Civ Pro II Outline Spring 2012 Campos

Rules Overview:
What are the Federal Rules of Civil Procedure?
o Congress gave the power to prescribe rules of procedure through the Rules Enabling Act; Congress has the power to make inferior courts, and delegate authority to the courts. o The Rules are drafted by an advisory committee consists of lawyers, academics, and judges. o SCOTUS than has to approve the rules drafted by the advisory committee. Congress has a year to veto, otherwise, it becomes a rule. o Modern version adopted in 1938 R. 1 Defines scope. Rules govern procedure in all civil actions and proceedings in US Dist. Ct. Defines how to construe the rules to secure the just, speedy, and inexpensive determination of every action and proceeding. R. 2 One form of action: civil action. Condenses old system of courts of law and equity R. 3 Civil action commenced by filing a complaint. A complaint can be understood as a conditional property interest. Conditional upon allegations being true. R. 4 Summons and Service of Complaint to other side. must be properly served for a court to have personal jurisdiction. A summons is an order to appear under pains of default judgment. R. 5 Service of all other papers in civil court R. 6 Computing and Extending Time R. 7 Defines pleadings and motions R. 8 General Rules of pleadings R. 9 Details one exception to short and plain statement rule under 9(b). In fraud cases, in addition to short and plain statement, need to allege fraud in particularity. R.10 Form of the pleadings. Must have captions and names of the parties, and have numbered paragraphs, with each paragraph limited as far as practicable to a single set of circumstances. R. 11 Duties of attorneys in signing pleadings, motions, and other papers R. 12 Defenses and Objections. 7 defenses under 12(b)(1)-(7) that are given by motion before a responsive pleading 1. Lack of SMJ 2. Lack of PJ 3. Improper Venue 4. Insufficient process 5. Insufficient service of process 6. Failure to state a claim upon which relief can be granted 7. Failure to join a party under Rule 19

A. Pleading
RULE 7(a): Types of Pleadings
(1) Complaint (2) Answer to complaint (3) Answer to counterclaim designated as a counterclaim (4) Answer to a crossclaim (5) Third-party complaint (6) Answer to third-party complaint (7) If Court Orders one, a reply to an answer

RULE 7(b)(1): Motions

A request for a court order must be made by motion.

RULE 8(a)(2): Short and Plain Statement Rule

(a) A pleading that states a claim for relief must contain: (2) a short and plain statement of the claim showing that the pleader is entitled to relief.

RULE 9(b): Fraud and Mistake Exception to Short & Plain Statement
In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake. Malice, intent, knowledge, and other conditions of a persons mind may be alleged generally. 2.

Possibility vs. Plausibility

Possibility Standard and Short and Plain Statement under R. 8(a)(2) Conley v. Gibson (1957) Not dismissed
Facts: were employees of Texas and New Orleans RR. The Union had a contract with the RR, giving employees in the bargaining unit certain protection from discharge and loss of seniority. In May, 1954, RR abolished 45 jobs held by and other Negroes, all of whom discharged or demoted. The Union refused to protect against discriminatory discharges and refused to give them protection comparable to that given white employees. s claim against the Union was dismissed. Issue: Whether sufficiently stated a claim upon which relief could be granted. Holding: A complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Rationale: 1. Rule 8 do not require a claimant to set out in detail the facts upon which he bases his claim, it only requires a short and plain statement of the claim that will give fair notice of what s claim is and the grounds upon which it rests. 2. In other words, only needs to show any possible set of facts under R. 8(a)(2)

Reinterpreting R. 8(a)(2) to Nudge the Complaint from Possible to Plausible. Bell Atlantic Corp. v. Twombly (2007) dismissed
Facts: were subscribers to local telephone and internet services. Allege that , local telephone companies, were violating anti-trust laws by agreeing not to compete with each other and by agreeing to exclude other potential competitors. The complaint alleged that they acted in parallel course of conduct, trying to bring an inference that there was a conspiracy. Element Allegation Violated 1 of Sherman Act conspiracy; agreement between the companies 1. Parallel conduct can support inference of anti-competitive agreement. (BAD) Then again, can also reasonably support inference of competition, (GOOD) i.e., gas stations lowering the price after another gas station lowers the price to stay competitive 2. Not competing with each other

Holding: Possibility is no longer the standard, rather, plausibility is. The complaint must nudge past the threshold of conceivability to plausibility. Mere possibility not enough to satisfy short and plaint statement. Rationale: 1. Parallel conduct alone is not sufficient to support the inference because it is not enough to make conclusion plausible. 2. Parallel conduct can support two completely opposite inferences 3. Plausibility is justified in the context of summary judgment. There has to be enough evidence at trial to establish preponderance of the evidence. If it is plausible, there is enough that if jury finds in favor of , it is a supportable decision Campos disagrees problem of importing summary judgment standard to Motion to Dismiss is that it does not give the chance to get to discovery, or even let answer the complaint, admitting or denying certain allegations. Stevens separate dissent: 1. MtD is before the answer, and an answer can highlight what is discoverable and what does not need to be discovered. So why not just move the MtD? Notes: 1. This is an 8(b)(2) case under Conley, as long as the element was possible (ie, 1% chance of anti-competitive agreement, 99% chance of competition), the claim would be good. Twombly reinterprets 8(b)(2) to mean plausible. 2. Plausibility comes from the old R. 56 enough for a judge to believe that if the case went to trial, a jury verdict for could be sustained 3. Burden of production getting enough evidence to get the case before the jury (factfinder) 4. Burden of persuasion burden of proof. For most civil litigation, it is a preponderance of the evidence.

2 part test - applying Twombly to a Bivens action Ashcroft v. Iqbal (2009) dismissed
Background: Courts use doctrine of qualified immunity to protect state and federal officials from liability where there actions are found to have been taken in good faith. After Sept. 11 terrorist attacks, FBI and other entities in Dept. of Justice began investigation, questioning more than 1,000 people suspected, holding some 762 individuals on immigration charges, and within that group, deeming 184 members high interest to investigation. Iqbal was one of these detainees. Facts: Iqbal arrested in November 2001 on charges of fraud in relation to identification docs and conspiracy to defraud US. Pending trail for those crimes, Iqbal housed at Metropolitan Detention Center (MDC) in NY. In January 2002, Iqbal placed maximum security section of MDC. Iqbal pleaded guilty to criminal charges, served a term of imprisonment, and was removed to his native Pakistan. Iqbal brought an action under Bivens (an action against officers for constitutional violations) against 34 current and former federal officials, complaining that he was made a person of high interest on account of his race, religion, or national origin, against 1st and 5th amendments of Constitution, and that each knew of, condoned, and willfully and maliciously agreed to subject respondent to harsh conditions of confinement as a matter of policy, solely on account of [his] religion, race, and/or national origin and for no legitimate penological interest. Element Allegations 1. Respondeat superior 1. 10: Aschroft principle architect 2. Deliberate indifference/ in spite of 2. 11: Mueller instrumental 3. Invidious discrimination/ because 3. 47 and 69: knowledge of 4. 96: general Holding: Court applies Twombly construction of Rule 8, and concludes that the complaint has not nudged claims of invidious discrimination from conceivable to plausible. Rule: Complaint must allow court to draw reasonable inference that is liable for alleged misconduct. Must use the facts to nudge conclusion past conceivable to plausible. Reasoning: 1. Just as plausible that with it being post 9/11, was lawful in their investigations. Its no surprise that arresting and detaining individuals because of their suspected link to the attacks would produce a disparate, incidental impact on Arab Muslims 2. Complaint uses circular reasoning allegations just support an already assumed complaint. The court does not have to assume Conclusory allegations are true. 3. For the complaint to prevail, it must contain facts plausibly showing that purposefully adopted a policy of classifying the detainees as high interest because of their race, religion, or national origin, which it fails to do. All it plausibly suggests is that sought to keep suspected terrorists in the most secure conditions available until suspects cleared of terrorist activity. 4. Two Prong approach: a. Identify all Conclusory allegations and reject them b. Look at remaining allegations and see if they present to a plausible entitlement of relief Souters Dissent (joined by Stevens, Ginsburg, and Breyer) 1. Because of s concessions that there is supervisory liability, the complaint satisfies Rule 8(a)(2)

2. Twombly does not require court at motion-to-dismiss stage to consider whether factual allegations are probably true. On the contrary, a court must take allegations as true, no matter how skeptical court may be, unless the allegations are sufficiently fantastic as to defy reality. 3. Different interpretation of discriminatory policy in complaint. The discriminatory policy is adequately detailed in the complaint. 4. The court misapplies Twombly. Twombly does not require a court at the motion-todismiss stage to consider whether the factual allegations are probably true. The court must take the allegations as true, no matter how skeptical the court may be. Breyers separate dissent 1. Agrees with the majority that it is important to prevent unwarranted litigation from interfering with the proper execution of the work of Government; however, he disagrees that this need is adequate enough to support the courts interpretation of Twombly (agreeing with the rest of the dissent). 2. The law provides trial courts with other legal weapons designed to prevent unwarranted interference. a. For example, a district court can begin discovery with lower level govt s before determining whether case can be made to allow discovery related to higher level govt officials. Notes about Pleading and Conclusory allegations: 1. Pleading is made up of both elements and allegations. 2. Allegations are promises, not evidence 3. There is a fine line between conclusory statements about evidence and conclusory statements that an element is satisfied. 4. One way to look at conclusory vs. factual allegation could admit or deny it? Difference between saying on this day and this time, CEOs agreed to restrain trade vs. the CEOs agreed to restrain trade

Awkwardness of importing MSJ standard at MtD Stage

1. Timing: making a screening decision before has a change to answer complaint and before discovery. In other words, the record is incomplete. The rationale for it, however, is that otherwise, can bring a meritless lawsuit to exploit discovery. a. Stevens: Judges can manage litigation to make sure does not exploit discovery 2. Problem of identifying what is a Conclusory allegation? Evidence can support both a factual and legal conclusion Functions: Conley Twombly Iqbal Pleading Notice giving the other side notice of the claims Notice + screening (types of cases that get to discovery) Notice + screening + immunity Discovery Clarify the Issues Concerned w/ abuse Concerned w/ abuse

B. Resolution Without Trial

1. Summary Judgment
RULE 56(a): MSJ
Court will grant SJ if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.

RULE 56(b): Time to File Motion

Can file MSJ at any time until 30 days after the close of all discovery

RULE 56(c): Procedure

Party asserting a fact cannot be or is genuinely disputed must support assertion by citing to record or showing that the materials cited to not establish the absence or presence of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.

Summary Judgment standards

With MSJ, the movant is essentially asking the judge to make a guess with all evidence taken together, a jury could not rationally make a finding for . o Movant is not saying that nonmovant should lose on the merits; rather, is saying that there is not enough here to let a jury find in favor of the nonmovant. o has to meet the burden of production in order to survive a MSJ or DV MSJ is a screening phase to decide whether a jury has to hear the case; while MtD is a screening phase to decide whether discovery is worth it or not How does court determine if has met burden of production? o Resolve all jury questions in favor of credibility, evidence, weight o If you assume everything goes s way and still do not have enough to get to burden of production, would win. So the question is did give enough evidence so that the jury has something to do? Plausible inference an inference that is reasonable for the jury to pick

What is Motion for Summary Judgment? Takes place after discovery It is the quintessential dispositive motion if the motion is granted, the case is over A court will grant SJ if there is no genuine issue of material fact and movant is entitled to

So, movant is essentially saying that there is nothing the nonmovant can do that would make a rational juror find in nonmovants favor Even if prevails in opposing s MSJ, it does not mean that will prevail at trial. It simply means that there is something to have a trial about MSJ vs. MtD Motion for Summary Judgment
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judgment as a matter of law Court has to make a determination that there is no genuine dispute where no rational juror could find in favor of nonmovant

Motion to Dismiss

Has judgment at end analog is R. 12(c) a motion for judgment on the pleadings Either party can move for MSJ Filed after discovery Court looks at evidence (affidavits, depositions, interrogatories, etc.)

No judgment Only filed by Filed in the middle of pleading stage Court looks solely at allegations

restaurant owner (). At the time, federal public accommodations laws provided no damages remedy for private discrimination, so liability depended on whether the business acted in concert with the local authorities, fulfilling the state action requirement of 42 U.S.C. 1983. There had been a police officer in the store at the time service was refused, but produced no evidence showing communication between the officer and any store employee. The store owner. o submitted affidavits and depo transcripts from the store manager and the police officer that they had not communicated with each other and that the manager had refused service because he was concerned about a riot. Element Evidence Inferences in concert 1) store manager affidavit 1) police offer talked to a 2) police officer affidavit store employee 2) no concert Holding: It was error to grant summary judgment Rationale: 1. Respondent, as moving party, had the burden of showing the absence of a genuine issue as to any material fact, and for these purposes the material it lodged must be viewed in the light most favorable to the opposing party. Did not carry its burden because of its failure to foreclose the possibility that the policeman did not communicate with an employee 2. moving for SJ had the burden of foreclosing the possibility that could prevail at trial movant has the burden of showing the absence of genuine material issues of fact

Movant has burden to foreclose the possibility of recovery Adickes v. S. H. Kress & Co. (1970) SJ not proper Facts: o A black man () was refused service at a racially segregated lunch counter and sued the

Notes on Adickes

1. Adickes is the SJ analog of Conley v. Gibson movant had to show no possibility upon the facts and evidence that nonmovant could recover. In other words, as long as there was a possibility that nonmovant could recover at trial, SJ was not proper 2. View of SJ here: The worry here is over screening out cases where the testimony and the jury together could show that the nonmovant truly should recover

Nonmoving party must meet burden of production Celotex Corp. v. Catrett (1986) SJ was proper
Facts: Respondents husband died due to exposure to asbestos products manufactured and distributed by 15 named corporations. Celotex moved for SJ, on the grounds that respondent failed to produce evidence that any Celotex product was the proximate cause of injuries 7

alleged. Respondent produced 3 documents to show that there was a genuine material factual dispute: 1) A depo transcript of the decedent 2) A letter from an official of one of decedents former employers 3) A letter from an insurance company to respondents attorney o The District Court granted MSJ; the Court of Appeals Reversed. Holding: Reversed and remanded to a lower court to see if inferences are plausible Rationale: 1. The standard for granting SJ mirrors the standard for directed verdict under R. 50(a) 2. The movant bears the initial responsibility of informing the dist. Ct. of the basis for its motion, and identifying portions of the record, which it believes demonstrate the absence of genuine issues of material fact. However, there is no express or implied requirement in R. 56 that moving party support its motions with affidavits or other similar materials negating the opponents claims; rather 56(c) suggests the absence of such a requirement. 3. The burden on the moving party is not to produce evidence showing the absence of a genuine issue of material fact, even with respect to an issue on which the nonmoving party bears the burden of proof. Rather, the burden on the moving party may be discharged by showingthat is, pointing out to the District Courtthat there is an absence of evidence to support the nonmoving partys case 4. The parties had properly conducted discovery; if there is any potential problem with premature motions that would railroad the nonmoving party, they can be adequately dealt with under R. 56(f), which allows SJ to be denied if the nonmoving party has not had an opportunity to make full discovery 1. Rehnquist is saying that the MSJ standard is at least a screening process before the trial 2. The inquiry is essentially whether the nonmoving party has met its burden of production 3. Essentially, this case holds that can win simply by showing that has not met the burden of production. Under Adickes, had an affirmative obligation to disprove s case. 4. If moves for SJ, has to show that there is nothing that can suggest otherwise.

Notes on Celotex:

Scott v. Harris (2007) SJ was proper

Facts: Harris was speeding (73mph in 55mph zone) on road in black Cadillac around Atlanta, GA around 11pm. Police tried to pull him over and a chase ensued. Officer Scott eventually applied his push bumper to the rear of respondents vehicle, which caused Harris to lose control, leave the roadway, and run down an embankment, overturn, and crash. Harris filed suit against Scott and others under 42 USC 1983 (action against officials for violating constitutional rights), specifically use of excessive force resulting in an unreasonable seizure under the Fourth Amendment. Harris actions: When deputy activated blue flashing lights, Harris sped away; initiating chase on mostly two-lane road at speeds exceeding 85 miles per hour. In the midst of the chase, Harris pulled into parking lot of shopping center and was nearly boxed by various police vehicles. Harris evaded by trap by making sharp turn and colliding with Scotts police car, exited the lot and sped off. Scott than took over as lead pursuit vehicle. Six minutes in, Scott was going to pull a PIT (Precisions Intervention Technique) maneuver and radioed his supervisor, who said to go ahead and take him out. Scott instead applied push bumper (See supra).

