Recap 2-16

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I. Long-arm Statutes Authorization

1. First question is whether the long-arm statute provides authorization for jx?
i. CA—really no question because jx is authorized so long as it passes
the constitutional mustard
ii. IL and others—have their own standard for jx

2. Doesn’t matter if it is Fed. Or State court.
i. A Federal District court can only exercise personal jx over
defendants that the state it sits in could exercise personal jx over.

II. If there is long-arm authorization, next question is Constitutional: Does the
exercise of personal jx here satisfy the requirements of due process. What due
process requires is central question in this bunch of material.

III. Due Process Requires = Purposeful availment + Reasonableness

1. Purposeful Availment is the threshold issue. If it is satisfied then
reasonablenss factors will probably be in line. (but go through the
reasonableness analysis anyway)
i. Asahi, one example where reasonableness factors outweighed
purposeful availment

2. Specific Jx. Unless you are trying to show that the court can take general
jx over the defendant, you must show that specific jurisdiction is proper.
This requires showing claim being sued upon somehow arises out of the
defendants contacts with the state.
i. Whether or not those “contacts” are sufficient is a question of
purposeful avaliment.

Purposeful Availment

A. Plaintiff must have voluntary contacts with the forum state.

B. The type and extent of the contacts is evidence by cases but there is no
brightline rule for what will satisfy minimum contacts in a given situation.

1. McGee Shows that a single contact can be enough when the claim arises from that
contact
a. Single contact, but a clear reaching out to the forum state seeking to serve a
citizen there
b. A clear state interest in protecting citizens from foreign insurance
companies reaching into the forum
2. VW “seeks to serve” language adopted

a. If a company seeks to serve a state, purposeful availment can be shown for
claims arising out of that effort
b. Contrast: Defendant unilateraly takes a product into the forum. In that
event P has not sought to serve
c. 1st Stream of Commerce theory noted in dicta:
i. If you put a product in the stream of commerce you are liable to suit
where that product causes injury. This is the Gray v. American
Radiator holding.

2. Asahi O’Conner’s Stream of Commerce Plus theory
a. Putting a product into the stream of commerce is not, in and of itself
enough. The company must also be involved in one of the other factors
noted like:
i. Advertising in the forum
ii. Marketing
iii. Providing service or customer support

b. Policy Arguments

i. “Plus” argument good because: mom and pop supplyer to a
company who sells its products in distant forums. Should mom
and pop be haled into court thousands of miles away? Did they
purposefully avail themselves?
ii. “Plus” theory Bad: too hard to sue manufacturers of products
who might be shelided because they do not market directly to
consumers but to other manufacurers.
iii. More cynically, you can argue that the stream of commerce plus
theory makes personal jx more difficult to compensat fore the
broadening of products liability

3. Calder Targeted conduct can be enough.

a. Idea is that jx is proper in a forum that is the object of defendant’s directed
conduct.

b. Calder Facts: National Enquirer article defaming Shirly Jones. National
Enquirer is headquartered in FL. Jones sues the editor and author (not
magazine for which P.A. is pretty straightforward) in CA, where she lives,
where the articles were about (her drinking in CA) and where the National
Enquirer has substantial circulation.

i. Distinguished from welder who negligently welds a boiler that ends
up in the forum. Why?
1. Authors were “primary participants”
2. Not mere untargeted negligence

c. But Calder is an easy case because all facts cited by the court point towards
the propriety of personal jx in CA
i. Magazine readership was primarily in CA
ii. Jones lived in CA and the article was about her activities in CA
iii. The authors knew this and must have been aware that the brunt of
the harm from the article would fall in CA

d. It is still an open question whether personal jx is still proper if you start
removing some of these factors

i. Does libel follow the person defamed whereever he goes such that
personal jx is always proper over the defamer. Burt says yes. Cert
denied

ii. What if P spends only part of her time in the forum? Not clear what
the answer should be in terms of a targeted conduct approach, but
Keeton suggests that minimum contacts would be satisfied to sue the
publisher because he was distrbuting the magazine to the forum. See
Keeton

5. Keeton: P sues in NH for defemation arising from Hustler articles because
everywhere else the SOL had tolled. Court held:

a. Circulation of 15,000 magazines is sufficient minimum contacts with the
forum.

b. Claim arise out of contacts with the forum because the libel decieved
citizens of the forum state

c. P not a resident of forum does not undermine exercise of personal jx over
D. It is a factor in weighing the state interest aspect of reasonableness,
but there is also a state interest in not having the populus misled by false
Hustler articles

6. BK Contract is not Necessarily a Contact

a. Contract by itself is not a sufficient contact. There must be additional
factors that show purposeful availment:
i. Breadth and seriousness of the contract
ii. Contract contemplates ongoing relationship
iii. Precontract activities and negotiations
e. These factors distinguish the contract in BK from situations where a
consumer buys something from a catalogue. You do not want jx in those
situtations and you avoid it by saying the contract was not broad or serious
or ongoing as BK’s.

f. BK also notes the “reaching out” aspect of the franchisee. The franchisee
reached outside the forum to draw on the benefits of affiliation with a
nationally recognized chain.

2. Internet

a. Problematic. Internet allows people to affect others more readily in other
forums, and without what would be called purposeful availment.

i. There is an argument that the internet demands a relaxation of
personal jurisdication requirements in the same way that the
automobile demanded relaxation of terretorial jurisdiction.
ii. Conversly, if you relax jurisdiction to accommodate for the impact
of the internet, there is a line drawing problem. Can it really be that
anybody, by having a website, can be haled into any forum in the
world?

b. Passive v. Active: Most courts fumble through the issue in this language

i. Active means a website that has some interaction, exchange,
commercial activity, interface.

ii. Passive means just a page with information on it.

1. Several courts have seen blog type sites that house a series of
“postings” as passive.
2. Barrett. Message board defamation did not establish
minimal contacts to the forum state in which defendant
resided.
a. How is this different from Calder—there is directed
activity at a person resideing in forum X.

iii. The common analysis is that active websites purposefully avail
themselves potentially to the world, and certainly to the areas they
seek to serve; Passive websites, conversly do not purposefully avail
themselves anywhere.

iv. The Basic Problem with the Passive v. Active view: A passive
website can be targeted at the forum. This is like Barrett above and
Marcus’ Ben Ladin Example.
c. There has not been, despite the relative novelty of the internet, a push for a
novel approach to personal jx. Courts proceed by analogizing internet
interactions with more traditional scenarios.
i. If website targets somebody look to Calder;
ii. if it is a commercial website look to VW, BK. Does the website seek
to serve the forum;
iii. A 1-800 number might be enough to show a desire to serve.

Reasonableness

1. If purposeful availment is satisfied, exercise of jx must still be reasonable.

a.Typcially, if purposeful availment is satisfied, due process will be satisfied. But
there are situations where the exercise of jurisdiction would be so unreasonable
that jurisdiction should not be taken.

4. BK rule: For commercial defendants, if purposeful availment is shown, the
defendant must make a “compelling showing” of unreasonableness to prevent the
exercise of personal jx over him.
a. But, for all defendants, the showing must be strong. Note: it is a similar
analysis to forum non convienens but a stronger showing is required
because saying there is no purposeful jx is saying that the taking of jx would
be unconstitutional;

3. Factors

a. Burden on the defendant
i. This argument is bolstered where defendant is a foreigner or
must travel particuarly far.
iv. But if there is really strong purposeful availment, the burden on
D
is hard to argue

b. Interest of the forum state
i. This is diminished if P is not a resident
1. Keeton: nonresidence of P not enough to make
ureasonable
2. Asahi: nonresidence of P as well as D was a big factor in
finding the exercise of jx unreasonable.

c. Interest of the interstate judicial system in obtaining the most
efficient resolution of controversies
i. Looks to: 1) What is P’s interest in relief, ie, if we dismiss
this suit, what can P do? Can he sue somwhere else. 2) The
systems interest in efficient resolution: If there are other
defendants, could they all be grouped together in some
other forum or would P have to make two lawsuits. This
might not be efficient use of judicial resources and it might
be detrimental to Ps interest in relief.

d. Asahi one case where court found purposeful availment but found the
exercise jx unreasonble due to the fact that the burden on D was high and
there was no state interest involved. In Asahi neither P nor D was a
resident of the state and the claim did not arise out of the state.

