PERSONAL JURISDICTION

Stage 1 Pre-Intl Shoe:

See states in international law model Implied consent There could only be personal jurisdiction with in rem or in personam actions, not

quasi- in rem A real concern with service of process Pennoyver v Neff (1877)

Stage 2 Intl Shoe breaks through/ Minimum Contacts Analysis:

1945 – legal realism articulated the difference between specific and general jurisdiction long arm statutes come in to determine the reach of personal jurisdiction, in order

to allow local plaintiffs greater ease in pleading locally generated actions

Stage 3: Current minimum contacts analysis:Themes of state sovereignty, protection of due process along with individual will to enter within the power of another’s domain

Does cause of action arise out of or relate to D’s contacts with the forum?

YES > Specific Jurisdiction ?

1. Was there purposeful availment?

BK 1985: “contract allowing enjoyment of state’s laws as minimum jurisdiction” (yes)

World Wide Volkswagen 1980: even if regional NY retailer could foresee that car be driven to another state, he did not purposefully avail himself of the benefits of forum state (no)

Asahi 1987: O’Connor: purposeful availment requires something additional beyond entering stream of commerce (sign of globalizing economy); Brennan: stream of commerce is typically enough to satisfy purposeful availment but here it is an issue of fundamental fairness (no)

Hanson v Denckla 1958: articulation of “purposeful availment” test, here a woman recently moved to FL cannot have trust decided by FL laws (no)

Gray 1961: Entering into sales contracts with customers in IL allows them to benefit from the state’s laws (yes)

2. AND Is it reasonable?

BK: Using VW view on reasonableness, in VW it went beyond a NY dealer’s reasonable calculations to be tried in OK; whereas it is not beyond a franchisee of a

firm based in FL’s reasonable calculations to be tried in FL (in direct contact with FL laws) (yes)

McGee 1957: One contract is reasonable based on the fact that the company was using it as a point of entry (yes)

Pebble Beach 2006: purposeful availment PLUS; 3 part test – 1) purposeful availment, 2) claim arising out of those activities, 3) exercise of jurisdiction is reasonable (no)

Shaffer v Hetiner 1977: mere presence of property is not enough to meet minimum contact requirement, here D’s ownership of one stock of a company incorporated in DE is not enough for personal jurisdiction (no)

Brennan: generous view on US companies being tried across the US, draws the line internationally [should be personal jurisdiction over VW bc cars are unique situation (dissent), should be personal jurisdiction in BK bc K with FL co. allowed it to enjoy FL laws (majority), should not be personal jurisdiction over Asahi bc it is fundamentally unfair (concurrence)], also shows tendency toward federal government power in his dissent in Merrell Down stating that the federal govt should have oversight of FDA, and his opinion in Gibbs allowing for federal review of a claim related to a federal Labor Act

White: widely changing views on personal jurisdiction [should not be personal jurisdiction in VW bc there was no purposeful availment (here he focused on preserving federal balance via state sovereignty) (majority); should be personal jurisdiction in Insurance Corp. of Ireland bc they subjected themselves to power of the court (here he invoked the Constitution’s due process clause as a ultimate arbiter of fairness rather than balance of federalism)]

Does cause of action arise out of or relate to D’s contacts with the forum?

NO > General Jurisdiction ?

Systematic and continuous contacts Helicopteros 1984: one time purchases are not sufficient to confer general

jurisdiction – requirement of “systematic and continuous” contacts – higher threshold for general jurisdiction (no)

Physical presence Burnham v Superior Court 1990: father visiting kids in CA is enough to be

served process, minimum contacts reached, sufficient notice due to history of this law (yes)

Kulko 1978: effects test – does your action that has an effect in a forum state indicate you will be subjected to personal jurisdiction there? (no)

Implied consent

Insurance Corp of Ireland 1982: Showing up to court to challenge jurisdiction implies consent (yes)

SUBJECT MATTER JURISDICTION

1. Diversity Jurisdiction28 USC section 1332 activated Constitutional power to create federal courts (Article III section 2): Diversity of citizenship plus minimum in controversy

Rationale that out of state defendants might be prejudiced in state courts but concern of overstepping state court sovereignty

Diversity of citizenship:a)1) citizens of different statesa)2) citizens of a state and of a foreign statesa)3) citizens of different states and foreign states are additional parties(note: there is no complete diversity if there are two foreign citizens on opposite sides)

Complete diversity articulated in Strawbridge v Curtiss Domicile does not necessarily indicate state citizenship, Mas v Perry 1974 Minimal diversity only in certain instances (impleader, class action)

Corporate citizenship:c)1) state where it is incorporated or has its principal place of business (nerve center test, corporate activities test, total activities is a hybrid of other 2) Minimum in controversy:$75,000

If one party reaches it, other parties can join as co-parties if seeking less (Exxon Mobil)

Case can only be dismissed if it is proven to a legal certainty not to have met the minimum in controversy (St. Paul Mercury Indemnity) and if the plaintiff has had a chance to brief the issue (AFA Tours)

2. OR Federal Question Jurisdiction

28 USC section 1331: federal courts shall have original jurisdiction over matters arising under the Constitution, laws, treaties of the US

Does the “cause of action” involve a “federal ingredient”?

