Civil Procedure

Civil Procedure Outline Professor Wax Fall 2001 Chris Seaman I. Subject-Matter Jurisdiction  Definition: subject-matter jurisdiction is the power of a court to adjudicate a case (hear, decide, issue an order, force parties to obey an order). It determines the extent to which a court can rule of the conduct of persons or the status of things. A. Subject-Matter Jurisdiction of the Federal Courts  Federal courts are courts of limited jurisdiction. o Article III, §2 provides jurisdictional power. o A legislative grant is necessary to convey that power to the courts.  Today, the scope of federal jurisdiction is limited to: o Questions of federal law (“arising under” jurisdiction) (§1331) o Diversity cases (§1332) o Admiralty cases (§1333) o Bankruptcy (§1334) o Patents & Copyrights (§1338) o Cases between a U.S. citizen (or resident) and an alien (foreigner)  There are two main types of federal subject-matter jurisdiction: arising-under and diversity jurisdiction.  Lack of subject-matter jurisdiction cannot be waived by parties o Rule 12(h)(3) - Lack of SMJ can be noted at any time during a proceeding (by suggestion of parties or by the court sua sponte), and results in dismissal of the case. o Exception: Des Moines case - did not allow collateral attack for lack of SMJ because the case had already run through appeal to the Supreme Court. Capron v. Van Noorden (USSC, 1804) -  won in district court; P appealed, citing lack of subject matter jurisdiction (no diversity). - USSC dismisses case for lack of SMJ. - Rule: Burden of establishing subject-matter jurisdiction lies w/the P. (Rule 8(a): Complaint must include a statement of the grounds for jurisdiction.) Marbury v. Madison (USSC, 1803) - Federal law (Judiciary Act of 1789) gave Supreme Court original jurisdiction over mandamus actions (under § 1361, now district courts now have original jurisdiction of mandamus actions). - Rule: Article III, § 2 determines the constitutional scope of the judiciary’s power. B. Federal Question Jurisdiction  Article III, § 2 gives federal courts jurisdiction over cases “arising under this Constitution, the Laws of the United States, and [its] Treaties.”  Scope of constitutional “arising under” power was defined in Osborn v. Bank of the United States (USSC, 1824) as “when a question of [federal] law… forms an ingredient of the original cause,” it falls w/in the Constitutional grant. [federal ingredient standard]  Scope of statutory authority is less than the Constitutional allowance. o 28 U.S.C. § 1331 (passed in 1875) is the statutory grant of this authority. o This grant was narrowly construed by Justice Oliver Wendell Holmes in Mottley. Louisville & Nashville R.R. v. Mottley (USSC, 1908) - Ps given lifetime “free passes” on RR in exchange for settling a previous lawsuit. - Congressed passed a law prohibiting “free passes” on RR;  revoked Ps passes. - P sued to get passes back; relied on ’s anticipated defense in an attempt to obtain subjectmatter jurisdiction. - Rule: The P must assert a claim [of his own] with a cause of action under federal law in his complaint. It is not sufficient that  will probably raise a federal issue in defense. (well-pleaded complaint rule) 1 o Subsequently, the Mottley standard has been broadened to permit cases where P’s claim is “necessarily decided” by an issue of federal law. Smith v. Kansas City Title (USSC, 1921) - P sued  (bank) that it couldn’t issue federal bonds because the law that authorized the bonds was unconstitutional. Cause of action was state-created (securities law), but turned on an issue of federal law (whether the statute authorizing the bonds was constitutional). - Court held that when a claim turns on a substantial federal issue (when an issue of federal law is integral to the Ps claim and must be decided), the federal courts have subject-matter jurisdiction even if the cause of action rests w/state law. Moore v. Chesapeake & Ohio Ry. Co. (USSC, 1934) - Similar situation to Smith - Federal law issue must be resolved in determining the state law claim. - Here, however, the Court holds this is not a basis for jurisdiction. - Consensus is that Smith and Moore cannot be reconciled. The inconsistent rules were superseded in Merrell Dow. Harms v. Eliscu (2nd Cir. 1964) - Reaffirms validity of Smith in 2nd Circuit, rules that Justice Holmes’ “cause of action” is “more useful for inclusion than exclusion” of claims that arise-under federal law. o The current test for the scope of federal subject-matter jurisdiction is Merrell Dow. Merrell Dow v. Thompson (USSC, 1986) - Ps sue Merrell Dow in state court; Merrell Dow removes the case to federal court; Ps object on the ground that there is no subject-matter jurisdiction. - Court creates a new test for subject-matter jurisdiction:  When there is a substantial federal issue necessary to the P’s claim, the P must establish that there is a cause of action under the relevant federal law for federal subject-matter jurisdiction.  If there is no explicit cause of action, there may be an implicit (private) cause of action (see Cort v. Ash below). - (In this case, Court holds there is no independent federal law claim under the Food, Drug and Cosmetic Act, so no basis for federal jurisdiction for removal.) o When there is a question under Merrell Dow re: implied (private) right of federal action, the four-part Cort v. Ash test determines whether the P has a federal cause of action. Cort v. Ash (USSC, 1975) - Four-part test for determining an implied (private) federal cause of action: 1. Does the statute create a federal right in favor of the P (is the P a member of the class for whom the especial benefit of the statute was enacted)? 2. Is there any indication of legislative intent, explicit or implicit, to create a remedy or deny one? 3. Is it consistent with the underlying purposes of the legislative scheme to imply a remedy for the plaintiff? 4. Is the cause of action one traditionally relegated to state law, in an area basically the concern of states, so that it would be inappropriate to infer a cause of action based solely on federal law? Bivens v. Six Unknown Agents of the FBI (USSC, 1971) - Court created an implied right of action from the Fourth Amendment of the Constitution. C. Diversity Jurisdiction  Article III, § 2 gives federal courts jurisdiction over “controversies between the citizens of different states.” 2     o 28 U.S.C. § 1332 is the statutory grant of this authority. o As with arising-under jurisdiction, the statutory grant does not reach full limits of Article III: For diversity jurisdiction, there is an amount-in-controversy requirement. To invoke federal subjectmatter jurisdiction in a diversity case, the amount-in-controversy between the parties must be greater than $75k. o This requirement is interpreted liberally in favor of the P. If there is a possibility that the P can win damages greater than $75k, the amount-in-controversy requirement is satisfied. [St. Paul Mercury v. Red Cab Co. (USSC, 1938)] o To reach the amount-in-controversy, a P may aggregate his claims against a .  Cardinal rule of aggregation: a single P can aggregate the amount of multiple claims against a single  in order (they don’t have to be related) to exceed the $75k requirement.  Two or more parties cannot generally aggregate claims against a single  so that all Ps can satisfy the requirement. (Exception: if the Ps are so closely related as to be joint parties (ex: two stockholders that together own all shares of a company), then they may be allowed to aggregate claims.) Complete diversity rule: No P can be from the same state as any . [Strawbridge v. Curtis (USSC, 1806)] State citizenship is determined by domicile (unique federal meaning): o A person is domiciled where he is found and where he intends to remain (domiciled where you are last domiciled). o Corporations can be citizens of multiple states. They are citizens of the following places:  Citizen of a state where it is incorporated, and  Citizen of a state where it has its principle place of business. - Usually the company’s principle place of business is determined by the “place of operations” or “bulk of the corporate activities” test; that is, the place where the company performs most of its activities. - For large corporations with widely scattered production facilities, courts may employ the “nerve center” or “corporate headquarters” test to determine the company’s principle place of business. o A resident alien is deemed a citizen of state where he is domiciled. Diversity is determined at the time complaint is filed and is not affected by subsequent changes in domicile of parties. Mas v. Perry (5th Cir. 1974) -  appeals from adverse judgment on ground of lack of subject matter jurisdiction. - P was a citizen of France, and under common law, his wife would also be considered a citizen of France and thus a citizen of no state (outside of the reach of §1332). - Court suspends common law rule: When husband is an alien, the common rule of “a wife is domiciled where her husband lives” no longer applies. D. Supplemental Jurisdiction  Supplemental jurisdiction is used when a federal court has jurisdiction over some claims between existing parties or between existing parties and new parties [independent claims], but does not have subject-matter jurisdiction over other claims between the parties [dependent claims] that are desirable to adjudicate at the same time as the primary claims.  Traditionally, there were two types of supplemental jurisdiction at common law: pendant jurisdiction and ancilliary jurisdiction.  In 1990, Congress passed 28 U.S.C. §1367, creating a unified system of supplemental jurisdiction that combined (and slightly altered) pendant jurisdiction and ancilliary jurisdiction.  The limits of supplemental jurisdiction are defined by the Constitution and the §1367. The federal rules can be used to add claims and/or parties when supplemental jurisdiction is satisfied under the Constitution and §1367. (laws first, then fed. rules) 1. Laws/Precedent Governing Supplemental Jurisdiction  Pendant and Ancillary Jurisdiction (Before §1367) United Mine Workers v. Gibbs (USSC, 1966) - P brought a federal law claim (independent basis for federal jurisdiction) and two state-law contract claims (no independent basis for federal jurisdiction). If the state-law claims are to be added, there must be pendant claim (supplemental) jurisdiction. 