Issue: Whether Harris actions warranted deadly force by Officer Scott. Holding: Officer Scotts attempt to terminate the chase by forcing Harris off the road was reasonable and Scott was entitled to SJ. Rationale: 1. Basing judgment off of the facts of the video, it was clear to the court that Scott did not really violate the Fourth Amendment. The testimony really is not important because it is all in the video. 2. At the summary judgment stage, facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts. 3. Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, there is no genuine issue for trial. Matsushita 4. When there are two different stories by opposing parties, one of which is blatantly contradicted by the record so that no reasonable jury could believe it, a court should not adopt that version of the facts for purposes of ruling on a motion for SJ. Stevens dissent: Whether a persons actions have risen to a level warranting deadly force is a question of fact best reserved for a jury. Stevens did not see the video in as bad a light as the other judges (back in his day, everyone drove fast on two-lane roads), and it was up to a jury to decide if the cop had the right to do what he did, or if some alternative procedure should have been used. o A juror might have a better idea about how the cops are in a particular area. The jury might consider that it was excessive force, knowing that all of these alternatives were available.

Notes on Harris

1. This case is a good reflection of the justices as people

2. Directed Verdict
RULE 50(a)(1): Judgment as a Matter of Law
If a party has been fully heard on an issue during a jury trial and the court finds that a reasonable jury would not have legally sufficient evidentiary basis to find for the party on that issue, the court may resolve the issue against the party and grant a motion for judgment as a matter of law against the party.

RULE 50(a)(2): Motion

The motion can be made at any time before the case is submitted to the jury.

RULE 50(b): Renewing the Motion After Trial; Alternative for a New Trial
If the court does not grant a motion for judgment as a matter of law under R. 50(a), the movant can file a renewed motion no later than 28 days after the entry of judgment, or if the motion addresses a jury issue not decided by a verdict, no later than 20 days after the jury was discharged. In ruling on the renewed motion, the court may (1) allow judgment on the verdict, (2) order a new trial, or direct the entry of judgment as a matter of law

What is Directed Verdict?

The Court should issue DV when there is nothing for the jury to do. 9

Courts grant judgments as a matter of law when the party with the burden of production has failed to carry that burden. Burden of production coming forward with evidence from which a rational trier of fact could conclude some proposition of material fact. A judge may never make a credibility determination in granting DV, nor weigh the evidence. Rather, the judge picks out the quality of the evidence, so that if the jury picks a side, it is supportable o FDA inspector analogy: judge is like more like an FDA inspector that grades the meat, while the jury is the consumer, weighing the different grades of meat to decide what type of meat they want for dinner. Awkwardness comes from the fact that the Judge, while not supposed to weigh the evidence, still has to decide if the party has met its burden of product; however, the judge cannot decide if they met their burden of persuasion since this is the jurys job. 1. Weigh credibility of witnesses 2. Weigh competing evidence 3. Weigh competing inferences

Functions of the Jury (the trier of fact, or factfinder):

Pennsylvania Railroad v. Chamberlain (1933) DV was proper

Facts: Decedent had charge of string of two cars. argued that the 9-car string collided with the 2-car string, causing him to fall off and be run over. Bainbridge - Witness for : Did not actually see a collision, rather, heard a loud crash, but did not turn around right away as this was not an unusual sound in a switching yard. When he turned around, he saw the two strings together still moving and decedent no longer in sight. Prior to crash, Bainbridge saw the 2-car going 8-10 mph, 9-car was going at a speed somewhat greater than 2 car. After the sound of the crash, they were traveling together. So from inference, it seems that the 9-car must have collided with the 2 car. Three employees witnesses for : They were riding the 9-car string, and testified positively that no collision occurred. They were corroborated by every other employee in a position to see, all testifying that there was no contact between the 9-car string and that of the deceased. Process: Trial court directed verdict in favor of , and the court of appeals reversed. Issue: Whether is entitled to a directed verdict where , with the burden of proof, alleges facts supporting two inconsistent theories, only one of which would impose liability against the defendant. Holding: The District Courts judgment is affirmed because the case for respondent () is left without any substantial support in the evidence, and a verdict in her favor would have rested upon mere speculation and conjecture. Rationale: 1. The circumstantial evidence does not support a plausible inference. Rather, it is two equally justifiable inferences (Rationale similar to Twombly). Learned Hand focuses on no set of facts (possibility) while SCOTUS focuses on plausibility. 2. There is no direct evidence that in fact the crash was occasioned by a collision of the two strings in question; at most there is an inference to that effect, which gave equal support to the opposite inference that the crash was occasioned by the coming together of other strings of cars entirely away from the scene of the accident. 3. Where, as here, there is a case where proven facts give equal support to each of two inconsistent inferences; neither of them being established, judgment, as a matter of law,

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must go against the party upon whom rests the necessity of sustaining one of these inferences as against the other before he is entitled to recover. 4. This is not a he said-she said situation. Bainbridge did not directly see the crash. Bainbridges testimony was indirect evidence. The employees all directly witnesses event and testified that there was no crash. This was direct evidence

Notes on Chamberlain:

1. In a sense, the court ignored the inference that was bad for , but made a separate inquiry as to whether it was sufficient. 2. In other words, suppose the collision was the only piece of evidence the jury was looking at: based on the evidence, could the jury find that met the burden of persuasion? Court held no. 3. Court has to identify all of the plausible elements to determine if has passed the burden of production. Once this happens, the jury can weight the evidence this is why, although it seems that the judges weigh the evidence, it is not a credibility case. 4. Campos believes that this case was decided wrong. The court here did not decide whether the inference was plausible; rather, it really decided whether it was more likely than not. If there is a 50/50 chance, it should be reasonable for jury to weigh in favor of a. Also, keep in mind that this case is from 1933 keep in mind that this was before a lot of other cases here. Law in this case is weaker

Burden shifting: Prima Facie case + pretext Reeves v. Sanderson Plumbing Prods., Inc. (2000) DV was not proper
Facts: Reeves, 57 years old, worked for Sanderson in the Hinge Room where he supervised the regular line. He had worked there for 40 years. Oswalt, in his mid 30s, supervised the Hinge Rooms special line, and Caldwell, 45, supervised both Reeves and Oswalt. Chestnut was director of manufacturing and the husband of company Sanderson. In 1995, Caldwell informed Chestnut that production was down in the Hinge room, so they did an audit and fired Reeves and Caldwell. Reeves filed suit, contending that he was fired because of his age in violation of the Age Discrimination in Employment Act of 1967. Procedure: o Trial court twice denied oral motions by respondent for directed verdict, and jury found for Reeves, awarding damages. Sanderson renewed motion for directed verdict, also denied. o 5th Cir. reversed, holding that Reeves did not introduce sufficient evidence to sustain jurys finding of unlawful discrimination. Court of Appeals said that the management statements were not credible since they were outside discharge. This was a problem because they substituted their judgment for jury, weighing the evidence. They also said pretext was not enough Issue: Whether s prima facie case of discrimination, combined with sufficient evidence for a reasonable factfinder to reject the employers nondiscriminatory explanation for its decision, is adequate to sustain a finding of liability for intentional discrimination.

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First: s burden to make a prima facie case of discrimination met 1. Element Evidence Prima Facie Case: 1. 1. Protected group: Age > 40 2. 2. Qualified for position 3. 3. Discharged 4. 4. Replaced by non-protected group: age < 40 Second: s burden to show that it was a legitimate, non-discriminatory reason met 2. Element Evidence 1. Legitimate, non-discriminatory discharge 1. Testimony of Chestnut (since its not judges job to test credibility, it doesnt matter that Chestnut is sleeping with the company president) Third: , still having the ultimate burden, would have to make a substantial showing that respondents explanation is false. 3. Element Evidence Discrimination 1. Pretext 2. Manager statements outside of discharge 3. The prima facie case Holding: s prima facie case, combined with sufficient evidence to find that the employers asserted justification is false, may permit the trier of fact to conclude that the employer unlawfully discriminated. Rationale: 1. Pretext + prima facie = enough to get to a jury 2. Court should give credence to the evidence favoring the nonmovant as well as that evidence supporting the moving party that is uncontradicted and unimpeached, at least to the extent that evidence comes from disinterested witnesses.

Notes on Reeves walking through the case:

1. First, makes prima facie case burden of production a. was a member of class protected by ADEA (over 40) b. Otherwise, was qualified for position c. was discharged by d. successively hired three persons in their thirties to fill position. i. At this point, there are still multiple inferences; has not met plausibility. The analog of this is the parallel conduct claim in Twombly 2. Second, has to show that was fired for a legitimate, non-discriminatory reason a. Opportunity for to show that it was another inference b. If this is all we have so far, would get a directed verdict. 3. Third, (and here is the trick), shows positive evidence that s explanation is pretextual a. 5th circuit: If negated s legitimate, non-discriminatory reason successfully, but didnt add anything else, DV would still go to because still hasnt met burden of production. All pretext did was negate legitimate, non-discriminatory reasons without proving anything, as there could always be a third non-discriminatory reason.

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b. However, SCOTUS disagrees. Not only did pretext negate the legitimate, nondiscriminatory reason, but also increased the strength of inference for . If there had actually been a third, non-discriminatory reason not mentioned, why wouldnt bring it up? 4. We see this burden-shifting a lot in cases of employment discrimination and antitrust

Approach to Directed Verdict

1. Make the wedge 2. Figure out what the burden of persuasion is (usually preponderance of the evidence in most civil cases, HOWEVER, it can be higher, i.e. some 1st amendment cases dealing w/ free speech are under clear and convincing evidence) 3. Identify who has the burden of persuasion i. Burden of proof always on for affirmative defense ie. Statute of limitations ii. Affirmative defense burden of proof is always on

Review of MtD/MSJ/DV
Motion to Dismiss R. 12(b)(6) Before answer Allegations Plausibility Motion for Summary Judgment R. 56 After discovery Everything but witness testimony Genuine issue of material fact Motion for Directed Verdict R. 50 At close of nonmovants evidence All nonmovants evidence Reasonable jury could find in nonmovants favor

Timing Source of Facts Standards

The main differences are the timing of the motions and the source of the facts all essentially are under the same standard of plausibility ie, there is nothing for the jury to do Also, MSJ and DV both sides can move for them Celotex can win simply by showing that has not met burden of production, does not need to foreclose the possibility of genuine issue of material fact

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3. Other Methods of Resolution Without Trial

RULE 41(a)&(b): Govern Voluntary and involuntary dismissals. An involuntary dismissal,
except one for lack of jurisdiction, improper venue, or failure to join a party under R. 19 operates as an adjudication on the merits.

RULE 55: Default; Default Judgment As a matter of federal law, the law that applies to judgments in diversity cases is the law that would apply to the judgment in the state in which the court is sitting Semtek Intl Inc. v. Lockheed Martin Corp. (2001) Fed rule applies state rule
Facts: sued in CA court on state law claims. removed to CA federal court based on diversity and moved to dismiss because the two-year statute of limitations had run. Claim gets dismissed on merits with prejudice. then filed the same suit in MD state court because MD had a three-year statute of limitations, which had not yet run. filed a motion to dismiss based on res judicata, which the MD court granted. They concluded the claim is barred in MD by federal law, which says that all claims in federal court under diversity jurisdiction that are dismissed on the merits are automatically claim-preclusive on res judicata grounds. argues: Should not be claim-preclusive, because if brought in CA state court, it would not have been claim-preclusive. This is under rule of Dupasseur, which held that the res judicata effect of a federal diversity judgment is such as would belong to judgments of the State courts rendered under similar circumstances. (Court said that this was not dispositive however, because it was decided under pre-Rules legislation) argues: Outcome of case controlled by Rule 41(b) dismissal, except for lack of jurisdiction, improper venue, or failure to join a party under Rule 19 operates as an adjudication on the merits.

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Issue: Does CA courts decision prevent MD from adjudicating this claim? More broadly stated, is the claim-preclusive effect of federal judgment determined by the law of the State in which the federal court sits? (should the court apply the CA state law related to statute of limitations, which would not bar the claim, or apply Rule 41b, which would bar the claim) Holding: Adjudication upon the merits, under FRCP 41(b), only has the effect of preventing a re-filing in the same district court in which the case was earlier filed. Federal common law governs the claim-preclusive effect of a dismissal by a Federal court sitting in diversity. As a matter of federal law, the law that applies to judgments in diversity cases is the law that would apply to the judgment in the state in which the court is sitting. Rationale: Court applies Dupasseur rule: the res judicata effect of a federal diversity judgment is such as would belong to judgments of the State courts rendered under similar circumstances and may not be accorded any sanctity or effect. 1. Application of Hanna test: a. Is federal practice covered by rule? Yes Rule 41(b) b. Does this regulate procedure? Scalia says no, that its substance the right is the claim. Because federal rule allows for claim to be destroyed when state law may not destroy it, it is substantive. c. Even if procedure, REA says it cannot abridge, enlarge, or modify state substantive right, in this case, the right to bring the claim. 2. Scalia dismissing it and not allowing it to be brought again would encourage forum shopping. For instance, someone would always go to federal court if they wanted a final judgment. (On merits might mean that claim cannot be brought again in that particular federal court, as opposed to state court) 3. Court interpreted Rule 41(b) by reading 41(a)[(1)(B)], which regards dismissal without prejudice. Court seemed to think the primary meaning of this Rule related to the dismissing court itself. a. Therefore this case was not dictated by Rule 41(b) 4. Since state, rather than federal, substantive law is at issue there is no need for a uniform federal rule 5. Nationwide uniformity in substance of the matter is better served by having the same claim-preclusive rule of the state apply whether the dismissal has been ordered by a state or federal court. (Guaranty) 6. Any other rule would produce the sort of forum shopping . . . and . . . inequitable administration of the laws that Erie seeks to avoid. 7. LIMITATION: The federal reference to state law will not obtain, of course, in situations in which the state law is incompatible with federal interests. In this case, however, there is no conflicts with potential federal interests. a. Ex If . . . state law did not accord claim-preclusive effects to dismissals for willful violation of discovery orders, federal courts interest in the integrity of their own processes might justify a contrary federal rule Notes: 1. The court here is saying there was NOT a valid federal rule on point. 2. REMEMBER: Unlike any of the other Erie cases, this was not a question of law to be applied by a FEDERAL court in diversity jurisdiction. Instead, a question of how a state court, in a subsequent case, should understand a federal judgment in a diversity action. Specifically, the question was whether the state court should give the federal diversity judgment a broader scope than it would have given a state judgment, had the diversity case remained in state court. Held: NO Takeaways: 15

o Court reinterpreted R. 41(b) o The law that applies to federal judgments is federal common law o In diversity cases, the law that applies to judgments is the law that would apply to the judgment in the state in which the court is sitting

Peralta v. Heights Medical Center (1988)

Facts: Medical center () sued Peralta () over guarantee of a hospital debt incurred by one of his employees. (Peralta was a guarantor of his employees debt). gave personal service, but it was untimely (not served within Texas law, which under TX law is a nullity). did not answer or appear and default judgment entered against him on July 20, 1982. Peralta is trying to set aside a judgment on the grounds that it was a due process violation. Process: TX courts held that to have the judgment set aside, was required to show that he had a meritorious defense, on the ground that without a defense, the same judgment would again be entered on retrial, therefore the lack of notice would not have caused prejudice. Holding: A default judgment is void for defective service, whether or not had a meritorious defense. Rationale: 1. Had had notice of suit, he might have impleaded the employee whose debt had been guaranteed, worked out a settlement, or paid the debt. He also would have preferred to sell his property himself in order to raise funds, rather than to suffer it sold at a constables auction. 2. State procedures for creating and enforcing a lien encumbering the property are subject to strictures of due process 3. Where a person has been deprived of property in a manner contrary to the most basic tenets of due process, it is no answer to say that in his particular case due process of law would have led to the same result because he had no adequate defense upon the merits.

Notes on Peralta:
1. What is happening here is the process of converting a claim to a judgment. 2. Why would Peralta not show up in court? It is possible that this would be seen as consent to jurisdiction. 3. What was taken here was Peraltas opportunity to be heard. Under Mullane, it was notice reasonably calculated to apprise him; but the service after 90 days was a nullity in TX, depriving the court of PJ over Peralta.

Involuntary Dismissal
Involuntary dismissal does to what default does to : it forces them to pursue the lawsuit to some resolution. Rule 41(b) and similar state statutes provide for involuntary dismissal if the plaintiff fails to prosecute

Voluntary Dismissal
Rule 41(a)(1)(A)(i) allow to dismiss at any time before answers, and Rule 41(a)(1)(A)(ii) permits to dismiss a suit at any time if all the parties agree. If voluntary dismissal will harm your case, answer the complaint promptly, so as to lock the plaintiff into the forum. See Texaco Inc. v. Pennzoil

Review of Semtek & Peralta

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MtD/MSJ/DV all are effectively motions for judgments

Judgment a conversion of a claim from a conditional entitlement to an unconditional entitlement. Need to show that the law, and the facts, support the claim. These motions are based on conversions of claims based on the facts. Semtek, however, is about the REA and is based on law Peralta, about the due process clause, is also based on law. o DP clause imposes restrictions on conversion of a claim into judgment. The court cannot convert a claim into judgment without affording some type of opportunity to be heard.

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C.