General Jurisdiction

1. Fall back where P cannot satisfy specific jx.

a. How it works, generally: P sues but fails to show sufficient connection
between the claim being made and D’s contacts with the forum. P can then
argue that D’s connection to the forum is such that the court can exercise
general jx over him irregardless.

2. General jx does not require that the claim arise out of D’s contacts w/ the forum.

3. However, D’s general contacts with the forum must be systematic and
continuous

4. You can always sue D in his homebasen under general jx. After that, an
argument needs to be made that the contacts are systemic and continuous.

a. Older cases were more liberal, finding general jx even where defendant
has an office, phone listing, bank account, etc.

b. Modern trend is less receptive. In Nichols there were 15 employees in the
forum, pretty regular business, but the court found no general jx

c. S. Ct.  hasn’t weighed in entirely. Has noted that some operations,
state farm, are so large that they are sueable in all 50 states

d. There is an argument to treat gen. jx as specific where the cause didn’t arise
out of contacts with the forum but very well could have. Robinsons sued
VW in OK for car bought in NY. They could have very well have bought
the car in OK so really this seems more like specific rather than general jx,
the difference is that fortuitously they bought the car in NY.

Quasi in rem Property Present in the forum seized

1. Seizing property is not enough to establish jx over the person; P must still satisfy
purposeful availment and reasonableness

2. But property in the forum can still relevant
3. Where is property in the forum relevant? It depends on the nature of the relatinship
between the claim being asserted and the property in question. There are basically
three situations where property can be relevant.

4. Note the Bak situation where P can seize anything D has in the forum and assume jx
over D will be proper is out the window.

e. True in rem: Where the case is to adjudicate all all interests in the subject
property.
i. Forfieture
ii. Condemnation

f. Quasi in rem 1: preexisting claim in the subject property. Example: P
alleges that D stole his Ming Vase and that the vase is here in this forum. If
seizure is permitted, then seizing the vase and holding it is probably
sufficient to uphold jx over D in the forum.
i. Distinguish: P says D defrauded me of money and he has a bank
account here with money. Even if P could get a court to seize the
bank account, personal jx would not be proper because the specific
bundle of money in the bank is not necessarily P’s money.

g. Quasi in Rem 2: P does not claim that he owns the property (like in rem 1)
but there is nevertheless a connection between the claim being asserted and
the property in question. Then, arguably, P can get personal jx if he can
seize the property in question. Examples
i. Plaintiff is injured on the property
ii. Airplane in SFO inflicts a harm at SFO, that might suffice if you
could catch up with the airplane and seize it (the law permitting)

Transient Jx

1. Service in the forum is still enough
2. Exception: if D does not know that he is in the forum then serving him there will
not be enough

Litigating Jurisdiction

1. Catch 22 when sued in questionable jx, one can:

a. not do anything and let a default judgment be entered, and then argue
improper jx and thus no “full faith and credit” when the plaintiff attempts to
get the judgment enfocrced. This is risky because once you lose by default,
you have lost on the merits and cannot reargue the case.
b. Show up and argue jx. But, you might lose that argument and then you
have to put on a defense on the merits. Typically, you cannot appeal an
unfavorable jx ruling until after trial on the merits.

2. How to object to jx Federal courts 12(h) says that you have to raise lack of
personal jx defense at the first pleading. The court can rule on this like any
motion. If it decides that jx is proper, D must defend the suit on the merits. If you
make a special appearance objecting to jx, you must abide by the court’s decision.

State courts must enter special appearance to avoid submitting to jx. CAjx has
to be entirely dealt with at the beginning of the suit. In most state courts, you
cannot appeal a jx decision without first having a trial on the merits.

3. When you enter a special appearance, you are opening yourself up to discovery
pertaining to the propriety of jx

a. The pitfall in this is illustrated in Insurance Corporation of Ireland. There,
D did not abide by a discovery request for materials pertaining to jx. The
court sanctioned D by finding jx. D argues that you can’t bootstrap into jx
by finding it in a sanction. The S. Ct.’s response is that a proper sanction
against a party resisting discovery is to establish the very thing that the
discovery was aimed at proving. Here, the inference is that if D did
respond it would become clear that jx was proper, therefore finding jx is a
proper sanction

Consent to Jx

1. Can consent contractually to suit in a particular jx. Further, contract can appoint
somebody for survice of process in the forum.

2. This “consent” can be obtained in forum selection boilerplate so long as there is
no “fundamental unfairness”

a. The counterargument is that boilerplate should not be given effect where
parties are of grossly unequal bargaining positions (this is in K, however,
and not civ. Pro)

b. But in Carnival Cruise, a forum selection clause on the back of a cruise line
ticket was held valid. Court said the issue was that it was not fundamentally
unfair (thus, arguably forum selection clause that is fundamentally unfair
could be non-binding). Carnival Cruise Lines.

c. Forum selection in online subsription found valid. Caspi

Notice requirement
1. Due process requires: notice of suit reasonably calculated, under the
circumstances, to apprise interested parties of the pendency of the action and
afford them an opportunity to present their objections.

a. Notice requirements are almost always governed by state/federal rules.
If you can satisfy the relevant rule, that is going to be enough. If you
can’t provide notice through the relevant rule, you can go to the court to
get an order authorizing a different form of service
b. Fed Notice is satisfied if service is provided by means sufficient to satisfy
the state rules where this federal court sits
c. Read CA rule in the blue book

5. Further, the means of notifying the other party have to look like the means one
would take if they actually intended to notify that party

a. Publish in paper found in violation of due process where P could very well
have contacted most of the parties involved. Mullane
b. Seizure can be a way of attracting enough attention to satisfy notice
requirement
c. Where defendant is hard to find or identify, P must at least show that he
made some effort, but he need not make a “heroic effort”

Venue = statutory limitation on jx

A. Purpose of venue rules: protect defendants against the risk that a plaintiff will
select an unfair or inconvenient place for trial

B. Refers to a specific place within the jurisdiction and only becomes a question
once personal jurisdiction is established.

C. If Venue is not proper, the defendant moves to dismiss

Venue Statutes

1. States: Have their own venue statutes (we didn’t study any)

2. Federal: 1391 states three ways that venue can be proper in a specific district. If
you can satisfy at least one of them, venue is proper (remember that personal jx
must be shown first):

a. One D resides in the district and all other Ds (if there are any) reside in
the state
i. If D is a Corporation, then if you can satisfy personal jx for them,
you can satisfy venue (unless corporation consents to jx after suit is
filed, then there is not necessarily an existing basis for jx, and venue
must be established by asking whether jx could be taken if the corp
had not consented)

b. Any district in which a substantial part of the events or omissions
giving rise to the claim occurred, or a substantial part of the property
that is the subject of the action is situated
i. 1990 amendmends made clear that there can be more than one
satisfactory venue under this provision
ii. Still room to argue where events (omissions) occurred.
iii. Also, by “act” do we mean thing that was bad or the thing that
had to happen under substantive law to sue

d. Escape Hatch Venue. Only applies if the other two (a and b) do not.
Thus, the events must occur outside the US and there must be atleast
two defendants from different states.

i. Invoking the escape hatch requires slightly different things where
jx is predicated on diversity or federal question:
1. Diversity: one defendant must be subject to personal jx in
the district
2. Federal Q: One defendant must be capable of being “found”
in the district
Doesn’t this mean the same thing as subject to personal jx

ii. Example: A sues B (citizen of WA) and D (citizen of OR) in WA
Federal Court. The claim arises out of events that took place in
Mexico. A must find a place that can take personal and subject \
matter jx over both B and D, and then that will be OK

Bates

Transfers between Federal Courts §1404(a) and
Dismissal for Forum non Convienens

Transfer

A. You only get to the issue of transfer or dismissal for forum non if both personal
jurisdiction and venue are proper. The reason is that if either is not, the defendant
moves to dismiss. Here, D is saying that even though venue here is good, it makes
more sense to have this thing in some other place.