Osborn 1824: Issue of whether state could tax a federal bank was a federal ingredient because it involved a preliminary question of law (statutory interpretation of the charter establishing the US bank) which qualified as federal law under Article III definition (yes)

Mottley 1908: Issue whether a railroad has the right to rescind settlement of free life passes to couple did not plead a federal cause of action, merely anticipated a defense relying on federal statute, must be a “well pleaded complaint” (no) (federalism concerns, strict apprehension of impeding on states’ jurisdiction; SW airlines case tried to get into federal court based on FAA but there are also state aviation claims)

Smith 1920: An inquiry into whether a state bank could invest in federally issued bonds recently declared unconstitutional was found to involve a federal ingredient crucial to the cause of action, though this is an outlier case (yes)

Does connection to a federal statute confer a private right of action in federal courts?

Merrell Dow 1986: a federal standard guided the creation of the state law, but this is not enough to have a well-pleaded complaint, Congress does not stipulate a private right of action for citizens so it must remain with default presumption of state courts (no) (some federal statutes spell out private rights of action, such as securities fraud)

Empire Healthcare 2006: another case of Congress not creating a private right of action, here an issue over reimbursement of a third party provider on a federal employee health plan, this was very fact-specific (no)

Grable and Sons 2005: a claim to quiet title transferred as a result of a violation with federal tax laws does count as a federal issue, because the issue of proper notice under federal tax law “turned on substantial questions of federal law”, a policy goal of uniformity in tax oversight (yes) (contrast with Mottley)

Default presumption of having cases be heard in state courts – a federalism concern of taking away too much of the states’ jurisdictionSome policy influences regarding taxes to be managed by the federal courts

(Note: SMJ is crucial that a lack of SMJ may be raised at any time, and the court can raise it even if parties did not, this occurred in Mottley)

(Note: certain substantive areas are always exclusively within the jurisdiction of the federal courts: patent, admiralty, copyright, anti-trust)

3. Supplemental Jurisdiction Underlying tension between broad efficiency goals of the joinder rules and the concern of overstepping federal jurisdiction/stringent requirements of SMJ (diversity and federal question)

Created in 1990: 28 USC 1367 – a) Congress grants the federal courts power to hear cases that “are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy” (including joinder and intervention)(note: Congress is borrowing “common nucleus of operative fact” from Gibbs in its statutory language, and the last phrase of section comes from Aldinger, Owen and Finley)

Gibbs lays out a 2 part test:1) are the facts so logically inter-related that they are part of the “common nucleus of

operative fact” or “same case or controversy” such that pulling them apart would seem illogical? (1367 a)

2) Does trying this case comport with notions of “fair play and substantial justice”? This is a discretionary component that Brennan suggests consist of looking at whether state law predominates, whether it would require a novel question of fact or law, whether leaving the cases together would confuse the jury and whether the federal issue will be resolved early and leave only the state claim. (1367 c)

Before 1367, could a federal court hear a related claim that did not have its own basis for federal jurisdiction?

Gibbs 1966: Two claims were brought in federal court, 1 based on federal question (Labor Management Relations Act), 1 was a state claim based on interference with contractual relations, when the federal claim was dismissed, the federal court was able to still hear the state claim because they involved the same set of facts, same witnesses “common nucleus of operative fact” that would typically be tried in one proceeding, (even though the state claim was dismissed), (yes)

Aldinger 1976: Two claims are brought in federal court, 1 was a 1983 civil rights claim (a federal statute) and 1 was a state claim against the county government, the court found the second case was not part of the same set of facts (no)

Finley 1989: Two claims were brought in federal court, 1 was based on federal question jurisdiction regarding the FAA, 1 was a state tort claim against San Diego County, there was neither diversity nor a federal question, so the second claim was dismissed, fails the common nucleus test (no)

b) Claims founded on diversity jurisdiction cannot obtain federal jurisdiction unless the added claims have original diversity jurisdiction (under Rule 14 impleader, 19 required joinder of parties, 20 permissive joinder of parties or 24 intervention) (codifies Owen)

(Note: generally courts will permit supplemental jurisdiction over a compulsory counter-claim 13 a, cross claims 13 g, impleaders 14, and intervention 24, because they naturally are part of the same case or controversy. Not so with permissive counterclaims 13b, or permissive joinder of claims 18, given that they are not the same claim or event.)

Can a claim without complete diversity be heard in federal court? Owen 1978: when a plaintiff is from the same state as a 3rd party defendant, and a D

is dropped, this is not complete diversity and under no exception did Congress entitle a federal court to hear a case without complete diversity (no)

Can there be supplemental jurisdiction over a claim joined as a class action if not all members meet the minimum in controversy?

Exxon Mobil 2005: A class action by gas service dealers against Exxon for overcharging them when only some members of the class met the minimum in controversy was ok under 1367 b (yes) (Ginsburg dissents, saying it’s too broad a reading of the statute)

c) List of instances in which courts can decline to exercise supplemental jurisdiction

Can a court decide to remand a case for lack of subject matter jurisdiction without stating one of the permissible instances?