3 - Court develops test for supplemental jurisdiction:  Claims for which there is no independent basis for jurisdiction must arise from the same “common nucleus of operative fact.” If claims arise from the same “nucleus,” they can be added.  If they arise from the “common nucleus of operative facts” as the independent claim, supplemental jurisdiction may includes state-law claims for which there is an insufficient amount-in-controversy. Aldinger v. Howard (USSC, 1976) - P brought a federal question (civil rights claim) case against one , and attempted to bring a related state law claim (battery) against a separate . - Court did not allow jurisdiction over this pendant party because the statute (§1983) specifically prohibited it. (since reversed in another case, but irrelevant for civ pro) - Aldinger creates a presumption in favor of pendant-party jurisdiction unless explicitly negated in the statute. Lower courts to assume that pendant-party jurisdiction exist unless “Congress in the statutes conferring jurisdiction has not expressly or by implication negated its existence.” Owen Equipment & Erection Co v. Kroger (USSC, 1978) - P sues a diverse  (diversity jurisdiction);  impleads third-party D, P tries to assert claim against third-party D. - On summary judgment, P’s original claim against  drops out, leaving only P’s claim against third party D, who is not of diverse citizenship. - Court does not allow jurisdiction over this pendant party - would be an end-run around the complete diversity rule. - Timing and sequence of adding parties does not matter. Only the endpoint matters in subjectmatter jurisdiction. Finley v. United States (USSC, 1989) - Court refuses to allow pendant party jurisdiction in the absence of an express grant of authority by Congress (reversal of the presumption under Aldinger). - Finley’s holding was superceded by §1367 2. Supplemental Jurisdiction Under 28 U.S.C. §1367  In response to the Finley decision, Congress passes §1367 to provide an express grant of authority to grant supplemental jurisdiction.  Section § 1367 was meant to codify pre-Finley case law and preserve Kroger (to preserve the complete diversity requirement).  Three parts to a supplemental jurisdiction analysis under §1367: o §1367(a): “In any civil action in which the district courts have original jurisdiction, the courts shall have supplemental jurisdictions over all other claims (NOT parties) related to the claims in the original action (the primary claim) as provided by Article III of the Constitution.” (all claims that arise from a “common nucleus of operative fact” under Gibbs.)  Requirements to invoke §1367(a): - a primary claim (jurisdictionally sufficient claim). - other claims (jurisdictionally insufficient claims) that are related to same nucleus of facts at issue in the primary claim. amount in controversy satisfied by the independent claim (controversy over whether that has to be true for one P or all Ps - see Abbott Labs vs. other circuits)  Key facts about §1367(a): - Creates a broad, permissive grant of supplemental jurisdiction to all dependent claims that meet the the Gibbs standard (arising from a “common nucleus of operative fact” with the primary claim) under Article III of the Constitution. - Involves only claims between two or more parties (including intervening or joined parties). o § 1367(b): “In any action where the courts have subject-matter jurisdiction based solely on diversity, there is no supplemental jurisdiction for claims made by a P against persons made parties under Rules 14, 19, 20 or 24 when it would destroy diversity.”  §1367(b) attempts to codify Kroger.  Key facts about §1367(b): 4  Applies only when the independent claim is based only on diversity jurisdiction. Applies only to claims by a P. Applies only to persons made parties under Fed. Rule 14, 19, 20, or 24, or persons proposed to be joined as Ps under Rule 19, or parties seeking to intervene as Ps under Rule 24; - Applies only when adding claims and/or parties would destroy diversity. - Amount in controversy rule remains unchanged. Major exception that has caused controversy and a split in the circuits: §1367(b), according to its plain language, does not apply to class action suits under Rule 23. - o §1367(c): “The district courts may decline to exercise supplemental jurisdiction when: 1) the claim raises a novel or complex issue of state law, 2) the dependent claim substantially predominates over the independent claim, 3) the district court has dismissed all independent claims, or 4) in exceptional circumstances.”  §1367(c) attempts to codify the discretionary factors in Gibbs.  Key facts about §1367(c): - Permits the court to exercise its discretion and decline supplemental jurisdiction when some or all of the above-listed circumstances exist. §1367(d): Tolls the (state) statute of limitations while issues re: supplemental claims are pending in federal court. o  Four Major Problems with §1367 o Aggregation rules for multiple claims by one party: What effect does §1367 have on the old amount-in-controversy aggregation rules?  These cases would be originally permitted in federal court; A and B are diverse. 1. A sues B; two related claims 50k each 2. A sues B; two related claims, 80k and 20k 3. A sues B; two unrelated claims, 50k each 4. A sues B, two unrelated claims, 80k and 20k  Under the plain text of §1367, however, 1 and 3 do not have an individual cause of action – no “primary claim” exists (neither meets the independent jurisdiction requirement – fails on amount of controversy).  Courts, however, have decided that §1367 had no intent to change the aggregation rules (by one party) and kept the pre-existing framework. o Adding amounts-in-controversy for multiple claims by multiple parties (Zahn /Abbott Labs problem) (example: class action cases). Defect in diversity problem: when a class representatives’ claims met the amount in controversy requirement, but the claims of other class members did not.  Zahn held that the claim of each class member must meet the amount in controversy requirement.  Some circuits, however, have held that §1367 overrules Zahn, and allows supplemental jurisdiction over claims by parties that do not meet the amount-in-controversy. (plain-language of the statute).  Other circuits disagree and hold that Zahn is still good law. (legislative intent)  Supreme Court could not resolve this issue in Abbott Labs because it split 4-4, which affirmed that particular lower circuit (upholding its legislative intent argument), but is not binding precedent for the other circuits (only four votes to affirm).  (Note: don’t need diversity among all class members under Rule 23.) o Patterson problem: Multiple Ps allowed to sue a single  under Rule 20, even if the amount-incontroversy for some of the Ps is insufficient, because §1367(b) only applies to Ds joined under Rule 20). o Cohill problem:  In Cohill, P amended complaint after removal to affect remand to state court.  §1367(c): if district court has dismissed all claims over which it has original jurisdiction (federal claims), then the district court may decline to exercise supplemental jurisdiction.  Court says 1441(c) is incoherent and that it applies to no claims at all after 1367. (In effect, the Court pasted §1367(c) on top of §1441-1446.) 5 3. Federal Rules of Joinder a. Joinder of Claims: o Rule 13: Counterclaims and Cross Claims  Rule 13(a): Compulsory Counterclaims - Must arise out of same transaction & occurrence. - Failure to assert results in waiver of counterclaim.  Rule 13(b): Permissive Counterclaims: - Do not have to arise out of same transaction & occurrence. - Failure to assert does not result in waiver of counterclaim.  Rule 13(f): Omitted Counterclaims: - When a counterclaim is omitted, the court may allow amendment.  Rule 13(g): Cross Claims: - Permissive (not waived if not asserted). - Must arise out of same transaction & occurrence. Rule 18: Joinder of [Unrelated] Claims  Liberal rule - allows joinder of all claims one party has against an opposing party, even if not related, when the party already has a claim arising out of the same transaction & occurrence against the other party. o b. Joinder of Parties o Rule 20: [Permissive] Joinder of Multiple Parties  Grants permission for federal lawsuits with multiple parties on either side of the v (multiple Ps or multiple s, or both).  Two requirements for joinder of multiple parties (Gibbs requirements): - Claim(s) against multiple parties must arise out of same transaction & occurrence. - Claim(s) against multiple parties must have a common question of law or fact. Rule 14: Third Party Practice (Impleader)  Rule 14(a): When  Can Add a Third Party -  may implead a third party who is liable to the him for all or some of the P’s claim against third-party P. - Third-party  may assert counterclaims or cross claims; raise defenses against third-party P’s original claim; and assert claims arising out of the same transaction & occurrence against the original P (see Rule 13). - (Note: Third-party Ds cannot join new Ps, however. They can only add new third-party Ds.)  Rule 14(b): When P Can Add a Third-Party - When a counterclaim is asserted against a P by the third-party , he may implead that thirdparty D under the rules above. Rule 19: Compulsory Joinder of Parties  Rule 19(a): Joinder of Parties If Feasible - Requires “necessary” parties to be joined if it will not deprive the court of subject matter jurisdiction.  Rule 19(b): Determination When Joinder Not Feasible - When joinder of a “necessary” party is not possible, 19(b) provides for dismissal of the case, or if the party is not that necessary, the continuation of the lawsuit without the party. Temple v. Synthes (USSC, 1990) - P injured by a plate in his spine; sues manufacturer  in federal court and sues doctor in state court.  moves to dismiss for failure to join necessary parties (the doctor) under Rule 19. - Court does not allow dismissal as doctor is not a necessary party; joint tortfeasors are always permissive parties. 