     i. Upon remand, parties can move for original court to transfer case back to
                                        transferee judge if transferee judge will have PJ and venue
                                    ii. Parties could stipulate the transferee judge will hear the case (waives PJ)
                                   iii. Plaintiff could dismiss and re-file with transferee judge
                                   iv. Try a bellwether case originally tried in that district so that they have
                                        jurisdiction over the case and as a predictor if the others will settle or make a
                                        decision that precludes trial of issues.
                                    v. Pick a case in which there is a class action (or encourage plaintiffs to make a
                                        class action), define the class to encompass all the plaintiffs and then triy the
                                        class action (all parties will be bound regardless of individual PJ)
                                   vi. Cases could be remanded and the transferee judge could petition to the
                                        original court to sit as the trial judge there
         v. When Does Pre-trial End?
                  1. Most MDL cases don’t go to trial anyway
                           a. They settle out or are dismissed on pretrial motions (some transferred before Lexecon)
                  2. Pretrial judges are allowed to decide summary judgment motions, so pretrial ends after the
                      summary judgment decision is made
        vi. Cases
                  1. In Re Aviation Products Liability Litigation
                  2. In Re Factor VIII or IV Concentrate Blood Products Litigation
h.   Dual State-Federal Proceedings: Abstention
          i. Introduction
                  1. When asking a court to abstain, the party is asking the court to decline to take the case.
                  2. Doctrines are based on lines of cases
                  3. Either one courts declines its own jurisdiction or enjoins the parties from proceeding in
                      another court
                           a. Notice that courts don’t enjoin each other for the sake of comity
         ii. Doctrines
                  1. Pullman Abstention
                           a. When to apply: when there is an unsettled question of state law and the resolution of
                               the unsettled question might make a decision on a constitutional issue unnecessary
                                     i. Only if the state law is unsettled—not for law that is clear on its face or has
                                        already been authoritatively decided by the courts
                                             1. Just because a law is new doesn’t mean that it’s unsettled (BT)
                                    ii. Only if the constitutional issue will be disposed of—if the constitutional
                                        issue will remain in the case regardless of the state question, Pullman
                                        abstention is not appropriate for the constitutional issue, at least
                                   iii. NOT if the delay that results from sending back to state court would harm
                                        the parties
                                                                                                                     12
                 iv. NOT if there isn’t an adequate state forum in which to get an answer to the
                      state law question
         b. Reasons for Pullman Abstention
                   i. Respects state’s authority over its own state constitutional issues
                  ii. Federalism: states should have authority over their own law when they can
                 iii. Unsettled law should be left to state court
                 iv. While federal courts are permitted to decide state law, in order for decisions
                      to binding precedent, it must come from the state court, so especially for
                      unsettled law, it’s more efficient to leave it to state courts to establish
                      precedent rather than forecast opinions from the fed
                  v. Avoids raising US constitutional issues
                 vi. Fosters comity in the system
         c. How it works
                   i. If fed court decides to abstain, it keeps the case on its docket (federal
                      jurisdiction is not abdicated but rather postponed)
                           1. More efficient in case it comes back to fed court to not require re-
                                filing by the parties
                           2. Easier to get back into fed court if the constitutional issue lingers
                           3. Retaining jurisdiction could allow fed court to order intermediate
                                relief if necessary
                  ii. Traditionally, the parties commence another action in state court or
                 iii. (In modern practice) State might have a procedure for the fed court to abstain
                      and certify the case in state supreme court
2.   Burford Abstention
         a. When to apply: no clear guidance, but the main idea is that the fed should keep its
             hands off when there’s an overriding state interest and a state’s right to administer its
             own laws. Here is what is known from cases:
                   i. When there is an overriding state interest in policy
                           1. Key word: overriding (BT investments)
                  ii. Where fed jurisdiction would disrupt a state administrative process
                 iii. Where fed jurisdiction would interfere with collection of state taxes
                 iv. Where fed jurisdiction would affect difficult issues of state law and policy
                      and the state’s application of that
                  v. Where fed jurisdiction would disrupt a state’s effort to establish a coherent
                      policy in an area
                 vi. Where states have a special expertise in an area
                vii. NOT when federal law preempts state law
               viii. NOT if there isn’t an adequate state court to review the issues
                 ix. NOT if time is of the essence (e.g. elections)
         b. How it works:
                   i. If fed court decides to abstain, the fed dismisses the whole case out and all
                      issues must go to state court
                           1. There need not be a state law issue if all of the fed law issues still
                                pertain to an overriding state interest
3.   Younger Doctrine
         a. Apply when the three questions can all be answered in the affirmative:
                   i. Is there an ongoing/pending state judicial or admin proceeding?