1. Note: the defendant can move for both a dismissal on personal jx or venue
grounds & move to transfer if the dismissal motion is denied
2. If a judge grants a motion to dismiss on personal jx or venue grounds, he can
nevertheless grant a transfer under 1406 even though D obviously wants the
case dismissed.
a. That is: D moves to dismiss and P says, if this thing can be
dismissed, don’t do it and just transfer it over to this place where
venue and personal jx are certainly proper

1. Both transfer and FNC look to the same issue: Whether the suit should be moved
to a different jx or venue because of:

a. Location and convience of witnesses

b. Location of the Evidence

c. Private expense of litigation and all other factors that make litigation
efficient and expedious for the parties involved

d. Grab Bag of local and judicial interests:
i. Congestion of courts
ii. Problems applying foreign law
iii. Interest in having local controversies decided locally

2. These factors must be strong because there is a “considerable thumb on the scales”
recognizing the plaintiff’s right to sue

a. This deference to Ps choice of forum is made weaker if the plaintiff is not a
resident of the forum.
b. The reason is that there is an assumption that P has chosen a local
convienent forum for him. If he is foreign, P’s choice of forum probably
has more to do with favorable law

3. Note: The court has pretty broad discretion in deciding whether to move the case,
whether to move it as a transfer

4. Transfer should not result in a change of the applicable law if jx was valid in
transferring state. Choice of law rules in transferring court’s state apply to the court
where the action is transferred. Van Dusen

Forum non conveniens

1. The same analysis as transfer, but forum non conveniens results in dismissal of the
case. Only a stronger showing is required.
2. In practice: federal courts will not dismiss for forum non conveienens if there is an
alternate forum in the federal system that could satisfy venue and personal jx
requirements. If there is such a venue, the federal court will transfer the case there.

3. Thus, a dismissal for forum non conveniens only results when the alternate forum
is in a different country. Piper (CA DC transferred to east coast and then that DC
dismissed because Scotland was a better venue)

4. Showing must be stronger than transfer and the court must consider whether the
alternate forum is, in fact an adequte forum (generally not an issue when
transferring between federal courts)

a. The “inadequacy” of an alternate forum is a controversial notion. The S.
Ct. in Piper held that a forum will be inadequte if it does not recognize the
cause of action, or where the lawsuit would simply not get off the ground do
to other factors. But the simple fact that the other forum does not allow
discovery or jury trials is not going to be enough to make an alternate forum
“inadequate”

b. Unfavorable laws in a different forum weigh on its adequacy, but are not
enough to require that the suit remain where it is. Piper

Piper

Notice = another bell the plaintiff has to ring

1. How does he ring it?
a. Satisfy the statutory requirements.

2. What are those requirements?
a. In Federal court the requirments are laid out in rule 4

3. Even if you satisfy the rule, the rule can be attacked on due process grounds
a. Due Process: requires that the notice be reasonably calculated to give
actual notice

Subject Matter Jurisdiction
Two Types:
a. Federal Question
b. Diversity of Citizenship + Jx amount

1. Complaint must state grounds upon which the court’s subject matter jurisdiction
depends—8(a)
a. Either state diversity of citizenship + jurisdictional amount, or
Federal Question

2. Why go to Federal Court when you could sue in state?
a. Hometown bias
i. Fed. Judges are elected for life and may not be as compromised as
state judges who face reelection.
ii. There may be some aspect of intimidation behind a federal as
oppossed to a state court
iii. Jury pool may be more sympathetic / open minded
iv. Distance between the state court and federal may be a hassle to
defendant

3. Defendant can challenge subject matter jurisdiction at any time—12(h)(3)
a. This includes after the verdict and on appeal
b. IMPORTANT— 12(somthings) P can ask the court to resolve the jx issue
promptly to avoid the “time bomb”

I. Diversity of Citieznship + Jx amount

1. Governed by §1332

2. Diversity
a. D and P citizens of different states
b. D/P citizens of a U.S. state and P/D foreign national

c. Complete Diversity Required: No P can come from the same state as any D
i. Not required by Constitution but developed in Strawbridge (1806)

3. Citizenship = Residence (true, fixed, home) + intention to remain there for the
open-ended future.

a. A change of citizenship may be effected only by a combination of two
elements: (a) taking up residence in a different state with (b) the
intention to remain there.

b. Mas. D had no intention of going back to MI, but because she had no
intent to stay in La, or anywhere else for that matter, into the open-
ended future, MI remained her residence and place of citizenship
c. X-Pat hole: If a person moves and takes up residency in a foreign
country, he is no longer domiciled in US; at the same time, he is not an
alien because he is not a foreign national. Therefore he cannot sue or
be sued in federal court based on diversity of citizenship

4. Corporations citizens of:
a. Where it is headquartered, and
b. The state that is its principle place of business
i. There might be room to argue where this is
ii. In any event, there can be two states where the corp is a citizen if its
headquarters and principal place of business are different
c. Note: Membership organizations, partnership law firms and the like can
have many citizenships based on the citizenship of the member/partners

5. Alienage
a. Alien = A national of another country
b. Alienage jx = alien v. US citizen
i. Two aliens cannot sue in federal court under diversity of citizenship
c. An alien becomes a citizen of a state if:
i. He has a greencard, and
ii. He is domiciled in a state
d. Therefore, a resident alien (greencard + domicile) cannot sue somebody
else domiciled in that state based on diversity of citizenship
e. Jx Split can a resident alien in one state sue a resident alien in a different
state under diversity of citizenship. Historically this has not been considered
constitutional, but a literal reading of the resident alien amenment seems to
suggest that it is ok.

6. No diversity jurisdiction taken for
a. Family law (divorce, custody)
b. Probate
c. Don’t ask why; that is just what the law says

+ Jurisdictional Amount in Controversy:
1. Based off what P prays for, not what he gets

2. P must ask for an amount in “good faith”

3. The amount prayed for stands unless it can be said “to a legal certainty” that the
award will not reach the jurisdictional amount.

a. Two types of arguments that, to a legal certainty, jx amount won’t be
reached
i. Under operative damage laws, there is literally no way that P will be
awarded the jurisdictional amount
ii. Damages (punitive) are not applicable to the claim
iii. D can argue at trial, based on the evidence, that there is no way the
jx amount will be awarded. This argument is usually a looser, for
the issue is whether at the time the claim was filed, P asked in good
faith for an amount that met jx amount.

4. The amount is determined by looking at the face of the complaint, you do not add
a counterclaim (this would allow D to remove case, defeating P’s choice of forum)

5. Affirmative defenses cannot be used to whittle down claim
a. This may seem counterintuitive for really strong defenses, SOL, but the
idea is that the defendant may overlook the defense

II. Federal Question §1331

1. Federal Jurisdiction proper for cases brought under federal law
2. The question must appear on the face of complaint

a. Not in answer/defense. See Mottley (railroad ticket case)(P pled breach of
K. D had a defense that Congress had just passed an act that would make
their compliance with the K illegal. Court found that the complaint did not,
on its face, raise a federal question even though one would most certainly be
at the heart of the litigation)
i. Why this strange result? Otherwise, D could plead a federal
defense in order to remove the case from state court thereby
defeating P’s choice of forum.