6 o o o Rule 22: Interpleader  Nationwide service of process authorized.  See 28 USC §1335. Rule 23: Class Actions [mostly a subject for a complex litigation course]  Rule 23(a): Prerequisites to a Class Action - Applies when there are questions of law and fact common to all members of the class, and joinder is impractical because of the size of the class. Rule 24: Intervention  Rule 24(a): Intervention of Right - Mandatory - party has a right to be in this suit. - Permissive - must get permission from a judge. - Strict test for mandatory intervention: statute must confer a right to intervene, or have an interest in the property and the interest of the intervening party is not protected by existing parties.  Rule 24(b) - Permissive Intervention - Must have a common question of law or fact - Difficult to get - judge will consult the existing parties. o o E. Removal Jurisdiction  Generally, any action brought in state court that the P could have brought in federal court may be removed by the D to federal court (§1441(a))  Key facts about removal: o Only s may remove an action to federal court. o Courts have interpreted §1441 to mean all ’s must agree on removal. o In diversity cases, the action may be removed only if no D is a citizen of the state in which the action is pending. (§1441(b)) o In federal question cases, action is removable without regard to the residence or citizenship of the parties (§ 1441(b)). o Removal is subject to the well-pleaded complaint rule - federal question raised in answer cannot confer jurisdiction. Shamrock Oil & Gas v. Sheets (USSC, 1941) - Court held that a P cannot remove based on a counterclaim when the P originally submitted to the court’s jurisdiction. o o  Cases are removed to the federal district court for the district and division embracing the place where the state cause of action is pending. (§1441(a)). An action removed from a state court that had no jurisdiction to hear the case is not precluded from being heard in federal court. (§1441(e)) Common Strategies for Defeating Removal: o Lower amount-in-controversy to make it less than $75k  Courts make distinction between pre-removal and post-removal by amendment. - Pre-removal: P is the master of his complaint, can do what he wants. - Post-removal: Treated w/skepticism by the courts; may not be permitted o Additional parties  Under a primary federal question claim, §1367(a) gives jurisdiction to pendant state law claims adding parties really doesn’t defeat removal.  Under a primary diversity claim, joining a party who a citizen of the state in which the action is brought can defeat removal under §1441(b). o Additional claims  Adding a claim that does not have supplemental jurisdiction under §1367 can defeat removal of the entire case. o Dropping federal claim  See Cohill, which gives courts authority to remand in this case. Procedures for Removal (28 USC §1446) o s must file notice of removal in federal district court. 7  o o  All s must agree on removal. Must be filed w/in 30 days of receipt of complaint. Remand to State Court (28 USC §1447) o Upon filing of notice, case is deemed removed. o An improperly removed case must be remanded to state court o Motion for remand must be filed w/in 30 days of removal. o Two grounds for remand are specified:  Defect in the removal procedures.  Lack of subject matter jurisdiction (never waive right to remand under this ground). o Under § 1447(d), orders to remand are not reviewable on appeal. o Denials of orders to remand can be appealed and reviewed. Thermtron v. Hermansdorfer (USSC, 1976) - In this case, district court remanded a properly removed case (diversity jurisdiction) for a reason not authorized by removal statute (judge said his docket was overcrowded). - Court, noting that remand was only authorized in two cases, held that §1447(c) and (d) must be read together, allowing for review of remand orders on grounds not specified in statute. Carnegie Mellon University v. Cohill (USSC, 1988) - Ps brought suit in state court, s removed to federal court based on federal question jurisdiction. Ps later dropped federal question claim and sought an order to remand the case to state court. - Court holds that remand of these cases is allowed for reasons of efficiency, fairness, and comity. 8 II. Personal Jurisdiction A. Intro to Personal Jurisdiction  Two requirements for assertion of personal jurisdiction: o Abstract Power Over the Person: Power of the sovereign to bring parties before it and bind them. o Exercise of Power Over the Person: Court must take steps to assert their power over the parties.  This is effected through service of process.  Procedures are geared to provide notice and opportunity to be heard.  Three forms of personal jurisdiction: o In personam jurisdiction: Jurisdiction over the person and his rights/liabilities. o In rem jurisdiction: Jurisdiction over a thing to determine the status of the property. o Quasi in rem jurisdiction: Jurisdiction over property to determine status of disputes not dealing with this property (damages limited to value of property).  Personal Jurisdiction is a constitutional requirement under the Fifth Amendment (federal) and the Fourteenth Amendment (states)  The application of personal jurisdiction is normally a prerogative of the ; when a P files suit, he submits to the court’s personal jurisdiction. o As the ’s prerogative, personal jurisdiction can be waived by  if he wishes. B. Traditional Basis for Personal Jurisdiction  Formal, geographical, territorial, physical presence, authority of sovereign.  Based on the notion that the jurisdiction of a state’s courts extends to the borders of the state and no further.  Traditionally, for personal jurisdiction to be asserted by a court, one of the three was required: o Citizenship in the state (domicile) o Physical presence in the state. o Consent of the out-of-state party. Tickle v. Barton (Supreme Court of WV, 1956) - P was injured in an accident in WV, but the  (car driver) was a resident of VA. WV courts did not have citizenship personal jurisdiction over the  - P serves process on  when he is physically present in WV. Issue is whether  was fraudulently induced to come there for that purpose and whether that nullifies service of process). - Court holds that fraud nullifies service of process. Pennoyer v. Neff (USSC, 1877) (beginning of modern constitutional personal jurisdiction) - Oregon rule allows jurisdiction based on seizure of property in the state coupled with notice published in newspaper. -  collaterally attacks default judgment entered against him on the basis that the court lacked personal jurisdiction when notice of suit was published in newspaper outside of the ’s home state. (Problem: court did not seize property prior to asserting jurisdiction; property was seized after judgment to satisfy judgment.) - Court agrees w/, refuses to enforce judgment of first case. Court rules  was deprived of notice and opportunity to be heard, which is a constitutional Due Process right of the . Milliken v. Meyer (USSC, 1940) - Domicile in a state is alone sufficient to bring an absent D within the reach of the state’s jurisdiction. C. Modern Personal Jurisdiction and Long-Arm Statutes  Functional, contacts/relational, non-intentional/non-geographic “rights” - burden on the .  Principle of where a person was gave way to the principle of whether there was a relationship between the person and the jurisdiction.  These considerations were constitutionalized under the Fourteenth Amendment’s Due Process Clause.  Int’l Shoe was the first case that established the “modern” standard for personal jurisdiction. 9 International Shoe v. Washington (USSC, 1945) -  (Int’l Shoe) a DE corporation with HQ in St. Louis, had salesman operating in Washington state, but no offices. WA sued to collect sales taxes. - Court decides the standard for establishing personal jurisdiction is that there must be “minimum contacts” between  and the forum state. - Reciprocity - D took advantage of and invoked the protection of the laws of the state, so it must also meet its obligations to respond under the law.  After Int’l Shoe decision, states began to pass “Long Arm Statutes” to assert their personal jurisdiction. They employed several means to do so: o Single Action Statutes: point to a single act (committing a tortious act in the state) and provide a rule for service of process. o Activity Statutes: “doing business” in the state. o Laundry List Statutes: list of acts or activities that equated to consenting to personal jurisdiction. o “Catch-All” Statutes: Allow jurisdiction to the limits of Constitution. Hess v. Pawloski (USSC, 1927) - MA law provided that operation of a motor vehicle on roads in the state deemed equivalent to appointing registrar as your agent. - Constructive Consent: Parties were deemed to “consent” to personal jurisdiction simply by driving in the state.  Four concepts in determining minimum contacts: o Reciprocity (International Shoe) o Undue burden on D (International Shoe) o Volition/purposeful availment of the state’s laws (Gray) o Systemic or forum-specific factors (is this forum a good place to litigate? Evidence/witnesses? Interest state has in providing a forum for vindication or protection of its citizens rights?) Evolution of Modern Personal Jurisdiction after Int’l Shoe Gray v. American Radiator (Supreme Court of IL, 1961) - Stream of commerce case. - Court holds that minimum contacts exist where the maker of a product injects that product into the stream of commerce for ultimate sale in another state; not unreasonable to hold maker responsible in that state. Court focuses on foreseeability of maker’s products ending up in the forum state. McGee v. International Life Insurance Co. (USSC, 1957) - CA citizen (P) has an insurance policy with a TX corporation () - Court holds that a single contact (here, a contract) may be sufficient to establish personal jurisdiction if the contact gives rise to the claim being litigated. (specific personal jurisdiction) - Court also weighs systemic factors: 1) CA has an interest in seeing rights of its citizens protected under its law; witnesses located and most events occurred in CA. Hanson v. Denckla (USSC, 1958) - Similar to McGee in form - single contract case, but here the contract is not enough to establish a basis for personal jurisdiction by a FL court over a DE trustee. - Court develops “purposeful availment” standard – to have minimum contacts, the  must avail themselves of the benefits of the forum state’s laws. World-Wide Volkswagen v. Woodson (USSC, 1980) - P purchases car in NY, on the way to destination in AZ where he is an accident in OK and car’s fuel tank explodes. P files products liability suit in OK, naming car dealership (a NY corporation w/no business in OK) the . -  contests jurisdiction on the ground that it had no minimum contacts with OK. - Court holds that  does not have sufficient contacts w/OK; rules there must be “purposeful direction” to be in/derive benefits from the forum state. 