                           1. Even if the state proceeding begins after the fed filing, the pending
                                requirement is met (Ciotti on text P182 n.3)
                  ii. Does the federal action implicate important state interests?
                           1. The state does not have to be a party to have an interest (Pennzoil)
                 iii. Will the federal plaintiff have a full and fair opportunity to litigate the
                      federal issue in the state proceeding?
                           1. The issue is a chance at litigation, and it must be assumed that state
                                courts will apply their own law fairly (Pennzoil)
         b. Background: case arose from Younger v. Harris in which the court said that fed courts
             should not enjoin a state criminal prosecution except to avoid severe irreparable harm
             due to the strong state interest in its own criminal statutes and prosecution.
                   i. Rule: Absent usual circumstances (prosecutor’s bad faith, harassment by
                      prosecutor, etc.), fed courts should not interfere with state prosecution
                  ii. Subsequent rulings have extended this to some civil and admin proceedings
                                                                                                  13
                            c.   Supreme Court’s three rationales for Younger in Pennzoil v. Texaco:
                                      i. Long standing tradition that equity courts do not get involved in criminal
                                         prosecutions
                                     ii. Notion of comity/proper respect for state functions (extending YD to civil
                                         actions)
                                    iii. In general courts want to avoid determining fed constitutional issues
         iii. Cases
                   1. BT Investments v. Lewis
                   2. Pennzoil v. Texaco
i.   Stay Orders for ―Wise Judicial Administration‖
           i. Introduction
                   1. Basic idea: a federal court that has jurisdiction over a claim may properly dismiss that claim in
                       interests of ―wise judicial administration‖ (WJA), Colorado River.
                            a. This would only be used when an abstention doctrine is inappropriate
                            b. It should only be used in extreme circumstances
                                       i. Fed courts have an ―unflagging obligation to adjudicate fed claims‖
                                      ii. Extreme Circumstances (applied where court is decided to stay or dismiss):
                                               1. In rem jurisdiction (one or other courts has juris over the res)
                                               2. Convenience of the parties
                                               3. Avoid piecemeal litigation
                                               4. First-filed action
                                                         a. Some circuits (10th Cir.) interpret this to refer to the case
                                                              that has progressed the most, but not all agree
                                               5. Adequacy of state court proceedings (from Moses H. Cohen)
                                               6. Federal law issues (from Moses H. Cohen)
                                               7. Was federal jurisdiction invoked in bad faith?
                            c. It doesn’t matter which case was filed first
                   2. Reasons for WJA
                            a. To avoid inconsistent results
                            b. Judicial economy
                   3. Claims with ―exclusively federal jurisdiction‖
                            a. Some circuits (9th Cir.) say that courts cannot stay these proceedings
                            b. Not all circuits agree
                            c. Situations where it might not be best to stay
                                       i. Exclusively fed claim is only a little part of the whole claim
                                      ii. State proceedings might resolve the claim or preclude it
                                     iii. State court has already put a lot of time and effort into the case
                                     iv. If the other six factors (above) weigh in favor of the state
          ii. Combination of Younger and WJA: SC has said that a court can use a Younger reason (like a pending
              criminal prosecution) as a reason to stay its action without dismissing, per WJA (see text P188 n.4).