2. Federal Law implicated in two general ways:

a. Holmes Variety Federal Law gives rise to the cause of action.
i. Example: §1983 Claim clearly implicates a federal law.
ii. Simply suing under a federal law is not enough unless the law has a
citizen suit provision or an implied cause of action.

b. Trickier Variety State law that relies on a federal law, or implicates a
federal standard

i. Starting point is to ask whether the federal issue is implicated as part
of “the well pleaded complaint”
1. Ask: is it just tacked on there or is it an integral part of the
structure of the allegations.

ii. Next, look to four other factors:

1. Centrality of the Federal Claim
a. Is the Federal Issue critical to the resolution of the
Federal law claim. Would the federal claim’s
resolution bear on the outcome of the case
2. Importance of the claim

3. Federal Interest
a. Challenge to the constitutionality of a federal law
presents a claim of significant federal interest. As
oppossed to say invoking a federal standard in a
negligence per se claim.

4. Implied Cause of Action
a. If there is no implied cause of action, the invocation
of the federal law is not going to provide a federal
question.

Mas and Motley

Supplemental Jurisdiction

1. General Idea: If the court has subject matter jx over one claim, it can, in certain
situations, take supplemental jx over additional claims.

2. Note: Personal jurisidiction requirements must still be met over every
Defendant; supplemental jx only gets you around subject matter jx.

3. Constitutional Limit = You need a cause of action for which there is federal
subject matter jx. After you have a case, the question is whether the additional
claims arise out a common nucleus of operative fact.

4. §1367(a) Givith to the Constitutional Limit
c. (a) Whenever there is a civil action for which the court has subject matter jx
over one claim, the court will have supplemental jx over all claims arising
out of the same case or controversy (common nucleaus). 1367(a) makes
clear that the broad grant of supplemental jx applies to added parties as well
as claims.

d. But §1367(b) taketh away where the original claim is based on diversity:
i. The Court cannot take supplemental jx over the following claims,
and therefore there must be independent subject matter jx for these
claims to proceed.

1. Claims by P against a 3d party defendant made a party
through 14(a). Example: P sues D. D impleads X seeking
indemnity. P cannot sue X. (not X can sue P if claim satisfy
joinder rules)

2. 19(a) If a party is deemed to be a person “to be joined if
feasible,” the court cannot take supplemental jx over him.
The question then turns to 19(b), whether to dismiss the
whole case or not.

3. Defendants permisively joined pursuant to 20.
Example: P is hit by a car and then run over by a
motorcyle. He sues the operators of both vehicles, D1 and
D2. Each of those claims must independently satisfy
diversity and amount in question.

4. Plaintiffs joined under Rule 20. Allapatah Rule.
Plaintiffs permissivly joined must satisfy the diversity
requirement. But, the amount in controversy requirement
does not need to be satisfied so long as one plaintiff
satisfies the amount.

5. Claims Intervening parties pursuant to rule 24.

ii. Thus, importantly, Supplemental Jx can be taken over the following
if arising out of a common nucleaus of operative fact.
1. Compulsory counterclaims (remember persmissive
counterclaims do not arise out of the same transaction . . )
2. Additional parties to compulsory counterclaims: 13(h)
3. Cross-Claims: 13(g)
4. Impleader (but no supplemental jx over a claim by original P
against 3d party defendant.

e. §1367(c) Gives the court some discretion over whether or not to entertain
supplemental jx. Four reasons to decline the exercise of supplemental jx
where it could otherwise be taken:

i. The claim involves a novel or complex issue of state law
ii. The claim substantially predominates over the claim or claims over
which the court has original jx
iii. The district court dismisses (or they settle) all the claims for which it
has original jx, and only the claim to which it has supp. Jx is left.
1. Tough issue. Look to the amount of time the state claim has
been sitting there in federal court. Would it just make sense
for the court to keep it and adjudicate it. Remand if the
claim was removed to fed. court?
iv. Other compelling reasons
The DC cannot just willy nilly decide not to exercise supplemental
jurisdiction if it is within the rules to exercise it. The reason for not taking
the claim must be one of those enumerated in the above list. Even though
iv. is a “catch all” category, the DC cannot invoke it without explainng what
the “compelling reason” is. Any reason may not be good enough.

f. 1367(d) Gives 30 days to sue in state for a claim that is dropped out of a
federal case for lack of subject matter jx and no supplemental jx.
i. Otherwise, D could lull P into thinking that all was well with his
added state claim, object to jx when the state statute runs, and then
move to dismiss the claim for lack of subject matter jx. If no
supplemental jx can be found, P would be out of luck. Thus,
1367(d) gives P time to get a suit in state.

Removal

Issue: Should D be able to overrule P’s choice of suing in state court?

1. §1446 Provides that a defendant can remove a case to federal court on the
simple fact that it could have been brought there. Two arguments (obviously)
a. The case presents a federal question
b. There is diversity of citizenship

2. Big Exception. Case cannot be removed where the defendant is a resident of the
state the claim is originally brought.
a. Justification: Home-town bias will not disfavor a home-town defendant

3. Often Plaintiffs want to stay in state court
a. Considered better for personal injury type suits
b. Relaxed evidentiary standards

4. There is a big timing issue
a. Defendant has 30 days to move to remove starting at service of process
b. This is not a big deal when it is obvious that the case can be removed, but
what if the the grounds for removal are not clear?
c. The statute provides that where the grounds for dismissal become
ascertainable later in the process, D’s 30 days start running then.
d. The difficult question is, when exactly did the thing “become
ascertainable?” Secondly, how much research is expected from D into the
grounds for removal?

Various Removal Scenarios and the approach courts take to them

1. Fraudulantly joined defendant
a. Issue: P wants to sue in state. Case is removable for diversity. P joins as
defendant a citizen of the same state as D in order to defeat removal.
b. Courts hold that a nondiverse defendant joined fraudulantly will not defeat
removal. The difficult question is whether or the act was fraudulant. It
seems that to show that the defendant was fraudulantly joined requires an
examination of the claim against him. Would this then require a summary
judgment or 12(b)(6) motion? Do you have to move to the merits?

2. Nondiverse defendant is dropped/or settles/or is granted summary judgement
a. Issue: P sues A and B. There is no complete diversity because P and B
are both citizens of WA. Therefore, case is in State. B and P settle 6
months into the suit. Now, there is diversity of citizenship. What do
courts do?
i. A can seek to remove based on 1446(b), which covers suits that
were not originally removable, but circumstances changed such that
they become so.
1. Exception. In the above circumstance, where removal
would be based on diversity, the case cannot be removed if
the removal would occur more than a year after the suit was
originally brought.
2. Thus, P could settle with B, but stipulate that the cause
against him would be dropped after a year in order to
maintain case in state court. At least one court has barred
this practice because it is unfair.

3. Adding Defendant or Plaintiff after removal in order to defeat diversity
a. Issue: P sues A. A removes on diversity. P seeks to add a claim against
P a citizen of his home state. This would defeat the court’s jurisdiction
because there would not be complete diversity (nor could the court take
supplemental jurisdiction because joinder would be under 20—no supp jx
over permissive joinder of ). Courts can do two things 1447(e):
i. Bar the claim against the new defendant
1. This is basically where the joinder is fraudulant
ii. Allow the claim and remand to state court
1. This is where the claim has merit

II. Can plaintiff ask for below the jurisdiction amount in order to defeat removal?
a. Sure

III. Can plaintiff initially ask for below the jurisdictional amount, stay in state court,
and then increase the damages prayer?
a. If increase is within a year, then removal is allowed under basic rule
b. If after a year, removal is not allowed for diversity. Courts have still
allowed removal because this practice is manipulative.