10  - Court also establishes a list of plus/minus factors re: minimum contacts. Keeton v. Hustler Magazine, Inc. (USSC, 1984) - P (NY) sues  (OH corp.) in NH federal court because of statute of limitations in NH. - Court holds that  does have sufficient contacts w/forum due to magazine sales (general personal jurisdiction). - Court also holds that it is irrelevant that the P does not have “minimum contacts” with the forum state; by filing the suit, P consents to the court’s personal jurisdiction over him. “Minimum contacts” applies only to s. Burger King Corp. v. Rudzewicz (USSC, 1985) - P (Burger King, a FL corporation) sues  (MI franchisee) in federal court in FL.  objects to jurisdiction on the ground of insufficient contacts. - Court rules that limited but continuous contracts with the forum state are sufficient for personal jurisdiction under the “minimum contracts” standard. - However, court also holds that a contract with an out-of-state party alone cannot establish minimum contacts - prior negotiations, contemplated future consequences, terms of contract, and parties’ course of dealing are all factors that add to this case. Asahi Metal Industry Co. v. Superior Court (USSC, 1987) - Another stream of commerce case. - O’Connor plurality opinion: develops a “purposeful direction” test for stream of commerce cases. In this case, the contacts lie toward the weaker end of the minimum contacts spectrum. - The court also weigh other factors that cut against a finding of personal jurisdiction: forum state has little interest in the dispute, as the plaintiff is not a CA resident; heavy burden on alien D. - Asahi stands for the notion that sometimes a court may be able to exercise personal jurisdiction due to minimum contacts, but can choose not to do so because it would offend “traditional notions of fair play and substantial justice.” (Role of plus/minus factors)   Specific personal jurisdiction over the D results when the D has sufficient contacts with the forum state to warrant jurisdiction over him for matters arising from his activities within the forum, but not necessarily sufficient to warrant general jurisdiction. Specific jurisdiction exists when D has established “minimum contacts” with the forum state re: the facts giving rise to the claim being litigated, evaluated by the differing factors in cases above. o Note: corporate s need not enter the state to have sufficient minimum contacts (business dealings). General personal jurisdiction results when a D has such continuous, systematic and/or substantial activities in the forum state that assertion of jurisdiction is warranted even if the cause of action is unrelated or does not arise out of the D’s activities.  Helicopteros Nacionales de Colombia v. Hall (USSC, 1984) - P (survivors of victims of a helicopter crash in Peru) sue  (Colombian corp.), owner of the helicopter, in TX state court. - Court holds that s contacts with the forum state are not sufficient to ground assertion of personal (general) jurisdiction. The continuous flow of purchases alone is not enough to establish general personal jurisdiction. - Brennan’s dissent: believes this could be a specific personal jurisdiction case. D. Other Bases for Personal Jurisdiction 1. Power Over Property  Since Pennoyer, new forms of property put in rem and quasi-in-rem jurisdiction under scrutiny. 11 Shaffer v. Heitner (USSC, 1977) - Quasi in rem jurisdiction over  cannot be exercised unless the  had “minimum contacts” with the forum state such that in personam jurisdiction could be exercised over him. - Applies the International Shoe due process standard to the assertion of quasi in rem jurisdiction. - Court also confirms that real property in a state will satisfy minimum contacts for jurisdictional purposes most of the time.  Limited appearances are allowed in some states; in these states, you can only limit liability to the value of the property seized by defaulting and not contesting. o If you default (do not show up for a limited or special appearance), you retain the right to collaterally attack judgment for lack of personal jurisdiction. o If you do contest and lose, cannot collaterally attack. o In a QIR case, you may argue the merits of a case and liability will only be up to the value of the property. 2. Presence  Notion of “tag” jurisdiction - serve someone while they are in forum state. Burnham v. Superior Court (USSC, 1990) (4-4 opinion) - Court rules that jurisdiction may be asserted over an individual by virtue of his presence in the state, even if he has no minimum contacts w/it. - Scalia: relies on the history of presence to establish its validity, argues that presence satisfies test of “traditional notions of fair play and substantial justice” because it is traditional. - Brennan dissent: the traditional rules for jurisdiction were changed in the Int’l Shoe test. 3. Consent  Parties can consent to personal jurisdiction through their actions, by waiver, or by contract.  Constructive Consent (Hess) o Business registration laws - to do business in the state, you must register and appoint an agent to receive process. This standard is still being worked out in the courts.  Consent by Appearance o Failure to file a motion under Rule 12(b) raising a defense of lack of personal jurisdiction waives this defense. o General v. Special Appearances  Most states (and federal system) permit a party to contest personal jurisdiction w/out submitting to the court by a special appearance.  Note: If you contest personal jurisdiction in a special appearance and lose, you cannot come back and collaterally attack the judgment (even if you fail to appear to argue the merits).  Only get one shot to litigate the issue of personal jurisdiction; cannot do it in the forum state and on collateral attack.  Consent by Agreement/Contract o Forum-selections clauses - set the forum for any disputes over a contract. They waive objections to personal jurisdiction and venue. Carnival Cruise Lines (USSC, 1991) - Court upholds forum selection clauses, citing benefits: often lower the costs to parties. - These cases are limited in that they are admiralty (boat) cases. - Choice of law clauses (Erie) can perform a similar function. E. Jurisdictional Reach of Federal District Courts 1. Quasi In Rem Jurisdiction in Federal Courts  After Shaffer, QIR jurisdiction requires the same minimum contacts as in personam jurisdiction. o QIR jurisdiction still serves two purposes:  Service of process is easier in QIR (rather than chasing someone to serve them personally, you can seize property and post.)  In states with short long-arm statutes, QIR may be only option (statute may not allow in personam jurisdiction in a case). 12  Federal Rules re: QIR o Rule 4(n) governs QIR jurisdiction in federal courts. (Rule 4(k) deals only with persons, not property.) o Rule 4(n)(1): allows QIR jurisdiction if a federal statute so provides. o Rule 4(n)(2): allows state law (where court sits) to be used to assert QIR jurisdiction in federal court. 2. Rule 4 (Summons)  Rule 4(k)(1)(A): “Piggyback Provision” o A federal district court has power of PJ if a state court of general jurisdiction would have PJ (use state’s long-arm statute).  Rule 4(k)(1)(B): “Bulge Provision” o Federal district court can go over the state border, up to 100 miles from the court, to establish PJ over parties joined under Rules 14 or 19. o Open question on whether minimum contacts are needed:  Yes: U.S. has jurisdiction over anyone within its borders as the sovereign creating the courts, only using 100 miles of this.  No: May not comport with fairness under Intl Shoe (Oxford case).  Rule 4(k)(2): Omni Provision o Enacted by Congress in reaction to the USSC decision in Omni Capital International v. Rudolf Wolff & Co. (1987). Omni - Ps (investors in Louisiana) sued  (British corporation) in LA federal court. LA longarm statute did not reach British s. - Court refused to refused to create a rule authorizing service of process in this situation, leaving it for Congress. This meant some foreign s doing business in the U.S. might not be amenable to service of process in any one state. o Function of Rule 4(k)(2):  Allows a federal district court to assert personal jurisdiction over a foreign  who has minimum contacts with the U.S. as a whole, but not any one state.  Only applies in federal question cases.  Only applies when PJ cannot be asserted in any other place - in no state could PJ be asserted.  Aggregates contacts with U.S. as a whole to ground jurisdiction. Other provisions of Rule 4 o Rule 4(a): Form of Summons o Rule 4(c): Who Can Serve Summons  P must arrange for service  Anyone over 18 years not a party to the suit. o Rule 4(d): Waiver of Service  P can mail service to D requesting waiver.  Reward for D for waiving - 60 days to file answer (20 days).  Penalty for failing to waive - pay costs of personal service. o Rule 4(e): Rules for Service of Process  Piggybacks on rules of the state where the district court is located OR where the service is actually effected.  Can personally deliver it, leave a D’s home with someone responsible, or by delivering a copy to an authorized agent. o Rule 4(h): Service on Corporations  Serve an agent authorized to receive summons.  