j.   Anti-Injunction Act: Federal Court Injunction Against Prosecution of State Proceedings
           i. Introduction
                   1. Anti-Injunction Act is a limitation on the authority to issue writs under the All Writs Act
                   2. The statute, 28 USC 2283
                            a. Prohibits a federal injunction against state litigation (either to parties or judges)
                                 except in the case of exceptions
                            b. Exceptions
                                       i. Where there is another federal statute that expressly allows the injunction of
                                          the state proceeding (e.g. the Civil Rights Statute)
                                      ii. Where the fed injunction is necessary in aid of federal jurisdiction
                                               1. Interpreted to mean when the fed has in rem jurisdiction over a res
                                     iii. Where the fed injunction is necessary to aid or effectuate judgment
                                               1. Re-litigation exception. Allows the fed court to prevent re-
                                                    litigation of claims in state court that have already been decided in
                                                    the fed court
                                               2. Also, it must be an actual judgment, Standard Microsystems
                   3. Other case law exceptions
                            a. Dobrowski Exception: Fed court can enjoin a state proceeding before the state
                                 proceeding is filed
                            b. Barancik Exception: Notwithstanding the Anti-Injunction Act, the fed court can
                                 enjoin the state plaintiff even if he filed while the fed injunction order is still pending
                                                                                                                         14
                                    i. This exception responds to the race to the courthouse that might occur under
                                        the Dobrowski Exception
                                   ii. Courts don’t always have to apply this if they don’t find its reasoning
                                        compelling, Standard Microsystems
                  4.   Strategy: What parties can do if their motion for injunction is denied
                            a. Ask for a temporary restraining order
                            b. Go to the state court and ask it to stay its own proceeding
          ii. Case
                   1. Standard Micro Systems Corp. (SMC) v. Texas Instruments (TI)
k.   All Writs Act: Authority for Federal Court Orders Relating to State Court Suits
           i. Introduction
                   1. Writ: order directing the performance of a specified act or giving authority to have the act done
                             a. Court can issue writs to another court, party or non-party
                                        i. Non-parties can only be drawn in by writ if they might interfere with the
                                            judgment or settlement of a specific case
                             b. Includes injunctions and injunctions against proceedings in other courts
                   2. The Anti-Injunction Act is a limitation on the authority to issue writs under the All Writs Act
          ii. The Statute, 28 USC 1651
                   1. ―In the aid of the court’s jurisdiction‖ should be construed in the same way that it is in the
                        Anti-Injunction Act (in pare materia), so applies to in rem actions
         iii. In the settlement context
                   1. A federal court may enjoin a state court action under the AWA when class action settlement is
                        imminent in the federal court, In re Baldwin-United Corp.
                             a. Imminent: 2d Cir. says ―substantially significant that there will be a settlement,‖ so
                                 this appears to be very broad but not limitless
                   2. Necessary to make the MDL effective
                             a. The purpose of MDL transfer is to encourage settlement, but settlements will be
                                 threatened if defendants knows he still might be sued
l.   Multi-party, Multi-forum Trial Jurisdiction Act, 28 USC 1369
           i. Introduction
                   1. Reason for the Act: despite all of the ways of resolving multi-party, multi-jurisdiction, dual-
                        system litigation, there is still a lot of duplicative litigation allowed to exist. This might be
                        resolved if all of the cases can at least be brought into the fed system
                             a. Transfer, consolidate, MDL.
                   2. The Multi Act allows all claims of a certain kinds of cases to be brought into the fed court
          ii. The Statute, 28 USC 1369
                   1. What kind of cases are eligible:
                             a. Must include:
                                        i. Minimal diversity between parties, 1369(a)
                                                 1. Minimal diversity satisfied if any plaintiff is from a different state
                                                     of any defendant, 1369(c)(1)
                                                 2. Notice no mention of the $75K minimum for diversity jurisdiction
                                       ii. A single accident
                                      iii. At least 75 people have died
                                      iv. The defendant
                                                 1. Resides in a state different from the state where the accident
                                                     occurred, or
                                                 2. Any two of the defendants reside in different states, or
                                                 3. Substantial parts of the accident took place in different states
                             b. Does NOT include cases where
                                        i. The substantial majority of all plaintiffs are citizens of a single state of
                                            which the primary defendants are also citizens; and
                                       ii. The claims asserted will be governed primarily by the laws of that state
                                                 1. This means the case is a primarily local dispute
                                                 2. ―Substantial majority‖ has not been construed by courts yet
                             c. Examples
                                        i. Plane crashes, industrial accidents, fires, building/bridge collapses, etc.
                   2. Who can sue under 1369?
                             a. Anyone who has a claim relating to the accident has the right to intervene as a
                                 plaintiff, even if they could not have otherwise brought the suit.

                                                                                                                       15
                                            i. Includes relatives of the dead, the injured, and people who suffered property
                                               damage from the accident
                                           ii. The Act wants to get all related litigation into the fed system so that there is
                                               no duplicative litigation at all
                        3.   Removal
                                 a. Parties can litigate these cases in the state court if they want to, but 1441(e) creates
                                      additional removal for 1369 cases, and it nullifies the restriction on in-state defendant
                                      removal
                        4.   Relationship to the MDL Panel
                                 a. District Courts are required to notify the MDL Panel of 1369 cases
                                 b. MDL transferee judges are permitted to make a binding finding of liability under
                                      1441(e), which might overturn Lexecon (no case law yet).
                        5.   Damages
                                 a. Cases should be remanded for damages under 1441(a), unless the court finds that for
                                      the convenience of the parties and it justice it should be maintained by the transferee
                                      judge
              iii. Cases
                        1. See the Great White case in N2 P20-21 and N3 P1.
      m. Bankruptcy
                i. Introduction
                        1. Bankruptcy is a last resort: when the number of duplicative cases is so great that the defendant
                            is overwhelmed
               ii. Congress extended fed jurisdiction over bankruptcy proceedings in 28 USC 1334.