Discovery

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1. Introduction to Discovery
RULE 11(a): Signature
Every pleading, written motion, and other paper must be signed by at lease one attorney of record

RULE 11(b): Representations to the Court

By presenting a pleading, written motion, or other paper, an attorney represents that (1) it is not being presented for any improper purpose (2) the claims are warranted by existing law or a nonfrivolous argument (3) the factual contentions have, or are likely to have, evidentiary support (4) denial of factual contentions are warranted on evidence or reasonably based on belief or a lack of information

RULE 11(c): Sanctions

If 11(b) has been violated, the court may impose an appropriate sanction on the party that violated it. Such motions

RULE 11(d): Inapplicability to discovery:

This rule does not apply to disclosures and discovery requests, responses, objections, and motions under Rules 26 through 37.

RULE 26(b)(1): Discovery Scope and Limits

Parties may obtain discovery regarding any nonprivileged matter that is relevant to any partys claim or defense.

What is discovery? Discovery Factual investigation. Discovery is only part of factual investigation o In particular, it is includes tools to compel disclosure of information from the other
side or a third party Under R. 11(b)(3) when you sign a piece of paper presented before the court, you are certifying that you made a reasonable inquiry under the circumstances, and that there is evidentiary support for any factual allegation or contention

Pro: Informational symmetry Increases information symmetry, leading to more settlements, reducing costs. Both sides have incentive to settle because, with more symmetry, parties more likely to see that it is in their interest to not go to trial

Con: Expensive Discovery is really expensive even if has no chance of winning and has a completely meritless claim, it is still within s interest to pose a settlement to avoid costs of discovery and litigation. In other words, discovery can be used to wear the other party down, without regard to the merits of the case

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Scope of discovery
Under R. 26(b)(1) pertains to matters that are o Nonprivileged o Relevant* Relevant to claims and defense However, if judicial permission is granted, this can expand to anything relevant to the subject matter of the lawsuit o Reasonably calculated to lead to the discovery of admissible evidence *Relevant o Has to be associated with the case o Tends to prove or disprove an element of the claim or the defense

Narrowly tailored to the claims Davis v. Precoat Metals (N.D. Ill. 2002) Information was discoverable
Facts: , employees in s Chicago plant, filed suit against , alleging that they had been exposed to a hostile working environment, including being subjected to racially insulting and derogatory comments by s management- level employees. filed motion to compel discovery regarding discrimination complaints made against by other employees who worked at the same plant as s. Defendants opposed the motion, arguing that the discovery requests were too broad in that they improperly sought information regarding all allegedly discriminatory actions by . Element 1. Hostile working environment 2. Placement discrimination Evidence 1. Complaints By Non-plaintiffs Same plant as plaintiffs

Issue: Whether the complaints by other employees working at the plant are discoverable Holding: s requests seek discoverable information and those requests are narrowly tailored to the specific claims of the case. Rationale: 1. This information is relevant because it could be used to establish pretext. 2. In other words, the other discrimination claims by employees at the same plant can help support the inference that the employer was discriminating. Notes: 1. If the request had been simply for all complaints that took place at the plant, it would be overbroad and not relevant the fact that others are complaining about the same things supports some evidence of the first element hostile working environment 2. In talking about relevance simply focus on tends to prove or disprove. a. These are not MSJ-type determinations. Even if there is plenty of nondiscriminatory reasons related to placement, the evidence here is relevant because it supports the specific inference that could help prove s claim

Steffan v. Cheney (D.C. Cir. 1990) Information was not discoverable

20 Facts: resigned from US Naval Academy after administrative board recommended that he be discharged, based solely upon his statements proclaiming himself a homosexual. brought suit,

claiming constructive discharge and challenging constitutionality of the regulations that provided for discharge of admitted homosexuals. The Navy asked deposition questions about whether he had engaged in homosexual conduct during or after his tenure as midshipman and claimed Fifth Amendment protection against self-incrimination (worried about anti-sodomy laws, which were later declared unconstitutional in Lawrence v. Texas). also refused to answer on the basis that the questions were not relevant to the legality of his separation. The district court dismissed s action for failure to comply with its discovery order under R. 37(b)(2), and appealed. Element -discharge Evidence -questioning related to homosexual conduct

Issue: Whether deposition questions pertaining to s homosexual conduct is relevant to s action. Holding: The district court erred in finding the inquiry into homosexual conduct to be relevant on the ground asserted in its opinion. Rationale: 1. Sanctions under R. 37 may not be upheld if their imposition is based upon an error of law. 2. Judicial review of an administrative action is confined to the grounds upon which the record discloses that the action was based. 3. Ultimately, the question of whether engaged in homosexual conduct was irrelevant because it was his personal declarations, not his conduct, which was the basis of the administrative dismissal. a. In other words, the fact that he seeks reinstatement as relief for an invalid separation does not put into issue the question whether he engaged in potentially disqualifying conduct, unless such conduct was the basis for his separation. Notes: 1. Why would need evidence related to homosexual conduct, when the admission itself was sufficient to discharge? wanted evidence of the conduct as an alternative, independent ground for upholding the discharge. (Even if the policy against homosexuals was considered unconstitutional, the homosexual conduct would have supported the discharge.) 2. If wanted homosexual conduct to be relevant, should have tried to get evidence of it at the administrative level, when he was discharged the information was irrelevant because there was nothing in the record related to the homosexual conduct. a. Developing the record is one of the main jobs of a litigator. Once the record is closed, its closed.

2. Management of Discovery
General Notes on Cooperation
Under R. 12(a)(1)(A)(i) The answer is due within 21 days after being served with summons of complaint. However, under R. 12(a)(1)(A)(ii) if has timely waived service under R. 4(d), then must serve an answer within 60 days after the request for a waiver was sent, or within 90 days, if is outside of the U.S. 21

After the answer, attorneys must meet & confer under R. 26(f). This takes place 21 days before the scheduling conference, which is required under. R. 16.

RULE 26(a)(1)(A): Initial Disclosures

Before awaiting a discovery request, must provide: (i) Testimonial evidence Witnesses that may be used to support its claims or defenses. (However, do not need to disclose witnesses that can harm you, only support you.) (ii) Documentary evidence A copy, or description by category and location, of all docs, electronic info, and tangible things that the disclosing party has in its possession and may use to support claims or defenses (iii) A computation of each category of damages claimed by disclosing party (iv) For inspection and copying under R. 34, any insurance agreement, in which insurance business may be liable to satisfy all or part of judgment in action

Notes on initial disclosures:

Documentary evidence key element is authenticity Testimonial evidence key element is credibility We have automatic disclosures because it forces both sides immediately to disclose information, helping reduce asymmetrical information from the start. (i)-(ii) points to the probability; (iii) points to the liability These are items everyone asks for; so the point is that initial disclosures simply save everyone time. (Kind of like the final round of Wheel of Fortune automatically giving R, S, T, L, and E, because those are the most common letters everyone asks for) The next step after initial disclosures is the scheduling conference under R. 16

RULE 26(f): Meet & Confer

(1) Parties must confer at least 21 days before a scheduling conference is to be held or scheduling order is due under R. 16(b). (2) In conferring, parties must essentially discuss (1) nature and basis of claims and defenses and possibilities for promptly settling or resolving; (2) make or arrange disclosures required by R. 26(a)(1); (3) discuss any issues about preserving discoverable information; (4) develop a proposed discovery plan. Must submit to the court within 14 days after the conference a written report outlining the plan.

RULE 37(f): Failure to Participate in Framing Discovery Plan

If a party fails to participate in developing proposed discovery plan under R. 26(f), the court may require that party or attorney to pay to any other party reasonable expenses

RULE 16(b)-(c): Pretrial Scheduling & Attendance

(b) Magistrate judge must issue scheduling order after receiving 26(f) report and after consulting with attorneys and parties, as soon as practicable, but within the earlier of 120 days after any has been served or 90 days after any has appeared. (c) Represented party must have at least one of its attorneys present. 16(c)(2)(A)-(P) lists the matters for the court to consider. Notes on Pretrial Scheduling: 1. A judge can use the scheduling order to restrain the parties in discovery. A good litigator will ask the judge to set up in any way that they want. 22

RULE 26(a)(3)(A): Pretrial disclosures (do not mix up with initial disclosures)
In addition to automatic disclosures, must disclose the following information about evidence that it may present at trial: (i) Witnesses that the party expects to present and those it may call if the need arises (ii) Designation of witnesses whose testimony the party expects to present by deposition (iii) Documents or other exhibits that identify those items the party expects to offer and those it may offer if the need arises Differences from initial disclosures: Must be made at least 30 days before trial, while initial disclosures are generally made within 14 days after the parties R. 26(f) conference

RULE 16(e): Final Pretrial conference

If the court holds a final pretrial conference to formulate a trial plan, it must be held as close to the start of trial as reasonable, and must be attended by at least one attorney ho will conduct the trial for each party

RULE 26(b)(2): Limitations on Frequency and Extent (of Discovery)

The court may alter the limits in discovery rules pertaining to the number of depositions, interrogatories, and requests allowed, under R. 30 and 36.

RULE 37(e)
The Court cannot impose sanctions on a party for failing to provide electronically stored information lost as a result of the routine, good-faith operation of an electronic information system

Spoliation the destruction of relevant evidence Zubulake v. UBS Warburg LLP (S.D.N.Y. 2003)
Facts: o December 2000, , who worked for UBS, was fired. She sued for gender discrimination, failure to promote, and retaliation under federal, state, and municipal law. o In August 2001, filed her charge with the Equal Employment Opportunity Council (EEOC), before suit, as required. o filed the action in February 2002. o Back in August 2001, UBS issued an oral directive a litigation hold. (Oral because they did not want to necessarily put anything bad into writing.) In addition, in August 2002, after specifically requested e-mail stored on backup tapes, UBSs outside counsel gave another oral litigation hold. o now seeking sanctions against UBS for its failure to preserve the missing backup tapes and deleted emails. Issue: (1) Did UBS have a duty to preserve the emails, (2) when did this duty kick in, and (3), was there a breach of this duty? Holding: o Scope of Duty to preserve Anyone anticipating being a party or is a party to a lawsuit must not destroy unique, relevant evidence that might be useful to an adversary. They are under a duty to preserve what it knows, or reasonably should know, is relevant in the action, is reasonably calculated to lead to the discovery of admissible evidence, is 23

o o o

reasonably likely to be requested during discovery and/or is the subject of a pending discovery request. Whose documents must be retained Duty to preserve extends to those employees likely to have relevant information the key players in the case. What must be obtained All relevant documents (but not multiple identical copies) in existence at the time the duty to preserve attaches, and any relevant documents created thereafter. Applied to the facts: UBS employees had a duty to preserve the backup tapes at issue here, as it had a duty to preserve all backup tapes that existed as of August 2001, when filed her EEOC charge, and all such backup tapes generated thereafter. Remedies: Reconsideration of Cost-shifting order? No. At the time the motion was made, the Court was well aware that certain emails had not been retained and certain backup tapes missing. Adverse Inference (a jury instruction that it can infer from the fact that UBS destroyed certain evidence, that the evidence would have been favorable to )? No. Three elements required for an adverse inference remedy. 1. The party had a duty to preserve the documents satisfied 2. The documents were destroyed with a culpable state of mind satisfied a. culpable state of mind = ordinary negligence. If it was wanton or willful destruction, the third element is automatically satisfied because it is assumed that the evidence was relevant. Here, could only show that UBS was ordinarily negligent, not grossly negligent. 3. The destroyed evidence was relevant to the parties claim not satisfied a. No reason to believe that the evidence resides solely on the missing tapes; therefore has not sufficiently demonstrated that the lost tapes contained relevant information Cost shifting pertaining to costs of additional depositions? Yes. Court orders that UBS must bear s costs for re-deposing certain witnesses for the limited purpose of inquiring into issues raised by the destruction of evidence and any newly discovered e-mails. Takeaway on Spoliation: A party that reasonably anticipates litigation has a duty to ensure the preservation of relevant documents. Does not apply to inaccessible backup tapes (e.g. those typically maintained solely for the purpose of disaster recovery), which may continue to be recycled on the schedule set forth a companys policy; however, does apply to backup tapes that are accessible (e.g. actively used for information retrieval)

3. Discovery Tools
RULE 34: Document Request
(a) A party may serve on any other party a request within scope of R. 26(b) to produce documents and electronically stored information, or any designated tangible things, or to permit entry onto designated land or other property possessed or controlled by responding party. 24

(b) The request must describe with reasonable particularity the items, specify time, place and manner for inspection, may specify forms in which electronically stored data is produced. The party to whom the request is directed must respond in writing within 30 days of being served.

Notes on requests:
When you make the request, you make it to the other side; if they do not wan to product its their job to saw why it is not relevant. This is usually the next step in a typical discovery plan after going through pleadings, initial disclosures, and the interrogatory process Unlike interrogatories and depositions, the number of document requests is not limited by the Rules.

RULE 33: Interrogatories

Unless otherwise stipulated or ordered by the court, a party may serve on any other party no more than 25 written interrogatories. May relate to any matter within R. 26(b). Responding party must serve its answers and any objections within 30 days of being served.

Notes on interrogatories:
Interrogatories are useful because they can identify people that might have documents that you need get the names of any and all persons that knew of the policy in dispute for instance. Also good for surveying possible locations and persons. Can use interrogatories in order to find out where you are going to look. R. 33(d) exception there is an option to produce business records rather than a written response.

RULE 30-31: Depositions

R. 30(a)(1) party may depose any person without leave of court except as provided in R. 30(a)(2). Attendance may be compelled through R. 45 subpoena. R. 30(a)(2) defines when a party must obtain leave of court. Limited to 10 depos w/o stipulation or leave. R. 30(b)(6) when serving notice or subpoena, a party may name as the deponent a public or private corporation, partnership, association, governmental agency, or other entity, and must describe reasonable particularity the matters for exanimation. The named organization must then designate one or more officers or other persons who consent to testify on its behalf. R. 30(c) Examination and cross-examination of a deponent proceeds as it would at trial under Fed. R. Evid. Except R. 103-615. Objections must be noted on record. Questions must be nonargumentative and nonsuggestive. R. 30(d) Depositions are limited to 1 day of 7 hours. Court must allow additional time consistent with R. 26(b)(2) if needed to fairly examine deponent. The court can impose sanctions for delays. At any time during the depo, deponent may move to terminate or limit on the ground of bad faith. R. 31 A party may, by written questions, depose any person. Limited to 10 w/o stipulation or leave. A party wanting to depose a person by written questions must serve them on every other party.

Notes on depositions:
Typically, you file a notice to party to ask them to appear at particular place and time. In addition, if you are conducting a deposition you get a court reporter. Very expensive, but also often critical. Depositions give lawyers the opportunity to explore what may be blind alleys, and to ask questions without having the least notion of wha the answer might be. 25

RULE 45: Subpoenas

Can be used to compel nonparty compliance applies to both things and oral testimony.

RULE 29: Stipulation About Discovery Order

Unless court orders otherwise, parties may stipulate the time and place, and manner specified for taking depositions. May also stipulate other procedures governing or limiting discovery be modified. Ex. suppose parties want to increase interrogatories to 30 parties may stipulate that procedures limiting discovery be modified

RULE 36: Request for Admissions

A party may serve on any other party a written request to admit the truth to matters relating to facts, and the genuineness of any described documents. A matter is admitted unless, within 30 days after being served, the party to whom the request is directed serves on the requesting party a written answer or objection addressed to the matter and signed by the party or its attorney.

Notes on Request for Admissions:

Share 4 characteristics with interrogatories: 1. Usable only against parties 2. In writing 3. Relatively Cheap 4. Of limited usefulness in most litigation Can be thought of as much as much a pleading rule as a discovery device. It does not discover evidence so much as makes evidence irrelevant by taking an issue out of controversy Especially useful with the adoption of notice pleading

RULE 37(a): Motions to Compel

A party may move for an order compelling discovery.

Notes on Motion to Compel:

This is used if you send a request and get no response. Under R. 37, a court may impose punishments ranging from awards of expenses to dismissals of an entire case or the entry of default judgment if the party refuses to comply with the motion.

RULE 26(e): Supplementing Disclosures and Responses

A party who has made a disclosure under R. 26(a), or responded to interrogatory, request for production, or request for admission, must correct or supplement its disclosure or response in a timely manner.

4. Discovery Limitations
RULE 26(c): Protective Orders
A party to whom discovery is sought may move for a protective order.