Executive Software 1994: a federal judge remands the three supplemental state claims joined to two federal question claims without stating his reason (no) (judges can’t just be “sick of black lung cases”)

REMOVAL

No Constitutional basis for removal but Congress based its statutory power on the Judiciary Act of 1789

Rationale is that defendants should have a chance to seek a fairer forum in the federal courts if they think they may be prejudiced in state courts, an exception to the plaintiffs being the master of the claim

28 USC 1441a) D can only remove actions “which the district courts of the US have original

jurisdiction”; and in the same district in which it was brought in state court (note: if there are co-defendants, they all must agree on removal)

b) D can’t remove if he is an in-state D and the case is in his state courts (in keeping with the rationale)(example, A from IA sues B from KS in KS state court, although there is diversity, B cannot remove to federal court)

c) Eliminates the “same case or controversy” requirement of 1367 by stating that D can remove a joined claim containing one 1331 claim and an unrelated state claim, even if P may not have been able to bring both claims with supplemental jurisdiction in state court originally (rationale for this broader view is to allow D to have an opportunity to take control of the case if he feels prejudiced in state court), BUT the judge has discretion to remand the state claim even beyond the criteria in 1367 c if he feels the claims are egregiously tried together

Borough of West Mifflin 1995: a state claim and a federal civil rights 1983 claim were joined and then removed to federal court; the federal judge remanded the state claim on the basis of 1367, but the court of appeals overturns it stating the language of 1441c that claims can be “separate and independent” and that here they are related (yes)

f) Even if P incorrectly brings action in state court (on a patent or other federal only claim), the federal court doesn’t have to dismiss upon removal

Who can remove? (1441)Original defendants, and they must agree if there is more than one(Ds sued by out of state Ps in their home state cannot remove)Shamrock Oil and Gas 1941: After a counterclaim, original P seeks removal, court says no, only original D can remove (only original D)

Where can they remove to? (1441a)The district court in the state where claim originally filed

When must D file for removal? (1446)Within 30 days of receiving process or copy of complaintORWithin 30 days of receiving process or amended complaint

Can a P join additional Ds that destroy diversity after case has been removed? (1447 e)No – court will either remand to state or refuse joinder

How can a P challenge removal?Must be in federal court, and within 30 days of notice of removal if it’s a procedural objection (1447 c)If it’s an objection to SMJ, it can be any time

VENUE AND “FORUM NON CONVENIENS” (Refers to Geography)

Rationale is that P be able to bring claims only in places that have a logical connection with the claim, a sense that there is a proper place to bring a claim

Unlike federal jurisdiction, venue is not based on a Constitutional provision. Congress moderates 28 USC 1391 with the rules for proper venue.

1. Venue

a) For diversity claims:1. where any D resides2. where a substantial part of the events or omissions giving rise to the claim occurred; or where the property is situated

(3. where any D is subjected to personal jurisdiction, if no other option – fallback provision)

b) For all other types of claims: 1. where any D resides2. where a substantial part of the events or omissions giving rise to the claim occurred; or where the property is situated

(3. where any D found, if no other option – fallback provision)

(Note: residence for purposes of venue is typically where the individual lives, though there is dispute about whether there can be proper venue in many places if one has several homes)

Bates 1992: NY P receives a letter from PA D regarding his debt, files claim in NY federal court under federal question jurisdiction (Fair Debt Collection Practices Act), D challenges venue on 1391b2 grounds, but it is overturned, bc NY was a critical place where the claim arose (yes)

Reasor-Hill Corp. 1952: AK is one of 2 states that has overruled the local action rule that states that an action for injury to property must be held in the state where the property is held, reversing the precedent of Livingston v Jefferson for being obsolete (yes)

c) corporations are deemed to reside in the state(s) in which they can be subject to personal jurisdiction, and if there are none, then the state in which it has the most amount of contacts

Burlington Northern RR v Ford 1992:

Can a D challenge a P’s choice of venue?Yes but it must be raised before or while filing a response, otherwise the right to object is waived according to 12 h

Do all cases fall under 1391?No – patent infringement, interpleader, copyright suits or suits against federal govt officials have their own venue provisions

- forum selection clauses (Carnival Cruise Lines v Shute)

2. Transfer of Venue

28 USC 1404 A claim can only be transferred to a venue where a P could have originally filed under 1391Rationale is that there is a proper place to try the case, and that P is the master of the claim, and that a strict construction of 1404 will keep better order than making individual assessments where certain witnesses or facts can best be tried

Where can D file to transfer venue?

Hoffman 1960: P files patent suit in TX federal court, D files to transfer venue to IL but P moves to retransfer to TX because there was no personal jurisdiction or other criteria met under 1391 to have filed the claim in IL (no transfer of venue) (despite proximity to witnesses, the court vies for the countervailing principle that the original venue is the proper venue)

What law is applied? Ferens v John Deere, relying on Van Dusen: In a federal diversity claim, the law of

the transferor state is applied in the transferee state whether P or D moves to transfer venue

3. Forum Non Conveniens

A doctrine that allows dismissal of an action within a particular geographic court’s jurisdiction, properly brought under 1391, but clearly inconvenient to the partiesGeneral presumption for P’s choice

What criteria must be considered to grant forum non conveniens? Gulf Oil Corp 1947: criteria for determining forum non conveniens – access to proof,

access to premises where claim occurred, ability to subpoena witnesses, avoidance of harassment to D, can only be granted if there is an alternative forum