                        1. Bankruptcy courts have broad power concerning:
                                 a. How pending cases are eventually brought
                                 b. When pending cases are eventually brought
              iii. Other Powers of Bankruptcy Courts
                        1. Power of Stay—court can stay all litigation against the debtor, and in fact filing of the
                            bankruptcy petition starts an automatic stay against all pending suits and prevents new
                            proceedings from being initiated
                                 a. The stay extends to state and federal court
                                 b. This power alone is why many companies file for bankruptcy
                                 c. The stay normally does not reach to do-defendants unless
                                           i. The claims are so intertwined that the debtor should be viewed as the main
                                               party with interests
                                          ii. Lawsuit seeks to gain possession over property (e.g. lawsuit against the
                                               debtor’s insurance company, Johns-Manfield)
                        2. Fix the Venue of Pending Cases for Trial—the court can fix the venue of personal injury
                            lawsuits against the debtor either in its own court or in the district in which the claim arose
                                 a. This means that the court can transfer cases to itself or it can order all pending state
                                     court claims be removed to the fed and transferred to the court hearing the
                                     consolidation.
                                 b. Why allow this power?
                                           i. Facilitates the task of estimating the claims against debtor, which is
                                               necessary to determine if reorganization program is feasible
                                          ii. Makes settlement easier and more likely (to the advantage of debtor and
                                               claimants).
                        3. Combined litigation resulting from bankruptcy court powers:
                                 a. Suits against some non-parties (insurers of anyone else with property of the debtor);
                                 b. Lawsuits against the debtor’s past and present officers, directors, and employees of
                                     the debtor (they would be indemnified by the corporation and these people should be
                                     devoted to the ailing company and not lawsuits against them).
                                 c. Discovery against the debtor, officers/employees of the debtor in unrelated lawsuits
                                     (concern is that if the debtor has to engage in discovery, resources of the company are
                                     being used up when we’re trying to conserve them)
                                 d. All claims brought by plaintiffs by any of the debtor’s codefendants in the lawsuit
                                     because the codefendants might have cross-claims against the debtor.
                        4. See also text P209-217
IV.   Class Actions, FRCP 23
      a. Introduction
                i. History
                                                                                                                             16
                   1.  Class actions emerged from equity where the necessarity parties were too numerous to
                       individually enjoin.
                  2. The rules for class actions are codified in FRCP 23
          ii. Classes can be created for plaintiffs or defendants, or both
        iii. Questions of responsibility: things for class counsel to consider
                  1. There is some concern over plaintiffs attorneys who bring class actions on behalf of other
                       plaintiffs who otherwise wouldn’t have sued merely because of the enormous attorneys fees
                       that will result, Kline (J. Duniway, concurring).
                            a. Some tension does exist because plaintiffs lawyers has a stake in the litigation
                                       i. They have a lot to gain, and also a lot to lose
                  2. Things that class representatives should be told before the action commences:
                            a. P attorney will make money, maybe a lot of it
                            b. Rep will only receive the individual portion to which he is entitled, even if collective
                                 damages are a lot (some courts allow a representative bonus, but it’s not much and it’s
                                 not all courts)
                            c. P attorney is counsel for the class, and therefore his role is different: he is in charge of
                                 settlement proceedings, not the class rep.
                            d. Cost of litigation: in theory the attorney has to charge, win or lose (although he may
                                 decide to eat some of the costs of they lose, depending on the ethical rules of the
                                 jurisdiction), and if the P class loses, they may be responsible for the for the
                                 defendant’s costs
                            e. Rep’s role in litigation: rep will have to invest time and energy into the suit, and the
                                 defendant has rights to rep’s personal financial information and other private matters
b.   The Analysis (a summary)
           i. Define the Class
          ii. Meet the 4 Pre-requisites
                  1. NUMEROSITY – is the class so numerous that joinder of its members is impracticable
                  2. COMMONALITY – there are questions of law or fact that are common to the class
                  3. TYPICALITY – the claims or defenses of the representative parties are typical of the claims or
                       defenses of the class; it arises from the same event, practice or course of conduct and based on
                       the same legal theory
                  4. REPRESENTATIVENESS – representatives and class counsel can fairly and adequately
                       protect the interests of the class
        iii. Fit the class into one of the 3 types of maintainable class actions
                  1. 23(b)(1) – Separate actions would risk inconsistent results, obligations, etc.