Privileges Rule 26(b)(1) parties may obtain discovery that is non-privileged and relevant to their
claim or defense o Relevant tends to prove or disprove 26

o Can ask for things that do not have to be admissible at trial meaning that it does not have to comply with the rules of evidence. But, it should be reasonably calculated to lead to admissible evidence.

a. Attorney-Client Privilege
Applies to (1) communications between (2) attorney and client (3) in the context of seeking legal advice o Distinguished from confidentiality rule this privilege is an evidentiary rule and not as broad Does not apply to a third-party Does not apply if the client discusses the information with someone else Attorneys are typically not witnesses in cases because of this Reason for attorney-client privilege In order for the attorney to best represent the client, they need all the facts; a client needs a safe harbor to be able to trust the attorney.

b. Work Product doctrine

Work product is a lawyers mental impressions the work he has produced for his client Codified in Rule 26(b)(3): Rule 26(b)(3)(A) a party may not discover documents and tangible things that are prepared in anticipation of litigation or for trial by or for another party or its representative (not necessarily an attorney), unless: o Otherwise discoverable under Rule 26(b)(1) and o Other party has substantial need for the information and cannot get it without undue hardship 26(b)(3)(B) if court does order discovery of those materials, must protect against disclosure of the mental impressions, conclusions, opinions, or legal theories of a partys attorney or representative concerning litigation

Work-product doctrine Hickman v. Taylor (1947)

Facts: o 2/7/43 Tug sank while helping to tow a car float off the Baltimore & Ohio Railroad across Delaware River at Philadelphia. Five crew members drowned. Tug hires an attorney, Fortenbaugh. o 3/4/1943 Four survivors examined before the US Steamboat Inspectors o Shortly after Fortenbaugh privately interviewed survivors and took statements from them with an eye toward the anticipated litigation. Fortenbaugh also interviewed other persons with relevant info and made a memo of what they told him. (not clients, A/C privilege did not apply) o 11/26/43 Four of the five claims have settled, and the fifth claimant brings a lawsuit in federal court. o One year later petitioner filed 39 interrogatories directed to tug owners. 38th interrogatory asked for the statements that Fortenbaugh took after interviewing the survivors but Fortenbaugh claimed it was privileged and refused to give it up.

27

Issue: To what extent can a party inquire into oral and written statements of witnesses, or other information, secured by an adverse partys counsel in the course of preparation for possible litigation after claim has arisen? Holding: Witness statements that an attorney takes are part of work-product and are protected. Absent the showing of necessity, Fortenbaugh did not have to give up the notes Reasoning: 1. could obtain information from other sources there was a public hearing and they could also interview the survivors themselves. 2. Adversarial system It is essential that a lawyer work with a certain degree of privacy, free from unnecessary intrusion by opposing parties and their counsel. This is the essence of the adversarial system. 3. Deterrence system we enable victims to sue for damages. The attorneys become deputized, to compel disclosure of relevant information. By aligning private interests, they serve a public function. Notes: 1. This is not to say that all facts are privileged. Where relevant and non-privileged facts remain hidden in an attorneys file and where production of those facts is essential to the preparation of ones case, discovery may properly be had. 2. Attorney client privilege is always protected. When citing work product, cite Rule 26(b)(3) first, than possibly Hickman

United States v. Textron Inc. and Subsidiaries (1st Cir. 2009)

Facts: Textron required by federal securities law to have public financial statements certified by an independent auditor. To prepare statements, Textron had to calculate reserves to be entered on the company books to account for contingent tax liabilities. These liabilities included estimates of potential liability if the IRS decided to challenge debatable positions taken by the taxpayer in its return. This case began with a 2003 IRS audit of Textrons corporate tax liability. The IRS requested certain liability spreadsheets, which Textrons outside accountant, Ernst & Young. This enforcement action arose after Textron refused to comply. Issue: Whether tax accrual work papers prepared by lawyers and others in Textrons Tax Dept. to support Textrons calculation of tax reserves for its audited corporate financial statements is protected by the work product doctrine. (A/C does not apply since the accountants saw the papers too) Holding: The work product privilege does not apply to the Textron work papers Rationale: 1. Work product privilege does not apply to documents that are prepared in the ordinary course of business or that would have been created in essentially similar form irrespective of the litigation. IRS pointed this out to characterize the work papers as tax documents and not case preparation materials. 2. However, the Court employed three tests: a. Because of test whether anticipation of litigation is a but for cause for producing the materials Textron passes b. Primary purpose test whether litigation was the main motivating cause for producing the materials Textron does not pass because the work papers sole function was to back up financial statements. However, this test was employed by the 5th Cir.

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Textron does not pass, because they would have had to prepare the forms under SEC regulation in absence of any litigation; this is the test that the 1st Cir. adopts. Campos: On the other hand other than when possible liability is 0%, they are still anticipating litigation. So until they actually know the probabilities, there is still the anticipation of possible litigation

c. For use test whether the documents were prepared for possible litigation

Notes:
1. Majority switches from a test of but for causation to a test of function/purpose 2. Overall, Campos disagreed if the primary function of WP doctrine is to deal with free-riding and in particular to deal with strategy, then we can think of strategy more broadly. a. Besides litigation, lawyers strategize to determine whether to settle; lawyers help determine these probabilities 3. In Upjohn v. United States (1981) the Supreme Court held that A/C privilege extends beyond the control group to those that are in middle management. a. However, this creates a weird situation in Textron, A/C privilege did not apply because the papers were disclosed to the accountants, a third party; however, if they had used in-house accountants to do their work, arguably, the A/C privilege would apply.

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D. Trial
U.S. Constitution Amend. VII
In Suits at common law*, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law. *There used to be courts of common law and courts of equity (chancery courts). R. 2 There is one form of action the civil action. This rule was intended to signify that the two courts were merged. Common law (legal) Remedy Monetary Exceptions: replevin Equity Remedy Specific performance, eg. Injunction; Exceptions: cleanup damages (backpay); restitution No

Jury?

Yes

Jury?

Two parts to the Seventh Amendment:

1. Trial by Jury clause 2. Re-examination clause

1. Trial by Jury Clause

Trial by Jury
The jury serves as a fact-finder. Remember from MSJ materials three functions of factfinder: 1. Draw reasonable inference 2. Test credibility of witnesses 3. Weigh conflicting evidence Key phrases at common law and shall be preserved

Historical Test
Two Court asks two questions: 1. Whether a given claim lay within the jurisdiction of the common law courts in 1791 2. If so, the parties have the right to jury; if a court of equity would have heard the claim, there is no right to a jury

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Applying the Historical Test to New Claims Chauffeurs, Teamsters & Helpers, Local No. 391 v. Terry (1990) jury trial
Facts: Union members sued the union and trucking company to which they were employed, claiming that the company had violated the collective bargaining agreement and the union had violated the duty of fair representation Issue: Whether an employee who seeks relief in the form of back pay for a unions alleged breach of its duty of fair representation has a right to trial by jury Holding: The Seventh Amendment entitles to a jury trial Plurality Rationale (Marshall, Rehnquist, White, Blackmun): 1. Because an action for breach of a unions duty of fair representation was unknown in 18th century England (in fact, collective bargaining was unlawful), the court looked for an analogous cause of action that existed in the 18th century to determine whether the nature of a duty of fair representation suit is legal or equitable. 2. Court held that the duty of fair representation issue is analogous to a claim against a trustee for breach of fiduciary duty (equitable); while the 301 collective bargaining issue most resembled a breach of contract claim (legal) 3. The remedy of back pay sought in this duty of fair representation action is legal in nature. Brennan concurs: 1. Joins with majority that the remedy being sought was legal in nature 2. Believes the historical analysis is not necessary Stevens concurs: 1. Believes the duty of fair representation action most resembles a common law action of attorney malpractice, not breach of fiduciary duty. Dissent (Kennedy, OConnor, Scalia): 1. Believes it resembles an equitable trust action more than a suit for malpractice. 2. The inquiry should end after the first prong.

Notes 1. The Markman functional approach: In Markman v. Westview Instruments (1996)

the Court reanalyzed patent cases in a way that dramatically reduced the jurys scope. Although patent infringement was historically a legal issue, the Court held that because these claims had become increasingly more technical and complex since 1791, the claim construction had no analogy in 1791, and a judge was better suited to oversee the matter. a. This is an outlier unless Campos throws a patent infringement fact pattern on the exam, follow the Terry analysis in determining the right to jury trial

7th Amendment test 1. 1791?

Plurality: Marshall, Rehnquist (CJ), White, Blackmun 1. Vacate arbitration? Equitable 2. Breach of fiduciary duty? Equitable* (+ breach of K legal) 3. Attorney malpractice? Legal Backpay = compensatory (Jury)

Concurrence: Brennan N/A dumb analogy

Concurrence: Stevens Malpractice group has power to elect union reps and can fire if they choose, only difference is that its a group vs. an individual A/C relationship Agrees (Jury)

Dissent: Kennedy, OConnor, Scalia Breach of fiduciary duty Equitable so no jury

2. Remedy

Agrees (Jury)

N/A (inquiry should stop there) 31

2. Unlike the Sixth Amendment, the Seventh Amendment does not apply to states. Accordingly, there is no federal constitutional requirement that states accord the right of jury trial in any civil case. State courts may thus reach conclusions under their own laws that differ from those reached by the federal courts under the Seventh Amendment.

Amoco Oil Co. v. Torcomian (3d Cir. 1983) jury trial

Facts: o There was a dispute between Amoco () and the Torcomonians (), who wanted to take the station over from its previous operators and become Amocos franchised dealers. The disagreement stemmed from whether Amoco rep had ever promised the plaintiffs would be accepted as franchisees and whether they met the state qualifications for franchisees o Relief that sought (1) ejectment, (2) permanent injunction against continued use of Amoco station, (3) permanent injunction against use of Amoco trademarks, (4) monetary damages for lost profits, (5) mesne profits and wrongful use of Amoco trademarks, (6) attorneys fees. However, Amoco attempted to orally amend its complaint to delete money damages other than mesne profits in order to eliminate any legal claims and eliminate s right to a jury trial o Relief that sought (compulsory counterclaim) (1) injunction to enjoin to comply with franchise agreement, (2) monetary damages for lost profits, (3) attorney fees and costs. (Beacon procedure find the common factual issues that might arise in both legal and equitable claims, then a bench trial on anything else) o The district court denied a jury trial, based on the fact that the claims, which arose out of the parties dealings concerning an Amoco service station, were equitable in nature. Issue: Whether the district court erred in refusing to afford a jury trial Holding: There were a number of legal components to which was entitled to a jury trial under the seventh amendment Rationale: 1. Neither joinder of an equitable claim with a legal claim nor joinder of a prayer for equitable relief with a claim for legal relief as to a legal claim can defeat an otherwise valid seventh amendment right to a jury trial. 2. An equitable main claim cannot preclude a jury trial on a legal counterclaim, at least when the counterclaim is compulsory 3. The twist here: although it was an error to deny a jury, it would have been harmless had the directed verdict been appropriate. Thus, the issue of jury trial would only be relevant if the directed verdict was inappropriate. Because the outcome largely rested upon issues of credibility, a directed verdict was inappropriate.

2. Re-examination Clause
Rule 59: New Trial; Altering or Amending a Judgment
The court may, on motion, or on its own, grant a new trial on some or all issues after a jury and a nonjury trial. The time to file a motion or for the court to order a new trial is no later than 28 days after entry of judgment. If a motion for a new trial is based on affidavits, they must be filed with the motion and the opposing party has 14 days after being served to file opposing affidavits.

Rule 50(b): Renewing a DV motion after trial (Judgment notwithstanding the verdict)
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With 28 days of entry of judgment, movant may file a renewed motion for judgment as a matter of law (j.n.o.v.). The court, in ruling, may allow judgment on the verdict (keep the jury verdict), order a new trial, or give DV.

Notes on renewed DV:

By renewing DV, asking the court to reexamine the facts. This was permissible under common law rules in 1791 hence, no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law When a judge awards a renewed DV, they can also order a conditional new trial, as alternative relief. Although you already have judgment, a judge will order a conditional new trial on the anticipation that if DV is vacated on appeal, a new trial can still be had. There are certain practical reasons to do this: o It limits the discretion of the appellate court o Facts of the evidence are still fresh in the judges mind, so particularly with procedural defects, its better to have them ruled on now rather than later. MDV results in an immediate entry of judgment; by contrast, a grant of a new trial merely begins the contest again. So MDV is for the most part appealable while with a motion for a new trial, you have to wait for judgment on the new trial before appealing. In order to file a R. 50(b) motion for j.n.o.v., had to file an MDV before the verdict. However, this is not a requirement in filing a motion for new trial

Motion for New Trial vs. MDV

Common law suggests two reasons for granting new trials

1. Flawed procedure i.e. the judge mistakes the law in the jury instructions and the jury returns a verdict that is obviously based on wrong instruction 2. Flawed verdict this is much harder because it looks at the weight of the evidence.

When Should District Court Grant a new Trial based on weight of evidence?
The only way for a Dist. Ct. to grant a new trial on basis of evidence is if there was a miscarriage of justice. The clearest example of this is where the jury follows their own agenda, blatantly disregarding the facts and the law, such as acquitting an obviously guilty person out of protest. What is the standard in Appellate Court? Abuse of discretion where the trial court made a clear error. One example would be a clear case where the trial judge is simply disagreeing with the jury verdict. Give more deference for complex matters and more scrutiny for simple matters District Court 1. Disagree 2. DV 3. Miscarriage of justice Court of Appeals 1. Abuse of discretion freedom/deference a. complex (more deference) vs. simple (more scrutiny)

Lind v. Schenley Industries (3d Cir. 1960)

Facts: Sales manager () alleged an oral promise by liquor co. () to increase pay and give a very high share of commissions. Jury found a K and awarded damages to sales manager. moves for judgment notwithstanding and alternately a new trial. Judge granted the j.n.o.v. and alternately new trial 33

Issue: What is the appropriate standard of review of a trial courts granting of a new trial after verdict? Holding: The district court abused its legal discretion by substituting its judgment for the jurys judgment. There, the basis for ordering a new trial is that the verdict was against the weight of the evidence, it is frequently stated that a motion for a new trial on this ground is nonreviewable because it is within the discretion of the trial court. But this discretion must still be exercised in accordance with ascertainable legal standards and if an appellate court is shown special or unusual circumstances, which clearly indicate an abuse of discretion in that the trial court failed to apply the proper standards, reversal is possible. Rationale: 1. Where there was no undesirable element introduced into the trial and the trial judge nonetheless grants a new trial on the ground that the verdict has, was against the weight of the evidence, the judge, to some extent at least, substituted his judgment of the facts and the credibility of the witnesses for that of the jury.

Peterson v. Wilson (5th Cir. 1998)

Facts: filed suit in district court after he was fired as grant director at TSU. He claimed that his property interest in his employment at TSU was damaged when he was arbitrarily and capriciously terminated. The jury found for . Four months later, the district granted a new trial, not for insufficient evidence, but instead based on comments the jurors made to the court after returning the verdict. The court concluded that the jury had completely disregarded the Courts instructions. Issue: Whether a trial judge may overturn a verdict based on his conclusion that the jury based its decision on a misunderstanding of the judges instructions Holding: No. The Court found that the grant of new trial was an abuse of discretion Rationale: 1. According to Fed. R. Evid. 606(b), Receiving testimony from the jurors after they have returned their verdict, for the purpose of ascertaining that the jury misunderstood its instructions, is absolutely prohibited 2. Fed. R. Evid. 606(b) is grounded in the firmly established common-law rule in the United States prohibiting admission of juror testimony to impeach a jury verdict 3. Typically, ex parte procedures only permitted if there is a significant reason (in interest of time). Normally not allowed. Potential ethical violations

3. Impartiality of the Jury

28 U.S.C. 1861-70 covers trial by jury Thompson v. Altheimer & Gray (7th Cir. 2001)
Facts: After the jury in a Title VII racial discrimination trial returned a verdict for , appealed, arguing that juror Leiter should have been struck for cause. failed to use any of her three peremptory challenges to remove Leiter. said that she used up her peremptory challenges on jurors whom she considered even less likely to favor her cause than Leiter was. Issue: Did the juror manifest a degree of bias such that the judge abused his discretion in failing to strike her for cause? Holding: Not necessarily, but the judge abused his discretion by failing to follow up by discovering if Leiter could indeed exercise a judgment unclouded by her prior belief.

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Rationale: 1. Just because Leiter had a prior belief that some people sue their employer simply because they have not gotten a promotion or a raise or some other benefit does not mean she was manifesting bias. 2. This belief is based on some truth, since obviously employees make bogus claims, so the inability to set aside this belief does not make a biased juror, rather it makes a more realistic juror. 3. The relevant question instead to ask is whether the juror can distinguish the averages from the individuals. Not whether the prior beliefs are true or false, but rather, whether this prior belief would somehow impeder the juror in giving due weight to the evidence and following the judges instructions. 4. The judge abused his discretion because he should have followed up in seeing if Leiters prior belief actually led to a bias 5. When a prospective juror manifests a prior belief that is both material and contestable, it is the judges duty to determine whether the juror is capable of suspending that belief for the duration of the trial.

Notes:
1. Each party is entitled to three preemptory challenges under 1870. All other challenges for cause or favor, shall be determined by the court.

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E.