Hellenic Challenger case: Interprets Rule 4(h) as allowing service who stands in a position to render it “fair, reasonable and just to imply the authority on his part to receive services.” o Rule 4(m): Time Limit  Within 120 days of filing complaint.  13 III. Venue A. General Principles & Statutes  Venue is a final set of rules governing where a trail takes place. Think of it as a series of hoops: 1. Subject Matter Jurisdiction. 2. Personal Jurisdiction. 3. Venue.  Focus of Venue: o Convenience of the parties involved (particularly ’s) o Relation between litigated events and place of trial.  Venue has sub-constitutional status. o Balancing of practicality, rather than substantive rights. o Like personal jurisdiction, venue can be waived if not raised by the . o Forum-selection clauses contract around both personal jurisdiction and venue. 1. Federal Venue Rules: 28 USC §1391  §1391(a): Diversity cases may be brought in: 1. Judicial district where any  resides, if all s reside in same state, or (“Resides” basically means “domiciled,” except for corporations) 2. Judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or in which a substantial part of property that is the subject of the action is situated, or 3. (Fallback provision) Judicial district in which any  is subject to personal jurisdiction at the time the action is commenced, if there is no other district in which the action may other be brought. §1391(b): Federal Arising-Under (and other types of) jurisdiction cases may be brought in: 1. Judicial district where any  resides, if all ’s reside in same state, or 2. Judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or 3. (Fallback provision) Judicial district in which any  may be found, if there is no other district in which the action may otherwise be brought §1391(c): Corporate s o Defines where corporations reside for purposes of § 1391(a)(1) and (b)(1).  A corporation is deemed to reside in any judicial district in which it is subject to personal jurisdiction at the time the action is commenced.  In a state with more than one judicial district, a corporation is deemed to reside in any district in that state within which its contacts would be sufficient to subject it to personal jurisdiction that district were a separate state.  If there is no such district, the corporation is deemed to reside in the district with which it has the most significant contacts. §1391(d): Aliens o Aliens are subject to suit in any district.    2. Federal Change of Venue: 28 USC §1404  For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought. o This is a partial codification of forum non conveniens doctrine (only allows transfer between 2 federal courts, not federal and state court). o Key aspects of change of venue under §1404:  Transfer, not dismissal.  Made upon motion by P or .  Alternative forum: only federal.  Law of transferor forum applies for diversity cases (including choice of law rules and statutes of limitation).  Van Dusen Rule: Law applicable in the transferor forum follows the transfer (some disagreement among circuits on circuit precedents). This prevents ’s from forum-shopping: searching for a forum with more favorable law is moot; law follows transfer. 14 o Transferor and transferee forums must have proper venue, personal jurisdiction and subjectmatter jurisdiction (i.e. this is a court where action could have been brought, but there is a better place for this action). Hoffman v. Blaski (USSC, 1960) -  moves to transfer case to IL under § 1404(a). Action could not have been brought by P in IL originally. - Court holds that §1404(a)’s requirement that the action could have been brought in a court applies at time the suit was originally brought, not at the time of transfer (otherwise  would waive personal defense) 3. Cure or Waiver of Defects: 28 USC §1406  §1406(a): The district court which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought. o Applies only when venue in the transferor court is improper. o Court has power to either dismiss or transfer to court with proper venue. o Either P or  may move for transfer.  §1406(b): Nothing in this chapter shall impair the jurisdiction of a district court of any matter involving a party who does not interpose timely and sufficient objection to the venue. o Venue can be waived. o Venue is waived if not timely objected to. (Rule 12(b)(3)) o Key aspects of §1406:  Transfer or dismissal.  P or  may make motion  Alternative forum: federal  Law of transferee forum applies.  Potential for P’s to continue to pursue the claim without risking the expiration of statute of limitations (may run during case).  Majority rule: statute of limitations of the transferee forum applies (prevents gaming of the system).  Venue must be improper in the transferor forum for § 1406 to apply.  P/J can be lacking in transferor forum (as long as venue is also) Goldlawr v. Heiman (USSC, 1962) - PA court lacked both P/J and venue, but transferred case to NY federal court. - NY court dismissed, claiming lacked the power to transfer the case because it lacked P/J. - Court held that such a case is exactly what §1406 is meant to address; even if a court lacks P/J (as long as it also lacks venue so that § 1406 applies), it can transfer to proper court. B. Forum Non Conveniens   Definition: A court may resist imposition of its jurisdiction even when jurisdiction is authorized by the letter of a general venue statute. (Too inconvenient for the  or court to litigate the case.) Key provisions: o Only dismissal, not transfer, but only if there is an alternative forum. o Only on ’s motion (inconvenient for him) o Alternative forum: foreign or state court.  In federal system, FNC only applies where this is a more convenient non-federal court (state or foreign) - § 1404(a) covers the rest. o Substantive law of the alternative forum applies:  But statute of limitations may be waived as a defense by the  as condition of dismissal (let you move to more convenient forum, if you allow this).  Substantive law taken into account in dismissal decision (will the different law significantly impact the outcome of the case?). o Dismissing forum must have venue, personal jurisdiction, and subject-matter jurisdiction. o No venue and personal jurisdiction necessary in the alternative forum (if waived). 15  Three-part test for appropriateness of FNC: 1. P-specific factors: a. Connection to the forum (geographic); weight given to P’s choice of forum. b. Presence of evidence and witnesses for P’s case. c. Substantive law concerns (choice of law). 2. -specific factors: a. Presence of witnesses and evidence for ’s case. b. Third-party practice (if  needs to implead a party). 3. Public or forum-related interests: a. Burden on the jury/court (familiarity with the law to be applied). b. Event of local concern or interest. c. Connection of events/persons to the alternative forum. Piper Aircraft v. Reyno (USSC, 1981) - Scottish P’s sued  (airplane maufacturer) for damages from a plane crash in Scotland. - After removing and transferring to PA, ’s moved for dismissal on the ground of forum non conveniens. Alternative forum is available, and s agree to be sued in Scotland. - Supreme Court upholds dismissal, applying the three-part test for FNC (above), and finds weight of factors points to Scotland as the appropriate forum. 16 IV. Notice & Opportunity to be Heard A. Notice  Adequate notice of a lawsuit is part of due process rights.  Components of Due Process: 1. Power over the person (personal jurisdiction). 2. Perfection of the power over the person through correct service of process. 3. Adequate notice of the lawsuit. 4. Opportunity to be heard. - Defects in any of these factors means due process rights of a party are violated. - Notice of a suit is given by service of process on a  (see Rule 4 above)  Adequacy of Notice o Standard of “best notice practicable” o In-person service of process is the standard against which other means of notice are measured. Mullane v. Central Hanover Bank & Trust Co. (USSC, 1950) - Court creates a single standard of notice: best notice practicable. - In all cases, notice must be reasonably calculated to succeed; provide notice to the most people in an efficient manner. - Notice need not reach all parties; just requires best efforts practicable. - Test: what would be the most effective and efficient way to inform the parties of the situation given who the parties are and the means of service available. Mennonite Board of Missions v. Adams (USSC, 1983) - Traditional method of notice used here: publication and seizure. - Court holds this is not the best notice practicable: more effective service is available at a reasonable cost, and because the name of mortgagee is available through public records:, personal service or mailed notice should be required. Greene v. Lindsey (USSC, 1982) - Court holds that an eviction notice posted on tenant’s doors not sufficient notice; notice must be mailed to the tenants. B. Opportunity to Be Heard  Parties must have an opportunity to be heard on their side of the case.  Due process requires parties have a chance to participate in the resolution of a dispute and present their side of the issue.  Rule 64 - Seizure of Person or Property o “Provisional remedies” - temporary restraining orders, preliminary injunctions, pre-actions attachments or seizures. o These are exceptions to the constitutionally required opportunity to be heard. Fuentes v. Shevin (USSC, 1972) - P sued in federal court to challenge the constitutionality of FL pre-judgment seizure procedures. - Court finds FL procedure does not comport with due process: due process requirements of notice and opportunity to be heard ensure that a fair decision-making process is followed. The pre-deprivation hearing in FL was one-sided and based on an affidavit only, debtor was not given any opportunity to present her case. Sniadach v. Family Finance Corp. (USSC, 1969) - Court holds that pre-judgment garnishment (seizure) of wages violated due process. Mitchell v. W.T. Grant Co. (USSC, 1974) - Court upholds a pre-hearing seizure of property in LA, distinguishes from Fuentes because 1) creditor makes required showing before a judge, not a clerk; 2) documentary proof is needed to satisfy a more narrow standard. 