                  2. 23(b)(2) – Classes seeking primarily injunctive or declaratory relief
                  3. 23(b)(3) – Classes where common questions predominate so that the class action is a superior
                       method for litigating the cases
c.   Defining the Class, FRCP 23(c)(3)
           i. Why is it so necessary to define the class?
                  1. To know who is entitled to enforcement
                  2. To know if the named representative can adequately represent the class
                  3. Res judicata—to determine what the res judicata effect will be on tohers
                  4. To determine if the class action is going to be manageable
          ii. The process of defining a class:
                  1. First, the P attorney comes up with a class definition and files the suit (for both P & D classes)
                  2. Then the D attorney has the opportunity to
                            a. Argue why the class shouldn’t be certified at all
                            b. Argue why the class should be defined differently
                            c. Settle on a class definition with the P attorney
                  3. Finally, the judge has the final say on how the class will be defined
        iii. How broadly should a class be defined?
                  1. For the sake of efficiency, class should be as broad as possible without jeopardizing the
                       manageability of the class action
                  2. There is no obligation to sue on behalf of the largest possible plaintiff class
         iv. Exactitude: Does the definition have to be exact?
                  1. Exactness is not required, just so long as the court has a clear idea of how many plaintiffs will
                       be included and how they can be identified if need be.
                  2. However, class should probably not be defined by mental state, since this would make
                       identifying class members very difficult, especially in actions that involve monetary damages,
                       Simer v. Rios
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                   3.   Less exactness is necessary for injunctive/declaratory relief since the court will assume that the
                        relief will automatically flow to the injured
                   4. More exactness will be necessary for cases that request monetary relief since the court will
                        need to know the aggregate award and to whom it should be paid.
                   5. Exactness will also be needed for 23(b)(3) class actions since these require notice
                             a. Strategy: Notice. Is it possible to give notice to hard-to-identify people? What are
                                  some methods?
                                        i. Send out targeted mailings
                                       ii. Put up postings (although court will need to approve then and opponents will
                                           oppose and limit the content)
          v. Manageability
                   1. Source: this requirement comes from 23(b)(3)(D), but it should be considered in all types of
                        class actions as a practical matter
         vi. Cases
                   1. Simer v. Rios,
d.   Certification Prerequisites
           i. Numerosity, FRCP 23(a)(1)
                   1. The most straightforward requirement—if the claims could have been joined via one of the
                        other FRCP, then it probably isn’t appropriate for class action
                   2. Analysis
                             a. How many class members are there?
                                        i. No set rule on definiteness
                                       ii. In special cases, court may consider informal surveys sufficient
                                                1. Special cases would include those with plaintiffs whose information
                                                     should be kept private
                             b. Is that too many to join (not in a class action)?
                                        i. No set number on how many this is, may depend on the circumstances of the
                                           case (i.e. where parties are located, evidence required, etc.)
                                       ii. Convenience v. impracticality: Courts may consider convenience of the
                                           parties when determining sufficient numerosity, but impracticality is the
                                           bigger issue—can the joinder be done?
                                      iii. Amount in controversy: smaller amounts may lead towards certification
                                           since they couldn’t have been brought individually while large claims might
                                           be more likely to be sued upon individually
                   3. Cases
                             a. Bd. of Education v. Climatemp
          ii. Commonality, FRCP 23(a)(2)
                   1. In general, the standard for commonality is not very high, so almost no cases turn on this
                        prerequisite
                   2. Predominance is the bigger issue: does the common issue of law or fact predominate over
                        individual questions?
                             a. Definition of predominance:
                                        i. Some courts focus on the time spent litigating the issues will cause them to
                                           predominate
                                                1. Although it might be hard to judge how much time it will take when
                                                     the issues haven’t been litigated yet
                                       ii. Other courts focus on which issues ―feel‖ more predominant
                             b. Governing substantive law may be important when determining predominance of
                                  claims and granting/denying certification
                                        i. E.g. securities law allows that in cases of fraud on the market, plaintiffs need
                                           not give individual proof to show reliance
                                                1. Most laws require proof of individual reliance
                             c. Conflicts among class members over damages, while a factor, is usually not enough
                                  alone to deny certification of a class (this is a claim commonly made in class actions)
                                        i. Methods court might use to resolve damage conflicts:
                                                1. Grant a different kind of remedy
                                                          a. E.g. in securities litigation, court could demand a
                                                              rescission in which the company must buy back stock with
                                                              interest
                                                2. Certify subclasses, 23(c)(4)(B)

                                                                                                                        18
                                                         a.  Delineate along lines of how much relief each is entitled to
                                                             or wants
                                                        b. Each subclass will be treated as a class itself
                                               3.   Certify under 23(b)(3) so that all members of the class have the
                                                    option of opting out and suing individually
                   3.  E.g. Securities Litigation
                            a. May be problems because stockholders buy and sell at different times and therefore
                                 may be in different positions for seeking awards
                                        i. Solution: Split into subclasses
                            b. Perpetrators of fraud (executives) may also be purchasers of stock, so they can’t be on
                                 both sides of the v. Plus, since they have insider information, they cannot claim to
                                 have been defrauded.