Alternatives to Trial

28 U.S.C. 651-657 covers alternative dispute resolution

1. Arbitration
What is Arbitration?
Arbitration a form of private, non-judicial adjudication, where a third party decides a dispute after having heard from both sides. How is it different then adjudication through the court system? 1. Arbitration results in an award that is essentially final and not subject to further challenge. 2. Parties can choose the arbitrator 3. Arbitration permits the parties to design their own procedure. For instance, parties can agree on whether or not arbitrator will be bound by precedent, or dictate the applicable substantive law. 4. Arbitration can be cheaper 5. More private than ordinary adjudication 6. Arbitration may avoid the vagaries in outcome that a jury may introduce 7. Arbitrators may decide a dispute more softly than a court applying his own sense of law and equity to make an award reflecting the spirit rather than the letter of an agreement Federal Arbitration Act (FAA), 9 U.S.C. 2 et seq. is the statutory framework that governs courts when considering whether to enforce an arbitration agreement.

Federal Arbitration Act (FAA) 9 U.S.C. 2

A written provision in any . . . contract evidencing a transaction involving commerce to settle by arbitration a controversy thereafter arising out of such contract or transaction . . . shall be valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract.

Notes on FAA:
Congress passed FAA to promote arbitration; in a way, to overturn common law that had a presumption that arbitration clauses are unconscionable The savings clause, save upon such grounds is a recognition that arbitration clauses are contracts, and therefore subject to the same restrictions as any other K in the US. 9 U.S.C. 3 If any suit is brought upon any issue referable to arbitration, the court has the authority to stay the lawsuit and enjoin the parties to arbitrate the proceeding. (Motion to Compel Arbitration pursuant to 3 of the FAA). Essentially, cannot get around an arbitration agreement simply ignoring it. 9 U.S.C. 4 If a party just does not show up (neither invokes the arbitration nor files suit), the court can enjoin the party to comply, or they will be in breach

Contractual Clauses affecting procedure: Parties can, by K, decide how they will decide disputes:

Choice of law clauses provide that the substantive law of a particular jurisdiction will govern disputes arising under the contract. For instance, in Burger King, the contract specified that Florida law would govern the agreement.

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Consent-to-jurisdiction clauses say that parties consent to suit in a particular place, waiving challenges to PJ. Forum selection clauses take things one step further, limiting forum to a single location (as was done in Carnival Cruise Lines) Arbitration clause takes disputes out of hands of judicial system and places them in an arbitration procedure Cognovit clause involves not only a consent to jurisdiction but also a waiver of the right to assert a defense and the right to trial and appeal. In effect, it is an agreement to confess to any alleged violations, switching the burden

AT&T Mobility LLC v. Concepcion (2011)

Facts: entered into a cell-phone agreement with AT&T. The K had an arbitration clause, but required that claims be brought in the parties individual capacity, and not as a plaintiff or class member in any purported class or representative proceeding. entered K, but were charged sales tax on a free phone and filed a complaint that was later consolidated with a putative class action alleging, among other things, that AT&T engaged in false advertising and fraud by charging sales tax on phones it advertised as free. AT&T moved to compel arbitration and opposed the motion, contending that the arbitration agreement was unconscionable and unlawfully exculpatory under CA law since the agreement disallowed class-wide procedures. Procedure: Although the district court described the agreement favorably, relying on a CA Sup. Ct. decision, the court held that it was unconscionable because AT& T had not shown that bilateral arbitration adequately substituted for the deterrent effects of class actions. The Ninth affirmed. Issue: Whether the FAA prohibits States from conditioning the enforceability of certain arbitration agreements on the availability of class-wide arbitration procedures Holding: Yes. Because it stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress, CAs Discover Bank rule is preempted by the FAA and the judgment of the 9th cir. is reversed. Rationale: 1. Although the saving clause preserves generally applicable K defenses, nothing in it suggests an intent to preserve state-law rules that stand as an obstacle to the accomplishment of the FAAs objectives. 2. The Discover Bank rule interferes with arbitration a. There is little incentive for lawyers to arbitrated on behalf of individuals when they may do so for a class and reap far higher fees in the process b. Faced with inevitable class arbitration, companies would have less incentive to continue resolving potentially duplicative claims on an individual basis. 3. Class arbitration, to the extent it is manufactured by Discover Bank rather than consensual, is inconsistent with the FAA a. The switch from bilateral to class arbitration sacrifices arbitrations informality, and makes the process slower, more costly, and more likely to generate procedural morass than final judgment b. Class arbitration requires procedural formality c. Class arbitration greatly increases costs to Rule: 1. The savings clause of 2 of the FAA allows it the arbitration agreement to be invalidated by generally applicable K defenses, such as fraud, duress, or unconscionability 2. The Discover Bank California rule a class-action waiver is unconscionable when the disputes are over predictably small amounts of damage, and when it is alleged that the party 37

with the superior bargaining power has carried out a scheme to deliberately cheat large numbers of consumers out of individually small sums of money. In other words, the waiver becomes in practice the exemption of the party from responsibility for its own fraud or willful injury to the person or property of another Breyer dissent: 1. The Discover Bank rule is not creating a blanket policy in CA against class action waivers in the consumer context, but rather is an application of the unconscionability principle, which is covered in the savings clause. 2. Weighing the pros and cons of class proceedings should be CAs decision to make

Ferguson v. Countrywide Credit Industries, Inc. (9th Cir. 2002) Agreement unconscionable
Facts: Misty Ferguson () filed a complaint against Countrywide Credit Industries and her supervisor Leo DeLeon (), alleging causes of action under federal and state law for sexual harassment, retaliation, and hostile work environment. filed a petition for an order compelling arbitration because had signed an arbitration agreement; however, the district court denied on the grounds that the agreement was unenforceable because it was unconscionable. Issue: Whether the arbitration agreement is enforceable in light of the doctrine of unconscionability Holding: Countrywides arbitration agreement was unfairly one-sided and therefore, substantively unconscionable Rationale: 1. The agreement compels arbitration of the claims employees are most likely to bring against Countrywide but exempts from arbitration claims Countrywide is most likely to bring against employees 2. The fee provision violates the Armendariz standard, in which a fee provision is unenforceable when the employee bears any expense beyond the usual costs associated with bringing an action in court. 3. Although Countrywides discovery provisions may afford Ferguson adequate discovery to vindicate her claims, it is part of an insidious pattern in which the provisions appear to favor Countrywide at the expense of its employees, and give Countrywide undue advantages. Unconscionability: 1. In Armendariz, Cal. Sup. Ct. held that in order to render a K unenforceable under doctrine of unconscionability must have procedural and substantive unconscionability. 2. Procedural unconscionability concerns the manner in which K was negotiated and circumstances of the parties at that time. Two factors: a. Oppression arising from inequality of bargaining power b. Surprise involves extent to which supposedly agreed-upon terms of the bargain are hidden 3. Substantive unconscionability focuses on the terms of the agreement, and whether the terms are so one-sides as to shock the conscience

Carter v. Countrywide Credit Industries, Inc. (5th Cir. 2004) Agreement valid
Facts: current and former employees of Countrywide () who brought suit to recover overtime compensation allegedly due under provisions of the FLSA. moved to compel the plaintiffs to submit their claims to arbitration under arbitration agreements which all employees sign. Although admitting signing the agreements, they asserted that the agreements were invalid because (1) FLSA claims not subject to arbitration; (2) agreements unconscionable; (3)

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agreements infringe on substantive rights otherwise granted by FLSA; (4) fee splitting arrangement contained in agreements imposes impermissibly prohibitive arbitration costs on them. District court rejected first 3 arguments, and agreed with the 4th argument, but merely severed the provision, as opposed to invalidating the agreement entirely. Issue: Whether the Arbitration Agreement is valid Holding: Finds no basis that the Arbitration Agreements are invalid, affirming the district courts judgment compelling arbitration. Rationale: 1. There is nothing in the FLSAs text or legislative history to support the assertion that the FLSA explicitly or implicitly precludes arbitration. 2. Rejects argument that their inability to proceed collectively deprives them of substantive rights available under FLSA, since the Supreme Court rejected similar arguments concerning the ADEA in Gilmer 3. There is no evidence that limits on discovery will prove insufficient to allow them a fair opportunity to present their claims. 4. The agreements failure to explicitly mandate that the arbitrator grant attorneys fees to prevailing parties is not a basis for invalidating the agreements, since paragraph 2 states that the arbitration shall be adjudicated in accordance with the state or federal law which would be applied by a US District Court sitting at the place of the hearing. 5. The forum selection clause in the agreements does not prevent from vindicating their substantive FLSA rights 6. Prohibitive cost argument is moot because Countrywide represented to the district court that it would pay all arbitration costs. 7. does not carry the burden of showing that the agreement is procedurally and substantively unconscionable although the terms are similar to in Ferguson, Ferguson was under CA law, and TX law is less hostile to the enforcement of arbitration agreements. In TX, there is nothing per se unconscionable; however, in CA, a contract to arbitrate between an employer and an employee raises a rebuttable presumption of substantive unconscionability Rules: 1. In TX, there is a strong presumption in favor of arbitration and a party seeking to invalidate an arbitration agreement bears the burden of establishing its validity. 2. Under Gilmer, a court is required to enforce a partys commitment to arbitrate his federal statutory claims unless he can show that Congress intended to preclude arbitration or other nonjudicial resolutions of those claims. This showing is made by reference to the text of the statute, its legislative history, or an inherent conflict between arbitration and the statutes underlying purposes. 3. Gilmer also held that the mere fact that discovery in arbitration proceedings might not be as extensive as in federal courts does not render those agreements invalid. Thus a party seeking to have the agreement invalidated must show that the discovery provisions in question will prove insufficient to allow FSLA claimants a fair opportunity to present their claims 4. A forum selection provision in a written contract is prima facie valid and enforceable unless the opposing party shows that enforcement would be unreasonable

Distinguishing Ferguson and Carter In essence, both suits involved employees suing Countrywide about disputes over arbitration
clauses In both cases, was arguing that the agreement was invalid under savings clause of 2 FAA.

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Ferguson

Court held terms unconscionable Took place in CA presumption of unconscionability Clause had inequitable distribution of arbitration costs

Carter Court held terms not unconscionable Took place in TX more amenable to arbitration
clauses and find them typically unenforceable Countrywide said they would pay the fees

2. Settlement
A. Shavell
Expected Value 1. When people make choices under uncertainty, they seek to maximize their outcomes 2. Thus, they evaluate decisions based on the total outcome, discounted by the probability that it will occur expected value 3. Civil liability is based on probabilities and expected outcomes Social vs. private costs: 1. Divergence from private and social incentives lawsuits that have high private costs and low social costs, and vice versa 2. Economically, generally cares only about private costs and benefits 3. Society would want social costs and benefits to primarily be taken into account deterrence, costs to and state 4. Why does typically not take deterrence into account? Because the tort has already taken place deterrence will not clearly or immediately benefit 5. Two function of lawsuits: dispute resolution and law enforcement Private Benefits Compensation Social Deterrence Payment of compensation at trial Costs to Costs to state Costs to jury Costs to

Costs

Litigation costs

Settlement and Asymmetric Information 1. Settlement agrees to release his or her claim in exchange for a payment 2. There is always incentive to settle because it reduces costs. Two reasons why they dont settle a. Asymmetric information discovery is to used to solve this b. Differences in beliefs ( and are both optimistic about winning) 3. Attorneys are used to help the party determine their probable liable or chance of winning 4. Settlement zones are created based on the difference between the minimum the plaintiff will expect and the maximum the defendant will pay out

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a. This is true so long as both sides know the respected expected values and there are positive costs of litigation. b. Settlement might not happen when the parties do not have the same information c. Settlement can occur when maximum that is willing to pay is higher than the minimum that will accept d. Ex Hyundai: $400,000 max; Professor: $450,000 min settlement wont happen. If Hyundai willing to pay $500,000 max, settlement can take place e. One reason for discovery help increase information symmetry f. Minimum will accept: PL C Maximum will pay: PL + C If PL>C will go forward If PL<C will not go forward P = probability that wins ( is liable). L = liability sought C = costs to each side

B. Fiss
Has a different frame of reference than Shavell, who was an economist that did not practice law. Fiss worked with the Civil Rights Division of DOJ and his frame of reference is civil rights cases Fiss stresses an important function of litigation that goes beyond enforcement of the law: a third function being to make law Settlement can be bad in that it allows to cut off rights, such as rights of minorities who litigate as it's the only way to get their rights enforced In a way, Fiss sees settlements as a compromise

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F.

Law of Judgments
Law of Judgments = law of preclusion

1. Claim Preclusion (aka res judicata)

Definition claim preclusion prevents a party from litigating a claim that was, or could and should have been raised, in former litigation. Ex: A cannot sue B to recover for injuries sustained in an accident, and then bring another lawsuit on the same accident suing to recover for damage to the car Governs the same cause of action can use claim preclusion as an affirmative defense in the pleading, under R. 8(c)(1)

Elements of Claim Preclusion (Restat. 2d of Judgments)

1. Same Claim a. Same transaction or occurrence i. Same Time ii. Same Space iii. Same Origin iv. Same Motivation b. Therefore, bring all claims related to transaction, or a series of connected transactions, out of which the action arose, otherwise the related claim not brought is waived 2. Same Parties a. Either the same parties, or a party in privity with an original party b. In privity close enough relationship for purposes of preclusion c. Not joining in the first action does not constitute a waiver. Just because you have notice that your rights can be affected in a lawsuit, you have no duty to intervene. The duty to bring in everyone to the suit is on , or the party that wants to bind everyone 3. On the Merits a. Not the same as on the merits under R. 56 simply means a final judgment that would preclude the claims b. In diversity cases, apply state law of preclusion in the state in which court is sitting (Semtek)

Same Claim transaction and operative facts tests Frier v. City of Vandalia (7th Cir. 1985)
Facts: Charlies Frier () parked his car on a narrow street, making it so cars had to go on someones lawn to get around it. The police left two notes at Friers house and when that did not work, towed the car. Frier did not want to pay the $10 fee the garage wanted, and keeping his cars out of the street. Frier filed suits in Ill. seeking replevin for 4 cars that had been towed, naming as the City of Vandalia and the garage that towed his car. The court ruled in favor of , so Frier brought his complaint to federal court, claiming that the City had not offered him a hearing either before or after it took the cars and that it is the official policy of the City not to do so. The court dismissed on failure to state a claim. o Forum 1 (F1) State Court; Claim replevin

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o Forum 2 (F2) Federal Court; Claim 1983 Due process violation Issue: Whether Frier was precluded from bringing essentially the same claim in federal court, with different remedies Holding: Frier was precluded from bringing his claim in federal court Rationale: 1. Transaction test: One suit precludes a second where the parties and the cause of action are identical 2. Same Operative facts test: Causes of action are identical where the evidence necessary to sustain a second verdict would sustain the first. The operative facts in the replevin and 1983 actions are the same 3. Frier could have urged constitutional grounds as reasons for replevin and joined a constitutional claim seeking punitive damages and declaratory relief to his demand for replevin 4. The replevin theory contained the elements that make up a due process theory, and courts of Ill. would treat both theories as one cause of action 5. Because Frier would have been precluded from bringing the claim in state court, under 28 USC 1738, he also loses in federal court Swygert concurrence: 1. Illinois follows the same operative facts test and Swygert believes that it is not satisfied a. Replevin claim was substantive has to establish such facts as ownership of car, and that it was taken illegally b. Due process violation was procedural has to establish such facts as the risk of error in the procedure used compared to the alternative, and that the increased risk of error was not justified 2. Would review the facts to determine whether Friers procedural due process claims could withstand MSJ and concludes that they could not* Notes: 1. The best way to not get your claim precluded is by bringing all the claims related to an event at once. By not bringing all the claims about that event at once, you may waive it. 2. *Using res judicata as an affirmative defense Not a 12(b) MtD; rather, you bring it up as a defense under R. 8(c), then when you establish that judgment is in place, move for MSJ.