17 Mathews v. Eldridge (USSC, 1976) - Different type of case: right vs. gov’t benefit. - Court develops a three part test to determine whether procedures for an opportunity to be heard are constitutionally sufficient: 1. Private interest involved 2. Risk of erroneous deprivation vs. the value of more procedures and safeguards 3. Cost/burden of the additional procedure Connecticut v. Doehr (USSC, 1991) - Court extends the Mathews Test to rights (here, seizure of a home). United States v. James Daniel Good Real Property (USSC, 1993) - Federal statute provides for forfeiture of property relating to drug crimes. In an ex parte proceeding, magistrate allows property seizure w/out prior notice or an adversarial hearing. - Court finds due process considerations apply to this forfeiture, applies Mathews test. to this forfeiture action. - This seizure of property is not one of extraordinary circumstances to justify the postponement of notice and hearing. 18 V. Ascertaining the Governing Law (Erie questions) A. The Erie Doctrine 1. Introduction to Erie  The Erie Doctrine involves choice of law problems. o Question: “Which sovereign’s law should apply to the dispute? o Two Choice of Law problems:  Horizontal (w/in the same court system): Law of which state applies? (Conflict of laws rules)  Vertical (between different court systems): Choosing between state or federal court? (Erie doctrine)  Statutory Underpinnings of Erie: 1. Rules of Decisions Act (28 UCS § 1652)  Laws of the several states shall be the rules of decision in civil actions in the courts of the United States, in cases where they apply, unless the Constitution or federal law provides otherwise.  Dates back from the Judiciary Act of 1789.  Questions: - Does this apply to statutory law or decisional law, or both? - Does this cover substantive law or procedural law, or both? 2. Rules Enabling Act (28 USC § 2072)  Congressional grant of authority to the Supreme Court to prescribe rules of practice and procedure for cases in federal courts.  Prohibits such rules from abridging, enlarging or modifying any substantive rights.  Distinction between substantive and procedural is unclear, resulting in tension between § 1652 (laws of the several states shall apply) and § 2072 (federal authority to provide for rules of procedure).  In general, courts have allowed federal rules of procedure to trump state law (even when the distinction is unclear). 2. History of Vertical “Choice of Law” Problems (pre-Erie) Swift v. Tyson (USSC, 1842) - Interpretation of the Rules of Decisions Act that stood for nearly 100 years. - Justice Story, writing for a unanimous court, decided that the Rules of Decisions Act applies only to statutory law of the states.  Problems with Swift: o Created the opportunity for forum shopping (see B&W Taxicab). o Deprived states of authority to effect policy through both statutory and common law. o Treated in-state P’s differently from out of state P’s o Separation of Powers problem: allowing federal courts to “make law” violates the Constitution’s delegation of legislative authority to Congress. o Federalism problem: allowing federal courts to “make law” in areas reserved to the states violated federalism principle. Black & White Taxicab v. Brown & Yellow (USSC, 1928) - Illustrates problems with Swift; classic case of forum shopping. - KY corporation (P) reincorporated in TN in order to gain diversity jurisdiction; federal court was then able to apply its “own” common law instead of KY common law to grant a favorable judgment to P.  Holmes dissent: “Legal Idealism” in Swift is not realistic - a “transcendental body of law” does not exist. Furthermore, federal common law is unconstitutional. 3. The Rise of Erie Erie R. Co. v. Tompkins (USSC, 1938) - P (in PA) hit by  (NY) railroad; sued for injuries. - PA common law would have denied P recovery as a trespasser, while federal “common law” under Swift interpretation would have allowed P recovery, so P sued in federal court and won 19  Court overrules Swift v. Tyson, holding the Rules of Decisions Act applies to both state statutory law and to state decisional law for diversity cases. Rationale for Erie: o Eliminates forum-shopping and disparity between federal and state rulings. o Eliminates discrimination against in-state ’s. o Restores balance of power between federal and state courts, recognizing and preserving their autonomy and independence. o Acknowledges no convergence of opinion after Swift. Aftermath of Erie: o Primary holding: Federal courts required to follow state substantive law, but follow federal procedural law, in diversity cases. o Certification: Some states allow federal courts to certify questions of state law to the state supreme court, to clarify state law position on an issue. o Unguided Erie choices: When there is no precedent from the state supreme court, federal courts can interpret lower court rulings or just guess at what the state supreme court would have ruled. This may allow some forum-shopping, but the result is probably unavoidable.  B. Evolution of the Erie Doctrine Guaranty Trust v. York (USSC, 1945) - Question of whether a state statute of limitations applies in a diversity suit on that state created right. (Actually a question of when a state rule applies or whether a judge-made rule applies.) - Court develops the “outcome determinative test” to decide whether a state procedural rule should be followed under Erie: 1. If the use of the rule will lead to a substantially different outcome than use of the judge-made rule, the state rule applies. 2. This is intended to encourage uniformity in decisions between state courts which enforce the rule, and federal courts which have the option. 3. An opposite rule would lead to the forum-shopping Erie tries to prevent. Byrd v. Blue Ridge Rural Electric Cooperative (USSC, 1958) - In this case, the question is allocation of decision-making power between the judge and the jury. Possible conflict between state common-law and the Seventh Amendment. - Court holds the state law must give way to important federal interest in jury trials (7th Amendment). - In effect, the Court modifies the outcome determinative test to allow for consideration of legitimate federal policy interests. Two Qs: 1. Is the difference in rules outcome determinative? - If Y, presumption in favor of state rule unless federal interest. - If N then apply the federal judge-made rule. 2. If the difference is outcome determinative, is there a strong federal interest in following the federal rule? - If Y, then the federal rule is followed. - If N, then follow the state rule. Hanna v. Plumer (USSC, 1965) - Case of conflict between a state rule and a Federal Rule of Civil Procedure re: service of process. - Court holds the federal rule applies in this case: Hanna Part I:  Refinement of the outcome determinative test.  Must look at the totality of the rule.  From an earlier perspective, the difference in rules amounted to nothing more than which type of service to use.  This would not affect the outcome of the case for most parties.  Viewed from the perspective of this case, the choice of service is dispositive (but this isn’t the view the court adopts). 20 Hanna Part II:  If a rule is “arguably procedural” - authority for it found in Article III - then it is presumptively valid.  Even if use of the federal rule would affect the outcome of the case, it applies because it trumps the state rule (Supremacy Clause).  Rules Enabling Act - the rules are a constitutionally valid grant of Article III power to the courts to make rules (broad reading). Modified Outcome Determinative Test: - The outcome test cannot be applied without reference to the twin aims of the Erie decision:  Will the choice of the federal rule encourage forum-shopping?  Will the choice of the federal rule lead to unequal administration of the laws (different outcomes in federal and state courts)? - A federal rule is valid even if it affects the outcome of the case, as long as it does not lead to forum shopping or unequal administration of the law. - Analysis of federal rules under § 2072 (Rules Enabling Act): 1. Does the rule regulate procedure (“arguably procedural”)? 2. If it does, does the rule “abridge or modify substantive rights” provided by state law? Walker v. Armco Steel Corp. (USSC, 1980) - Conflict between state law and FRCP Rule 3, for determining when an action begins for purpose of statute of limitations. - Court finds that when the Federal Rule is applicable, the test is whether the Rule was within the scope of the Rules Enabling Act [arguably procedural], and if so, within a constitutional grant of power under the Necessary and Proper Clause of Article I [within power of Congress] (rules never fail this). - Here, however, there is no direct collision between the rules, so we don’t have to apply the Erie/Hanna test, and state law applies. Stewart Organization, Inc. v. Ricoh Corp. (USSC, 1988) - Conflict of a state law and federal law re: change of venue - First question: is the federal statute “sufficiently broad” to control the issue before the court (is there a direct collision)? Y - federal statute is sufficiently broad to cover this issue. - Second question: is this a valid exercise of Congress’ power? Y - this rule is “arguably procedural.” Gasperini v. Center for Humanities (USSC, 1996) - Conflict between a state rule and a federal standard for JNOV. - Ginsberg sees this as a conflict between state statute and judge made rule, finds it implicates the twin aims of Erie, and thus state law controls. - Dissent: Fed Rule 59 (one of the “common law” grounds for a new trial was excessive damages) speaks to this issues and is sufficiently broad to cover the issue, thus causing a direct collision between fed rule and state rule. Therefore, the federal rule should trump the state statute. Klaxon Co. v. Stentor Electric (USSC, 1941) - Choice of law question. - Court holds that to promote uniform application of substantive law within a state, federal courts must apply the conflict-of-laws rules of the states in which they sit. This prohibits horizontal forum-shopping (as opposed to vertical). 