                                        i. Solution: exclude from the class anyone named as a defendant or executive
                                           officers of the company
                            c. Oral statements: courts will sometimes not certify classes if the plaintiffs relied on
                                 oral statements by brokers because they vary too much
                                        i. Unless all of the brokers were relying on the same false documents
                            d. Predominance may not be as hard to prove, since in cases of fraud on the market,
                                 securities law doesn’t require individual proof of reliance on fraudulent documents.
                  4. Cases
                            a. Blackie v. Barrack
                            b. Smilow v. Southwestern Bell Mobile Systems, Inc.
        iii. Typicality, FRCP 23(a)(3)
                  1. START LOOKING AT CLASS NOTES STARTING ON N3 P10 HERE
                  2. For typicality, the class representative must be part of the clas and have the same interest and
                       suffer the same injury as the class
                            a. Rep is playing the role of the class to the judge, so he must be able to look and act the
                                 part.
                  3. Cases
                            a. General Telephone Co of the Southwest v. Falcon, N3 P10
        iv. Representativeness, FRCP 23(a)(4)
                  1. Two Questions:
                            a. Adequacy of the class rep
                                        i. The class rep must be able to adequately represent the interests of the class
                                       ii. The class rep need not be the best of all possible reps, but rather one that will
                                           pursue a resolution of the controversy with the requisite vigor and in the
                                           interest of the class (Wetzel Rule), Peil
                                                1. The class rep need not know much about the facts of the case
                                                          a. Especially for situations of conspiracy where if the rep had
                                                               known, he would have been in on it, Peil
                                                          b. Besides, better informed reps may not be typical
                            b. Adequacy of the class counsel, FRCP 23(g)
                                        i. See N3 P13
                  2. Cases
                            a. Hansberry v. Lee, N3 P11
                                        i. Hansberryes not bound because their interests were not properly represented
                            b. Peil v. National Semiconductor Corp., N3 P12
e.   Types of Certification Available, FRCP 23(b)
          i. Rule 23(b)(1)(A) Classes – Incompatible Standards
                  1. Inconsistent obligations means court orders will order the defendant to do different things
                            a. Not just inconsistent results
                  2. Examples
                            a. Products liability (different things are better in different situations)
                            b. Maybe puntatives? (So D isn’t punished twice—not flying in courts yet)
         ii. Rule 23(b)(1)(B) Classes – Limited Fund
                  1. Two approaches to determine if a fund is limited
                            a. Limited assets approach
                                        i. Calculate
                                                1. Defendant’s net assets (probably can find out)
                                                2. Total Aggregated claims (hard to find out)
                                       ii. Is (1) less than (2)?
                                                                                                                         19
                  b.  Legally created limited fund
                            i. Through a statute (e.g. nuclear power plants)
                           ii. Established by contract (e.g. insurance policy)
                          iii. Other legal obligations (common law, Constitution, etc.)
         2. The Ortiz Analysis
                  a. Determine if the fund is insufficient
                            i. Make finding of true size of the fund
                           ii. Make a finding of the total aggregate claims
                  b. Determine if there is equity among class members
                            i. Inclusive class definitions (since it’s mandatory)
                           ii. Equity of distribution among the class members
                                    1. At a minimum this means that the must be some sort of procedure
                                         for solivng conflict b/w differently situated members of the class
                  c. Whole of the fund must be available to the class
                            i. No SC specification of how much will be the ―whole‖
         3. Cases
                  a. Ortiz v. Fibreboard, N3 P16 (limited fund via insurance proceeds)
iii. Rule 23(b)(2) Classes – Injunctive/declaratory relief
         1. A mandatory class action so there is no right to notice or opt out
                  a. Less need for a defined class because relief will get to the right people
         2. Some monetary relief can be asked for along with the injunctive relief but there are limits
                  a. Can’t ask for monetary damages if the damages depend on individual facts and
                      circumstances
         3. OK to ask for money when
                  a. Money flows automatically to people who deserve it (unlawful withholding rectified)
                  b. Monetary damages are easily calculated on a principle or formula easily applied to all
                      class members
         4. 2 Tests for certifying 2b2’s with monetary damages
                  a. 2d Cir: Would a reasonable plaintiff bring the suit for an injunction alone?