IV. D has 30 days to file a petition to remove once notified of suit
a. Issue 1: P faxes complaint to D, but does not serve him. Can D still seek to
remove within 30 days of service?
i. Yes. S. Ct. says that the 30 days will not start to run until service of
process

b. Issue 2: What if D can’t really tell from the complaint whether or not the
case is removable?

i. For Federal question all that is needed should be on the complaint
because the question as to whether there is a federal question is
based on the well-pleaded complaint rule.

ii. For Diversity, P may not say what his citizenship is on the
complaint. D’s 30 days does not start running until it is
ascertainable that removable. This would not occur until he got
wind of Ps citizenship. But the Courts require D to make
reasonable inquiry into the plaintiff’s citizenship for the purposes of
removal.

iii. For amount in question:

1. In some cases, the amount cannot be named in the
complaint. In this case, obviously, the amount in question is
not ascertainable and the clock will not start ticking until an
amount is named.
2. But, At least one court has held that D is allowed
demonstrate from outside materials that the claim is one that
is going to exceed the jx amount, even the damages prayer is
no where specified. This doesn’t appear to be a duty to do
outside investigation of the amount in controversy, however.

ERIE

1. NATURE OF THE PROBLEM

a. Federal and State courts often have overlapping jx—that is a P might be able
to bring a claim in one or the other.
b. This gives P a choice of forum limited by D’s removal rights
c. Different rules of law in the State and Federal systems create the prospect of
forum shopping
d. Thus, the answer has been for federal courts sitting in diversity to apply the
substantive law of the state and federal procedural law

2. Rules of Decision Act §1652 governs the application of substantive law in federal
courts. It says:
Federal courts must apply the “law of the several states, except where the
Constitution or treaties of the United States or Acts of Congress otherwise
require or provide.”

a. Uncontroversial Points/ Basics of the Rules of Decision Act:

i. The Federal Constitution or any Act of Congress takes precedence
over a state provision.
1. That is, a Federal Court sitting in diversity must apply the
Constitution and any constitutional acts of Congress

ii. If there is no controlling Constitutional provision or Act of Congress
on point, State Statutes must be applied.
1. That is, a Federal Court sitting in diversity must apply the
state statutes of the state that the federal court is sitting in.

iii. Erie Decision: Federal Courts must also apply the common law
from the state in which they sit.

1. Overruled Swift and the notion of a “general” common law

2. The state’s common law might, however, be difficult to
ascertain. Principles to determine State’s common law:

a. The states hightest court has final say on the state’s
common law
b. Quetsion of first impression in the state? Federal
court shoud do what it thinks the states highest court
would do
c. If facing an old, obsolete decision, the Federal court
can overrule it if it genuinely thinks that the state’s
highest court would.

iv. Important: The Rules of Decision Act says that where a principle
of the constitution is on point or where an Act of Congress is on
point, a federal court must apply it. The decision in Erie is, then,
that where there is not a federal law on point, the federal court must
adopt the states law. The federal court, cannot develop its own
common law to deal with state law questions. But the federal court
must apply federal statutory or constitutional laws where they are on
point.

3. Rules Enabling Act of 1934 says:

The Suprme Court can:
1. 2072(a): “prescribe, by general rules . . . the forms of process, writs,
pleadings, and motions, and the practice and procedure in civil actions at
law for the federal courts.” ; and,

2. 2072(b): These rules must not “abridge, enlarge, or bodify the
substantive rights of any litigant.”

a. The Enabling Act resulted in the FRCP

b. Because the Rules Enabling act is an “Act of Congress,” the result, which is the
FRCP are applicable in Federal Court under the Rules of Decision Act

c. Moreover, because the FRCP were enacted with painstaking care and with an
awareness of Erie’s demands, there is a presumption that they are valid. No
FRCP has been found to violte the Rules and Enabling Act

4. How the issue comes up / scenarios:

a. There is a state rule/law that a litigant wants followed in a federal court
sitting in that state.
i. Say, the state SOL has run

b. If there is a federal rule on point, then the analysis turns to whether indeed
the rules—federal and state—are in conflict. If there is no federal rule on
point, there is then an unguided Erie analysis to determine whether the state
rule should be followed.
i. There is no fedral SOL rule (Walker takes narrow view of rule 3
timing requirments. Says they are not intended to govern or trigger
the SOL)
ii. Thus, the question is whether, under an unguided Erie, the State
SOL should be followed.
1. Twin aims
2. Equitable administration of laws
3. Federal and State interests

5. Outline of Analysis (assuming, of course, that a state rule is being proposed and
there is a fedreral rule lurking that could arguably be adopted)

First Question is Scope: Is the Federal law sufficiently broad to control the issue at bar.

a. Gasperini tells us that the federal court should be sensitive displacing state
law

b. If the Federal Law is a FRCP, look to:
i. Burlington Northern: takes a broad view of a FRCP scope, holding
that the federal rule occupies the general territory of the state rule
and thus must take precedence. This is a more general sweeping
view of a rules application (mandatory penalty on losing appeals is
trumped discretionary mode of handling frivolous suits emodied in
FRCP 38)

ii. Armco: repesents a more exacting analysis of a federal rule, not
looking at the “general field” it covers but the presice issues it is
aimed at. (FRCP governs timing issues in federal court, it is not a
SOL provision)

1. Gaspareni: Takes a narrow view of 59, holding that it details
an empty standard
2. Semtek: Takes a narrow view of 41(b), holding that it does
not emody a federa preclusion rule regarding what types of
dismissals have preclusive effect:
a. Dicta notes that if 41(b) was a preclusion law it
would, for instance,

c. If the Federal Law is a statute:
i. The quetsion of a statute scope goes to Congressional intent: Did
Congress intend for this statute to control this issue? If so, it would
seem to govern

d. If the Federal Law is the Constition
i. Scope is going to be a matter of interpretation
ii. Sensitivity to state law will not be a big concern when interpreting
the constition
iii. If the Constition does not “demand” a result, it is not on point; it
may still, express a federal “interest” that is a factor in whether or
not to apply the state rule.

If so, is there still “room” for the state law to operate

a. If the federal law and state law on point, the federal law wins out unless an
argument can be made that the two can coexist

e. This is like the scope argument, but with a slightly different focus:

i. Are the state and federal rules different enough so that they can
augment each other, dealing with slightly different issues. Can the
state rule be seen as “fleshing” out the federal principle.

ii. Under a strict Burlington approach, using the state law to augment
the federal rule would not fly. There, if the federal rule is on point,
any state rule not the federal rule has to drop.
If either 1) the federal rule is not on point or 2) there is “room” for the state law, the
question is whether the court should apply the state law

a. This is an Unguided Erie analysis

i. Twin Aims:
a. Forum shopping
i. Modified Outcome Determinitive Test. Hanna
b. Inequitable Administration

ii. Byrd Balancing with an emphais on whether application of the state law
would undermine an essential characteristic of the Federal system

a. Importance of the federal and state rules in their overal legal
scheme
b. Gaspareni. The application of a state rule might disrupt an
essential charateristic of the federal system, even if that
characteristic is not discreetly embodied in a rule.

If the federal rule is on point and there is no “room” for the state law, the question is only
whether the federal law is valid

a. FRCP
a. 2072(a)—Is it a procedural Rule (for FRCP this is a given)

b. 2072(b)—Does it abridge, enlarge, or modify any substantive right:
i. Burlington tips the scales heavily in favor of the FRCP. A
rule is still valid if it incidental affects a substantive right.

b. Statute
a. Is it a Constittional Exercise of Congresses Power
b. Looks to whether the rule is justifyable under the necessary and
proper clause—is the rule necessary and proper in the sense that it is
“conducive to the due administration of justice” in the federal court
system

c. Constition
a. It is valid

Joinder

1. Joinder of claims FRCP 18(a)
a. Applies to additional claims between the same parties

b. Extremely liberal standard. Basically says that unlimited additional claims.
No requirement of same transaction or occurance
c. Policy Reason: Efficiency

2. Permissive joinder of Parties FRCP 20

a. Multiple parties (Ps or Ds) can be joined freely if the claim that brings
them in arises from the same transaction, occurance or series of
transactions.

b. Court looks to several factors:
i. Do the several parties advance claims that are logically related. Ask:
what facts are needed to prove both their several claims? Are they
substantially the same.

ii. Same evidence involved in the added claim

iii. Same legal issues involved
1. This does not mean you can add all negligence claims
together simply because they are about negligence.

c. Additionally, the Court has discretion to not permit joinder where:

i. Joinder would be inefficient (the whole point of joinder, remember,
is efficiency)

ii. Joining the parties prejudice one or the other
1. One cop is “butcher bob,” joining other cops might
prejudice them through guilt by association

2. There is also the concern that joining a multitude of
plaintiffs may create reasoning in the jury similar to “where
there is smoke there is fire”

3. Would the joining unduly complicate things such that the
jury would be confused

iii. The court can decide whether to permit joinder, bar joinder, or
permit joinder and then separate out the proceedings in some way
(usually to avoid prejudice) pursuant to 20(b)

1. For instance, in Insolia the court refused to permit joinder
based on its discretion and weighing of jury confusion; In
Kedra, the court permitted joinder, but then separated the
claims into different trial to avoid prejudicing Ds.