Piper Aircraft Co. 1981: When representatives of Scottish decedents sued in US court, the court dismissed for forum non conveniens because the evidence, witnesses and interest was in Scotland, although there had been an FAA report done by US agency and US law provided better relief

JOINDER OF CLAIMS, JOINDER OF PARTIES

1. Permissive Joinder of claims – when there are multiple causes of action between the same parties they CAN join the claims

FRCP 18 Joinder of Claims(a) a party asserting a claim, a counter-claim, a cross-claim or a third-party claim may

join, as independent or alternative claims, as many claims as it has against an opposing party

(b) joinder of contingent claims is permissible without affecting substantive rights, ie you can plead two claims where the second is contingent upon a judgment in the first without having obtained that judgment

FRCP 13 Counter-claims, Cross-claims(b) Permissive counter-claims: a claim against an opposing party that is anything but compulsory

- No efficiency rationale since judge will likely order a separate trial (under Rule 42) given that the claims are not arising from the “same transaction or occurrence”, but efficiency in a sense of keeping a single record (one lawsuit) involving the same parties

(g) Cross-claims against a coparty: a party may assert a claim against a coparty if that claim arises out of the “same transaction or occurrence” that is the subject matter of the original action, or of a counterclaim, or if the claim relates to property (Note: Once there is a cross-claim, it is treated like an original claim for purposes of 13 (a) and (b), ie if the crossclaimed party has a claim against its crossclaimant, it either must or can bring it within the existing pleadings.)

How liberally must a court construe the words “same transaction or occurrence”?

LASA 1969: A marble supplier, LASA, sues multiple parties to the same construction job including the GC, the SC, the surety, the city where the theater was being built; one D filed a counter-claim against P, and cross-claims against the other Ds, and impled the architect; on appeal, the court reversed the dismissal of the added claims, saying that they were part of the same transaction or occurrence, although they dealt with different contracts, the same parties, the same project and the same facts were involved, plus the rationale is for efficiency so the court must construe with a deference towards a liberal interpretation (very liberally)

2. Compulsory Joinder of Claims – when there are more than one related claim between the same parties, they MUST join the claims

The only claim that is compulsory under the FRCP are counter-claims, claims that are not only between both parties involved but claims that are so related they must be tried in one proceeding, for the efficiency rationale, and for consistency.

13 (a) Compulsory Counter-Claims(1) (A) must state a claim at the time of service that it has against the opposing party

that arises out of the “same transaction or occurrence”(B) does not require adding another party over whom the court does not have jurisdiction

(Note: 13f is a rather liberal amendment policy for failure to raise a compulsory counter-claim, although there may be tension between the state laws of claim preclusion)

Can a federal court hear a compulsory counter-claim that doesn’t have original jurisdiction, if the original claim does have original jurisdiction?

Heyward-Robinson 1970: A sub-contractor adds a compulsory counterclaim, a state law contract claim, to the original federal contract claim the general contractor brought against him, given that the two contracts were part of the “same transaction or occurrence” under 13a (given that both contracts were formed together under the same set of circumstances, and that they were covered by the same insurance. There can be supplemental jurisdiction according to section 1367 given that the two cases form part of the “same case or controversy”. Generally, if it passes the 13a test, it passes the broader 1367 test. Here, the court also reaffirms the logical relationship between the two claims, and the efficiency rationale. (yes)

Can a counter-claim be raised during the second of two similar claims? Southern Construction 1962: Subcontractor sues Southern, the GC on two federal

contract claims; on the second claim, he counter-claims against the supplier without having done so in the first claim, and the court says he did not preclude his chance to counter-claim by not asserting it in the first of two related, but not identical actions. The rationale of the rule is to avoid multiplicity of actions, but here the claims have different damages, so they are distinct and it is a permissible counterclaim (yes).

3. Permissive Joinder of parties - when multiple parties are involved in one incident they CAN join one another in pleading

Rationale of efficiency and conservation of judicial resources

What happens if multiple parties are involved in one “transaction or occurrence”?

- Multiple Ps can join to bring suit on a single D- Multiple Ps can join to bring suit on multiple Ds- A single P can join multiple Ds

Are parties required to sue everyone involved?

No. – to preserve autonomy of each litigant “plaintiff is the master of his claim”- parties may not want to join one another for tactical reasons, such as ability to file in

federal versus state court or choice of venue- parties may prefer to work independently with their own attorneys

What are the requirements for joining parties in a single claim?

FRCP 20 is Permissive joinder of parties20a) 1) people may join as plaintiffs in a single action

A) assert relief jointly or severally, with respect to or arising out of the same transaction or occurrence or series of occurrences AND

B) any question of law or fact common to all plaintiffs will arise in the action

Will a married couple count as one person for purposes of joinder?

Ryder : when a wife sues a hotel for tortious breach of duty and a husband sues the same hotel for personal injury, this is not a joinder of parties because it is not “the same transaction or occurrence”, it is two separate causes of action (no)

Will a group of employees with several claims against a single D, their employer be able to join?

MK 2002: a group of former defense department employees want to sue their employer for blocking their access to information needed to proceed on a Title VII claim, court says that they have a single transaction or occurrence (20a1A) and there is a common question of law or fact (20a1B – namely the restriction from records and the violations of the Privacy Act), Plus the policy rationale toward efficiency, so there is a proper joinder of parties (yes)

Can a court choose to consolidate trials that were not brought jointly?