                            i. If not, then it shouldn’t be certified
                  b. 5th Cir: Allison v. Citgo
                            i. Monetary damages under 2b2 are ok if they are incidental to the claim
                                    1. Can be calculate by objectiv standards
                                    2. Flow directly from D to class as a whole
                                    3. Don’t introduce any new legal concepts
                                    4. No individual hearings would be necessary
         5. Cases
                  a. In re Monumental Life Insurance Co N3 P18
iv. Rule 23(b)(3) Classes – Monetary Damages
         1. Two requirements
                  a. Predominance of common questions of law/fact over individual questions
                  b. Superiority of proceeding in a class action
         2. Four factors for evaluating
                  a. Individual interest
                  b. Extent and nature of related litigation
                  c. Concentration in the forum
                  d. Manageability
         3. The full analysis
                  a. Class definition
                  b. 4 Pre-reqs
                  c. Predominance of common questions
                  d. Superiority of class action
                  e. Four factors
         4. Not Mandatory
                  a. Must give reasonable notice
                  b. Must allow an opt out
         5. The Pendulum
                  a. Mertens: No need for class actions, claims can be tried individually
                  b. Jenkins: Certify on specific issues (gets rid of predominance requirement)
                            i. 23(c)(4) allows class certification for single issues

                                                                                                        20
                                    1.   Careful that claims don’t overlap so that 2 juries would consider the
                                         same issues
                           ii. Bad for defendants
                         iii. Maybe helped that Jenkins court had a lot of experience with these kinds of
                               claims
                          iv. Cert probably driven by superiority analysis
                 c. Rhone-Poulenc: Posner’s reasons for not certifying mass tort b3’s (N3 P24)
                            i. Prejudice to D because of the huge liability – whole company out of business
                               in one jury trial
                           ii. Settlement pressure—judicial blackmail
                         iii. Feasibility of Individual Actions – usually decent-sized claims
                                    1. But small ones can’t come to fed in class action if they are under
                                         $75K, so that leaves us with medium ones
                          iv. Dubious Merit
                                    1. Judges shouldn’t look at merit for cert
                                    2. But rules say judge must consider pending litigation
                           v. Immaturity of the tort claim – new theory
                                    1. Castano: if it’s not mature, don’t know which issues will
                                         predominate
                          vi. Problem of varying state law
                         vii. 7th Amendment problem – multiple juries will look at some of the same
                               issues when mini-trials are held for damages
                 d. Castano: a lot like Rhone Poulenc
                            i. Court should do a state-by-state analysis of the law to see if the class action
                               will be superior
                           ii. Predominance inquiry must consider how trial would be conducted—just
                               because an issue is common doesn’t mean it is predominant
                 e. Castano and R-P make it almost impossible to get a mass tort b3 through (see N4 P2)
         6. ***SEE N3 P3***
 v. Defendant Classes, N4 P2
         1. Rules for a D class
         2. D Class Reps
                 a. Class reps don’t have choice. When you’re it, you’re it
                            i. At least if you lose, you only have to pay your smaller portion of the whole
                 b. If reps don’t raise a defense, there’s no appealing
                            i. Maybe by class members might say they weren’t adequately represented
                 c. Rep doesn’t have to be a member of the class if he can best represent the class’s
                     interests, Thillens Inc. v. Community Currency Exchange Association of Illinois
         3. Due Process is a little bit bigger concern for D classes
                 a. D class rep must be more adequate than a P class rep
         4. Requirements
                 a. D class still has to meet pre-reqs of plaintiff class actions and fit into one of the
                     categories
                            i. Some courts say D classes are not contemplated under23 b2, but 2d Cir.