21 C. Wax’s Method of Solving Erie Problems Qs to ask in an Erie situation: 1) What kind of rule is the federal rule? 2) Does the federal rule conflict w/the state rule? 3) Perform the analysis appropriate to rule.  First, determine whether there is a conflict between federal rule and state law in the case. (Is the federal constitution/statute/rule sufficiently broad to control the issue before the court? Is there a direct collision between the federal rule and state law?)    If Y, proceed to categorical analysis below. If N, then the state law applies. (Ex: Walker v. Armco: “federal rule not in direct conflict”) Then, determine which category of conflict exists between federal rule and state law: 1. Federal Constitution vs. State Rule  Federal Constitution always trumps state rule. End of discussion. 2. Federal Statute vs. State Rule  Federal Statute trumps the state rule (Supremacy Clause) if: 1. Federal statute covers the point in dispute, and 2. Statute is a valid exercise of Congressional authority. - “Arguably procedural.” - Necessary and Proper Clause.  Ex: Stewart v. Ricoh.  Statutes will almost always pass this test. 3. Federal Rule of Civil Procedure vs. State Rule  Federal Rule trumps state rule (Supremacy Clause) if: 1. Federal rule covers the point in dispute, and 2. Rule is a valid exercise of Congressional authority (Article III power).  Rules are considered a valid exercise of Congressional authority through the Rules Enabling Act (broad reading).  Note: Validity of federal JNOV rule never decided by the Supreme Court (could be an exam Q) 4. Federal Common-Law Rule (judge-made) vs. State Rule  Use Hanna II test: 1. Does the use of different rules affect the outcome? (outcome-determinative test)? 2. If it does, does this change implicate the twin aims of Erie: - Discouraging forum-shopping. - Providing for equal administration of the laws.  Ex: See the judge-made rules in York and Byrd  If you have this kind of question (federal common-law rule v. state rule) on an exam, step into the shoes of the party deciding where to bring suit (internal point of view). Would you forum-shop (in any of the states or to the federal system) as a result of the different rules? 22 D. The “New” Federal Common Law  In general, there is no federal “common law.” o Separation of Powers concern: power to make law lies with Congress. o Federalism concern: Areas assigned to states for regulation and legislation.  Federal courts are implicitly authorized to make some common law: o When Congress and the Constitution have not spoken to the substantive rights, and the states have not addressed an issue. o Deals primarily with issues of federal question:  Necessary to preserve federal powers.  Interpret/fill gaps in federal statutes (see Cort v. Ash implied remedy test). o Federal common law is subject to the Supremacy Clause - states must apply these doctrines.  Three areas of substantive federal common law: 1. Preservative  Courts fill in gaps in rules.  Reserved for quintessential federal powers where there are no state rules: - Military, international relations, Presidential powers (immunity). - Government in its commercial capacity (Clearfield Trust).  Such common law is necessary to make the government function. 2. Pre-Emptive  Rules for bodies of law already enacted to answer questions Congress did not address.  State rules won’t work because they may undermine the federal law.  Ex: Labor-Management Relations Act. Courts created special federal contract rules to promote uniformity under the Act. 3. Interstitial  Courts act to fill in total gaps in the law (as opposed to pre-emptive common law making, where state rules may exist but are not appropriate).  Most common in broad federal statutes (i.e. Sherman Antitrust Act).  Example: Making up a statute of limitations for a unique federal cause of action. Clearfield Trust v. United States (USSC, 1943) - Federal government acting in a money-disbursing capacity. U.S. sues  to collect money on a fraudulently endorsed federal check, which the  had guaranteed all endorsement. -  raises the defense of notice delay (U.S. took too long in notifying). Delay in notification is a state law rule. - Court refuses to apply the state rule to the U.S. in this capacity. Authority to issue check arose from Constitution, so rights, duties and obligations should also be governed by Constitution - First presumption in this case is to adopt the state law. Erie seems to promote such a view: promotes as little disparity. However, federal interest in uniformity trumps Erie presumption. 23 VI. Pleading A. Modern Approach to the Complaint; Dismissal on the Pleadings Dioguardi v. Durning (2nd Cir. 1944) - Court of Appeals finds P under Rule 8(a) is only required to include a “short and plain statement of the claim showing [he] is entitled to relief.” - Court says all you need is a possibility that these facts could amount to a claim for legal relief under some legal theory. Lodge 743 v. United Aircraft Corp. (D.Conn., 1962) - Rule 12(e) motions are disfavored because of liberal notice pleading standard of Rule 8(a) and because of liberal discovery rules. Dismissal on the Pleadings Rule 12(b)(6) - Failure to state a claim for which relief can be granted. If matters outside the pleading are presented to the court, the motion is treated as one for Summary Judgment under Rule 56.  Rule 12(c) - Judgment on the Pleadings. Rule Out Rule: Unless the complaint rules out any chance of  willing, the court will usually allow a  to go forward.  Garcia v. Hilton Hotels Int’l. Inc. (PR, 1951) B. Answer, Reply and Amendments C. Burdens of Production, Persuasion & Pleading D. Testing the Substantiality of Claims: Summary Judgment and Judgment as a Matter of Law  Summary Judgment (Rule 56) Analyzing Motions for Summary Judgment 1. First identify:  Who is making the motion?  Who has the burden of production? a. To succeed on a motion for summary judgment, court must find:  Non-moving party has not met its burden of production on an issue (if the non-moving party has it), and the moving party has.  Non-moving party has not created a genuine issue of material fact.  There is no material dispute on the facts, and the moving party is correct on the law. b. To defeat a summary judgment motion, court must find:  Moving party has not met burden of production, and the non-moving party has met its burden of production.  Non-moving party has created a genuine issue of material fact, on the correct view of the law.  Genuine: supported by competent evidence.  Material: Relevant to the question of law.  There is no material dispute on facts, but the non-moving party is correct on the law (who will usually file a cross motion for summary judgment), and the moving party is not. 2. Order of analysis: a. Determine if the non-moving party has met burden of production:  If yes, is there a genuine issue of material fact.  If no, S/J motion is granted. b. Determine if there is a genuine issue of material fact:  If yes, case proceeds to trial for fact-finder to resolve dispute.  If no, judge decides question of law. c. Determine who is correct on the question of law: 24   If moving party, S/J motion is granted. If non-moving party, S/J motioned denied (although this party is likely to have filed a cross motion for S/J, which would be granted). e. Celotex Corp. v. Catrett (USSC, 1986) - Court finds that , who does not have the burden of production, is not required to submit additional evidence when moving for summary judgment. (forces P to show evidence.) f. Anderson v. Liberty Lobby, Inc. (USSC, 1986) Court holds that in ruling on a motion for S/J, the judge must view the evidence through the “prism of the substantive evidentiary standard.”   For both summary judgment and directed verdict stages. When considering whether there is a genuine issue of material fact, judge must bear in mind the “actual quantum and quality of proof” necessary to prove libel. E. Judgment as a Matter of Law Rule 50 - Judgment as a Matter of Law Rule 59 - New Trials Rule 61 - Harmless Error Rule:  No error that is not prejudicial is grounds for a new trial.  To be prejudicial, the error must have a possible effect on the outcome. VII. Discovery & Pre-Trial Management A. Discovery Reform  Discovery: Method by which the parties obtain information for use in litigation or in anticipation of litigation.  Goals of Discovery: o Keep litigation from turning into a game won by the party with more resources or superior access to information (leveling device). o Eliminate the element of surprise during the trial. o Facilitate a search for the truth by ensuring both sides are fully prepared to advocate for their position. o Dispenses with irrelevant/unimportant issues.  Old vs. New Discovery Rules o Under old rules, parties had to request discovery for the process to begin. o Under new rules, the filing of a complaint triggers the duty of the opposing party to disclose matters alleged with “particularity.”  Scalia opposes new rules because they are not compatible with an adversarial litigation system (put attorneys in the position of disclosing information, perhaps undermining their client’s position.) B. Scope of Discovery Rules  Extremely broad for parties involved in the lawsuit.  Standard for discoverable material: any matter not privileged relevant to the pending subject matter. Rule 26(b)(1). C. Rule 26 - Required Disclosure; Methods to Discover Additional Material  Mandatory spontaneous disclosure under Rule 26(a): 1. Identifying information for people likely to have discoverable information. 2. Copies/descriptions of documents, data, and other tangible things. 3. Computations of damages claims. 4. Insurance agreements. 5. Identity, reports, opinions of experts expected to testify at trial (a)(2). 6. Identity of witnesses. (a)(3)(A) 7. Identity of evidence/exhibits to be presented at trial. (a)(3)(C)  Discovery scheduling conference under Rule 26(f) – parties must develop a proposed discovery plan. 25 D. Discovery Limits:  Privileged material like attorney-client communications (Rule 26(b)(5))  Work product (Rule 26(b)(3) and (4)).  