Tanbro Fabrics 1957: Three separate cases involving a buyer, a seller and a manufacturer regarding breach of contract and product liability claims (ie the same parties and facts) can be facilitated for judicial efficiency even if claims not brought under joinder, according to Rule 42 (yes)

20a) 2) people may join as defendants in a single action A) any right to relief is asserted against them jointly or severally, with respect to or

arising out of the same transaction or occurrence or series of occurrences ANDB) any question of law or fact common to all defendants will arise in the action

4. Impleader – when a D can bring in a new party who may be fully or partly liable

Impleader is more complex of a pleading mechanism. It makes the original D the new third party P, thus transferring some of the power the P has as master of his claim, however this power is limited because impleader is still a subsidiary to joinder, and D cannot compel P to add a third party D, he has to simply add it onto Ps claim and remain in the hot seat (unless, like in Owen, the original D is dismissed).

FRCP 14: 14 (a) (1) D may bring in a third party who is or may be liable to it for all or part of the claim against it. D becomes 3rd party P, he has to implead within 10 days or get leave from the court.

What might a court consider when granting leave to file impleader?

Too 2003: P sues a clothing manufacturer and the manufacturer impleads two of its employees; there were two claims 1 for infringement of intellectual property and 1 for indemnification, the first claim is ok even though the first part of the claim has not been finalized, the second is not because the original D/3rd party P is liable for some part of the cause of action so the impleader for indemnification is not meritorious on its face, showing that even impleaders face the same scrutiny, and there could have been a Rule 11 sanction (a trial court should permit a third party

complaint if the allegations involve the same core of facts as those stated in the original complaint, but not if the 3rd party allegations are facially without merit)

(2) Third party can:(A) assert any Rule 12 defense against original D/3rd party P(B) must assert any compulsory counter-claims against original D/3rd party P (13a), any

permissive counterclaims against original D/3rd party P (under 13b), any crossclaims against other 3rd party Ds (13g)

(C) may assert against the P any defenses that D has asserted(D) may assert any claim (counter-claim?) arising out of the same transaction or

occurrence as the original claim of P against D(3) Original P can permissively join claims against 3rd party D, (4) Any party can move to strike the impleader(5) 3rd party D can further implead another party

(b) P can bring in a 3rd party D under a counter-claim, according to the same rules above

Can you combine cross-claims and impleaders? M. Jorgenson Co. 1991: P brings claim against 8 Ds, One of the Ds impleads a 3rd

party D, the court allows one of the 7 other Ds to cross-claim against the 3rd party D given that they are all on the same side of the “v; the formal opposing parties are 3rd party D and 3rd party D (yes)

Can a party implead another despite the state not recognizing substantive claims of derivate liability?

Jeub 1942: P sues a restaurant for rotten ham, restaurant impleads Jeub (the manufacturer) to take some of the liability, Jeub contests in that Minnesota law does not allow derivative liability claims to proceed until the initial liability claim has proceeded; they don’t recognize a cause of action for indemnification; court allows it to proceed stating that the rules “don’t do violence to substantive rights”, the policy rationale of avoiding circuitry of proceeding prevails (yes)

5. Required Joinder of parties – when there are multiple parties to a lawsuit and it is required to proceed with them all

FRCP 19(a) Persons required to be joined if feasible(1) A person who is subject to service of process and whose joinder will not deprive the court of SMJ must be joined if:

(A) the court cannot accord complete relief in that party’s absence(B) if that person wants part of the relief, such that proceeding without him will:

(i) as a practical matter impede or impair that person from protecting their interest in the relief

(ii) leave an existing party at the risk of incurring multiple liabilities/obligations

(2) If person is not joined, there can be a court order(3) if a joined person objects to venue and joinder would make venue improper, the court must dismiss the action

What is an example of a required party? Bank of California Nat’l Assoc. 1940: P sues bank, residuary legatee and executor of

estate in an inrem proceeding over inheritance, then moves to required other grantees to join, the court says they are not indispensible and action may proceed without them

Warner 1953: a woman sues a phone book company over a duplicate listing of her name as Mrs. Caryl Warner with the ex-wife of her husband, court requires the ex-wife to be there

(b) If it is not feasible to join a party, the court must examine “in equity and good conscience” whether they can proceed without them or dismiss the action, considering:(1) extent of prejudice on that party or others by proceeding without them(2) extent to which the prejudice can be lessened by certain actions(3) whether it would be an adequate judgment if rendered without them(4) whether the P would have adequate remedy if action were dismissed

What is an example of proceeding “in equity or good conscience”?

Provident Tradesmen Bank 1968: a complicated set of facts involving a multiple car collision, and insurance claims, lower court dismisses the case because a required party would defeat diversity, appeals court reverses, saying that it would be within “equity and good conscience” to proceed without him

Interpleader(Hancock v Independent Distributing Co.)(NY Life Insurance Co v Dunlevy)(Pan American Fire and Casualty Co v Revere)(State Farm Fire and Casualty Co v Tashire)

APPLICABLE LAW

1. From federal common law to application of state law in federal court

Rules of Decision Act of 1789 states that federal court shall follow the “laws of the several states, except where the Constitution, treaties and statutes shall be required as rules of decision.”