Same Parties virtual representation rejected Taylor v. Sturgell (2008)

Facts: o Suit 1: Herrick, an aircraft enthusiast, filed suit in US Dist. Ct. of Wyoming to compel the FAA to release copies of technical documents about the F-45 contained in the agencys records after they refused under an FIOA request. The Dist. Ct. granted SJ to FAA and the 10th Cir. affirmed on July 24, 2002. o On August 22, Herricks friend Brent Taylor unsuccessfully submitted an FOIA request for the same docs and filed a complaint in D.D.C., but raised 2 issues concerning recapture of protected status that Herrick had failed to raise in his 10th Cir. appeal. D.D.C. granted SJ after it concluded that Taylors suit was barred by claim preclusion. Although Taylor wasnt a party in Herricks suit, it held that a non-party may be bound by a judgment if virtual represented by a party, relying on the 8th Cir. 43

Issue: Whether there is a virtual representation exception to the general rule against precluding nonparties. Holding: No. The Court rejects virtual representation as a preclusion doctrine, ruling that the preclusive effects of a judgment in a federal-question case decided by a federal court should instead be determined according to the established grounds for nonparty preclusion, and holding that the judgment against Herrick does not bar Taylor from bringing suit. Rationale: 1. The rule against nonparty preclusion is subject to 6 exceptions: a. Agreement by the parties to be bound by a prior action b. Preexisting substantive legal relationships (ie preceding and succeeding owners of property) c. Adequate representation by someone with the same interests who was a party (ie trustees, guardians, and other fiduciaries) i. A partys representation of a nonparty is adequate for preclusion purposes only if, at a minimum: (1) the interests of the nonparty and her representative are aligned; (2) either the party understood herself to be acting in a representative capacity or the original court took care to protect the interests of the nonparty; (3) there was notice of the original suit to the persons alleged to have been represented d. A party assuming control over prior litigation e. Special statutory schemes such as bankruptcy and probate proceedings, provided those proceedings comport with due process 2. It is a general rule that a litigant is not bound by a judgment to which she was not a party 3. Virtual representation would recognize in effect, a common-law kind of class action ie no procedural protections prescribed in Hansberry, and R. 23 (infra). It does not satisfy the due process clause because it odes not have the same structural protections o property that are seen in class action procedures. 4. In response to the threat of vexatious litigation being heightened in public law cases, the Court points out that stare decisis will allow courts swiftly to dispose of repetitive suits brought in the same circuit, and when stare decisis is not dispositive, people will have economic incentives not to bring suits on issues where others have already lost Notes: 1. There is an implication here that a class action is one of the only ways that you can have a nonpartys claim precluded without privity. 2. This goes back to Pennoyer, which stood for the proposition that you cannot preclude a claim for which you are not a party

Same Parties agents and principals Searle Brothers v. Searle (Utah 1978)
Facts: o F1: Dispute over ownership of Slaugh House in a divorce proceeding. Woodey (the husband) countersued, claiming he had only undivided interest in the house, that his sons split the other half in a partnership with him (Woodey being the managing partner). Woodey loses and Edlean (the wife) gets the full house. o F2: The sons then bring a new claim against Edlean for interest in the house. The trial court held that claim and issue preclusion barred the action. Sons appealed, as they were not parties in the divorce action, therefore, couldnt be bound to the judgment.

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Issue: Were the songs in privity with the father, such that they could be considered a party in the first suit for preclusion purposes? Holding: No. The judgment of the trial court is reversed and remanded Rationale: 1. The sons were not in privity with Woodey because their interests are independent and distinct. In the first suit, Woodey was litigating his interests 2. Appellants cannot be regarded as in privity because the property interest arose before the commencement of the first action, not subsequent thereto. Also, partnership is directly opposite to successive interests. 3. As applied to judgments, privity means one whose interest has been legally represented at the time 4. Although Woodey, as managing partner, could have brought up the sons interest in F1, this does not matter for preclusion purposes because it is a separate interest, and there was nothing binding Woodeys interest to the sons interest. Therefore, there was no privity. Takeaway: The general rule is that agents and principals do not have any mutual or successive relationship to rights of property and are not, as a consequence thereof, in privity with each other.

On the merits settlement judgments are on the merits Matsushita Elec. Industrial Co. v. Epstein (1996)
Facts: Two sets of class action lawsuits: o F1: Fed actions alleging breach of fed securities laws o F2: DE state court, alleging breaches of various state-law fiduciary responsibilities of directors parties settle, court gives judgment, based on both federal and state claims o Federal claims were appealed to 9th Cir. which held that the adjudication of the state claims could have no preclusive effect on issues in the fed case. Nor, because of exclusive fed jurisdiction, could DE courts have adjudicated the fed securities claims; therefore, DEs approval of the settlement could not bar litigation of the fed claims in fed court. Issue: Whether a federal court may withhold full faith and credit from a state-court judgment that approves a class-action settlement because that settlement releases claims within the exclusive jurisdiction of the federal courts. Holding: No. Absent a partial repeal of the Full Faith and Credit Act, 28 U.S.C. 1738, by another federal statute, a federal court must give the judgment the same effect that it would have in the courts of the State in which it was rendered. The judgment of the Court of Appeals is reversed. Rationale: 1. The Full Faith and Credit Act directs all fed courts to treat state-court judgment with the same respect that it would receive in the courts of the rendering state. Fed Courts cannot employ their own rules in determining the effect of state judgments, but must accept the rules chosen by the State from which the judgment is taken. 2. Even when exclusively federal claims are at stake, there is no universal right to litigate a federal claim in a federal district court. Notes: 1. Judicial approval of settlements only required with class action. If these suits were not class action, they could have just reached an out-of-court settlement that included the fed claims as well 2. Important to note that the opinion did not question the exclusivity of fed jurisdiction for the adjudication of the fed securities claim at issue. The Court did not hold that DE could 45

adjudicate these claims, only that the settlement judgment, which included fed claims, should be given full faith and credit by the fed court 3. Campos believes that Matsushita was wrong in the context of Semtek and the REA. A court cannot turn a claim into judgment due to lack of SMJ, so how can it turn a settlement into a judgment? Supreme Court essentially allowed a state court to convert settlement to judgment over claims that were exclusively federal. 4. The question here was, if you have judgment in state court and you are in federal court, can you preclude claims in the federal court that the state court would not have had jurisdiction over? The Court says yes. 5. In class action suits, a settlement usually means a judgment (called a consent decree) Takeaway: on the merits simply means that it is the kind of judgment that precludes a claim. One thing to know about consent decrees: For purpose of exam, consent decree = judgment on the merits. However, this does not mean that the issues were litigated and determined for the purposes of collateral estoppel. In other words, if there was a consent decree in the first case, a party can still litigate on issues of fact and law from first case

After judgment on the merits

Courts might want to assign preclusive effect for 2 reasons: 1. Court considered and decided merits of suit 2. A party misbehaved

Preclusion Gargallo v. Merrill Lynch, Pierce, Fenner & Smith (6th Cir. 1990)
Facts: Merrill Lynch () sued Gargallo () in Ohio ct. over an unpaid debt. In response, filed a counterclaim against , alleging that violated federal security laws. Due to a history of discovery difficulties, the ct. dismissed s counterclaim with prejudice for failure to comply with s discovery requests and courts discovery orders. then filed a complaint in Fed. Ct charging with violating federal securities laws based on same transactions at issue from first litigation. The dist. Ct. dismissed the suit on res judicata grounds. Issue: Whether a court should apply claim preclusive effect to a dismissal based solely on failure to comply with discovery orders. Holding: No, the Ohio Ct. judgment cannot be given preclusive effect in a subsequent federal action asserting those same claims because Ohio Cts. would not give claim preclusive effect to a prior final judgment upon a cause of action over which Ohio Ct. had no SMJ Rationale: 1. To determine whether a prior state court judgment has preclusive effect in a federal court, must look at full faith and credit statute, 28 U.S.C. 1738, which requires a federal court to give a state court judgment the same preclusive effect such judgment would have in a state court 2. Because Ohio subscribes to Restat. 2d of Judgments, which says that a court lacking SMJ ought not to be given preclusive effect, a final judgment in Ohio by a state court in which the court did not have SMJ does not have a claim preclusive effect

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2. Issue Preclusion (aka collateral estoppel)

Definition: Issue preclusion prevents a party from litigating an issue that was already litigated and determined in a prior judgment. Issue preclusion protects the integrity of prior judgments by precluding the possibility of opposite results by two different juries on the same set of facts (see Parks, infra) Ex: Jury verdict in trial that is liable for a car accident against driver (). would be estopped from relitigating the issue of liability if the passenger brought a claim for medical expenses. Governs issues of law and issues of fact

Elements of Issue Preclusion (Restat. 2d Judgments)

1. 2. 3. 4. Issue of fact or law that is the same Actually litigated and determined The determination was by a Valid and Final Judgment The determination was essential to the Judgment and conclusive in a subsequent action between the parties, whether no the same or a different claim 5. Added by case law: Adequate opportunity and incentive to litigate the issue in an earlier proceeding

Illinois Central Gulf Railroad v. Parks (Ind. App. 1979)

Facts: o Bertha and Jessie sued Illinois Central when a car driven by Jessie (Bertha was a passenger), collided with one of their trains o F1 Bertha received $30k, but Jessie lost on loss of consortium o F2 Jessie than sued on negligence for his own injuries. o There were two possibilities for why Jessie lost the first claim he either failed to prove damages, or the jury found that his was contributorily negligent. Issue: Whether Illinois Central Gulf has sustained its burden of showing that judgment against Jessie could not have happened in the prior action without also deciding that Jessie was contributorily negligent, thereby precluding the issue of contributory negligence. Holding: Ill. Central failed its burden and the trial court was correct in granting partial SJ estopping the railroad from denying its negligence and limiting the issues to Jessies contributory negligence and damages. Rationale: 1. Where a judgment may have been based on any of two or more distinct facts, a party wishing to plead the judgment as precluding those issues involved in a subsequent suit must show that the issues went upon those facts. 2. Although evidence of Jessies loss of consortium and services is uncontroverted, the evidence was minimal and thus could have caused the jury to make its finding based on no compensable damages, as opposed to contributory negligence. 3. Basically, because there were two possibilities (contributory negligence or failure to prove damages), the second element, actually litigated & determined, was not fulfilled Ill. Central failed to show that the issue of contributory negligence was actually litigated and determined. Notes: 1. Unlike claim preclusion, where claims are barred even if not raised, issue preclusion only applies to issues actually decided in the prior action. 2. For instance, if an action is decided on default judgment, usually wont preclude the issues since no issues were actually decided 47

3. Exception: A party who deliberately precludes resolution of factual issues through normal adjudicative proceedings may be bound, in subsequent, related proceedings involving the same parties and issues, by a prior judicial determination reached without completion of the usual process of adjudication. This is because the actual litigation requirement is satisfied by substantial participation in the adversary contest in which the party was afforded a reasonable opportunity to defend himself on the merits but did not do so.

Actually litigated and determined

Why have this requirement for issue preclusion, but not claim preclusion? When it comes to issue preclusion, there is concern; not only with a claim, but also with respect to issues of law whatever a court decides is going to be the law. Because of externality, the court will not duck the issues unless it has some confidence that it was looked as by a prior court. This not only affects parties, but affects the law of jurisdiction o This comes in when the court lists multiple grounds for judgment: When a judge does this, it is possible that the judge is lazy about those grounds if one fails, the other is there as a backup. Therefore, there is less incentive to have really good fact-finding if is not essential to the judgment. o So, cannot preclude based on any ground when the court decided in favor of a party on multiple grounds.

Offensive vs. Defensive Preclusion

Offensive preclusion where is seeking to estop a from relitigating any issues which
previously litigated and lost against another . Defensive preclusion where is estopped from asserting a claim that the had previously litigated and lost against another . Offensive Preclusion Defensive Preclusion

seeking to estop from relitigating issues that

previously litigated and lost against another 1 sues ; 1 wins. 2 then sues on same issue. had opportunity to be heard in F1 and lost Does not promote judicial Creates opposite incentives from defensive preclusion 2 has incentive to not join first action, and instead wait and see if it will result in a favorable judgment for the 1. In other words, subsequent s have nothing to lose and everything to gain by not intervening in the first action

is estopped from asserting a claim that had

previously litigated and lost against another sues 1; 1 wins. then sues 2 on same issue. However, 1 could not estop 2 from relitigating because 2 never had an opportunity to be heard in F1. Precludes from relitigating identical issues by merely switching adversaries ( loses against 1, so tries to sue 2 on the same issues). Thus, has strong incentive to join all potential s into first action.

Non-Mutual Offensive Issue Preclusion (NOIP) Parklane Hosiery Co. v. Shore (1979)
Facts:
o F1: SEC brings suit against Parklane in Fed. Ct., alleging false and misleading statements. The Dist. Ct. held for the SEC and the 2nd Cir. affirmed. o F2: Class action suit against Parklane in Fed. Ct., alleging false and misleading statements (no claim preclusion, because different parties)

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 Issue: Whether a party who has had issues of fact adjudicated adversely to it in an equitable

action may be collaterally estopped from relitigating the same issues before a jury in a subsequent legal action brought against it by a new party. Holding: Yes. None of the considerations justifying a refusal to allow use of offensive issue preclusion are present here. Rationale: 1. Parklane had a full and fair opportunity to litigate their claims in the SEC action so they are collaterally estopped from relitigating the issue of false and misleading statements in subsequent litigation 2. The preferable approach is not to preclude the use of offensive collateral estoppel, but rather, give trial courts broad discretion to determine when it should be applied. When a trial judge should not allow offensive collateral estoppel: a. Where it hurts judicial economy for instance, Restat. 2d of Judgments provides that offensive issue preclusion may be denied if party asserting it could have effected joinder in the first action between himself and his present adversary b. Where it is unfair to . Court gives four fairness factors: i. Could the party trying to assert issue preclusion have intervened in the earlier suit? ii. Did have incentive to litigate the first action? (i.e. In F1, L = $1000, so does not try as hard. F2, sues for $1,000,000) iii. Are there multiple, prior inconsistent judgments (State farm, infra) iv. Are there procedural opportunities available to in the second suit that were not available in the first suit? 3. The mutuality doctrine, in which neither party could use a prior judgment as estoppel against the other unless both parties were bound by the judgment, no longer applies. a. The mutuality doctrine failed to recognize the obvious difference in position between a party (in this case, the class action s) who has never litigated an issue and one who has fully litigated and lost (in this case, Parklane) Notes: 1. If, hypothetically, Parklane won the suit against SEC, Parklane could not use defensive issue preclusion against the class in F2 because the class did not have an opportunity to intervene in F1 2. Another example where offensive issue preclusion is unfair to . In State Farm Fire & Casualty Co. v. Century Home Components (Or. 1976) appealed a ruling by the trial court that was collaterally estopped from contesting liability for a fire in each of 48 actions. a. The first trial was a jury verdict in favor of , but the appellate court reversed for a new trial. During the appeal, a second trial resulted in another jury verdict for . The third trial resulted in a jury verdict for , which was affirmed on appeal. The first trial, which was retried, resulted in a verdict (no jury) for . b. The rest of the plaintiffs tried to preclude from litigating the issue of liability in subsequent cases. The court determined that, because prior determinations were basically inconsistent, circumstances were such that it would be unfair to preclude from relitigating the issue. 3. Even with judicial economy concerns, there may be no incentive to litigate when the expected recovery for each individual suit is negative (L < C). Even if 1 could win, and preclusion of the issue would mean that all subsequent s have 100% probability, no one will want to put the money. Class action suits fix this by increasing the economies of scale (L > C) 49

 Key thing with non-mutuality

1. We allow non-mutuality when the party being burdened already had the opportunity to be heard 2. Even with issue preclusion, there is a sense of mutuality, just like claim preclusion 3. However, because one party had the opportunity to litigate in the prior suit, this becomes the exception to mutuality

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G. Joinder

1. Introduction to Joinder
Definition: joinder is the process in modern civil litigation by which a party can combine claims
and add additional parties R. 8 general rules of pleading; in a way, this is the original joinder, as is bringing a claim against , joining . Three basic actions: o Claim: sues o Counterclaim: sues o Crossclaim: 1 sues 2

Rule 13: Counterclaim and Crossclaim

R. 13(a)(1) compulsory counterclaims: a pleading must state as a counterclaim any claim if it
(A) arises out of the transaction or occurrence that is the subject matter of the opposing partys claim; and (B) does not require adding another party over whom the court cannot acquire jurisdiction. R. 13(b) permissive counterclaims: a pleading may state any counterclaim that is not compulsory. R. 13(g) crossclaims: pleading may state a crossclaim against a coparty if the claim arises out of the transaction or occurrence, or if the claim relates to any property that is the subject matter of the original action.

Notes on compulsory counterclaim: R. 13(a) encompasses a number of things to be considered when adding a party to a lawsuit

PJ over a new party a. has already consented to suit in the forum b. Service of process R. 4 service of a complaint SMJ a. We are in federal court, which has limited jurisdiction under Art III. and statutes. b. Two main statutes ( 1331-32); 1367 extends SMJ c. Standard under 13(a) matches the case or controversy requirement under Art. III and 1367, so you do not have to worry about SMJ in a compulsory counterclaim Preclusion 51

a. If Restat. 2d governs law of preclusion in the forum, then if you are going to bring any claim having to do with the transaction or occurrence, you have to bring them all or else they are deemed waived. If you forget to bring a claim that is part of the same transaction or occurrence, it is gone

Rule 14: Third-Party Practice (aka Impleader)

A defending party, as a third-party , may serve a summons and complaint on a nonparty who is,
or may be, liable to the defending party for all or part of the claim against it. The person served with the summons and third-party complaint is the third-party . may assert against third-party any claim arising out of transaction or occurrence that is the subject matter of s claim against third-party . Impleader applies when the liability of the impleaded party is contingent upon a finding of liability of the first party. Does not apply to it not me, its him situations

Notes on Impleader: Two key benefits to :

1. Gives them a way of bringing anyone else into the suit who might help them foot the damage bill 2. Gives them a way of delaying the case and making litigation more costly for s The suit between and impleaded party is a separate lawsuit; is considered a third-party because is asserting the claim; impleaded party is a third-party . Examples of impleader: insurance, indemnity, j&s liability, guarantor

Rule 18: Voluntary Joinder of Claims

A party asserting may join as many claims as it has against an opposing party.