Kedra (broad view of 20(a) “series of transactions” joinder)
F: Delores Kedra and her eight children allege that the Philly police department
enganged in a series of acts harrasing, beating, arresting, and threatening over a
period of 2 years. The Police Dept argues that there was an improper joinder of
parties pursuant to rule 20(a).

I: Are the various police officer defendants alleged actions related enough to
properly join them as defendants in one action under rule 20(a)? If so, is there a
reason under 20(b) to separate out the claims?

H: Evidence of a systemic pattern of abuse is enough to show that joinder is proper
here. However, some defendant’s are accused of doing some really terrible stuff
and others are only slightly involved and in different actions. It would prejudice
these minor players to try them along the other defendants accused of disgusting
acts. Thus, rule 20(a) is satisfied; but there is a reason to separate out the claims,
prejudice, under rule 20(b).

Notes: The key to the linking of claims is that there is some police policy aimed at
the Kedras, not the community at large. The “series of transactions” cannot be
“philly cops are brutal.” It has to be a series of occurances against the Kedra
family. Secondly, there is a strong argument that the Kedras need the joinder of
claims permitted to state their case because the validity of each allegation builds on
the others.

Insolia (narrorer view of 20(a) joinder)

F: Three plaintiffs sue the major cigarette companies. They allege fraud and a
conspiracy to hide the addictive properties of cigarettes. Particuarly, Ps allege that
D formed the Tobaco Institute to combat the propogation of disfavorable heatlth
assessments of cigarettes. [Ps also tried to create a class action was denied] D
moves to disagrage the claims because the do not satisfy Rule 20—that they do not
arise from the same tranaction occurance or series of tranactions or occurances.

Holding: The court agrees, for three reasons (the reasoning here is a bit suspect)
1. They claims are not “logically” and “factually” related enough. They started
smoking at different times, different brands, in different places. The court
would not be looking at a common set of facts but highly individualized facts.

2. The suit would be too complicated and would confuse a jury.

3. Prejudice might occur because the confused jury might apply evidence relevant
to one party mistakingly to another.
Impleader FRCP 14
1. The rule is basically an indemnity provision (at least as we studied it)

2. How it works: A defendant can implead a third party who may be derivitavly liable
to for all or part of the claim against it.

a. Deriviative liability is narrower than same transaction: the 3d party D’s
liability must be conditioned on 3d party P’s liability to P.
i. If D’s argument is, “hey, I didn’t do it, this guy did,” that is not an
impleader but a defense. D is arguing that he is not liable because
another party is.

ii. Sausage Case. If sausage factory says we didn’t make you sick X
did, that is a defense. If factory says hey if you got sick from sausage
it was both of our faults, that is an impleader claim.

b. Alternative: A party can still implead and argue that he is not liable anyway.
The argument is: “I’m not liable, but if I am, this guy owes you for it.”

c. Partial Claim: 3d Party Plaintiff can claim that 3d party D is liable for only
part of the claim.

d. May be liable: It does not have to be certain that 3d party D will be liable
only possible.

i. If local indemnity law precludes indemnification, then 3d party D
can not be “may be liable,” and indemnity is improper.

3. Impleader is available to a plaintiff whom a counterclaim is filed against

4. Once a party is impleaded, several different claims can be made:

a. 3d Party D can:
i. Counterclaim against 3d party P pursuant to 13 (permissive or
compulsory)
ii. Cross-claim against any other 3d party D
iii. Any claim against P that arises out of the “same transaction. . .”
iv. A counterclaim against P, if P asserts a claim against the 3d party D
v. 3d can even implead 14 another party

b. Original P can assert any claim against 3d party D arising from the “same
transaction. . .”
i. Note: no supplemental jx for these claims.
5. Supplemental Jx: Court can take supplemental jx over claims against 3d party Ds
and counterclaims by 3d party Ds. The court cannot take supplemental jx over
claims by the original P against the 3d party D.

6. Defenses: 3d party D can put on any defense against the original plaintiff that the
original defendant could have raised.

a. This protects 3d party D from a defendant who impleads and then mails in
his defense because he is covered by the impleaded party.

7. Strategy: A defendant can implead the “little guy” who is ultimately going to be
liable to garner jury sympathy that otherwise might be unavailable.
a. How much discretion does the trial judge have to deny impleader?

8. There is significant overlap with rule 13(a) and (h). If D counterclaims against P he
can also assert a claim against a third party that arises out of the same transaction or
occurance.
a. Why ever implead; why not just use rule 13?

Clark

Interpleader—FRCP 22 and §1335

1. Issue: Interpleader is used to avoid multiple exposure on claims to a single thing—
often an insurance policy. The rules are structured to overcome jurisdictional
limitations to getting all claimants together.

a. Why doesn’t it work under the rule 19.
i. P could argue that he faces exposure to multiple judgments, but
there can be no supplemental jx over parties added through 19.

ii. The whole point of interpleader is to get every claimant together in
one suit. If one claimant is not amendable due to jx limitations,
there is little value to the proceeding.
2. Statutory Interpleader—1335—is more permissive than Rule interpleader—22—and
will generally be used.

3. The crucial difference is that statutory interpleader liberalizes the personal jx, venue
and subject matter jx requirements.

INTERPLEADER Statutory Rule 22
When there is no Federal Some Pair of claimants must The stakeholder must not
Question, what kind of be diverse with each other have the same citizenship as
diversity must exist ANY claimant—complete
Where may service of Anywhere in the U.S. Ordinary Rules for federal
process be made? suits must be followed
Must the stakeholder Yes No
deposit the amount in court
May the stakeholder claim Yes Yes
that he is not liable to any of
the claimants

Question: What is the role of personal jx in this analysis? Why would anyone ever choose
to use rule interpleader. It is just harder to satisfy and I don’t see any advantages.

4. How it works:
a. There must be a fixed stake.
i. Often this is an insurance policy with a fixed limit to which several
parties are laying claim.
ii. The “stake” has to be limited; interpleader is not available to parties
who face multiple, even unlimited, lawsuits unless what the parties
seek is naturally bounded (there is no limit to wealth because a
judgment has value irregardless of the parties present ability to pay)

b. The stakeholder takes it to the court (he actually has to deposit it in
Statutory) and says “anybody who wants it, come fight for it.”

c. So long as the relaxed jx requirements are met, the interpleader goes
forward.

5. The stakeholder does not have to admit liability. He can plead in the alternative
that he owes nothing to nobody

6. The Proceeding has two stages:

a. The stakeholder has to demonstrate a good faith fear of multiple exposure
i. The stakeholder does not need to show that he “is” liable to the
claimants, only that he might be. If only parties with judgments
against the stake could get in on the interpleader, there would a race
to judgment that would undermine the plenary nature of the
motion.

b. After that, the issue shifts to deteriming the validity of the various claims.