Federal common law – ambiguous amalgam of British law, variations of state law, academic commentary

Swift 1842: D wants application of NY law, J. Story says the RDA indicates application of federal common law not individual state law > this led to forum shopping among states with favorable law (goal of horizontal unity in the federal system) federal common law

Erie 1938: P wants application of federal law rather than state law so sues in NY federal court and wins, J. Brandeis overturns Swift and declares that the contemporary reading of the RDA is that the state laws will apply (goal of vertical unity between the state and federal systems) (one critique of Brandeis’ pronouncement against the power of the federal govt to enforce law across the states is the emergence of the interstate commerce clause shortly after Erie). State law in federal courts

State or federal statute of limitations?

Guaranty Trust: Must a federal court apply a state’s statutes of limitations or laches? The substantive state rights require application of the state’s SoL; this brings about the discrepancy between equity and law given that typically SoL is an equity principle represented by a written instrument typically promulgated by the federal government so it could be seen as Story’s idea of federal common law. Outcome determinative test

Walker: P files action in federal diversity suit, discrepancy about which rule to apply about when an action commences, if applying the federal rule it is within SoL, state rule is not within SoL (federal rule: filing, state rule: service of process). Under federal law, the suit would have been ok, but the court says that when a rule affects a substantive rule (under logic of REA), then the state law must apply. When a procedural rule affects substantive rights, use the state rule.

Federal or state rules of procedure?

Byrd: P was hired by a subcontractor of D, the question of law was whether he could be considered an employee or a contractor, according to So. Carolina state law, this issue would be determined by a judge, and according to the practice in federal courts, this issue would go to a jury; here they determine it is a jury issue under federal law. State law cannot determine the essential functioning of the federal courts, 7th amendment is essential, “mere form and fact” does not need to be state law, federal law dictates the essential functioning of the courts

Hanna: P sues D in federal court in MA (where D is from), there is a discrepancy between the FRCP for service of process and the state rule, D argues for application of the state rule, but the court decides that in federal court, the federal rules must apply since Rules Enabling Act states that 1) courts have the power to make rules, 2) these rules must not “abridge, enlarge or modify” substantive rights, court wants to make a point to uphold FRCP, which was safe given that it didn’t interfere with Hanna’s true substantive rights (he could refile) federal courts apply state substantive state law and FRCP as long as it does not affect substantive rights

Burlington RR v Woods: conflict between AL state rule that requires a penalty for certain appeals and the FRAP (appellate) that allows for discretion in whether or not to apply a penalty for certain appeals, consistent with Hanna, the court holds that they should apply the federal law. When a federal rule only “incidentally” affects substantive rights, go with the federal procedural rule.

Stewart: P sues D in AL court, D moves to change venue according to a contract clause that stipulates that all litigation must take place in Manhattan; P asserts that AL law disfavors venue clauses (a relic from the days of anti-forum selection clauses), and that this is a substantive and not a procedural law that should apply; court says that in a federal suit, federal statutes governing transfer of venue should apply, so the case is remanded to be analyzed under a 1404 inquiry; regarding change of venue, a federal 1404 analysis applies

Gasperini: P sues D in a federal diversity action in NY, P gets a large award measure and D appeals, the issue is whether the federal standard of review of damage measures ought to be used(“shock the conscience”) or whether the state standard out to be used (“materially deviates”); court decides on state standard of review; federal review should apply state standard of review

State or federal choice of law rules?

Klaxon: the rules to determine issue preclusion and other issues of choice of law in cases with parties from multiple states will vary from state to state, court rules that federal courts must apply the state’s choice of law rules from where it sits, the benefit of uniformity within a state (and putting state interest before national interest), outweighs consistency in federal courts (brandeis’ goal of vertical rather than horizontal uniformity) “the purpose of a federal court is to ascertain what state law is, not what it ought to be”, use and work within the framework that already exists for state lawFederal courts must apply state choice of law rules

Does Erie allow a federal court to diverge ever from state substantive law?

Mason: P sues D for product liability and the state law in Mississippi is that you can only sue with privity of contract, the federal court overturns this on the grounds that the state court would also likely change the 1928 law in 1957Federal courts can update state law

A return to the idea of federal common law

Can courts ever apply federal substantive law?

Clearfield Trust: US check gets wrongfully intercepted, govt sues but under PA state law this is past the SoL, the federal court says that because this is an issue of federal concern, and because it is important to have uniformity on issues of federal concern (like Grable and

Sons vis a vis tax law) federal govt does have the right to assert law (based on federal paper)

Miree: Fed govt is a party on a contract for land, P sues D for breach of contract, this differs from Clearfield because it is a fact-specific issue that is not a federal concern, Despite the federal government being a party to the contract, state law applies

Boyle: P sues D for products liability, his son died during military service, Scalia writes for the majority that federal law should apply because 1) it applies the rights and liabilities of the US govt, and 2) the civil liability of US employees. (Brennan dissents stating that this is unfair because had he contracted with a private party, he could recover, and that Congress is suspiciously silent about how to interpret the statute) This marks return to federal common law made by court, not Congress

What was the statute?