Rule 19: Required Joinder of Parties

R. 19(a)(1) persons (so long as they are subject to service of process and court has subject
matter jurisdiction over them) must be joined if: (B) In that persons absence, the court cannot accord complete relief among existing parties; or (C) That persons claims an interest relating to the subject of the action and is so situated that disposing of the action in the persons absence may: as a practical matter impair or impede the persons ability to protect the interest R. 19(a)(2) if person not joined as required, the court must order that person be made a party. A person who refuses to join as may be made either , or in a proper case, an involuntary . R. 19(b) if joinder is not feasible, the court must determine whether, in equity and good conscience, the action should proceed.

Rule 20: Permissive Joinder of Parties

R. 20(a)(1) persons may be joined as if:
(A) They assert any right to relief jointly, severally, or in the alternative with respect to or arising out of the same action, occurrence, or series of transaction or occurrences; and (B) Any question of law or fact common to all s will arise in the action R. 20(a)(2) persons may be joined as if: (A) Any right to relief is asserted against them jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions and occurrences; and

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(B) Any question of law or fact common to all s will arise in the action.

Rule 21: Misjoinder and Nonjoinder of Parties

Misjoinder of parties is not a ground for dismissal. On motion or on its own, the court can add or drop a party, or sever any claim against a party

Rule 42: Consolidation; Separate Trials

R. 42(a) The Court may sua sponte (on its own accord) consolidate actions involving common
questions of law or fact R. 42(b) The Court order a separate trial of one or more separate issues, claims, crossclaims, counterclaims, or third-party claims.

Compulsory Counterclaim Plant v. Blazer Financial Services (5th Cir. 1979)

Facts: Plant () took out a loan from Blazer (), but makes no payment on the notes. files a
TILA action for failure to make disclosures required by the Act. counterclaimed on the note for the unpaid balance. Trial court held for Plant, but offset Plants award against the judgment for on the counterclaim. appealed on the grounds that the court did not have jurisdiction to entertain the counterclaim. Subject Matter Jurisdiction over a counterclaim: A permissive counterclaim must have an independent jurisdictional basis, while a compulsory counterclaim falls within the ancillary jurisdiction (codified in 28 U.S.C. 1367(b)) of the federal courts. Personal Jurisdiction: Plant sued there, so consented to jurisdiction; and Blazer consented by filing an answer with a counterclaim. However, Blazer would have to worry about PJ if they brought in another on a cross-claim Issue: Whether the counterclaim on the unpaid balance was compulsory or permissive. Holding: The counterclaim is compulsory Rationale: 1. Court employs several tests: a. Are the issues of fact and law raised by the claim and counterclaim largely the same? No b. Would res judicata bar a subsequent suit on s claim absent the compulsory counterclaim rule? c. Will substantially the same evidence support or refute s claim as well as s counterclaim? d. Is there any logical relation between the claim and the counterclaim? Takeaway: Under R. 13(a) if a counterclaim meets the two criteria then it must be brought, otherwise it would be precluded because it was waived. For this to work, it has to define claims that the court would have SMJ over; so, transaction or occurrence is included in case or controversy under 1367

Impleader Price v. CTB, Inc. (M.D. Ala. 2001)

Facts: Price () contracts with Latco () to build chicken coops. Price sues Latco for a faulty coop;
to which Latco impleads ITW, the maker of the nails, for making faulty nails Issue: Whether Latco could implead ITW.

53

 Rule: R. 14(a) gives the right to assert a claim against anyone not a party to the original action

if the liability of the impleaded party (ITW) is in some way contingent upon a finding of liability of (Latco); however, third-party liability must be derivative to the original claim; can only be impleaded when the original is trying to pass all or party of liability to third-party. Holding: Latco has properly impleaded ITW under R. 14(a). Alabama has a doctrine of implied contractual indemnity which is a right that if seller is liable for a defect caused by manufacturer, then manufacturer impliedly agrees to pay for the damages. Takeaway: Impleader is important in the context of joint and several liability (where each is liable for the whole, and each has a right to contribution); impleader is contingent liability; if Latco wins, the chain breaks. o If files a counterclaim against , then can also implead someone else, effectively becoming the impleader. o PJ over an impleaded third-party will usually lie because he will typically be involved in the occurrence/transaction leading to original claim, and be subject to PJ under Intl Shoe line of cases

2. Joinder & Supplemental Jurisdiction

28 U.S.C. 1367: Supplemental Jurisdiction
(a) Any action which district courts have original jurisdiction, the district courts shall have supplemental jurisdiction over all other claims that are so related to claims in the action within such original jurisdiction that they form part of the same case or controversy under Const. Art. III. (b) In diversity cases, district courts shall not have supplemental jurisdiction under 1367 (a) over claims by against persons made parties under R. 14, 19, 20, or 24, or over claims by persons proposed to be joined as under R. 19, or seeking to intervene as under R. 24, when exercising supplemental jurisdiction over such claims would be inconsistent with jurisdictional requirements under 1332 (L > $75k, complete diversity).

Kroger Cases (8th Cir. 1975); (US 1976)

Background: Krogers wife filed a wrongful death suit after her husband dies in a work accident
while working for Paxton. Decedent Kroger was killed while trying to secure a tank. Walking alongside a crane, the crane got too close to powerlines, and the electricity jumped to decedent. Potential s: 1. Paxton employer and lessor of crane. However, workers comp bars the tort claim because it has exclusive jurisdiction 2. Owen Equipment manufacturer of the crane. However, there are plausibility issues 3. Omaha Public Power District (OPPD) manufactured the power lines. The better party over Owen because the electricity was a more plausible cause (after all, Kroger was electrocuted) Potential Claim: State law tort claim; Kroger (IA) sues OPPD (NB) Process: o Original Suit: Kroger sued OPPD; OPPD impleaded Owen under R. 14 for contribution under a theory of joint & several liability. OPPD filed MSJ because they had no duty to decedent (had already sold power lines to Paxton); Kroger then files an amended complaint to sue Owen

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o Amended Complaint: Kroger (IA) Owen (inc: NE, PPB: NE); In answering, Owen admitted that they were incorporated in NE, but denied everything else (R. 8(b)(3) allows a party to admit specific allegations and deny the rest) o Two years later: Owen raised an SMJ defense on lack of diversity under R. 12(h)(3), which is basically a R. 12(b)(6) defense, but which can be asserted at any time. This was slimy lawyering, as Owen probably waited to pull this defense on purpose in order to let SoL run longer; Owens PPB turned out to be IA, destroying complete diversity under Strawbridge. (What Krogers lawyer should have done was immediately send out a request for admissions asking for PPB; this was a HUGE mistake not to do so) (a) Kroger argued that there was still supplemental jurisdiction Issue: Whether a federal court has ancillary jurisdiction over a third-party named in an amended complaint in a suit in which complete diversity exists between the and the original , but where the newly named third-party is a citizen of the same state that the is. 1367(b): In cases solely on diversity, district court shall not have supplemental jurisdiction under (a) over claims by plaintiffs against persons made parties under R. 14, 19 when exercising supplemental jurisdiction over such claims would be inconsistent with the jurisdiction requirements of 1332 o OPPD impleaded Owen so Owen originally joined in the action under R. 14 Holding: Kroger could not assert supplemental jurisdiction Takeaway: has the choice of forum, but does not; so supplemental jurisdiction is expanded so that can defend itself, but not to the original , because had the choice of forum in the first place. Goes to the basic due process idea that he who picks forum picks jurisdiction (possibly cite Pennoyer) Exam Note: When the statute says plaintiff, it means the plaintiff who filed the action; not the third-party or functional plaintiff

Review Consolidation vs. Separate lawsuit

An action is initiated under R. 3 with the filing of a complaint. The most basic concept of jurisdiction is whether can add Claim piece of property that is conditional upon a finding of liability o Judgment changes conditional entitlement into a certain one (either liability, or no liability) o Jurisdiction is essentially the power to do this, i.e. the power to declare law through judgments General rule for nonparties: A court cannot decide the legal rights of a nonparty (Pennoyer); so a judgment cannot preclude a nonparty unless there are very special circumstances (i.e. class action) One function of joinder is to bring in everyone you want so you can have inclusive conversion of the claim into judgment.

3. Compulsory Joinder, Intervention, and Interpleader

Rule 19: Required Joinder of Parties (Compulsory Joinder)
R. 19(a)(1) persons (so long as they are subject to service of process and court has subject
matter jurisdiction over them) must be joined if: (B) In that persons absence, the court cannot accord complete relief among existing parties; or

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(C) That persons claims an interest relating to the subject of the action and is so situated that disposing of the action in the persons absence may: as a practical matter impair or impede the persons ability to protect the interest

Rule 24: Intervention

R. 24(a) Intervention of right: A court must permit anyone to intervene who: (1) is given an unconditional right to intervene by a federal statute; or (2) claims an interest relating to the property or transaction that is the subject of the action, and is so situated that disposing of the action may as a practical matter impair or impede the movants ability to protect its interest, unless existing parties adequately represent that interest. R. 24(b)(1) Permissive intervention: A court may permit anyone to intervene who: (A) is given a conditional right to intervene by a fed statute; or (B) has a claim or defense that shares with the main action a common question of law or fact

Rule 22: Interpleader

R. 22(a)(1) Persons with claims that may expose to multiple liability may be joined as and required to interplead. This is proper even though: (B) the claims of the several claimants lack a common origin or are adverse and independent (C) denies liability in whole or in party to any or all of the claimants R. 22(a)(2) A defendant exposed to similar liability may seek interpleader through a crossclaim or counterclaim Used in cases where, in absence of interpleader, there would be a race to the courthouse. Claimants all have a claim on the pot of money, but there is not enough to satisfy everyone. Interpleader allows the holder of the bank to bring a lawsuit that in effect is against all of the claimants; the court distributes the proceeds on a pro rata basis. Why might the bank want interpleader it can prevent multiple suits, which is especially burdensome if the class of is all over the place. Interpleader kind of resembles R. 23(b)(1)(b) a limited fund class action (infra). Statutory interpleader there is a relaxation of the complete diversity rule under 1332 and Strawbridge only requires minimal diversity Interpleader actions are very rare would never use this; the only way it would come up is if the holder of the bank thinks it is better to do it that was as opposed to separate lawsuits 28 U.S.C. 1335 defines when the a federal court has original jurisdiction over interpleader actions 28 U.S.C. 1397 designates where the action may be brought (any judicial district in which one or more of the claimants reside) 28 U.S.C. 2361 defines the process and procedure for carrying out an interpleader action in federal court

Notes on Interpleader:

Required Parties Temple v. Synthes Corp. (1990)

56 Facts: Temple (MS) underwent surgery to get a plate and screw device implanted in lower spine. The device malfunctioned and caused injury. The device was manufactured by Synthes

(PA), and the surgery was performed by LaRocca (LA) at St. Charles General Hospital (LA). Temple sued Synthes in Fed. Ct. (there is diversity); and filed a separate administrative proceeding against LaRocca and St. Charles; at the conclusion of the proceeding, Temple filed suit against LaRocca and Hospital in LA state court. Procedure: At trial level, Synthes files a R. 12(b)(7) motion to dismiss for failure to join necessary parties pursuant to R. 19; when Temple failed to comply, the court dismissed the case and Temple appealed. The appellate court affirmed, holding that R. 19 calls for mandatory joinder of necessary parties in the interest of judicial efficiency. Issue: Whether joint tortfeasors are indispensable parties under R. 19(a) Holding: No Joint tortfeasors are not indispensable parties under R. 19(a) Rules: o R. 19(a) person must be joined as a party if action would impair or impede the persons ability to protect their interests. o R. 19(b) if the person who is required to be joined cannot be joined, the court is required to determine in equity if the claim can proceed. 19(b) also lists factos for the court in determining whether it would be fair to proceed. The Court can dismiss where a persons interest would be impaired by the action but they cannot be brought in wants to file the suit in a forum where they can bring in the party Rationale: 1. It has long been the rule that it is not necessary for all joint tortfeasors to be named as defendants in a single lawsuit. 2. A defendant subject to joint and several liability is not a required party under R. 19(a); they are a permissive party. The doctor and hospitals interests are not impaired by Temples action against Synthes. a. If Synthes is found liable, will likely just bring a separate suit against the doctor for contribution; this is the functional equivalent of impleader. Notes: 1. This is an example of joint & several liability. Synthes could have impleaded the doctor, because 1367(b) only applies when the claims are by the plaintiff; so Synthes, as , can implead even if it destroys complete diversity. Instead, Synthes filed for MtD under R. 12(b)(7) 2. The idea behind required parties is that if you dont bring them in this action, there is not other place to bring them. This is not the case here. 3. Compulsory joinder required in suits in which joint rights and liabilities are held by more than one party, if granting relief would affect the rights of parties not in the lawsuit 4. While permissive parties may be joined in the same suit, indispensable parties must be joined in the same suit.

Intervention
Definition: Allows a nonparty to come in to protect an interest short of preclusion This serves an opposite function of the other joinder devices: Unlike the other devices, which serve to bring into a lawsuit another party, intervention serves to permit an unjoined party to elbow their way into the lawsuit Looking back at Searle [pg. 43], imagine Edlean was planning to immediately bulldoze Slaugh House if she won it in the divorce proceeding. The sons would be impacted by F1 and their rights would potentially be impaired, even though they are not precluded. 57

o This is an example of how an action can still impair a nonparty even though it was not
precluded (also, precedent, stare decisis) o Intervention tries to account for the fact that judgments can still have an impact over the rights of nonparties.

Intervention adequate representation NRDC v. US Nuclear Regulatory Commission (NRC) (10th Cir. 1978)
Facts: o The underlying action was instituted by , National Resources Defense Counsel (NRDC), requesting declaratory and injunctive relief against the NRC (a federal agency) and NMEIA (a state agency), prohibiting these agencies from issuing licenses for the operation of uranium mills in New Mexico without first preparing environmental impact statements (which was authorized by 274(b) of the Atomic Energy Act of 1954. o United Nuclear Corp. (UNC), who had already received a license on the date that the complaint was filed, was allowed to intervene. o After that, Kerr-McGee, American Mining Congress (AMC), and others filed motions to intervene, but were denied on the grounds that the interests would be adequately represented by UNC. Permissive intervention under R. 24(b) was also denied. Kerr-McGee and AMC appealed. o Kerr-McGee: one of the largest holders of uranium properties in New Mexico, its application for renewal is pending at the time of action. Issue: Whether the denial of intervention was correct Holding: No, the motions to intervene were granted Rationale: 1. The Court considers the standards set forth in R. 24(a)(2): a. Whether applicant claims an interest relating to the property or transaction which is the subject of the action i. Here, the interest is the delivery of the issuance and delivery of the license sought by UNC. Because the consequence of litigation is either the imposition of the impact statement or not, the consequence would be felt by UNC and Kerr-McGee. ii. Therefore, because a decision in favor of would have a profound impact on Kerr-McGee and the members of AMC, they do have an interest within the meaning of R. 24(a)(2) b. Whether the claimants are so situated that the disposition of the action may as a practical matter impair or impede their ability to protect that interest. i. There is little question that if the relief sought by is granted, the interests of AMC and Kerr-McGee would be affected. ii. It should be pointed out that the Rule refers to impairment as a practical matter. Although Kerr-McGee and AMC would not be bound to the result through res judicata, the judgment, especially with the NRC and NMEIA as parties, could have a strong stare decisis effect. iii. In looking at the impairment, as a practical matter, the court is not limited to strictly legal consequences; they may consider any significant legal effect in the applicants interest and not just take into account res judicata. c. Where their interest is not adequately represented by existing parties i. Although the district courts finding was that the representation would be adequate because UNC has interests that are the same as Kerr-McGee and AMC,

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and the same level of knowledge and experience, the fact is that, because UNC was granted its license already, it is situated somewhat differently in the case than other members of the industry. ii. While the interests of UNC may seem similar to Kerr-McGee and AMC, there is no way to say that there is no possibility that they will not be different and the possibility of divergence of interest need not be great to satisfy the burden of applicants. 2. In addition, there would be some value in having the parties before the court so that they will be bound by the result; AMC, representing a number of companies having a wide variety of interests, could provide a useful supplement to the defense of the case. The same can be said of Kerr-McGee

Cannot be precluded for not intervening in prior action Martin v. Wilks (1989)
Facts: o F1: BFF & NAACP v. Birmingham NAACP and Black firefighters (BFF) filed separate class-action suits against City of Birmingham and the Board (made the hiring decisions), alleging Title VII discrimination and violation of Civil Rights Act of 1964, and other federal law. After bench trial, but before judgment, the parties entered into two consent decrees (a class action settlement, which requires a fairness hearing by the Court) o F2: WFF v. City White firefighters (WFF) then brought suit against the City and Board seeking injunctive relief against enforcement of the decrees. They argued that the decrees would operate to illegally discriminate against them (reverse discrimination). A group of black individuals were allowed to intervene as s in their individual capacities to defend the decrees. o Process: moved to dismiss the reverse discrimination cases as impermissible collateral attacks on the consent decrees, and the Dist. Ct. granted MtD. The 11th Cir. reversed on the groudns that WFF were neither parties nor privies to the consent decrees, so their independent claims of unlawful discrimination are not precluded. Supreme Court granted cert. Issue: Whether a consent decree could preclude another suit brought by persons not a party to the prior action, that challenges the validity of the consent decree Holding: No, affirmed 11th Cir, that WFFs independent claims of unlawful discrimination could not be precluded because they were neither parties nor privies to the consent decrees. Rationale: 1. It is a principle of general application in Anglo-American jurisprudence that one is not bound by a judgment in personam in a litigation in which he is not designated as a party or to which he has not been made a party by service of process 2. If a party is seeking a judgment binding on another, he cannot obligate that person to intervene; instead, that person must be joined. 3. It is joinder as a party, not the knowledge of a lawsuit and an opportunity to intervene, that is the method by which potential parties are subjected to the jurisdiction of the court and bound by a judgment or decree. Takeaway: People on the sidelines have no duty to intervene. Due Process fork: However, WFF had notice and an opportunity to be heard; its hard to tell whether there would be a due process violation if WFF was precluded; in other words, WFF had notice and an opportunity to come in, but did not. Asymmetry: R. 19 requires joinder, but R. 24 does not require intervention 59

o The consequence is that the court can preclude the original claim, but cannot preclude the new claim if they bring a lawsuit. If the potential intervener does not exercise the right, than the burden is on to join them in. o In other words, a required party, if not brought in, is not precluded from judgment.