Discretionary grounds for court to limit discovery: (Rule 26(b)(2)) o Unreasonably cumulative or duplicative, or obtainable from some other source that is more convenient, less burdensome and expensive. o Party has already had ample opportunity for discovery but has not done it. o Cost of discovery outweighs its benefits, considering these factors:  Discretionary grounds for court to issue protective orders: (Rule 26(c) o Court has authority to limit discovery that would annoy, embarrass, harass, oppress, or impose and undue burden on a party. o Court has authority to tailor protective orders under 26(c) to fit the situation; outright granting or denial of orders is not necessary. Marrese v. American Academy of Orthopaedic Surgeons (7th Cir., 1984) Seattle Times v. Rhinehart (USSC, 1984) E. Discovery Mechanisms 1. 2. 3. 4. 5. 6. 7. 8. 9. F. Rule 26(d) - Timing and Sequence of Discovery Rule 26(e) - Supplementation of Disclosures and Responses Rule 30 - Oral Depositions Rule 31 - Written Depositions Rule 32 - Use of Depositions in Court Proceedings Rule 33 - Interrogatories Rule 34 - Document Production Rule 35 - Physical and Mental Exams Rule 36 - Requests for Admission Privileges 1. 2. Privileges Generally (Rule 26(b)(5)) Work Product Rule (Rules 26(b)(3) & 26(b)(4)(B) Hickman v. Taylor (USSC, 1947) - Court creates a two-tiered privilege for “work product”: 1. Qualified Work Product Privilege - Applies to documents and things. - Adverse party cannot have access unless there absolute need demonstrated by the party. 2. Absolute Work Product Privilege - To the extent a document contains mental impressions or plans of an attorney, this material is not discoverable. - Access to this information could “chill” preparation efforts. G. Experts 1. Testifying Experts (Rule 26(a)(2)) 1. Required under spontaneous disclosure provisions. 2. Report prepared and signed by the expert is required. 3. Lists other information that must be disclosed. 4. Rule 26(b)(4)(A) - Parties may depose testifying experts. 2. Non-Testifying Experts 1. Rule 26(b)(4)(B) - Facts or opinions held by a non-testifying expert retained in anticipation of litigation may be discovered (through depositions or interrogatories) only upon showing of exceptional circumstances or need. 26 VIII. Prior Adjudication A. Stare Decisis  Stare decisis is the notion that like cases should be decided alike. o SD applies to issues of law, not fact. o Prudential doctrine: not the same status as firm doctrines like res judicata.  Rules for which courts follow which precedents: o Courts must follow their own decisions. o District courts must follow their Circuit Court of Appeals decisions.  Across Circuits, decisions may be persuasive, but not binding. o Supreme Court decisions are binding on all federal courts, and decisions on federal issues are binding on all state courts. o State courts are not bound by federal court state law decisions.  When deciding state law cases, federal courts look to state supreme courts.  Federal district courts can follow state supreme courts, rather than Circuit Court of Appeals. B. Claim Preclusion (Res Judicata)  Res Judicata means “the thing is decided.” As a principle, it prohibits the relitigation of claims that have been adjudicated (or “merged” claims that should have been adjudicated in the first action)  Four prerequisites for Res Judicata to operate: 1. Final judgment in first action. 2. First judgment must be on the merits (full and fair opportunity to litigate) 3. Parties the same in first and second actions. 4. Applies to any claim that was brought or could have been brought arising out of the same transaction and occurrence.  RJ precludes collateral attack on prior final judgments. o Judgments become final when the time to appeal expires, court of appeals issues a decision, or when a court of appeals rejects an appeal. o Other dispositions rendering finality:  Full trial.  Summary judgment.  Judgment as a matter of law (directed verdict or JNOV).  Default judgment (except for lack of P/J question).  Rule 41 dismissals: - Without prejudice - not final. - With prejudice - final.  Procedural dismissals under Rule 12 are not final judgments on the merits (but they are final decisions as to the subject of the motion). Federated Department Stores v. Moitie (USSC, 1981) - 12(b)(6) dismissal for failure to state a claim is a judgment on the merits.  Justifications for Res Judicata: o Judicial efficiency - saves resources of courts from trying the same case repeatedly. o Fairness to  - once you have dragged a party into court, all matters should be resolved for all time (prevents harassment). o Not unfair for person suing - he has had his “day in court” and should only get “one bite at the apple.” Rush v. City of Maple Heights (OH, 1958) - Question of splitting cause of action (personal injury vs. property injury). - Court rules no; this is an example a claim that “could have been brought.” C. Issue Preclusion (Collateral Estoppel)  Four prerequisites for collateral estoppel: 1. Same issue in both actions. 2. Issue must have been actually litigated in first action.  Issue must have actually been in dispute. (not stipulated or conceded) 3. Issue must have been necessarily decided in first action.  Was this a logical precedent for a judge’s decision? 27 4.  Problem with general jury verdicts - alternative grounds for deciding. Issue must have been necessary to the judgment in first action.  Problem with judicial opinions listing several grounds.  Two or more alternative sufficient grounds get no preclusive effect for either ground (if one ground is defective, it will not be appealed because the other ground is sufficient: caution about perpetuating possibly defective and uncorrected grounds).  Mutual Collateral Estoppel: o Applies when parties are the same. o Distinguished from res judicata:  In RJ, same nucleus of facts/set of events.  In CE, may have only a few facts in common, but will have a different set of facts and possibly a new theory of law (clearest example is events separated in time). o Collateral estoppel applies to only part of the case. Cromwell v. County of Sac (USSC, 1876) - First case: legal decision made concerning status of bonds: fraudulently issued. - Second case: rule that you could not collect unless you were a bona fide purchaser. - Court holds only collateral estoppel effect for the status of the bonds. Because new bonds are at issue, the question of whether the P was a bona fide purchaser of them is a new, unlitigated issue.  Non-Mutual Collateral Estoppel: o Analyzing non-mutual collateral estoppel cases:  Parties the same, or is the right party the same?  Same requirements as above (same issue, necessarily decided, etc.)  Does the doctrine of non-mutuality apply? o Estoppel never applies to parties not bound by (not a party to) a previous judgment (must have your “day in court”). o However, a party asserting preclusion need not be a party to the first action, as long as preclusion is asserted against a party was a party. d. Bernhard v. Bank of America (CA, 1942) - -  asserts collateral estoppel defensively, to preclude relitigation of who owns a bank account, even though he was not a party to the first action, but the  was a party to that action. Court finds no reason to keep the “mutuality” requirement. Not unfair to the party against whom the preclusion is asserted (she had her day in court to litigate this issue and lost). Blonder-Tongue Laboratories v. University of IL Foundation (USSC, 1971) - First case: P patent holder (University) sued a  in a patent infringement action, and the patent was held to be invalid. - Second case: Court overrules the mutuality requirement established in Triplett. - This holding only allows defensive use of non-mutual estoppel. Parklane Hosiery Co. v. Shore (USSC, 1979) - Offensive use of non-mutual estoppel case. (In a piggyback case, Ps sue the  company for an SEC violation, after government sues first and wins. P asserted the  was collaterally estopped from relitigating the fraud issue determined in the government’s suit.) - Court suspends the mutuality requirement for offensive use and replaces it with a rule of discretion, giving judges discretion to allow offensive use. Two reasons:  Offensive use is not efficient: encourages a wait-and-see attitude among Ps and provides no incentives to consolidate claims.  Because of lower stakes in first action,  may not have anticipated the full extent of liability in a first case and it may not have defended as vigorously as it could have.  Martin v. Wilks (USSC, 1989) 28 - Illustrates the principle that non-parties cannot be bound by a decision. - In this case, the remedy affected the rights of non-parties (common in complex, institutional remedies). When Ps challenges the consent decree in first case (a final judgment), s assert that Ps claims are estopped (Ps should have intervened in the first case). - Supreme Court holds the P’s suit is not precluded, because 1) they were not a party to the first action, and 2) the judicial system never places the burden on a non-party to join an action or risk collateral estoppel, even if their interests are involved. Antrim Mining v. Davis (M.D. PA, 1991) - Illustrates the principle that you cannot bind others to a judgment just by saying so (including a provision).  Offensive and Defensive Use of Non-Mutual Collateral Estoppel o Offensive: “Offensive use of collateral estoppel occurs when the P seeks to foreclose  from litigating an issue the  has previously litigated unsuccessfully in an action with another party.” (Parklane).  For offensive use of non-mutual collateral estoppel, the four prerequisites for collateral estoppel must be met, and the court must consider other factors including: - Does this encourage a “wait and see” approach? - Did the  litigate the first case aggressively enough? - Was the  at a procedural disadvantage (he did not chose forum)? - One or more prior inconsistent judgments may make giving preclusive effect to one unfair. o Defensive: “Defensive use occurs when  seeks to prevent a  from asserting a claim the  has previously litigated and lost against another ” (quoting from Parklane, example is Blonder-Tongue.) 29