                               allows it
                           ii. Mandatory class actions means that D’s can’t opt out
                         iii. Opt out required for b3
                                    1. Reasons not to opt out on N4 P4
         5. Rules
                 a. Each named plaintiff must have colorable claim against each defendant class member
                 b. Must have a clear showing that common questions do in fact predominate over
                     individual issues
                 c. Requirement (a) above can be waived where the D members are related by a
                     conspiracy or juridical link (legal relationship which relates all Ds in a way that single
                     resolution of the dispute is preferred to a multiplicity of similar actions) Thillens
         6. D class counsel
                 a. Can’t get an attorney on contingency
                 b. Class attorney can settle even if the rep doesn’t like it
         7. Cases
                 a. Thillens N4 P3
vi. Settlement Classes, N4 P5
                                                                                                            21
                  1.   Settlement cert for mass torts
                            a. SC says maybe, not withstanding the advisory notes
                            b. Maybe if there is a common casue or disaster and not many individual facts
                                       i. In products liability, there’s no chance that the individual tampered with the
                                          device (e.g. like an internal device)
                   2. Requirements for settlement cert
                            a. SC says that settlement should be considered when certifying
                            b. No need to address manageability as much
                            c. BUT still does not supercede FRCP 23 requirements
                   3. Issue of predominance
                            a. Difference of state law may not matter as much since settlement pretty much waives
                                 application of law (in a sense)
                            b. But predominance gets at class cohesion, and there must be cohesion for settlement
                                       i. Goes to fairness—if there are a lot of conflicts, each class member won’t get
                                          a fair settlement
                   4. Cases
                            a. Amchem v. Windsor N4 P5
f.   Remedies, N4 P6-7
           i. Really matters most for 3b actions
          ii. How to determine what people should get
                   1. From D’s records
                   2. Indiviudal trials or heaings
                            a. Grouped together by similar characteristics
                            b. Special masters who coordinate this evaluation
                   3. Claim forms
                            a. Maybe even before the judgment is handed down
                            b. Facilitates settlement early on
                            c. Although forms will have to be good and have some accuracy check
                   4. Lump sum award and fairly divide it
                   5. Invoke assistance of gov’t agency charged with admin of the law in this area of the case to
                       distribute the remedy to class members
                   6. Fluid Recovery—something that goes at getting the award (or benefit of) to the harmed
                       members even when they are not easily identifiable
                            a. Controversial and debated
                                       i. Rejected by 2d cir.
                                      ii. Not rejected by 7th Cir.
                                     iii. Most will allow it for settlement since D is waiving rights to defenses
                            b. Methods of
                                       i. Market share (reduce price)
                                      ii. Funding a project that would likely benefit members of the class
                            c. Allows recovery when there otherwise wouldn’t be one and the D would get away
                                 with the spoils of its wrong-doing
                            d. Substantive goals
                                       i. Deterrence
                                      ii. Disgorgement
                                     iii. Compensation
                            e. State courts more open to fluid recovery than fed courts
g.   Jurisdiction Choice of Law, N4 P8
           i. Subject Matter Jurisdiction
                   1. Diversity
                            a. Diversity among parties: only needs exist b/w named reps
                            b. Amount in controversy: must be satisfied by all P, Zahn
                                       i. Some courts think 1367 overrules Zahn
          ii. Personal Jurisdiction
                   1. Shutts gives requirements for Due Process over named P (see text P419)
                            a. PJ over unnamed plaintiffs (and maybe unnamed parties from both sides) isn’t a
                                 problem b/c of other class action safeguards and because unnamed parties don’t have
                                 to worry about convenience or fairness of litigating in a particular forum because
                                 they don’t have to show up anyway.
                            b. Shutts says no need for an opt in for PJ over a class
                   2. Due Process does not require notice to be delivered
                                                                                                                     22
                            a.    Notice provided to the class as a whole must be the best under the circumstances and
                                  reasonably calculated to reach the class member
                                        i. Attack this:
                                                1. Say interests weren’t adequately represented
                                                2. Say notification wasn’t reasonable
                   3. D class members should be treated the same as P class members for PJ
                   4. No need to distinguish between mandatory class members with relation to the forum and those
                        that don’t since they would see N4 P10.
         iii. Choice of Law
                   1. According to Shutts, unlike PJ, COL is an important factor for class actions
                             a. When most of the connections to the forum are tenuous, court should do a claim-by-
                                  claim analysis to decide which COL applies to each plaintiff, meaning they will have
                                  to determine to which forum each unnamed plaintiff has significant contacts
                                        i. Probably going to de-cert the class since the court doesn’t have this
                                           information off hand, and they probably aren’t going to take the
                                           time/expense to do it.
                                       ii. Or they may pick a law like where the transaction took place
                             b. If there are other substantial connections, like the defendant is located in the forum,
                                  which creates ties to the forum and gives the state interest in the outcome on account
                                  of regulating its own companies, there may not be a COL problem
h.   Class Action Fairness Act
           i. Heart of the Act is: if the controversy is for over $5M (and most are), and there is minimal diversity, the
              class action can be brought in federal court
                   1. No more 75K minimum test
                   2. Although if each plaintiff’s claim is over 75K, they’ve already met the min and don’t need the
                        act, as long as they have diversity of named parties




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