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H. Class Actions
1. Introduction to Class Actions
What is a class action?
Defined under 28 U.S.C. 1711 o Definition: any civil action filed in a district court under R. 23, or any civil action filed under a State statute or rule of judicial procedure authorizing an action to be brought by 1 or more representatives as a class action o Class: all members in a class action o Class counsel: persons who serve as attorneys for class members o Class members: persons who are within certified class of class action o Plaintiff class action: class members are plaintiffs o Proposed settlement: an agreement regarding a class action that is subject to court approval, and approval would be binding on some or all class members o Basic definition of a party: the people in the caption of the lawsuit, i.e., the representatives of the class. Absent class members are all that are not listed in complaint; however, they are considered parties for preclusion purposes 28 U.S.C. 1712 15 provide further protections for class action o 1712: Coupon settlements o 1713: Protection Against Loss by Class Members o 1714: Protection against discrimination based on geographic location o 1715: Notifications to appropriate federal and state officials

Due Process Clauses (5th and 14th Amendments)

14th Amendment, Sec. 1 (Due Process Clause): No state shall deprive any person of life, liberty or property without due process of law o Remember, for the purposes of Due Process, claims and defenses are considered property Derives relation to jurisdiction via Pennoyer v. Neff (personal jurisdiction) The court must have power to act, either upon given property, or on a given person in order to subject one to personal liability for suit Court must have given adequate notice of the action against him, and an opportunity to be heard notice + opportunity to be heard = procedural due process imposed by DPC

a. Substantive Due Process b. Procedural Due Process

Rule 23: Class Actions

All classes must satisfy all 4 requirements under R. 23(a) and fit into 1 of the 3 categories under R. 23(b) R. 23(a) Prerequisites: (1) Numerosity enough persons are in class to make joinder of all members impracticable (2) Commonality there are questions of law or fact common to class (3) Typicality claims or defensives of representative parties are typical of the claims or defenses of the class 61

(4) Adequate representation the representative parties fairly and adequately protect the interests of the class. R. 23(b) Types of class actions: (1)(B) limited funds problem where there is a risk of adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties, or would substantially impede or impair their interests Ex: where all claimants seek to collect on claims that exceed insurance coverage (2) Injunctive Relief where the party opposing the class has acted or refused on grounds that apply generally to the class so that injunctive or declaratory relief is appropriate Ex: civil rights claims (3) predominance superiority where court finds that questions of law or fact common to class members predominate over any questions affecting only individual members and that a class action is the superior method Two groups: 1. Small claims lawsuits where many s with small L combine for large L (ex. Concepcion, the cell-phone arbitration case) 2. Mass torts litigation ex. exposure of hundreds of workers to asbestos, or BP oil spill case Notes: o Do not need to provide notice and opt-out for R. 23(b)(1) & (2), only R. 23 (b)(3)

Due Process Hansberry v. Lee (1940)

Facts: Hansberry (), a black family, bought property in a housing subdivision with a racially restrictive covenant. The covenant did not take effect unless signed by owners of 95% of the frontage; but the signers represented only 54%. Neighbor Lee () brought an action against the Hansberry family, alleging violation of the covenant. The Hansberrys claimed that not enough people had signed the covenant, but Lee countered by referring to Burke v. Kleiman, an earlier suit to enforce the same covenant, in which Burke represented a class of plaintiffs suing four named individuals in violation of the covenant. The Supreme Court of Illinois determined that Burke had been a class action, and that the Hansberrys were members of the class of plaintiffs o F1: Burke (class) sues Kleinman; brought an action to enforce the covenant, which the court upheld. This was based on false stipulations that there was enough signers to uphold the covenant. o F2: Neighbor suing Hansberrys, also bringing an action to enforce the covenant Claim Preclusion?: Lee is part of the class in the first case; but this is a new claim Issue Preclusion?: Actually litigated and determined and essential to the judgment? Issue: Whether the Hansberrys can be bound to a judgment rendered in an earlier litigation to which they were not parties Holding: No. A judgment in a class action binds absentee members of a class only if they have been adequately represented. Rationale: 1. There was a conflict of interest; the class in F1 was seeking to enforce the covenant while Hansberry is seeking not to enforce the covenant. Therefore, the class was not adequately representing the interest of Hansberry

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2. More importantly, it is a general principle of Anglo-American jurisprudence that one cannot be bound by judgment in personam in a litigation, in which he is not designated a party, or made a party through service of process. Hansberry was not made a party, and there was no service of process in the first case. 3. Where the procedure adopted does not fairly insure the protection of the interests of absent parties bound by it, there has been a failure of due process 4. Circumstances where members of a class not present as parties to litigation may be bound by judgment a. Where they were adequately represented by the present parties b. Where they actually participated in the conduct of the litigation c. Where the interest of the members of the class is joint d. Where the relationship between the parties present and absent is such as legally to entitle the former to stand in judgment of the latter 5. There are dual and potentially conflicting interests of those who want to compel the agreement and those that want to resist the agreement, and it is impossible to say that solely because they are both parties to it, that any two of them are of the same class. Notes: 1. For due process purposes, the touchstone is adequacy of representation we will allow a class action to exist as an exception to joinder law and Pennoyer, so long as procedures are designed to adequately protect the interest of nonparties a. Here, Burke did not adequately represent interests of Hansberry, because the representative had a conflict of interest with Hansberry.

Personal Jurisdiction over class members Phillips Petroleum v. Shutts (1985)

Facts: , royalty owners to gas produced by , brought a class action on behalf of himself and 33,000 small royalty owners in Kansas state court against to recover interest on royalty payments. The trial court sent notice to all class members, most of whom were located outside of Kansas, notifying them of the litigation, their right to appear and their right to opt out of the litigation. The trial court, applying Kansas law to the transactions, found liable to all class members. appealed on the basis that Kansas trial court did not possess personal jurisdiction over absent class members, and that Kansas courts could not apply Kansas law to every claim in the dispute (less than 1,000 members actually resided in Kansas and only .25% of the gas leases involved in the suit were on Kansas land) o Why it was in Kansas state court? Simply because this is where Shutts brought the suit Issue: Whether Kansas state court could assert personal jurisdiction over non-Kansas class members. Holding: A forum State may exercise jurisdiction over the claim of an absent class-action plaintiff, even though that plaintiff may not possess the minimum contacts with the forum which would support personal jurisdiction over a defendant. Rule: 1. Plaintiff must receive notice + an opportunity to be heard and participate in the litigation. 2. Notice must be reasonably calculated under all the circumstances 3. DP clause requires at a minimum that an absent plaintiff be provided with an opportunity to remove himself from the class by executing and returning an opt out or request for exclusion form to the court. 63

4. DP clause requires that named plaintiff at all times adequately represent the interests of the absent class members. Rationale: 1. Although made a good argument, pointing out that a chose in action is a constitutionally recognized property interest possessed by each plaintiff, therefore an adverse judgment would be every bit as onerous to an absent plaintiff as an adverse judgment on the merits to an absent defendant, this premise is in error. a. This is because the burdens placed by a State upon an absent class-action plaintiff are not of the same order or magnitude as those placed upon an absent defendant. 2. Unlike the defendants being haled to out-of-state court, the plaintiffs in this suit were not haled anywhere upon pains of default judgment 3. A class action resembles a quasi-administrative proceeding, conducted by the judge plaintiff class cannot first be certified unless the judge, with the aid of the named plaintiffs and defendants, conducts an inquiry into the common nature of the named plaintiffs and the absent plaintiffs claims, adequacy of representation, jurisdiction possessed over the class, and any other matters that will bear upon proper representation. 4. Absent plaintiff class members are simply not under same burdens as defendant a. Do not need to hire counsel or appear b. Almost never subject to counterclaims or crossclaims, or liability for fee or costs c. Not subject to coercive or punitive remedies d. Adverse judgment typically will not bind an absent plaintiff for any damages, although it will extinguish any of plaintiffs claims litigated 5. Because fewer burdens, DP clause need not and does not afford them as much protection from state-court jurisdiction as it does for defendants Notes: o PJ analysis Court has PJ over whom: Shutts brought the suit In-state residents domicile (under Milliken v. Meyer) What about PJ for absent out-of-state s? No general jurisdiction No minimum contacts, such that it does not offend traditional notions of fair play and substantial justice under Intl Shoe line of cases The closest case would be Mullane, where brought an action on behalf of out-of-state beneficiaries the issue there was whether the proceeding had jurisdiction over out-of-state residents Implicit in Mullane holding was that you can bring in out-of-state if notice is sufficient; as long as notice is reasonably calculated to apprise s of the proceedings, PJ can bind them Here, the court takes that implicit assumption in Mullane and makes it explicit o The Court here suggests that it is not as big of a deal for absent as it is for absent , because it is essentially all up-side for and only down-side for o Counter-argument to this would that losing your claim would be pretty bad

Notes on Class Action, Federalism, and Jurisdiction

How do we look at class action under a diversity action? o Before the Rules, Supreme Tribe of Ben-Hur v. Cauble (1921) held that for purposes of diversity, courts should look to the citizenship only of class reps and ignore class members thus creating an exception to complete diversity for class actions.

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In 2005, Congress enacted the Class Action Fairness Act, which grants original jurisdiction to the federal courts in class actions in which any member of the class of plaintiffs possess the requisite diversity with respect to any defendant. In addition, it gives the ability to aggregate claims of all class members to reach the $5 million amount in controversy requirement. o Such suits may be brought under original jurisdiction, or under provisions of 1453, removed by any defendant whether or not a citizen of the state in which the action arose. 1332(d)(3) defines factors relevant to discretionary power to decline federal jurisdiction. Judges look at: o Relative size of the in-state and out-of-state class membership o Whether the claims asserted involve matters of national or interstate interest o What states laws will apply to the claims o The connection of the forum to the class members, the harm, and the defendant. 1332(d)(4) Circumstances in which a federal court must decline jurisdiction o If more than two-thirds of the class members are in-state, o At least one significant defendant is also in-state o The injuries giving right to the claim occurred in in-state

Class Action vs. Non-Mutual Offensive Issue Preclusion

Similar, in that it requires someone to bring the first suit (Shutts in this case) Class action, unlike NOIP, has shared costs. Cost of lawsuit = %(L-C) Why we need preclusion disincentive to bring separate suits, especially in a case like Shutts, where individual L was only around $100 on average

2. Class Action Settlement

Settlement of Class Actions and the Settlement Class
Laws requiring lots of transparent process to expose conflicts of interest and forbidding some forms of settlement: o R. 23(e) requires court approval of any settlement of a class action. To order such approval, the judge must first direct notice in a reasonable manner to all class members who would be bound by the proposal. However, no individual notice is required After notice, the court must conduct a hearing at which it hears from the settling parties about why the settlement is fair to the class members. The Rule permits class members to come forward with objections. Also requires a judicial finding that the proposed settlement is fair, reasonable, and adequate o R. 23(h) creates the process the court must use to approve any fees

Amchem Products, Inc. v. Windsor (1997)

Facts: There was a huge fall-out of lawsuits based on asbestos inhalation. The Panel of Multidistrict Litigation transferred all the asbestos cases then filed but not yet on trial to one district for pretrial proceedings. A settlement as a result of negotiation was reached between s and s who had already filed suit. After settling the inventory claims, moved to certify a class of people who had been exposed to asbestos but had not yet sued, purely for the purpose of settlement. More than half of the named s alleged that they or, their family members had already suffered injury. The others alleged that they had not yet manifested any asbestos-related 65

condition. After the class was certified and the District court conducted a fairness proceeding, the district court approved the settlement. The Court of Appeals, however, reversed. Issue: Have the requirements been met under R. 23, such that the class of those injured and exposed to asbestos should be certified for settlement purposes? Holding: No, the predominance of common questions of law and fact, and superiority of the class action method for adjudication were not satisfied. Rationale: 1. Predominance requirement under R. 23(b)(3) fails The benefits asbestos-exposed persons might gain from the establishment of a grand-scale compensation scheme is a matter fit for legislative consideration, but is not pertinent to the predominance inquiry. 2. Adequate representation under R. 23(a)(4) fails The critical goal of those currently injured, ie, immediate payment, did not align with the interest of those who have only faced exposure an inflation-protected fund for the future. Notes: o (class) was to be made up of pending litigants, people with present injuries, but also people who were exposed to asbestos that had not yet seen injury (asbestos has a long latency period nothing can happen to you from asbestos exposure for as much as 40 years). The second group were risk-based claims, which are not generally recognized in tort law o An appeal to a certification order is an exception to the final judgment appeal rule this is an interlocutory appeal Incentive of the plaintiffs, or, why Campos disagrees with Amchem: o Thinking, in terms of adequacy of representation, this is fulfilled if we think of it in terms of the common issues. Here, the attorney will make rational choices based on the model below that would adequately protect everyone. o We think of torts in terms of B < pL; essentially a cost-benefit analysis (Hand formula) B = cost of not using asbestos, such as lost profits pL = the total liability would face from using asbestos o The reality is that in order for a business to do anything, they always run the risk of bad consequences; so they try to assess possible liability beforehand o Let LT = total harm caused by use of asbestos. o Let L = s expected Liability o LT might not equal L however, because not all s will necessarily collect, or not all s will collect their full amount of L. If L < LT, would use asbestos (under-deterrence) If L = LT, would not use asbestos (optimal-deterrence) If L > LT, would shut down company, because it is not worth it to produce asbestos (over-deterrence) o Assume that first suffers L1, second suffers L2, and everyone else suffers L. L1 + L2 + L = LT (First & Second recovery + rest of recovery = total recovery) o In mass torts litigation there is the issue of generic causation (all claims based on the general premise that asbestos causes injury) o can hire 2 experts for the issue of whether asbestos causes injury. The only costs being: CB = the cost of a bad expert ie, less prestigious degree CG = cost of a good expert ie, highly published Ivy League grad o 1 can win on res ipsa loquitor can win based on circumstantial evidence, so he does not need to hire a lawyer o 2 would automatically win if he pays CB

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o Everyone else would get pL if they hire CB, or L if they hire CG (p = 100% with CG) L2 > CB L2 < CG so 2 would not hire CG L2 + L < CG L1 + L2 + L > CG if 1 joins with 2 and the rest of , then CG is worth it o In a situation with no class action, but non-mutual offensive issue preclusion: 1 automatically gets L1 2 pays CB, and gets L2 No incentive for 1 and 2 to get together with class to pay CG 3 n free-ride off CB (NOIP) and get pL L1 + L2 + pL < LT Therefore, Amchem would use asbestos o In a situation with class action with ability to opt-out 1 would opt out and automatically get L1 Back to NOIP model, because 2 is the only one that benefits from the class action because 2 can spread costs o However, in a situation with no opt-out class action Because no-one opts out, they can afford CG; however, is it worth it? %(L1 + L2 + L CG) > %(L1 + L2 + pL CB) L CG > pL - CB L pL > CG - CB L > C therefore, they will hire CG, and L = LT o Because of the incentive created by allowing a no opt-out class action in Amchem, Campos disagrees with the holding On one hand, having no opt-out forces 1 to essentially pay a tax; however, the counter-argument is that gives Amchem incentive not to produce asbestos

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