Dice: P sues D under the Federal Employers’ Liability Act; a divergence between federal (D liable for fraud) and Ohio law (P’s signature on a release would be enforceable, whether or not it was fraudulent) here, the rights were granted under a federal statute, so the federal law is controlling, federal rights governed by federal law must apply federal law, even in state courts

THE LAW OF JUDGMENTS: PRECLUSION

Liberal pleading rules and joinder rules lead themselves to stricter rules vis a vis the retrying issues that have already been tried

1. Claim preclusion (Res Judicata)

Requirements:1) final judgment2) judgment must have been “on the merits” *3) identical claims*4) identical parties

(Notes: * these are the most contentious requirements)

Final judgment Interlocutory rulings > no preclusion (because the case is either still going, or

because it was not final) If appeal is pending> yes, preclusion (you cannot start another action when the

original one still has a chance to be evaluated)

Federated Department Stores: when law changes between a final judgment and a second claim

Judgment “on the merits”

One extreme is the claims that proceeded to trial> clearly preclusion appliesOther extreme is the claims dismissed for nitpicky procedural reasons and never got heard on the merits > clearly preclusion does not apply

Difficult is the middle cases:

What has preclusive effect?

Failure to state a claim upon which relief can be granted - RST section 19 says: ppl have broad opp. to amend to > yes, preclusion applies

(applies in federal courts, based on Federated Dept. Stores Case, rationale is to avoid harassing a defendant if there is no meritorious claim)

- Some state courts allow it to proceed after having been dismissed > no preclusion applies (rationale is that little litigation effort has gone into these cases so it does not clash with the purpose of claim preclusion, ie preservation of judicial resources)

Failure to prosecute (dropping a case after filing)- parties had an opportunity to litigate after filing a claim and dropped the ball > yes,

preclusion applies (a waste of judicial resources) Default judgments

What does not have preclusive effect?

Dismissals for improper venue or lack of jurisdiction Dismissals for nonjoinder or misjoinder of parties Election or direction of a nonsuit

Identical claims:

Federal courts and most state courts follow RST 2nd of Judgments, which uses the language from the joinder rules “same transaction or occurrence” > purpose is to have ppl join claims the first time around

(one effect is making permissive joinder of claims under Rule 18 optional, this makes it mandatory if you ever want to sue on them again)

Rush: old rule had been that because trespass to person and trespass to property were two different forms of action, they represented two claims. Change to new rule: one motorcycle accident, one claim. Change focusing on theory of recovery/claim to focusing on the underlying set of events giving rise to the conflict

Matthews: Could not bring a claim for assault, lose it, then bring a claim for false arrest on the same set of facts (see above mentioned effect on permissive joinder of claims)Must bring related claims under one suit, otherwise precluded

Boomer: If there is ongoing conduct, as in nuisance, and it doesn't stop after the first suit, then you can sue again, unless damages from the first were "permanent"If event is ongoing, one is not precluded from bringing suit on the continuation of the injury

Russell: patentee sues infringer and wins, but infringer keeps on infringing. Patentee can sue infringer again without being claim-precluded, no preclusion on re-suing on patent claim if damage continues

Identity of parties

Self explanatory – makes joining certain parties on certain claims required although this may not be expressly stated as such in the rule

What are some instances without claim preclusion?

Settlements (a “contract” not a judgment) Non judicial tribunals (like Alaska Supreme Court in Holmberg) Consent Judgments - Hanover Logansport: if a court enters a consent judgment, the

claim that it relates to precludes further claims, but it must be written expressly into the consent judgment

2. Defense preclusion If you've used something as an affirmative defense, you can't sue on it as a plaintiff Instead, you should have raised it as a counterclaim in the first suit

3. Issue preclusion (Collateral Estoppel)

Acts as a bar to issues litigated in actions based on other “transactions or occurrences”. It is broader than claim preclusion because it allows preclusion even in a completely new context, but narrower because it doesn’t bar entire actions, just specific issues.

Requirements for issue preclusion:1) identical issues2) issue must be actually litigated (like the judgment on the merits)3) issue must have been actually decided4) issue must have been necessary to the court’s judgment

Identical issues

For contracts or taxes, each new contract or each new tax year counts as a separate "issue"

Moser: Moser sued for a military pension, which the court held that he was entitled to under Statute. The court later changed its interpretation of Statute, but because of preclusion, he could keep receiving his pension. Because this is a "mixed question of law and fact." Issue preclusion despite a change in law

Sunnen: made a certain tax agreement with his wife. The court held it legal once. Then they changed the interpretation of Statute. The practice was held illegal in later years. No issue preclusion when the law changes

- The Restatement Second of Judgments favors the Moser approach, stating that "it is unfair to the winning party and an unnecessary burden on the courts to allow repeated litigation of the same issue in what is essentially the same controversy, even if the issue is regarded as one of 'law.'"

Issue must have been actually litigated

Rationale: screens out the small-value issues, gives people strong notice to pay attention to the arguments/issues they raise

Cromwell: In defending himself, the D raised more issues (that the bonds and coupons were obtained legally) than required by the claim against him, so the second un-litigated issue was NOT precluded Issue not used although raised in defense is NOT precluded

"You have to get picky about what happened in the first round." Wood.