7. Tashire. Interpleader proceedings cannot be used as a judicial tactic to orchestrate
complex multiparty litigation. It might be an effective method for such ends, but it
is not legitimate for those ends. The only thing adjudicated is the claims to the pot.
The pot, therefore, defines the limits of the litigation.

Tashire

Intervention FRCP 24

1. Allows a party who is not part of the lawsuit to intervene on their own initiative.

2. Two types of interventions:

a. By Right: The court must permit the intervention if the party can satisfy the
“by right” criteria

b. Permissive: It is up to the court’s discretion whether or not to permit the
intervention.

3. “By Right” Criteria:

a. The party must have a “significantly protectable” interest in the subject
matter; and,

i. S. Ct. has been unclear on what type of interest is required.
ii. Must be more than a “philosophical” or political interest. Must be
particular to this plaintiff, in some way, and not general “public
interest”
iii. An economic self interest in the outcome was enough in Cascade,
but he court has moved away from that holding.
iv. Donaldson held, essentially, that the interest asserted must be
somehow protectable in the legal scheme

b. The interest will be impaired if intervention is denied
i. Wound up with (a) because the way a party asserts its interest in the
case is, usually, to say: “look, this is what is going to happen to me if
A loses, or B wins.”
ii. Intervenor does not need to show that he will be bound by the
judgement, only that his interests will be impaired as a practical
matter.
iii. Stare Decisis/Precedential effect: Usually not enough to be granted
an intervention by right.
1. NRDC. Held determintal precedent enough in light of the
fact that the NRC would likely create a general rule based
upon outcome of the litigation

c. His interest is not adequately represented already
i. The intervenor argues that his interests are implicated but, in terms
of litigation posture, are not the same as the present party. Thus,
the interest will not be represented properly
ii. This is a “motivation to represent” not quality of counsel type
question right?
iii. NRDC. D1 had already been granted a permit. He could make an
argument based on this fact that his permit is valid, but future
permits should not be. This type of litigation stance would not
represent D2’s interest in being granted a future permit.

4. Even if the criteria is not met, a party can intervene by right if a statute provides as
much
a. This is often available to the US government. See CAA (citizen suit
provision gives the gov’t absolute right to intervene)

5. Similarity to 19 Standard
a. The test for a party who may intervene by right is similar to that for a party
who must be “joined if feasible” pursuant to rule 19.

b. In practice, the intervention test is more permissive. Why?:
i. Determinining a necessary party under 19 has grave stakes. Sets in
motion a chain of events that might end up dismissing the case
ii. 24 has the additional “adequacy of representation criteria.” Thus in
theory, a lower bar for the type of interest involved is made up for
with the additional requirement that the representation of that
interest must not be adequate.

6. No Supplemental Jx:
a. No supplemental jx can be taken over intervening parties. Thus, no matter
how strong the proposed intervenors showing of the “by right” criteria is,
the court will not allow him to intervene.

b. The court cannot drop a case because it cannot take jx over a party that has
a “by right” ability to intervene but can’t due to subject matter jx limitations.

7. Permissive Intervention:
a. Court has broad discretion to allow a party to intervene who has a “claim or
defense” involving a “question of law or fact in common” with the litigation
b. Court could grant permissive intervention for a detrimental precedent type
claim

8. Timeliness: The interveaning party must assert his right or request for intervention
soon after he discovers his interests are implicated or not adequately represented.
a. Does the court have discretion to bar intervention because not timely or
because it would make the litigation unweildly even thougth the proposed
interveanor can claim a “by right” basis for intervention.

NRDC

Counterclaims FRCP 13

1. Two Types:

a. Compulsory Features

i. Test: The claim arises from the same transaction that is the subject
matter of the oppossing party’s claim.
1. is this broader than the rule 20 standard

ii. Supplemental jx can always be taken (because compulsory means it
arises out of the same transaction which is the threshold test for
supplemental jx)

iii. Embedded preclusion aspect: If you have a compulsory
counterclaim, the failure to bring it up will bar bringing it up later (in
any litigation)

iv. A compulsory counterclaim must be brought up in the defendant’s
pleadings
1. or else it is waived for even this suit
v. Exception: If the claim involves the presence of a third party that
the court could not get jx over, the claim is not compulsory and is
not waived.

b. Permissive counterclaim features

i. Does not arise out of the same transaction
1. Thus, these can be messy. The solution is to sever them for
a separate trial.

ii. No supplemental jx; the permissive counter claim must
independantly satisfy subject matter jurisdiction, which it won’t
because it does not

iii. No necessary preclusion aspect to a permissive counterclaim

2. Same Transaction Test: Is it basically the same or less stringent than 20 (language
is different than 20)

3. A counterclaim can be made by any party and the distinction between compulsory
and permissive remains.

a. Usually it is D v. P, but it doesn’t have to be
b. If D counterclaims P, P can counter-counterclaim
c. If a claim is asserted against a joined party that party can counterclaim.
i. Example: B impleads X. A who is suing B may assert a claim
against X. X can counterclaim against A. If the counterclaim arises
from the same transaction, it is even compuslory

4. 13(h) Can be a device to bring in new parties
a. A party making a counterclaim can add parties to that claim provided the
claim against the added parties arises from the same transaction or series
thereof within the meaning of rule 20.
b. Thus, once you counterclaim you cannot add additional claims against
other parties. The transaction of your counterclaim must implicate the
added parties pursuant to Rule 20. (this is slightly different than I thought).
Picture:
c. Example: X sues Y after their cars collided. X argues that Y was negligent
and this caused the crash. Y doesn’t have to counterclaim that X was
negligent. But because this claim arises from the same transaction, X will
be precluded from bringing it in later litigation.

Wigglesworth

Preclusion

1. The Difference between Claim and Issue Preclusion:

a. Claim preclusion looks to the set of facts that forms the transaction for which a suit
is brought. If there is a final judgment on a claim, that judgement precludes additional
claims that arise from the same transaction. Thus, the distinguishing characteristic of
claim preclusion is that it can bar claims that were never brought.

b. Also, claim preclusion can only be asserted on claims between the same parties as
the first case. Issue preclusion has more room for third party considerations

c. Issue preclusion is keyed in on specific issues that were decided in a particular
litigation. It is a more sharply focused analysis on things that were litigated not the
transaction as a whole.

A. Claim

1. Claim Preclusion: A final judgment on the merits of an action precludes the
parties or their privies from relitigating claims that were or could have been
raised in that action.

2. Final Judgment
a. Preclusion only applies to final judgments
b. In Federal court, a judgment is final even if it is being appealed
c. In some state courts, a judgment is not final until all appeals are
complete

3. On the Merits
a. 12(b) dismissal is considered to be on the merits.
i. Note: failure to state a claim should be followed with leave to
amend. If this is not provided, that decision can be appealed.
ii. If Federal Court dismisses a federal question claim for failure to
state a claim, there is an argument that that decision is
jurisdictional and not on the merits of the claim.
b. Not on the merits
i. Lack of jurisdiction
ii. Failure to join a necessary party
iii. SOL
For these “not on the merits” I just noticed the questions. Here are responses.

(1) I don't think that rule interpleader adds anything worth worrying
about. Maybe it could be the only way to go if there was complete
diversity between the stakeholder and all of the claimants but no
diversity between any of the claimants. If, for example, a New York
insurance company was facing competing claims from a bunch of
family members (all the grandchildren after grandfather died), and
all the claimants were from California, statutory interpleader would
not work but rule interpleader would work.

(2) I agree with your point. As somewhat a matter of form,
however, it is important to articulate the further conclusion (beyond
the 2072(b) conclusion) that under the twin aims test there is an
affirmative reason why the federal court has to apply state law. But
that is essentially a foregone conclusion once you decide that an
applicable federal rule cannot be applied because doing so would
modify or enlarge a substantive right.

I hope these responese are useful.
iv.

4. Claim preclusion can only be used by the same defendant as in case one. If
plaintiff looses case one, he can go after a different defendant (defensive use of
collateral estoppel might be used by D2). In Manego, the plaintiff could sue
the added parties in case two and case one was only res judicata for the
defendants he already sued.