Exceptions to the actually litigated requiremento Review of judgment

o Issues of law

o Procedural differences

o Burden of persuasion

o "Public interest"

This is the key distinction between claim and issue preclusion: claim preclusion makes it impossible to raise claims that COULD have been raised but weren’t, whereas issue preclusion requires that the issues WERE raised

Issue must have been necessary to the court’s judgment Balcom: suit over personal injuries, one issue was whether it was an issue of product liability, the court decided liability lay elsewhere, the manufacturer could bring a claim to determine who made the ladder because that issue was not necessary to the judgment example of issue NOT necessary to judgment that CAN be re-litigated

Issue must have been actually decided

Russell: Patent holder sues the infringer of his patent and wins. Infringer continues and patent holder resues. The case can go forward because the infringer raises two new defenses, no preclusion if repeat defendant raises two new issues

Rios: Dry Goods sued Davis. Davis impleads Rios as a third-party defendant (Dry Goods v Davis + Rios) finding there to be liability to Davis and Rios. Davis is found liable for negligence, not Rios. Then Rios sued Davis. Davis tried to say that Rios had already been found negligent. But that wasn't necessary to settle the third-party claim: Davis was contributorily negligent, and that was the end of that story. So Rios could press his claim.

Vasu:

De Weerth:

Blonder-Tongue Laboratories:

3. Non-mutual preclusion(offensive and defensive)

When different parties than were in the original suit are precluded from bringing a suit based on an earlier action

In federal courts, defensive nonmutual preclusion is always ok, but courts have to exercise discretion on offensive nonmutual preclusion

Defensive

In Bernhard and Blonder-Tongue, Plaintiff lost an issue against D1, then tried the same issue against D2. D2 raised preclusion as a defense.

This use may be more "fair" than offensive preclusion, because the losing plaintiff got to choose the forum and the defendant both times

OffensiveWhen a plaintiff sues the same defendant and D uses the same defense.

Parklane Hosiery: P1 sued Defendant and won an issue. Then an angry, similarly situated P2 swoops in and sues Defendant on the same issue.

Why non-mutual offensive issue preclusion is worrisome?

-Defendant didn't choose the initial forum

- The second plaintiff maybe should have joined the first suit as an intervenor but chose not to, instead choosing (rationally) to "wait and see"

- Defendant may not have given it her "best shot" if the stakes in the first suit were small or the forum inconvenient

- If there have been prior, inconsistent rulings on an issue, it would be unfair to give preclusive effect to one of them

Ex.: There is a plane crash with 50 people on board. 25 passengers sue and lose. Because the 26th passenger hasn't had his day in court, she can't be estopped, and she sues. She wins. Now passengers 27-50 can use offensive nonmutual estoppel, which is contradictory to the fundamental rationale promulgating these doctrines.

4. Intersystem preclusion

Intrastate The recognizing court uses the preclusion rules of the rendering court-Ex. (stylized Hart): Plane crash. Passengers sue in Texas and win. Other passengers sue in New York. The New York court must look to the Texas preclusion rules (e.g. is mutuality required?) and, if Texas would preclude based on that, apply preclusion.

Choice of law has to be the same-In Hart, both Texas and New York would have applied Kentucky lawBut if New York would have applied New York law, then there is no preclusion

State to Federal Preclusion

Federal courts must accord full faith and credit to state courts, according to §.1738.However, this is a statutory rule, not a constitutional one, so courts can make exceptions (same logic as Erie doctrine)

Civil rights?§1983 claims are like anything else. Allen v. McCurry for issue preclusion; Migra for claim preclusion.

What about if there is exclusive federal jurisdiction?Ex.: you sue under a state antitrust law and lose, then sue in federal court under the Sherman Act, which only federal courts can adjudicateUnder Marresse, two-step procedure:1) Would the state's preclusion law preclude the federal suit?If not – most states will say it can proceed because the Sherman act only applies to federal courts, so it is differentIf yes - If the state's preclusion law would preclude the federal suit, determine whether the federal law in question contains an implied exception to §1738.

Federal to State PreclusionThe Full Faith and Credit Clause and §1738 are not applicableNonetheless, it's widely accepted that state courts have to honor federal decisionsBut whose preclusion rule do we apply?We could set up a federal common law of preclusion (for example, that mutuality is or isn't required)But in Semtek, the Court decided that the state law of the state where the federal court sits is the law of preclusion that appliesSo if the District of Massachusetts renders a judgment and someone brings a suit on the same issue in Maryland state court, then Maryland would apply Massachusetts's rules of preclusion

State-Agency to Federal PreclusionFor issue preclusion:Most state courts give preclusive effect to that state's agency decisionsFederal courts will also give preclusive effect, if (Utah Construction & Mining)the agency was "acting in a judicial capacity" (p. 1237 has some suggested factors)the agency proceeding gave the parties an adequate shot at litigationUnless the federal statute in question refuses to recognize state-agency decisionsIn University of Tennessee v. Elliott, the Court found such an exemption in Title VII: no preclusive effect for state-agency decisions in Title VII claimsThe exemption need not be express, but in subsequent cases, the Court has required that it be pretty clear from the statutory scheme. Dicta in legislative history and "penumbras" don't count.For claim preclusion:Generally (and specifically for §1983 claims), no claim-preclusive effect for state-agency decisions. Gjellum v. City of Birmingham.