5. Scope of the “Claim” is the Big Issue and is determined by the Transaction
Test in modern courts:

a. Final judgment on the merits extinguishes the plaintiffs right to remedy
against the defendant for all or part of the transaction, or series of
transactions, out of which the action arose.

b. Thus, a transaction is a “grouping of facts.” The precise dimension of
that grouping is a pragmatic question looking to the relationship in time,
space, origin of the facts.

i. The standard is probably narrower than rule 20 but similar.
Cop Case for example: probably legitimate under 20 to say that
a series of cop beatings and cover ups arise from the same
transaction for purposes of joinder. A failure to join a claim of
covering up with a claim for beating, however, will probably not
preclude bringing the cover up claim later.
ii. Irony: this could lead to a situation where a court might say that
a party could be joined, but if that party is not joined for one
reason or another, the court could still hold that claim
preclusion does not bar a claim against him

c. In plain English, ask “why is P suing;” “what happened.” That “what
happened, is going to provide the general contours of the transaction.
From that transaction, potentially numerous theories of recovery might
be available. The plaintiff must bring them all against a defendant, or
be barred from bringing them later.

d. Another simple way to look at it is to ask if what facts form the basis of
the two claims and are they substantially similar.

e. Manego alleged a conspiracy against his development of a disco. The
factual basis of this claim was the denial of licenses, and intimidation
and the like. In his first suit he argued that the motivation was racial
animus. He lost. He discovered some evidence that the motivation for
the conspiracy was anti-competitive.

i. Held. Different motivation for conspiracy does not present
claim. The claim is still a conspiracy
ii. New information, arising after the verdict, that makes your claim
stronger can be dealt with through rule 60. It is generally not a
ground for not applying res judicata unless the party can show
that the new information creates an essentially new claim.

f. Cop Case. Cops beat a guy up and then covered it up. The brutality
and cover up claims were not part of the same transaction. The facts
pertaining to both could be logically parsed out.
i. Note: There could be an argument that the “claim” or
transaction is a vendetta or grudge and that both the beating and
the cover-up are part of that overarching transaction.

Against Defendants in Case #1—13(a)

1. 13(a) is a claim preclusion rule for defendants

a. D has to bring up any claim arising out from the same transaction or be
barred from bringing it later.
i. Justification is largely judicial effecincy of having D bring claims that
are related and deal with them all at once
b. Note: 13 is like all preclusion rules, it does not apply until there is a final
judgment. Thus, if D does not bring a counterclaim in suit one he is not
barred from suing on the counterclaim in suit 2, so long as there is no final
judgment in suit 1 yet.

Manego

Exceptions to Res Judicata Rules/ no exceptions really

1. Exclusive jx claims will not be precluded by adjudications in jx where the claims
cannot be brought. Maresse.

2. Basic Fairness / Public Policy: There are situations where the application of res
judicata appears fundamentally unfair. The S. Ct. has taken a hard-nosed stance,
however, and has accepted the unfair results of strict res judicata application.
Why?

a. Liberal pleading and discovery rules make it really easy to get a law suit up
and running and gather information. This justifies according final judgment
meaningful finality.

b. Mottie. M sues a Dept’ store with other Ps. They lose. The other Ps
appeal and win, invoking a change in the law that would allow M to sue if he
sued afresh. If M can’t relitigate he is the only member of the class of Ps
that will not be able to recover.

i. Held. Claim preclusion stops M from relitigating. The unfairness
of this holding is mitigated by the fact that M could have joined the
appeal and didn’t. Anyway, there just is no such thing as a public
policy exception to res judicata

Mottie

3. There is no exception for situtions where the law changes such that a losing suit
would become a winning suit. The judgment is still final.

B. Issue Preclusion

1. An issue actually litigated and decided in a case is final as between the two parties
that litigated it.
a. Third parties may use issue preclusion under limited scenarios, but that is
for later.
2. Analysis:
a. The issue must be fully and fairly litigated
i. What are the procedural attributes of the court; Kangaroo court
procedures may not create a final judgment on an issue for later
litigation.
1. Parklane, jury is neutral and therefore not the kind of
procedural difference that must exist
2. But summary, lower court proceeding with no discovery
might be different enough for issue preclusion not to apply.

b. Must be the same issue:

c. It must actually have been decided
i. Little: if it is a general verdict, what must have been decided
ii. You have to work backwards to determine what had to have been
decided

3. Who is bound: Anybody in privity with the litigant.
a. Privity is a narrow concept in light of due process consideration of giving
everyone their day in court
i. A party can actually be not in privity with itself. Widow in Little
sued as successor in interest. She would not be bound by that
judgement if she brough suit for injuries to herself.
b. Three types of Privity:
i. A party that controls another’s litigation is said to be in privity with
it. Why? It has had its day in court.
1. This is narrow. The party has to really control the litigation.
Having the same lawyer or even an important role in the
litigation is not enough
ii. A certain legal relaitonship can establish privity: a partnership,
authorization to act on someone’s behalf, successor in interest
iii. Virtual Privity
1. Again, pretty narrow. Ask Marcus how narrow.

Non-Mutual Use of Estoppel

1. A picture is worth a thousand words on this one

2. Defensive: A party that looses an issue in case #1 can be barred by a defendant
whom he sues on that issue. The second defendant is using non-mutual defensive
collateral estoppel
a. Court can still allow relitigation if:
i. Farness factors miltate for not having case #1 be preclusive
1. Stakes
2. Inconsistent Judgments (50 bus passengers, first 25)
3. Procedural Differences, ie, Kangaroo court
3. Offensive: A party that looses case #1 might be estopped from relitigating an issue
he lost by a plaintiff who wants to establish that issue against him.
a. Policy problem is “wait and see plaintiffs”
i. That is, if P1 wins, P2 can use the holding in case #2 against D1; if
P1 looses, that holding has no preclusive effect on P2.
b. S. Ct. says in Parklane, however, that there is no requirement that P2 join
suit #1, but the ease of joining will be a factor in determining the preclusive
effect of issues litigated in case #1. Factors:
i. Ease of joining the first suit
ii. Fairness:
1. Stakes
a. 5 dollar suit might arguably not be preclusive on a 5
million dollar suit; a good argument can be made
that it should if D saw the 5 million dollar suit
coming around the bend
2. Inconsistent judgments
a. If D wins a bunch of similar suits and then looses
one. There is a pretty good argument that the one is
an aborition and should not be given preclusive
effect
3. Procedural differences
a. Kangaroo court proceedings may always undermine
the preclusive effect of an issue decided:
i. Absence of discovery
ii. No witnesses

Full Faith and Credit

1. The Preclusive effect of a judgement is “part” of the judgment and must be
afforded full faith and credit. See chart below

2. General Exception: A court can always examine jurisdiction if it was neither
litigated or waived (ie, trial on merits with no objection to jurisdiction

#1 State  #2 State #1State #2 Federal #1Federal  #2State or
Federal
Governed by Full Faith and §1738 – full faith and credit Federel Common Law law
Credit provision of the applied to federal courts Governs
Consittion
The state where case #2 is A federal court where case #2 Semtek says: Federal effect
brouht must give holding in is brought must give case #1 court judgment in
Case #1 the preclusive effect the preclusive effect it would diveristy is given the
it would have in the state it have in the state it was preclusive effect of the
was adjudicated in adjudicated in state in which it sat
Exception: State preclusion Exception: There may
law will generally not give be a Federal Interest in
exclusive effect to a claim with giving judgment greater
exclusive jx in federal court. A preclusive effect., ie,
federal court should thus apply wilful violation of a
this rule. The possible FRCP like discovery
exception is where congress orders
has said that you must sue in
federal court for claim X and
all claims arising from the
same transaction.

4. Cases/ Examples:
a. Maresse: