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Civil Procedure
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Band's Refuse Removal, Inc. v. Borough of Fair Lawn
Table of Contents
CHAPTER I. Choosing A System Of Procedure.............................................................. 6 Band's Refuse Removal, Inc. v. Borough of Fair Lawn ................................................. 7 Kothe v. Smith ................................................................................................................ 9 CHAPTER II. The Rewards And Costs Of Litigation-Of Remedies And Related Matters ........................................................................................................................................... 11 Fuentes v. Shevin .......................................................................................................... 12 Connecticut v. Doehr .................................................................................................... 14 Carey v. Piphus ............................................................................................................. 16 Smith v. Western Electric Co........................................................................................ 18 Venegas v. Mitchell ...................................................................................................... 20 CHAPTER III. Describing And Defining The Dispute .................................................. 22 Gillispie v. Goodyear Service Stores ............................................................................ 23 United States v. Board of Harbor Commissioners........................................................ 24 McCormick v. Kopmann .............................................................................................. 25 Zuk v. Eastern Pennsylvania Psychiatric Institute of the Medical College of Pennsylvania ................................................................................................................. 27 Mitchell v. Archibald & Kendall, Inc. .......................................................................... 29 Ross v. A.H. Robins Company ..................................................................................... 31 Cash Energy, Inc. v. Weiner ......................................................................................... 32 Swierkiewicz v. Sorema N.A........................................................................................ 34 Shepard Claims Service, Inc. v. William Darrah & Associates.................................... 35 David v. Crompton & Knowles Corp. .......................................................................... 37 Wigglesworth v. Teamsters Local Union No. 592 ....................................................... 39 David v. Crompton & Knowles Corp. .......................................................................... 41 Swartz v. Gold Dust Casino, Inc................................................................................... 43 CHAPTER IV. Establishing The Structure And Size Of The Dispute........................... 45 Southern Methodist University Association of Women Law Students v. Wynne and Jaffe............................................................................................................................... 46 Kedra v. City of Philadelphia........................................................................................ 47 Insolia v. Philip Morris, Inc. ......................................................................................... 49 Janney Montgomery Scott, Inc. v. Shepard Niles, Inc.................................................. 50 Clark v. Associates Commercial Corp.......................................................................... 52 State Farm Fire & Casualty Co. v. Tashire................................................................... 54 Natural Resources Defense Council, Inc. v. United States Nuclear Regulatory Commission .................................................................................................................. 56 Hansberry v. Lee........................................................................................................... 58 In the Matter of Rhone-Poulenc Rorer, Inc. ................................................................. 60 CHAPTER V. Obtaining Information For Trial ............................................................. 62 Hickman v. Taylor ........................................................................................................ 63 In Re Convergent Technologies Securities Litigation .................................................. 65 Davis v. Ross ................................................................................................................ 66 Kozlowski v. Sears, Roebuch & Co.............................................................................. 68 Hickman v. Taylor ........................................................................................................ 70
Upjohn Co. v. United States ......................................................................................... 72 In Re Shell Oil Refinery ............................................................................................... 74 Cine Forty-Second Street Theatre Corp. v. Allied Artists Pictures Corp. .................... 76 CHAPTER VI. Adjudication Before Trial: Summary Judgment ................................... 78 Adickes v. S.H. Kress & Co. ........................................................................................ 79 Celotex Corp. v. Catrett ................................................................................................ 81 Arnstein v. Porter .......................................................................................................... 83 Dyer v. MacDougall...................................................................................................... 85 CHAPTER VII. Judicial Supervision Of Pretrial And Promotion Of Settlement .......... 87 G. Heileman Brewing Co. v. Joseph Oat Corp. ............................................................ 88 Marek v. Chesny ........................................................................................................... 90 CHAPTER VIII. Trial..................................................................................................... 92 Beacon Theatres, Inc. v. Westover ............................................................................... 93 Ross v. Bernhard........................................................................................................... 95 Curtis v. Loether ........................................................................................................... 97 Tull v. United States ..................................................................................................... 99 Teamsters Local No. 391 v. Terry .............................................................................. 101 Granfinanciera, S.A. v. Nordberg ............................................................................... 103 Galloway v. United States........................................................................................... 105 Lavender v. Kurn ........................................................................................................ 106 Guenther v. Armstrong Rubber Co............................................................................. 107 Ahern v. Scholz........................................................................................................... 108 Dimick v. Schiedt........................................................................................................ 109 Whitlock v. Jackson .................................................................................................... 110 People v. Hutchinson .................................................................................................. 111 CHAPTER IX. Choosing The Forum-Geographical Location..................................... 112 Pennoyer v. Neff ......................................................................................................... 113 Hess v. Pawloski ......................................................................................................... 114 International Shoe Co. v. Washington ........................................................................ 116 McGee v. International Life Insurance Co. ................................................................ 118 World-Wide Volkswagen Corp. v. Woodson ............................................................. 119 Burger King Corp. v. Rudzewicz................................................................................ 121 Asahi Metal Industry Co. v. Superior Court ............................................................... 123 Pavlovich v. Superior Court........................................................................................ 125 Shaffer v. Heitner........................................................................................................ 127 Burnham v. Superior Court......................................................................................... 129 Helicopteros Nacionales de Colombia, S.A. v. Hall................................................... 131 Bates v. C & S Adjusters, Inc. .................................................................................... 133 Piper Aircraft Co. v. Reyno ........................................................................................ 134 CHAPTER X. Choosing The Forum-State V. Federal Court....................................... 136 Mas v. Perry ................................................................................................................ 137 Louisville & Nashville R.R. v. Mottley...................................................................... 139 Merrell Dow Pharmaceuticals, Inc. v. Thompson ...................................................... 140 CHAPTER XI. Choosing The Law To Be Applied In Federal Court .......................... 141 Swift v. Tyson............................................................................................................. 142 Erie R. Co. v. Tompkins ............................................................................................. 143
Guaranty Trust Co. v. York ........................................................................................ 145 Byrd v. Blue Ridge Rural Electric Cooperative, Inc. ................................................. 146 Hanna v. Plumer.......................................................................................................... 148 Walker v. Armco Steel Corp....................................................................................... 150 Gasperini v. Center for Humanities, Inc. .................................................................... 152 Mason v. American Emery Wheel Works .................................................................. 154 Dice v. Akron, Canton & Youngstown R. Co. ........................................................... 155 United States v. Kimbell Foods, Inc. .......................................................................... 157 CHAPTER XII. Appeals............................................................................................... 158 Quackenbush v. Allstate Insurance Company ............................................................ 159 Digital Equipment Corporation v. Desktop Direct, Inc. ............................................. 160 Cardwell v. Chesapeake & Ohio Railway Co............................................................. 161 Will v. United States ................................................................................................... 162 Curtiss-Wright Corporation v. General Electric Company......................................... 163 Gulfstream Aerospace Corp. v. Mayacamas Corp...................................................... 164 Bose Corporation v. Consumers Union of United States, Inc. ................................... 165 CHAPTER XIII. Preclusive Effects Of Judgments ...................................................... 167 Manego v. Orleans Board of Trade............................................................................. 168 Federated Department Stores, Inc. v. Moitie .............................................................. 170 Rinehart v. Locke........................................................................................................ 172 Marrese v. American Academy of Orthopaedic Surgeons ......................................... 173 Semtek Intl. Inc. v. Lockheed Martin Corp. ............................................................... 175 Little v. Blue Goose Motor Coach Co. ....................................................................... 177 Hardy v. Johns-Manville Sales Corporation............................................................... 178 Commissioner of Internal Revenue v. Sunnen ........................................................... 179 Halpern v. Schwartz.................................................................................................... 181 Benson and Ford, Inc. v. Wanda Petroleum Co.......................................................... 182 Parklane Hosiery Co. v. Shore.................................................................................... 183 United States v. Mendoza ........................................................................................... 184
CHAPTER I. Choosing A System Of Procedure

Citation. 62 N.J. Super. 522 (1960). Brief Fact Summary. Capasso (Defendant) appeals from a judgment declaring their garbage collection contract with the Borough of Fair Lawn void, declaring all payments made to them under the contract void, declaring Fair Lawn Ordinance 688 void, and awarding $303,052.62 to the Borough of Fair Lawn (Defendant). Defendant contends that the judgment must be reversed because of the manner in which the trial judge conducted the proceedings. Synopsis of Rule of Law. A trial judge must exercise impartiality and judicial restraint in order to protect a litigant's right of due process. Facts. In February, 1957, the Borough of Fair Lawn (Borough), advertised for bids for collection of the town's garbage. The borough awarded the contract to Capasso, the lowest bidder, and they began garbage collection. In August, 1957, the Borough adopted Ordinance 688, which required a permit to collect garbage, and further provided that only a person who had a contract with the town could be granted a permit. In other words, only the Capassos could collect garbage in Fair Lawn. Band's Refuse Removal, Inc. (Plaintiff), had a contract to collect garbage from a plant in the town, so it applied for a permit. According to the ordinance, the Borough denied the application. Plaintiff filed a complaint alleging that the ordinance was arbitrary, discriminatory, unconstitutional and ultra vires. Plaintiff asked that the court declare the ordinance void and order the borough to renew its previous permit or issue a new one. Plaintiff then sued the borough and the defendants subsequently filed an answer alleging that their actions were proper since the contract had been awarded to the Capassos under a proper competitive bidding process. The Capassos then intervened as Defendants and filed a counterclaim asking the Borough to be restrained from issuing a permit to Plaintiff during the term of their contract. In terms of Plaintiff's action, the appellate court held that Ordinance 688 was valid and that Plaintiff could not challenge the legality of the bidding process because it had not bid and was not a resident of Fair Lawn. In terms of Capasso's counterclaim against the Borough, the Law Division declared the garbage collection contract between the Borough and Capasso void, any payments made to Capasso under the contract void, and declared Ordinance 688 void. It also held awarded $303,052.62 to the Borough. Defendant appeals the judgment, asserting that the judgment must be reversed because of the manner in which the trial judge conducted the proceedings. On the first day of the trial counsel for the Defendants moved that the judge disqualify himself because his actions before trial demonstrated that he had prejudged the issues and had a plan to use the litigation as a vehicle for a broad municipal investigation. Defendant's counsel also objected throughout the trial to the participation in the action by the trial judge. During the trial, the judge called his own witnesses, and examined them at length. Issue. Has a trial judge acted prejudicially if he or she participates in the proceedings?
Held. Yes. Judgment reversed and the matter is remanded to determine the validity of the contract. The trial judge overstepped the permissible bounds of judicial inquiry. Generally, it has been held that a trial judge may interrogate a witness, when it is not excessive. However, this power to call and examine witnesses is not unlimited. A judge's power must be balanced against the interests of a litigant. In the instant case, prejudicial error resulted from the trial court's production of a large number of witnesses and admission of their testimony. Prejudicial error also resulted from the creation of new issues by the court without notice. A trial judge's function is to serve litigants by determining their disputes and issues based upon the applicable rules of law. A judge may not initiate litigation or expand the case by adding new issues without giving the parties full and fair opportunity to meet those issues. As a result of the creation of new issues and denial of opportunity to investigate those issues the defendant was denied due process. Discussion. The court has adopted the classical view that a judge should have an inactive role in proceedings and should make decisions based on the rules of law.
Kothe v. Smith
Kothe v. Smith
Citation. 771 F.2d 667 (2nd Cir. 1985). Brief Fact Summary. Patricia Kothe (Plaintiff) brought suit for medical malpractice against four defendants, Dr. Smith, Dr. Andrew Kerr, Dr. Kerr's professional corporation, and Doctors Hospital (Defendants). Plaintiff discontinued actions against Dr. Kerr, Dr. Kerr's corporation and Doctors Hospital. Sanctions were imposed against Defendant, Dr. Smith, for settling the case during trial at an amount suggested by the judge prior to trial. Thus, Defendant appeals from a judgment of United States District Court of Southern District of New York, which directed him to pay $1,000 to Plaintiff's attorney, $1,000 to Plaintiff's medical witnesses, and $480 to the clerk of the court. Synopsis of Rule of Law. A trial judge may not abuse his sanction power in order to encourage settlement. Facts. Plaintiff brought suit for medical malpractice against four defendants, Dr. Smith, Dr. Andrew Kerr, Dr. Kerr's professional corporation, and Doctors Hospital, seeking $2 million in damages. Actions against Dr. Kerr, Dr. Kerr's professional corporation, and Doctors Hospital were discontinued. Three weeks prior to trial, the trial judge held a pretrial conference during which he directed parties to conduct settlement negotiations. The judge recommended settlement between $20,000 and $30,000 and warned the parties that if they settled for a comparable figure after trial had begun he would impose sanctions. Defendant offered $5,000, which was rejected. Plaintiff's attorney informed the judge that his client would settle for $20,000 but requested that the figure not be released to the Defendant. The only pretrial settlement that was released to the Defendant was $50,000. When the case settled for $20,000 after one day of trail, the district court penalized the Defendant alone. Defendant appeals. Issue. Whether a judge may impose sanctions against the dilatory party for failure to settle prior to trial? Held. No. Judgment vacated and remanded. The district court's imposition of sanctions was an abuse of the sanction power in Rule 16 (f) of the Federal Rules of Civil Procedure. A trial judge must not use pressure tactics to compel settlement. Rule 16 was designed to encourage pretrial settlement discussion, not to impose negotiations on unwilling litigants. The coercion in this case was also troublesome, since the court imposed sanctions on the Defendant alone. The Defendant should not have been required to make an offer to settle because the court wanted him to. Defendant's attorney had every right to change his evaluation of the case after the trial had begun.
Kothe v. Smith
Discussion. The purpose of Rule 16 is to maximize the efficiency of the court system by urging attorneys and clients to cooperate with the court and to abandon practices that interfere with the management of cases. Imposing sanctions on parties for settling cases after the trial begins is contrary to the purpose behind the rules, which is to encourage the settlement of cases. This case is more troubling, as the judge imposed sanctions on the Defendant alone for settling during the trial.
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CHAPTER II. The Rewards And Costs Of Litigation-Of Remedies And Related Matters
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Fuentes v. Shevin
Fuentes v. Shevin
Citation. 407 U.S. 67 (1972). Brief Fact Summary. Two cases involving similar issues of due process considerations were joined. Plaintiffs challenged the constitutionality of prejudgment replevin statutes on the grounds that the denial of notice and a hearing was a violation of their right to due process. Synopsis of Rule of Law. Prejudgment replevin statutes, which deprive individuals of their property must comply with procedural due process. Facts. In the first case, Margarita Fuentes (Plaintiff), a resident of Florida, purchased a gas stove and service policy from Firestone Tire and Rubber Company (Defendant), under a conditional sales contract. A few months later, Plaintiff also purchased a stereophonic phonograph from the Defendant. Defendant retains title to the merchandise, while Plaintiff was entitled to possession of the items until she defaulted on her payments. With about $200 remaining to be paid, a dispute developed between the Plaintiff and the Defendant over the servicing of the stove. Plaintiff refused to make payments and the Defendant instituted an action in small claims court for repossession of the stove and stereo. When the Defendant filed that action, it also obtained a writ of replevin ordering a sheriff to seize the disputed goods. Plaintiff then filed suit in a federal district court challenging the constitutionality of the Florida prejudgment replevin procedures under the Due Process Clause of the Fourteenth Amendment. The Appellants in the second case filed a similar action in federal district court in Pennsylvania challenging the constitutionality of that State's prejudgment replevin process. The Appellants in this case also had possessions seized under writs of replevin. In both cases, the district courts considered the Appellants' challenges to the constitutionality of the Florida and Pennsylvania statutes. The courts in both cases upheld the constitutionality of the statutes. Plaintiffs appeal. Issue. Do state replevin statutes that fail to provide property owners with notice and an opportunity to challenge the seizure of their property violate the Fourteenth Amendment's guarantee that no state shall deprive any person of property without due process of law? Held. Yes. Judgment is vacated and remanded. One cannot deprive an individual of his or her property without prior notice and the opportunity for a pre-deprivation hearing. However, there are extraordinary situations that justify postponing notice and the opportunity for a hearing. Seizure of property without notice or a hearing is allowed in a few limited situations. First, the seizure must be necessary to secure an important governmental interest. Second, there
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Fuentes v. Shevin
must be a special need for very prompt action. Third, the person instituting the seizure must be a governmental official responsible for determining that it was necessary and justified in the particular instance. Here, the Florida and Pennsylvania prejudgment replevin statutes serve no important governmental interest. Neither statute limits the seizure of goods to special situations demanding prompt action. Lastly, no state official participates in the decision to seek the writ, reviews the basis for the claim for repossession, or evaluates the need for immediate seizure. Therefore, the Florida and Pennsylvania statutes do not provide extraordinary situations that justify denying the right to prior opportunity to be heard before property is taken from their possessor. Dissent. The decision depends on one's perception of the practical considerations involved. One should pay attention to the seller's interest, while also looking at those of the buyer. Here, the buyer's risk of harm is not as large as the majority concludes. Discussion. In order to have a due process violation, there must be state action and a deprivation of property. The court concludes that both of these requirements were not present, and therefore, both the Florida and Pennsylvania statutes were unconstitutional.
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Connecticut v. Doehr
Citation. 501 U.S. 1 (1991). Brief Fact Summary. In conjunction with a civil action for assault and battery against Brian K. Doehr (Respondent), John F. DiGiovanni (Petitioner), submitted an application for an attachment in the amount of $75,000 on Respondent's home in Meridan, Connecticut. Respondent challenged the constitutionality of the attachment statute, the General Statutes of Connecticut, Section 52-278(e) (1991), under the Due Process Clause of the Fourteenth Amendment. The Supreme Court of the United States granted certiorari to resolve the conflict in authority between the United States Court of Appeals for the Second Circuit's ruling that the statute was unconstitutional and the District Court's decision to uphold the statute. Synopsis of Rule of Law. Prejudgment attachment without prior notice and an opportunity for a hearing violates the Due Process Clause of the Fourteenth Amendment. Facts. Petitioner submitted an application to the Superior Court of Connecticut for an attachment in the amount of $75,000 on Respondent's home in Connecticut in connection with a civil action for assault and battery. The suit did not involve the Respondent's land nor did the Petitioner have any interest in Respondent's home or property. Connecticut's prejudgment attachment statute authorizes the attachment of real estate without prior notice or the opportunity for a prior hearing. The statute does not require the posting of a bond. Based upon Petitioner's affidavit that the Respondent willfully, wantonly and maliciously assaulted the Petitioner, the Superior Court of Connecticut judge found "probable cause to sustain the validity of the Petitioner's claim" and ordered attachment of the Respondent's home in the amount of $75,000. Only after the sheriff attached the property was the Respondent given notice of the attachment. Respondent filed suit against Petitioner in Federal District Court claiming that the statute was unconstitutional under the Due Process Clause of the Fourteenth Amendment. The district court upheld the statute. On appeal, the court of appeals reversed the district court's decision. The Supreme Court of the United States granted certiorari. Issue. Whether a state statute that authorizes prejudgment attachment of real estate without prior notice or the opportunity for a hearing, without extraordinary circumstances, and without the requirement that a person seeking attachment post a bond satisfies the Due Process Clause of the Fourteenth Amendment? Held. No. The judgment is affirmed and remanded for further proceedings. Prejudgment attachment provisions that fail to provide prior notice or preattachment hearing without some showing of exigent circumstances violates the requirements of due process. In order to determine what process is due when the government seeks to deprive an individual of their property, the following three step analysis must be completed: 1) the private interests that will be affected; 2) the risk of erroneous deprivation;
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3) and the government's interests. Here, however, the inquiry is slightly different because prejudgment remedy statutes deal with disputes between private parties. Therefore, instead of considering the government's interests, principal attention must be given to the interest of the party seeking the remedy. In the instant case, homeowners' interests would be significantly affected by attachment even though there is no interference with possession of property because it could cloud title and interfere with borrowing on the property. Second, there is a substantial risk of erroneous deprivation since it is state practice to rely on conclusory affidavits and does not lend itself to documentary proof. Third, the interests of the Petitioner are too minimal, the only interest the Petitioner has in the Respondent's real estate is to ensure the availability of assets to satisfy the judgment if he prevailed on the merits of the claim. Petitioner's interest in attaching the property does not justify the burdening of the Respondent's ownership rights without a hearing to determine the likelihood of recovery. Due process also requires that the Petitioner post a bond in addition to requiring a hearing or showing of some exigency. A danger exists that property rights may be wrongfully deprived without the safeguards of a bond, even with a hearing or exigency requirement. Concurrence. The concurrence is in agreement with the decision of the court that the Connecticut attachment statute fails to satisfy the Due Process Clause of the Fourteenth Amendment. However, the court's holding requiring the bond requirement is both unnecessary and not useful. The court should wait for more concrete cases, which present issues involving bonds to make such a decision. Agreement with the court that the Connecticut statute's validity should be determined by applying the test set forth in Matthews v. Eldridge, 424 U.S. 319 (1976). It fails this test. Discussion. The factors used in the case to determine what process is due when the government seeks to deprive an individual of their property was set forth in Matthews v. Eldridge, 424 U.S. 319 (1976). The factors are as follows: 1) consideration of the private interest that will be affected by the prejudgment measure; 2) an examination of the risk of erroneous deprivation of such interest through the procedures used; 3) the probable value of additional or alternative safeguards; and 4) the Government's interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Id. at 335. In Connecticut, the same test was used; however, the focus was different. In contrast to Mathews, the court emphasized that principal attention is to be paid to the interest of the party seeking the prejudgment remedy, with due regard for any ancillary interest the government may have in providing the procedure or in reducing its burden by not providing greater protections.
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Carey v. Piphus
Carey v. Piphus
Citation. 435 U.S. 247 (1978). Brief Fact Summary. The Supreme Court of the United States considered the elements and prerequisites for the recovery of damages of students who were suspended from public elementary and secondary schools without procedural due process. Synopsis of Rule of Law. In absence of any proof of actual injury only nominal damages may be recovered. Facts. Jariuss Piphus (Plaintiff) was caught smoking on school property by the school principal smoking. The principal thought that Plaintiff was smoking marijuana. The assistant principal imposed the usual twenty-day suspension for violation of the school rule against the use of drugs. The Plaintiff argued that he had not been smoking marijuana. A suspension notice was sent to the Plaintiff's mother. A few days later, a meeting was held to discuss the reasons for the suspension, but not to determine whether the Plaintiff had actually been smoking marijuana. Plaintiff and his mother filed suit against Defendants in Federal District Court under 42 U.S.C. 1983 and 28 U.S.C. 1343, alleging that the Plaintiff had been suspended without due process of law in violation of the Fourteenth Amendment. Plaintiff sought declaratory and injunctive relief, along with actual and punitive damages in the amount of $3,000. Plaintiff was readmitted to school under a temporary restraining order. Plaintiff's case was consolidated with another case brought by Silas Brisco (Plaintiff), who was also suspended without due process of law in violation of the Fourteenth Amendment. Brisco refused to remove a small earring from his ear when asked by the school principal. The school had a rule against the wearing of earrings by male students, because the principal believed that this practice denoted membership with street gangs. Brisco was suspended for twenty days. Brisco field suit and sought declaratory and injunctive relief, along with actual and punitive damages in the amount of $5,000. Brisco was also readmitted to school under a temporary restraining order. Piphus' and Brisco's cases were consolidated for trial and the district court held that both students had been suspended without procedural due process. However, the district court declined to award damages due to lack of proof. On appeal, the United States Court of Appeals reversed and remanded the case. It also held that the district court was wrong not to give declaratory and injunctive relief, and that the district court should have considered the pecuniary value of each day the students missed when they were suspended. However, the court said that the Plaintiffs would not be entitled to recover damages representing the value of the missed school time, if on remand, Defendants showed that there was just cause for the suspensions. Further, even if on remand the Plaintiffs' suspensions were
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Carey v. Piphus
justified, they would be entitled to recover substantial non-punitive damages because they had been denied procedural due process. The Supreme Court of the United States granted certiorari. Issue. Whether a Plaintiff must prove actual injury by a deprivation of due process before he may recover substantial non-punitive damages? Held. Yes. The judgment is reversed and remanded. A plaintiff must prove actual injury by a deprivation of due process in order to recover compensatory damages. Neither the likelihood of such injury nor the difficulty of proving it is so great as to justify awarding compensatory damages without proof that such injury actually occurred. The plaintiff must convince the trier of fact that he actually suffered distress because of the denial of procedural due process itself. Denial of procedural due process should be actionable for nominal damages without proof of actual injury since the right to procedural due process is absolute. Discussion. The Supreme Court of the United States draws on the general law of tort remedies to determine a constitutional tort. The concept of tort remedies is that money damages should be sufficient to compensate the plaintiff for the harm caused by the defendant's actions. Punitive damages are not designed to compensate but to deter wrongful conduct. Nominal damages are usually a small sum given when legal injury is suffered, but when there was no substantial loss or injury to be compensated.
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Smith v. Western Electric Co.

Citation. 643 S.W.2d 10 (Mo. Ct. App. 1982). Brief Fact Summary. Smith (Plaintiff) appeals an order dismissing his petition on the ground it fails to state a claim upon which relief can be granted. Plaintiff's petition sought an injunction to prevent his employer from exposing him to tobacco smoke in the workplace and from affecting his pay or employment conditions because of his medical reaction to tobacco smoke. Synopsis of Rule of Law. Injunctive relief is available if irreparable harm is likely to result and a plaintiff has no adequate remedy at law. Facts. Plaintiff appeals an order that dismissed his petition on the ground it fails to state a claim upon which relief can be granted. The petition seeks an injunction to prevent Plaintiff's employer from exposing him to tobacco smoke in the workplace and from affecting his employment conditions because of his medical reaction to tobacco smoke. Specifically, the petition alleges that Western Electric Company (Defendant) permits its employees to be exposed to a health hazard and breached its duty to provide a safe place to work. The petition further states that in 1975, the Plaintiff began to experience respiratory tract discomfort as a result of inhaling tobacco smoke in the workplace. A medical examination determined that Plaintiff suffers an adverse reaction to tobacco smoke. The doctors who evaluated and treated Plaintiff advised him to avoid contact with tobacco smoke. When Plaintiff first complained to Defendant in 1975, it moved Plaintiff to a different location within the plant. However, his health did not improve because those locations also contained a significant amount of tobacco smoke. In 1978, Plaintiff was informed that he should not file any other complaints. Defendant adopted a smoking policy in 1980, in response to recommendations of the National Institute for Occupational Safety and Health. However, Defendant failed to implement its policy and there was little to no improvement in the workplace air. In 1980, Plaintiff filed a Handicapped Declaration Statement with Defendant claiming that he was handicapped by his susceptibility to tobacco smoke. Defendant continued to refuse to separate smokers to limit smoking to non-work areas and informed Plaintiff he could either continue to work in the same location and wear a respirator, or he could apply for a lower paying job. Plaintiff's complaint states that he has exhausted all claims of relief and has no adequate remedy at law. The complaint alleges that Defendant breached his duty as an employer to maintain a safe place to work and that it has reasonable alternatives to avoid the continuing breach of duty. Issue. Whether Plaintiff's allegations entitle him to injunctive relief? Held. Yes. Plaintiff should be allowed the opportunity to prove his allegations. Injunctive relief is available if a plaintiff's allegations invoke principles of law entitling him to relief, irreparable harm is likely to result if not granted, and there is no adequate remedy at law available.
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Here, an employer owes a duty to their employees to provide a reasonably safe work place and to protect employees from avoidable peril. Plaintiff's petition adequately shows that the tobacco smoke of co-workers smoking in the work place is hazardous to the health of employees. The petition further demonstrates that Defendant knew the tobacco smoke was harmful to Plaintiff's health and Defendant has the authority, ability, and reasonable means to control smoking in the workplace. Thus, Defendant has breached his duty to provide a reasonably safe workplace. Exposure to smoke in the workplace causes irreparable harm. This is a harm for which money damages cannot adequately compensate a plaintiff. Plaintiffs should not be required to await the fruition of harm before he is entitled to seek an inadequate remedy. Therefore, the injunction is the appropriate remedy. Discussion. Permanent injunctions directly order defendants to either take action or to cease action. Monetary damages provide recovery for past harms, while injunctions prevent future harms from occurring. The purpose of an injunction is to provide a remedy when there is no available remedy at law. The effect of injunctions is that a defendant who violates an injunction may be liable for civil or criminal contempt.
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Venegas v. Mitchell
Venegas v. Mitchell
Citation. 495 U.S. 82 (1990). Brief Fact Summary. Prevailing petitioner, Venegas (Petitioner) was required to pay his attorney based on a contingency contract more than statutory award against respondent, Mitchell (Respondent). Petitioner appeals. Synopsis of Rule of Law. A statutory award of attorney's fees does not invalidate a plaintiff's ability to become bound by a private agreement, even if the private fee is larger than the statutory award. Facts. The current dispute arises out of an action under 42 U.S. C. 1983 brought by Petitioner alleging that police officers of Long Beach, California falsely arrested Petitioner and conspired to deny him a fair trial through the presentation of perjured testimony. The district court dismissed Petitioner's complaint as time barred by statute of limitations, which was subsequently reversed by the court of appeals. During this appeal, Petitioner retained Respondent as his attorney. Petitioner and Respondent signed a contingency contract for a fee of 40% of the gross amount of any recovery. The contract prohibited Petitioner from waiving Respondent's right to court-awarded attorney's fees. Petitioner obtained a judgment of $2.08 million. Respondent moved for attorney's fees and the District Court entered an order awarding Petitioner $117,000 in attorney's fees, of which $75,000 was attributable to work performed by Respondent. The award was calculated by multiplying a reasonable hourly rate by the number of hours the respondent expended on the case, and then doubling this lodestar figure to reflect respondent's competent performance. Petitioner and Respondent had a disagreement about representation on appeal and Petitioner obtained different counsel for appeal. Respondent then asserted a $406,000 attorney's lien against the judgment proceeds, his half of the 40% fee. Petitioner objected because the fee was excessive and should be limited to the $75,000 found to be reasonable on the Motion for Attorney's Fees. The District Court refused to disallow or reduce the fee and the Court of Appeals affirmed the District Court's decision. Issue. Whether 42 U.S.C. 1988, which states that a court may award a reasonable attorney's fee to the prevailing party in a civil rights case, invalidates contingent-fee contracts that require prevailing civil rights plaintiff to pay his attorney more than the statutory award against the defendant? Held. No. Judgment affirmed. 42 U.S.C. 1988 does not restrict a plaintiff's right to become contractually and personally bound to pay an attorney, a percentage of the recovery even if such a fee is larger that the statutory fee the defendant must pay to the plaintiff. The purpose of 1988 is to enable civil rights plaintiffs to employ reasonably competent lawyers without costs to themselves if they prevail. However, nothing in the section regulates what
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Venegas v. Mitchell
plaintiffs may or may not promise to pay their attorneys if they lose or win. An attorney can collect both a statutory award of fees and fees that are derived from a private agreement. Petitioner also argued that the contingent fees in this case were unreasonable under federal and state law. However, the courts rejected this argument. Discussion. The fee award in this case was calculated by what is called the lodestar method, multiply the hours worked by the lawyer by the lawyer's hourly rate. The court may disallow hours that were spent on unsuccessful claims or inefficiently used.
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CHAPTER III. Describing And Defining The Dispute
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Gillispie v. Goodyear Service Stores
Gillispie v. Goodyear Service Stores

Citation. 258 N.C. 487 (1963). Brief Fact Summary. Gillispie (Plaintiff) filed a complaint against certain defendants and the Goodyear Service Stores (Defendants), alleging that the Defendants assaulted the Plaintiff and humiliated and embarrassed her by subjecting her to public scorn and ridicule. The trial court sustained Defendants' demurrers and the Plaintiff appeals. Synopsis of Rule of Law. A complaint must allege material, essential and ultimate facts upon which Plaintiff's right of action is based. Facts. Plaintiff filed a complaint alleging that the Defendants trespassed on her land. Plaintiff further alleged that Defendants used harsh language, physical force, assaulted the Plaintiff, humiliated and embarrassed Plaintiff, and placed her in fear. As a result of this conduct, Plaintiff was seized and exhibited to the public as a prisoner and confined to a public jail. The Plaintiff sought $25,000 in damages and $10,000 in punitive damages. The trial court sustained Defendant's demurrers and Plaintiff subsequently appealed. Issue. Does Plaintiff's complaint state sufficient facts to constitute a cause of action? Held. No. Judgment affirmed and Plaintiff may file an amended complaint and therein allege facts upon which she based her right to recover. The Plaintiff's complaint does not state facts sufficient to constitute any cause of action. A complaint must contain plain and concise statements of the facts constituting the cause of action. Further, the complaint must provide the Defendant with notice to show the legal duty and violation thereof. When a complaint is merely conclusory it fails to state a cause of action and is dismissible. In the instant case, the complaint states no facts upon which legal conclusions were made. Specifically, the complaint fails to state what occurred, when it occurred, where it occurred and who did what. Discussion. Pleadings are comprised of the complaint, answer, reply and demurrers. The purpose of pleadings is to provide notice to the defendant of the cause of action, to provide notice to the court, and to provide the information necessary to decide the merits of the case.
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United States v. Board of Harbor Commissioners
United States v. Board of Harbor Commissioners

Citation. 73 F.R.D. 460 (D. Del. 1977). Brief Fact Summary. The SICO Company and North American Smelting Company (Defendants) filed a Motion for More Definite Statement on grounds that the Complaint filed against them was so vague and ambiguous that they were unable to frame a responsive pleading. Synopsis of Rule of Law. Motion for More Definite Statement is applicable in situations where pleadings are unintelligible. Facts. The Complaint filed by the United States Government (Plaintiff) alleged that Defendants owned and operated facilities near the Wilmington Marine Terminal from which oil was discharged into the Delaware River. The discharge of oil into navigable rivers is prohibited by the Federal Water Pollution Control Act. The owner of the facility responsible for the discharge of oil can be held liable to Plaintiff in the amount of actual costs incurred for the removal of such oil. Defendants contend that the Complaint is deceptively vague because it fails to state which Defendants are responsible for the discharge of oil, the amount of oil discharged, and the removal costs incurred, and the actions which are alleged to have caused the discharge. The Defendants moved for a more definite statement under Rule 12 (e) of the Federal Rules of Civil Procedure, which is typically restricted to situations when pleadings are unintelligible rather than lacking detail. Issue. Can a party make a Motion for a More Definite Statement based on want of detail? Held. No. Motion for more definite statement denied. If the requirements of Rule 8 are satisfied and the opposing party is notified of the nature of the claim, the Rule 12(e) motion is inappropriate. A complaint need not be more specific if it is sufficient on its face and notifies the defendant of the nature of the cause of action. In the instant case, the Complaint on its face can be read to charge each of the Defendants with owning and operating facilities that discharged oil into the Delaware River. These allegations and other facts in the Complaint fairly notify the Defendant of the cause of action against them. Defendants' use of Rule 12(e) is really an effort to flush out the government's case. Discussion. This case is an example of notice pleadings, which serve the primary function of providing notice to the other party. More specifically, notice pleadings provide the defendant with the cause of action.
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McCormick v. Kopmann
Citation. 23 Ill. App. 2d 189 (3rd Dis. 1959). Brief Fact Summary. Lewis McCormick (McCormick) was killed in auto accident with a truck operated by Kopmann (Defendant). McCormick's wife (Plaintiff) sued Kopmann and Huls (Defendants), the owners of the bar where McCormick had drunk beer before the accident. Two counts in Plaintiff's complaint were alternative pleadings. Defendants moved for a directed verdict, but the motion was denied. Kopmann appealed. Synopsis of Rule of Law. A complaint may contain inconsistent allegations, even though the proof of one negates any fault on the foundation of the other. Facts. McCormick was killed when a truck operated by Kopmann collided with his car. Plaintiff sued the operator of the car and the Huls, the owners of the bar where McCormick had beer before the accident. Count one of Plaintiff's complaint alleged that Kopmann, negligently drove his truck across the center-line and collided with McCormick's car. Count four, brought in the alternative to count one, under the Illinois Dram Shop Act alleged that the Huls, sold alcoholic beverages to McCormick, which rendered him intoxicated. As a result of the intoxication, he drove his car in such a manner as to cause a collision with Kopmann's truck. Kopmann moved to dismiss the complaint on the grounds that the contradictions between count one and count four were fatal. The trial court denied his motion and the jury returned a verdict against Kopmann for $15,500 under count one and for the Huls under count four. Kopmann appealed. Issue. Whether inconsistent allegations can be pleaded simultaneously? Held. Yes. Judgment is affirmed. Plaintiff had the right to go to trial on both counts and to adduce all the proof she had under both counts. Plaintiff could not recover on both counts simultaneously, since the two counts are mutually exclusive. However, the Illinois Civil Practice Act states that claims may be made in the alternative regardless of consistency. In order to ensure that controversies may be settled and justice is accomplished, a Plaintiff may plead in the alternative. Nonetheless, alternative pleading is not permitted when the pleader knows which of the inconsistent statements are true and which are false. Here, there is nothing that indicates the Plaintiff know that the averments in either court were true. The key witness here to the accident is dead, therefore, pleading alternative sets of facts is often the only feasible way to determine what happened. Discussion. Rule 8(e) of the Federal Rules of Civil Procedure allows a Plaintiff to plead alternative allegations. The pleader is also permitted to plead inconsistent versions of the
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facts. The purpose in allowing plaintiffs to plead in the alternative is to ensure that controversies may be settled and justice is accomplished.
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Zuk v. Eastern Pennsylvania Psychiatric Institute of the Medical College of Pennsylvania

Citation. 103 F.3d 294 (3rd Cir. 1996). Brief Fact Summary. Zuk (Plaintiff) alleged that Eastern Pennsylvania Psychiatric Institute of the Medical College of Pennsylvania (Defendant) was infringing on Plaintiff's copyrights by selling videos that he made while working for them. Defendant moved for dismissal and sanctions under Rule 11 of the Federal Rules of Civil Procedure on the grounds that Plaintiff had failed to conduct an inquiry into the facts and the law. Plaintiff's attorney, Lipman (Appellant) appeals from an order imposing sanctions against him in the sum of $15,000 and Defendant's counsel fees. Synopsis of Rule of Law. Rule 11 sanctions are proper when counsel fails to make an adequate inquiry into both the facts and the law, which is reasonable under the circumstances. Facts. Plaintiff, a psychologist on the Defendant's faculty, taped two of his therapy sessions. Defendant made them available for rental through its library. Plaintiff also wrote a book, containing transcripts of the therapy sessions. In 1975, Plaintiff registered the book with the United States Copyright Office. Five years later, Plaintiff requested that all copies of the films be returned to him, but Defendant ignored the request. In 1995, Appellant filed suit on Plaintiff's behalf alleged that Defendant was renting out the films and thereby infringed his copyright. Defendant moved for dismissal under Rule 12(b), and mailed a notice to Appellant of its intention to move for sanctions under Rule 11 on grounds that Appellant filed to conduct an inquiry into the facts and law. The district court granted the Motion to Dismiss and found that the copyright of the book afforded protection to the films. It also found that Defendant's use thereof was not infringement, and that Plaintiff's claim was barred by the statute of limitations. The court subsequently entered an order for attorney's fees and sanctions against Plaintiff and Appellant, who are joint and severally liable to the Defendant for counsel fees in the amount of $15,000. Plaintiff settled his liability with the Defendant in the amount of $6,250, leaving the appellant liable for $8,750. Appellants appealed. Issue. Were sanctions under 28 U.S.C.A. 1927 and Rule 11 proper? Held. No. Judgment vacated and remanded. Sanctions against the attorney under 28 U.S.C.A. 1927 should be vacated and the matter remanded because they were not divided between the Section 1927 violation and Rule 11. In order to prove a Section 1927 violation, there must be a finding of bad faith on the part of the offending attorney. Counsel has a duty under Rule 11 to make an inquiry into both the facts and the law, which is reasonable under the circumstances. Sanctions are
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imposed when there is an abuse of discretion, which occurs if the court based its ruling on an erroneous view of the law or erroneous assessment of the evidence. In the instant case, the appellant failed to prove that the films were being rented in the three years after the commencement of the action, and thus violated the three-year statute of limitations. Further, Appellant's legal arguments were not warranted by existing law, and therefore sanctions were within the discretion of the District Court. Furthermore, there was no error in the courts' type and amount of sanctions imposed by the District Court. However, it was error for the court to invoke without sanctions and without comment. The court must consider mitigating factors in imposing sanctions, most particularly, the sanctioned party's ability to pay. Other factors include history of behavior, willfulness of violation, frivolousness, and damage to the integrity of the legal system. Discussion. The court vacated and remanded the case because the District Court did not distinguish between the Section 1927 and Rule 11 sanctions. The court held that it was appropriate to impose Rule 11 sanctions against the Appellant on remand, because the court must provide an explanation for the severity of the sanctions.
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Mitchell v. Archibald & Kendall, Inc.

Citation. 573 F.2d 429 (7th Cir. 1978). Brief Fact Summary. Lawrence and Algerie Mitchell (Plaintiffs) appeal from a judgment dismissing their cause of action for failure to state a claim. The complaint sought damages for injuries suffered by the Plaintiffs as a result of Archibald & Kendall, Incorporated's (Defendant) negligence. Synopsis of Rule of Law. When deciding whether a Motion to Dismiss was properly granted, the court is only required to accept well-pleaded facts as true without considering any new legal theory presented by Plaintiffs. Facts. Plaintiffs filed an action against Defendant to recover damages for injuries suffered on land adjacent to Defendant's property. The complaint states that Plaintiffs were delivering Defendant's products to its warehouse. When they arrived at the warehouse, Defendant's employees directed Plaintiff to wait on the street until they unloaded another truck that was already in the warehouse. It was the Defendant's practice, custom and habit to do this while unloading other trucks. Plaintiff was waiting on the street, when two men approached the truck and demanded money. When Plaintiff refused to give them money on demand, one of the men shot Plaintiff in the face causing him permanent injuries. The complaint also alleged that the Defendant knew or should have known of criminal activity or high risk thereof in the area. The complaint set forth five duties that the Defendant breached. First, it was the Defendant's duty to exercise ordinary care to maintain premise and adjacent areas in reasonably safe manner. Second, Defendant breached the duty to exercise reasonable care to provide a reasonably safe means of ingress and egress within confines owned and operated by the Defendant. Third, Defendant owed Plaintiffs the duty to exercise reasonable care to protect them from criminal acts of third persons while on Defendant's property and beyond precise boundaries. Fourth, Defendant owed Plaintiff the duty to give notice and warning of the criminal activity, which was known to the defendant. Finally, Defendant had a duty to the Plaintiff to keep its premises and immediate adjacent area well policed and exercise reasonable care to see that invitees were protected from criminal acts of third persons and take reasonable steps to prevent such injuries. Issue. Whether dismissal under Rule 12(b)(6) of the Federal Rules of Civil Procedure was procedurally proper? Whether the owner of land has a duty of reasonably protecting an invitee against criminal acts that take place beyond the boundaries of his premises? Held. Yes, dismissal was proper under Rule 12(b)(6). No, the owner of land has no duty to invitees beyond the boundaries of his land. Dismissal affirmed.
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On the issue of whether dismissal under Rule 12(b)(6) was procedurally proper, the court properly relied on Rule 12(b)(6) in disposing of the case since the Plaintiff sets forth a new theory of liability. The court is only required to accept well-pleaded facts as true without considering any new legal theory presented by Plaintiffs. Here, the Plaintiff's complaint was a narrative recital of the facts relevant to the issue of the Defendant's duty. The Defendants have no duty to the Plaintiffs. A possessor of land is subject to liability to business invitees only while they are on their land. Plaintiffs were not considered to be on Defendant's property, so Defendant was under no duty to the Plaintiffs. Here, the Plaintiffs were parked on a public thoroughfare, which was not part of Defendant's property. Dissent. The dissent is in agreement with the majority that the Defendant had no duty to protect against criminal acts of third persons on a public street. However, the facts of this particular case created a duty due to the increased risk. Discussion. There is a very liberal standard for sufficiency of plaintiff's claim. Courts typically will not dismiss the claim unless the court is certain that the plaintiff cannot prove the facts in support of his claim that would entitle him to relief.
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Ross v. A.H. Robins Company
Ross v. A.H. Robins Company

Citation. 607 F.2d 545 (2nd Cir. 1979). Brief Fact Summary. Kalman and Anita Ross (Plaintiffs), appeal from an order dismissing their proposed class action, which alleged fraud by A.H. Robins Company (Defendant). Plaintiffs alleged that Defendant engaged in a scheme and plan to deceive the public as to the true financial condition of the company regarding Dalkon Shield. Synopsis of Rule of Law. A complaint alleging fraud must contain specific factual allegations. Facts. Plaintiffs purchased 100 shares of common stock of Defendant's company, a manufacturer and distributor of pharmaceutical products. They instituted this proceeding under Section 10b-5 of the Securities and Exchange Act of 1934 on behalf of all persons who purchased stock from April, 1972 through July, 1974. Plaintiffs also named seven individuals who are directors and officers of Defendant. Plaintiffs' claim alleges that Defendant engaged in a scheme and continuous course of conduct to deceive the investing public as to the true financial condition of the company with matters concerning Dalkon Shield. They also alleged that Defendants concealed from the investing public, facts concerning the safety and efficiency of Dalkon Shield. They also alleged that Defendants released false statements and recklessly disregarded serious issues regarding the safety and efficiency of Dalkon Shield. The information was subsequently released to the public and the stock price dropped from $19 a share to $13 a share. district court granted Defendant's Motion to Dismiss on the ground that the complaint did not comply with Rule 9(b) of the Federal Rules of Civil Procedure. Plaintiffs appeal. Issue. Whether the Plaintiffs' complaint alleged specific facts to prove fraud? Held. No. Judgment is affirmed, however Plaintiffs should be given a chance to replead. A plaintiff alleging fraud in connection with a securities transaction must allege specific facts upon which his claim is founded, in other words, they must do more than track the language of Rule 10b-5. Here, the Plaintiffs alleged misrepresentations made by the Defendant. However, the complaint failed to show a connection between the Defendants and the individual who made the misrepresentations in the report. Plaintiffs also failed to indicate when they obtained the information and when the crucial events occurred. Further, the complaint also fails to specify the time period during which the stock fell from $19 a share to $13 a share. Discussion. The purpose of Rule 9(b) is to diminish the possibility that a plaintiff will file a groundless or frivolous claim. This exhibits an attempt to increase the efficiency of the judicial system by eliminating frivolous claims.
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Cash Energy, Inc. v. Weiner

Citation. 768 F. Supp. 892 (D. Mass. 1991). Brief Fact Summary. Plaintiffs sought to recover clean-up costs under the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) from defendant corporations (Defendants). Synopsis of Rule of Law. A complaint alleging environmental claims has a high specificity of pleading requirement. Facts. Cash Energy, Inc. (Plaintiff) filed a complaint against Weiner (Defendant) to recover cleanup costs under CERCLA. The compliant alleged that Weiner contaminated property in North Andover, Massachusetts, owned and operated by Plaintiffs. Defendant corporations engaged in the storage and transfer of chemical solvents on a site adjacent to Plaintiff's property. Plaintiff also sued four individuals who were officers of the defendant corporations alleging that these individuals participated in and exercised control over the activities of defendant corporations. Since corporate officers are not personally liable for the activities of their corporate employers, the judge concluded that the Plaintiff must show that each of the individuals actively participated in the tortious activities. Issue. Is there a high specificity requirement for environmental claims? Held. Yes. Claims against individual Defendants will be dismissed unless Plaintiff files an amended complaint that pleads a factual basis for its claim. CERCLA involves many circumstances that has led courts to invoke higher standard of specificity in other contexts. Rule 9(b) of the Federal Rules of Civil Procedure recognizes an exception for allegations of fraud and mistake and applies a higher standard of particularity. This exception for fraud has been extended to a number of similar areas, for example, civil rights litigation. The trend toward requiring higher standards of particularity is due to the rising costs of litigation and the caseload crisis. The most widely accepted area of extension of Rule 9(b) is in the area of securities law. Therefore, since the consequences of individual liability for an environmental violation may be severe and due to the increased costs of litigation, the court extended specificity of pleading requirements to CERCLA cases. Discussion. This case was subsequently overruled by Leatherman v. Tarrant County Narcotics, 507 U.S. 163 (1993). The Supreme Court of the United States in Leatherman held that a federal court may not apply a more stringent pleading standard in civil rights cases. The Federal Rules require "a short and plain statement of the claim that will give the defendant notice of what the plaintiff's claim is and the grounds upon which it rests" (Conley v. Gibson, 355 U.S. 41, 47 (1957).) Since the Federal Rules only require notice
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pleading, it does not make sense that federal courts would require more stringent requirements.
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Swierkiewicz v. Sorema N.A.
Swierkiewicz v. Sorema N.A.

Citation. 534 U.S. 506, 122 S.Ct. 992, 152 L.Ed.2d 1 (2002) Brief Fact Summary. Petitioner, Akos Swierkiewicz, brought a discrimination action against Respondent, Sorema N.A., after he was demoted and ultimately fired. The lower courts dismissed his claims. Synopsis of Rule of Law. Under Rule 8(a)(2) of the Federal Rules of Civil Procedure, a complaint does not have to allege facts that establish a prima facie case, but rather just needs a short and plain statement of the claims showing why they are entitled to relief. Facts. Petitioner began working for Respondent in 1989. After six years of holding the position of Chief Underwriting Officer, he was demoted by the French CEO and replaced by a French National with only one year of underwriting experience. At the time of the demotion, the Hungarian Petitioner had 26 years of underwriting experience, and he was 53 compared to his replacements age of 32. After feeling isolated from the CEO, Petitioner requested a severance package. Respondent dismissed him without the package. Petitioner then filed this suit, alleging Respondent violated Title VII of the Civil Rights Act of 1964 (for discriminating against is national origin) and violated the Age Discrimination in Employment Act of 1967. The lower courts dismissed the claims for failing to allege facts that would establish a prima facie case of discrimination as explained in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 36 L. Ed. 2d 668, 93 S. Ct. 1817 (1973). Issue. The issue is whether Petitioners claims should be dismissed for failing to establish a prima facie case of discrimination. Held. A unanimous United States Supreme Court held that the district and appellate courts were incorrectly relying on precedent that concerned an evidentiary standard rather than a pleading requirement to survive a motion to dismiss. The prima facie standard is too high of a standard, and it conflicts with Rule 8(a)(2) which only requires a short and plain statement of the claim showing that Petitioner is entitled to relief. Petitioner has established facts to satisfy the Rule 8 standard, and therefore the lower court is reversed. Discussion. The Court emphasizes the importance of having a standard consistent with Rule 8 since many of the other procedural rules stem from Rule 8. The standard the Court uses also is more flexible than the evidentiary standard.
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Shepard Claims Service, Inc. v. William Darrah & Associates

Citation. 796 F.2d 190 (6th Cir. 1986). Brief Fact Summary. Shepard Claims Services, Inc. (Plaintiff), filed a contract action in the district court against William Darrah & Associates, alleging that an insurance broker (Defendant), failed to pay Plaintiff for services rendered. Defendant appeals from the district court's denial of Defendant's Motion to Set Aside Entry of Default. Synopsis of Rule of Law. In order to have an order of default set aside, the defendant must make a motion and show a meritorious defense. Facts. Plaintiff filed a contract action against Defendant for failure to pay Plaintiff for services rendered. On February 22, 1985, Defendant's attorney's secretary secured by telephone an extension of 45 days for filing an answer. By April 10, 1985, Defendant had not filed an answer, so Plaintiff requested that the clerk enter the Defendant's Judgment of Default. On April 19, 1985, Defendant filed a "Notice of Retention" with an answer on April 26, 1985, and on April 29, 1985, with a notice of affirmative defenses, a counterclaim, interrogatories and a request for production of documents. On May 1, 1985, Defendant filed a response to Plaintiff's Motion for Default Judgment and Motion to Set Aside Entry of Default. Plaintiff filed its Motion for Default Judgment on May 8, 1985, and Response to Defendant's Motion to Set Aside Entry of Default. Defendant also filed two affidavits from his counsel and counsel's secretary, which stated the agreement that there was to be a 45 day extension from the normal time period of 30 days to file an answer. Under this interpretation, the answer would have been due on April 23, 1985. Defense counsel insists that he did not learn of the April 10, 1985 Entry of Default until April 29, 1985. The district court denied Defendant's Motion to Set Aside Entry of Default and found that Defendant's attorney engaged in culpable conduct when he permitted his secretary to make arrangements for the extension, and then failed to review her work. Issue. Whether Defendant's Motion to Set Aside Entry of Default should be granted based on good cause? Held. Yes. Judgment is reversed and remanded for further proceedings. In order to determine whether a motion for default should be entered, the court must determine whether the plaintiff will be prejudiced, whether the defendant has a meritorious defense, and whether defendant's conduct was culpable. Here, Plaintiff suffered no prejudice, and Defendant presented a meritorious defense in its answer. To prove culpable conduct, the conduct of a defendant must display intent to frustrate judicial proceedings or reckless disregard for the effect of conduct on proceedings. However, when the first two factors militate in favor of setting aside the entry it is an abuse of the district court to deny the motion to set aside the default.
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Furthermore, it is not necessary that conduct be excusable to qualify for relief under the good cause standard. Strong policy exists in favor of deciding cases on their merits and is outweighed by the slight delay experienced by the court. A default judgment deprives the client of his day in court and should not be used as a means to punish attorneys. Therefore, despite evidence of disarray on the part of the Defendant, the Defendant should not be deprived of his opportunity to present his defense at trial. Discussion. As a matter of law, a default judgment establishes that defendants are liable to plaintiff for each cause of action alleged in the complaint. Since the effect of a default judgment is so harsh, this court is opposed to denying the party of his day in court. Absent the intent to frustrate the judicial process or reckless disregard for the party's actions on the court system, the court will generally find good cause to set aside a default judgment.
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David v. Crompton & Knowles Corp.

Citation. 58 F.R.D. 444 (E.D. Pa. 1973). Brief Fact Summary. Crompton & Knowles Corporation (Defendant) seeks to deny designing, manufacturing and selling the shredding machine to employer, Crown, based on lack of information to admit or deny the allegation. Synopsis of Rule of Law. A denial based on lack of information will be deemed an admission if the facts applicable to the issue are within the denying party's knowledge and control. Facts. Plaintiff was involved in an accident with a shredding machine and brought the following products liability action. Defendant seeks to amend its answer, which alleges that Defendant designed, manufactured and sold the shredding machine to Plaintiff's employer. Defendant argued that it was without sufficient knowledge to admit or deny the allegation and wants to deny that it designed, manufactured and sold the machine. Defendant further argues that the machine was designed, manufactured and sold by James Hunter Corporation prior to its purchase of the company and that it did not assume the liabilities for the negligent design, manufacture or sale of machines by James Hunter Corporation prior its purchase of the company. Issue. Whether a denial based on lack of information is deemed an admission if the denying party has knowledge? Held. Yes. Plaintiff's allegation should be deemed admitted. An answer to an allegation in a complaint, which states that the party lacks sufficient information to admit or deny the allegations has the effect of a denial. An allegation will be deemed admitted is the matter is one in which the defendant has knowledge. Here, the Defendant admits that it was aware the machine was a James Hunter Corporation product at the time it answered the complaint. However, Defendant's answer to the complaint indicated that it was responsible for the design, manufacture and sale of the machine. Defendant argues that it only recently discovered the information that the contract in which it purchased James Hunter Corporation did not make it responsible for liabilities of this kind. The Defendant had knowledge of the terms of its purchase agreement, therefore it does not seem unreasonable to hold him responsible for this information. Discussion. The function of the answer is to put into issue the factual allegations of the complaint. The defendant should either deny the allegations or set forth affirmative defenses that avoid effects of plaintiff's allegations. When the defendant does not have sufficient knowledge to either admit or deny the allegations it is called a non-positive
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denial. However, information that is responsible within the defendant's control use of the non-positive denial based on lack of information and belief may be forbidden. Also, where information is matter of public record, the defendant may not deny for lack of information and belief.
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Wigglesworth v. Teamsters Local Union No. 592

Citation. 68 F.R.D. 609 (E.D. Va. 1975). Brief Fact Summary. Welford Wigglesworth, Jr., (Plaintiff) filed a complaint under the Labor Management Reporting Disclosures Act (Act) alleging that the union and its president violated certain rights protected by the Act. Teamsters Local Union No. 592 (Defendants) filed a counterclaim for libel and slander against the Plaintiff. Plaintiff moved to have the counterclaim dismissed for lack of subject matter jurisdiction. Synopsis of Rule of Law. If counterclaims arise out of the same transaction or occurrence of the Plaintiff's claim then they are compulsory counterclaims and jurisdiction is ancillary to the Plaintiff's claim. Facts. Plaintiff filed a complaint against the Defendant alleging that the union and its president violated certain rights as protected by the Act. Specifically, the complaint alleges that Plaintiff was prevented from exercising his right to freedom of speech and denied his request to have union membership informed of their rights as required by the Act. The Defendants then filed a counterclaim against Plaintiffs, alleging that Plaintiff called a press conference at which he accused the union of being dominated by the mafia, and that past local union elections were fixed. Defendants claim that these actions constituted libel and slander. Plaintiff filed a Motion to Dismiss the counterclaim for lack of subject matter jurisdiction. There is no diversity of citizenship between the parties, and jurisdiction is founded solely on 42 U.S.C. 412. Issue. Whether Defendant's counterclaim arises out of the same transaction or occurrence that is the subject matter of the Plaintiff's claim? Held. No. Plaintiff's Motion to Dismiss the counterclaims will be granted. If Defendant's counterclaim arises out of the same transaction or occurrence that is the subject matter of the Plaintiff's claim, then it is a compulsory counterclaim and no independent basis for federal jurisdiction is required. Here, Plaintiff's claim is that he was denied his right to free speech and expression at union meetings. The claim solely arises from the alleged wrongful conduct on the part of the union. Defendant's counterclaim for libel and slander is predicated on events, which are in no way part of the transactions or occurrence, which gave rise to the Plaintiff's claim. Therefore, the counterclaim was permissive and not properly presented to the court. The evidence necessary to prove libel and slander is not relevant to the Plaintiff's claim. Discussion. There are two types of counterclaims: permissive counterclaim and compulsory counterclaim. A permissive counterclaim is any claim against an opposing
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party, which is not related to the action and therefore must have its own basis for federal jurisdiction. On the other hard, a compulsory counterclaim is any related claim arising of the same transaction or occurrence, and jurisdiction is ancillary to the claim. No independent basis for federal jurisdiction is required.
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Citation. 58 F.R.D. 444 (E.D. Pa. 1973). Brief Fact Summary. Crompton & Knowles Corporation (Defendant) seeks to amend his answer to deny the allegations that it designed, manufactured and sold the machine that injured David (Plaintiff). Synopsis of Rule of Law. A motion to amend should be denied if the plaintiff would be prejudiced and the defendant was aware of this information prior to filing his answer. Facts. Plaintiff was involved in an accident with a shredding machine and brought the following products liability action. Defendant seeks to amend its answer, which alleges that Defendant designed, manufactured and sold the shredding machine to Plaintiff's employer. Defendant argued that it was without sufficient knowledge to admit or deny the allegation, and it now wants to deny that it designed, manufactured and sold the machine. Defendant further argues that the machine was designed, manufactured and sold by James Hunter Corporation prior to its purchase of the company and that it did not assume the liabilities for the negligent design, manufacture or sale of machines by James Hunter Corporation prior to its purchase of the company. On the issue of whether a denial based on a defendant's lack of information is deemed an admission if the denying party has knowledge, the court held that Defendant's denial of the Plaintiff's allegation, that it designed, manufactured and sold the machine that injured Plaintiff was ineffective and was held to be an admission. Issue. Whether the Defendant should be permitted to amend its answer to deny the allegations? Held. No. Defendant's Motion to Amend is denied. A court may deny a request to amend an answer if it bases such denial on a valid ground. Some likely reasons to deny a motion to amend are that the amendment would result in undue prejudice to the plaintiff or that plaintiff has been unduly delayed. In the instant case, Defendant knew the basic facts surrounding the manufacture and delivery of the machine prior to filing its answer to the complaint. The effect of this delay would be highly prejudicial to the Plaintiff since Plaintiff would now be barred by the statute of limitations from instituting this action against another party. To allow an amendment here would penalize the Plaintiff, who is without fault and leave him with no remedy. Discussion. This portion of the case determines whether the Defendant should be permitted to amend his answer to deny Plaintiff's allegations, whereas the first case
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determined whether Defendant's denial based on lack of information constituted an admission if the Defendant was in control or had knowledge of applicable facts.
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Swartz v. Gold Dust Casino, Inc.

Citation. 91 F.R.D. 543 (D. Nev. 1981). Brief Fact Summary. Cavanaugh Properties Defendant moved for Judgment on the Pleadings on the grounds that the two-year Nevada statute of limitations is applicable to personal injuries caused by negligence. Synopsis of Rule of Law. When a newly added defendant is aware of the litigation and knows that the plaintiff may hold him liable, the amended complaint will be within the statutory period. Facts. Doris M. Swartz (Plaintiff) was injured on May 4, 1979, when she fell on a staircase in the Gold Dust Casino. Plaintiff filed a complaint in the United States District Court on April 30, 1980. The defendants listed were Gold Dust Casinos and Does I through IV (Defendants) the true names and identities of these defendants were not known or ascertainable, but they were liable to Plaintiff for damages. In terms of Gold Dust Casinos, the complaint alleged that the Defendant had negligently permitted the staircase to become bare, worn, and slippery. Gold Dust Casinos denied the allegations. In the answer to the complaint, Gold Dust Casinos disclosed that it leased the premises from Cavanaugh Properties. In December 9, 1980, Plaintiff filed supplemental answers, which disclosed that they had employed engineering consultant, Stephen I. Rosen (Rosen). The report from Rosen to Plaintiff's attorney stated that the conditions on the stairway violated the local building code. On February 19, 1981, Plaintiffs stated that they had discovered that the true name of Doe I was Cavanaugh Properties and they prayed for leave to amend their complaint. The district court denied the Defendants' Motion for Summary Judgment. On April 9, 1981, Plaintiff filed a Motion for Leave to Amend Their Complaint to add claims for relief and Cavanaugh Properties as a defendant. The amended complaint alleged that Defendant, Cavanaugh Properties, was responsible for the design and installation of the stairway. Motion for Leave to Amend the Complaint was granted and the complaint was served on Cavanaugh Properties on May 8, 1981. Cavanaugh Properties raised the two-year statute of limitations in its answer and filed a Motion for Judgment on the Pleadings based on the fact that the Amended Complaint was not filed within the time period allowed by the statute of limitations. Plaintiffs rely on the relation back provisions. Defendant, Cavanaugh Properties, argued in reply that the Amended Complaint sets forth a new and different cause of action that does not relate back to the date of filing of the original complaint; that adding Cavanaugh Properties as a defendant does not comply with the prerequisites to relation back; and that the filing of the Motion to Amend the Complaint prior to the expiration of the statute of limitations did not toll the running of the statute. Issue. Whether the adding of the Defendant in the Amended Complaint is within the statute of limitations? Held. Yes. Defendant's Motion for Summary Judgment is denied.
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Plaintiff's allegations in the Amended Complaint arose from the same occurrence as set forth in the original complaint, in other words, Plaintiff's fall on the stairway. Whether or not Plaintiff's injuries were a result of negligence in the design or the installation or maintenance of the stairway does not change the fact that all claims in pleadings resulted from her fall. Notice of the commencement of the lawsuit need not be formal. If a person receives notice of the litigation that he may be liable to the plaintiff, he has received the notice required within the statutory period. Lack of diligence on the part of Plaintiff's counsel after receiving the information as to the true identity of the property owner is insufficient to prevent the Plaintiff from seeking leave to amend. Specific prejudice must be shown in order to prevent the Plaintiff from seeking amendment. Here, no such prejudice was shown. Discussion. There are two types of amendments prior to trial: as a matter of right or by permission. Each party may amend once either before the answer or responding pleading is served, in other words amendment as a matter of right. On the other hand, a party can amend by leave of the court or written consent of the opposing party. Typically, motions to amend pleadings are liberally granted except when prejudice to the other party may occur.
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CHAPTER IV. Establishing The Structure And Size Of The Dispute
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Southern Methodist University Association of Women Law Students v. Wynne and Jaffe
Southern Methodist University Association of Women Law Students v. Wynne and Jaffe
Citation. 599 F.2d 707 (5th Cir. 1979). Brief Fact Summary. Southern Methodist University Association of Women Law Students (Association) and four female Lawyers A, B, C and D (Plaintiffs), who wished to remain anonymous, refused to disclose the identities of the four female attorneys that were allegedly discriminated against by the defendant law firms, Wynne and Jaffe (Defendants) when applying for summer law clerk and associate positions. Synopsis of Rule of Law. Only under special circumstances, where the issues involved are the subject of sensitive and a highly personal nature, will a court allow plaintiffs to use fictitious names. Facts. Plaintiffs brought a sex discrimination suit alleging that two defendant Dallas law firms discriminated against women in hiring summer law clerks and associates. Plaintiffs appeal from pretrial orders of the district court that required the Association to reveal the true identities of the four female lawyers. Issue. Whether special circumstances exist to allow plaintiffs to use fictitious names? Held. No. Judgment of the District Court is affirmed. Under Rule 10(a) of the Federal Rules of Civil Procedure and Title VII, individuals are required to state the names of all the parties to be included in the pleadings. However, in certain circumstances, courts have allowed plaintiffs to use fictitious names. Some of these special circumstances, which warrant plaintiffs to use fictitious names are issues involving birth control, abortion, homosexuality or the welfare rights of illegitimate children. All of these cases divulge intimate personal information. In the instant case, the four attorneys for the Plaintiffs did not reveal any intimate personal information or express a desire to participate in proscribed activities. Basic fairness states that individual party plaintiffs must bring suit against the defendants under their real names. Discussion. Rule 17(a) states that, "every action shall be prosecuted in the name of the real party in interest." One of the purposes of this rule is to protect the interests of defendants.
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Kedra v. City of Philadelphia

Citation. 454 F. Supp. 652 (E.D. Pa. 1978). Brief Fact Summary. Delores Kedra, her eight children and a son-in-law (Plaintiffs), brought an action against the City of Philadelphia (Defendant), alleging that the Defendant committed a systematic pattern of harassment against their family over a fifteen-month period. Defendant claims improper joinder of parties, because the events did not occur over a span of fifteen months. Synopsis of Rule of Law. Claims that occur over a lengthy period of time may be reasonably related and thus arise out of same transaction or occurrence. Facts. Plaintiffs' complaint alleges that two of the Kedra children and the husband of another were arrested on December 22, 1975, without probable cause, beaten, and interrogated at the police station. Seven days later, police officers conducted an unlawful search of the Plaintiffs' home, unlawfully detained members of the family and took some members to the station where they were beaten. It is further alleged that police engaged in a systematic pattern of harassment of Plaintiffs. One son was arresting and beaten in June, 1976, and another son was harassed by police in February or March, 1977. Plaintiffs jointly filed suit under civil rights statutes, 42 U.S.C. 1983, 1985, 1986, for deprivation of constitutional rights and sought compensatory and punitive damages. Defendants argued improper joinder of parties, because Plaintiffs' claims against them did not arise out of the same transaction or occurrence. The claims stemmed from events spanning fifteen months. Issue. Was the joinder of the Defendants procedurally proper? Was a single trial of all claims against all defendants would prejudice any of the defendants? Held. Yes, joinder of Defendants was proper. On the second issue, the district court decided that it should be determined after discovery has been completed and the case is ready for trial. The claims against Defendants arise out of the same transaction or occurrence or series of transactions under Rule 20(a) of the Federal Rules of Civil Procedure and therefore joinder of Defendants is proper. Even though the events giving rise to Plaintiffs' claims occurred over a long period of time, they are all reasonably related. The district court determined that the problem of whether to have a single trial of all claims against Defendants should be dealt with after discovery and when the case is ready to go to trial. Rule 20(b) states that the court may order separate trials to prevent delay or prejudice. Here, both the Plaintiffs and Defendants recognized potential prejudice in the joinder of
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the parties. The district court held that it was easier to determine the prejudicial effect of joinder after discovery takes place and the case is ready to go to trial. The court stated that it was easier to determine the prejudicial effect of joinder after discovery takes place because at that time the degree of involvement of each of the Defendants will be clearer and prejudice will be easier to assess. Discussion. Some of the benefits of a single trial are that it is more convenient and less expensive and time-consuming for the parties and the court. Rule 20(a) allows for the joinder of multiple persons if they assert a right to relief that arises out of the same transaction or occurrence and if there is a common question of law or fact. Joinder of parties is more restrictive than joinder of claims. Joinder of parties is divided into permissive joinder (Rule 20) and mandatory joinder (Rule 19). On the other hand, Rule 18(a) allows a party to join as many claims as the party has against the opposing party. In terms of joinder of claims, the Federal Rules allow claims to be joined that are not even related. The theory behind this rule is that it will prevent the parties from bringing multiple lawsuits against one another.
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Insolia v. Philip Morris, Inc.
Insolia v. Philip Morris, Inc.

Citation. 186 F.R.D. 547 (E.D. Wis. 1999). Brief Fact Summary. Insolia, May, and Lovejoy (Plaintiffs), three former smokers and their spouses, brought a civil action against the Philip Morris, Inc., and two tobacco industry trade organizations (Defendants) for fraud and civil conspiracy to commit fraud. Defendant filed a Motion to Sever the claims of the three Plaintiffs into three separate actions. Synopsis of Rule of Law. Claims not logically related to one another must be divided into separate actions. Facts. Plaintiffs' complaint alleged fraud and civil conspiracy to commit fraud. In order to win, Plaintiffs must demonstrate that the Defendants made false statements on which the Plaintiffs relied. Plaintiffs were recently diagnosed with lung cancer. Each smoked a pack of cigarettes a day for many years. Insolia began smoking at age of 12 and quit 40 years later. May and LoveJoy began smoking at the age of 16 and smoked for about 42 years. Plaintiffs' complaint presented evidence in support of a class action that the tobacco companies worked together for many years to counteract scientific evidence that smoking was harmful and addictive. In 1958, the companies created a trade association, Tobacco Institute, whose purpose was to create doubt about health effects of smoking. Plaintiffs' Motion to Certify a class of Wisconsin residents who had smoked for 20 years and been diagnosed with lung cancer was denied on ground that common questions did not predominate. Issue. Whether Plaintiffs' claims arose out of the same transaction or occurrence to be considered a single action? Held. No. Defendants' Motion to Sever the claims of the three Plaintiffs into three separate actions is granted. Plaintiffs' claims do not arise out of the same transaction or occurrence. Therefore, they are not similar enough to be joined as a single action. The claims were not logically related to one another for allegations of industry wide conspiracy. According to the facts, Plaintiffs began smoking at different ages, they smoked different brands of cigarettes, and they quit for different reasons. Further, a great burden would be felt on the part of the Defendant, and the risk of jury confusion would be outweighed by the benefits likely to be experienced by the parties. Discussion. Under Rule 21 of the Federal Rules of Civil Procedure, the remedy for misjoinder of parties is not to dismiss the action, but to add or drop parties, or to sever and proceed with the claims separately.
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Janney Montgomery Scott, Inc. v. Shepard Niles, Inc.

Citation. 11 F.3d 399 (3rd Cir. 1993). Brief Fact Summary. Janey Montgomery Scott, Inc. (Appellant), appeals from an order granting Shepard Niles, Inc. (Appellee's), Motion for Judgment on Pleadings for failure to join an indispensable party in Appellant's breach of contract action. Synopsis of Rule of Law. If complete relief can be granted to the individual party in the lawsuit without prejudicing an absent co-obligor in a contract suit, the absent party is not a necessary party. Facts. Plaintiff, a Pennsylvania investment banking corporation, brought a breach of contract action against Defendant. The Underwood Group (Underwood) is a Pennsylvania corporation and Defendant is a New York corporation. Plaintiff and Underwood executed an Investment Banking Agreement in which Plaintiff agreed to be an advisor to Underwood and its subsidiaries, including Defendant corporation, and to assist them in obtaining private placement financing to refinance Defendant's debt. When Plaintiff's actions did not show results, Underwood entered into negotiations with Unibank to provide private placement funding. Plaintiff contends that under the Investment Banking Agreement, the advice Plaintiff gave to Underwood entitles Plaintiff to a contingency fee from Underwood. Plaintiff now tries to recover this fee. First, Plaintiff filed a suit against Unibank for tortious interference with contract, but when Plaintiff tried to amend the complaint to add Defendant, the court denied the motion. Thus, Plaintiff filed a suit in district court against Defendant for breach of contract. Defendant then filed a Motion to Dismiss, which was denied. However, Appellee's subsequent Motion for Judgment on the Pleadings was granted for failure to join an indispensable party. The indispensable party was Appellee's parent corporation, the Underwood Group. The district court had to make a determination that Underwood was a necessary party before it could hold that Underwood was an indispensable party whose nonjoinder required dismissal because joinder would deprive the court of diversity jurisdiction. Issue. Whether complete relief to the parties could be granted without prejudice to them in a breach of contract action against only one of the parties that may be liable to Plaintiff? Held. Yes. Judgment of the district court is reversed. Rule 19(a) of the Federal Rules of Civil Procedure defines parties that are necessary as those whose joinder is compulsory if feasible. A party must be joined if in the person's absence complete relief cannot be granted or the person claims an interest in the action. A party must also be joined if an absent party's claims relate to the subject of the action and it is situated that the disposition of the action in the person's absence may impair the person's ability to protect the interest or leave any of the parties subject to
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substantial risk of incurring double or inconsistent obligations. A determination under Rule 19(a) is necessary to the determination under Rule 19(b) that the case must be dismissed because joinder of the party is not possible and the party is indispensable to the resolution of the case. In the instant case, complete relief can be afforded to the Plaintiff and Defendant in the absence of Underwood. The district court erred in its holding that the possibility of a decision in the present action would be "persuasive precedent" in subsequent actions against Underwood, and would impair or impede Underwood's interests. Thus, Underwood is not an absent party whose joinder is compulsory. Furthermore, the continuation of the case in the absence of Underwood does not subject Defendant to double or inconstant liabilities. The possibility that the continuation of this case would have some effect on a subsequent litigation between Plaintiff and Underwood is speculative. Since Underwood is not a necessary party to the litigation, it is therefore unnecessary to determine whether Underwood is an indispensable party. Discussion. Initially, the district court retained subject matter jurisdiction by diversity, because Plaintiff is a citizen of Pennsylvania and the Defendant is a citizen of New York. However, Underwood is a Pennsylvania corporation, which would destroy diversity.
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Clark v. Associates Commercial Corp.

Citation. 149 F.R.D. 629 (D. Kan. 1993). Brief Fact Summary. Clark (Plaintiff) sued Associates Commercial Corporation (Defendant) for damages to his person and property due to Defendant's repossession by force of a tractor that was collateral for a loan made to the Plaintiff. Defendants filed a third party complaint seeking indemnity from its employees and two parties that assisted in the repossession. Third party defendants moved to dismiss the third party complaint and Plaintiff moved to strike the third party complaint or for a separate trial to determine those issues. Synopsis of Rule of Law. A third party complaint for indemnity based on the agency theory, which does not demonstrate that the third party defendant has a duty to the original plaintiff is proper. Facts. Plaintiff's complaint against Defendant for damages to his person and property alleges causes of action in tort and contract. Defendants filed a third party complaint seeking indemnity from its employees and two parties that aided in the repossession of the tractor from the Plaintiff. Third party defendants moved to dismiss the third party complaint and Plaintiff moved to strike the third party complaint or in the alternative for a separate trial to determine those issues. Defendant alleges in its third party complaint that it hired Bob Howard (Third party defendant), who, unbeknownst to the Defendant, had subcontracted with Clark Investigation & Recovery (Third party defendant) to repossess Plaintiff's tractor. Defendant also alleges that other employees, including Lett, (Third party defendant) of the company conducted the actual repossession of the collateral. Plaintiff's complaint alleges that Howard and Clark were agents of Defendant, and thus Defendant was liable for their actions. Defendant brought an indemnity claim against third party defendants Howard, Clark and Lett for the amount that Defendant may be held liable to Plaintiff. Issue. Whether a third party claim for indemnity based on the agency theory is proper? Whether it is necessary for a third party defendant to have a duty to the Plaintiff in order to have a third party complaint. Held. Yes and no. Both the Motion to Dismiss and Motion to Strike the Third-Party Complaint or For a Separate Trial are denied. An employer has the right to seek indemnity against its employee for liability resulting from the employee's tortious acts under the agency theory. In other words, an employer can hold its agents liable for the amounts the employer is found to be liable to the plaintiffs. Here, Defendant brought indemnity actions against each third party defendants as a person who may be liable to the third party Plaintiff for all or part of
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the plaintiff's claim. Therefore, Defendants properly impleaded third party defendants. A third party complaint does not require the existence of a duty on the part of the third party defendant to the Plaintiff. Impleader is only proper if the third party defendant may be liable for some or all of the Plaintiff's claim against the third party plaintiff. The third party claim need not be on the same basis as the main claim and impleader is proper despite the fact that third party's liability is not established when the third party plaintiff's liability to the plaintiff is established. Therefore, in the instant case, the Defendants have stated a valid claim for indemnity against third party defendants. Inclusion of third party indemnity claims will not complicate the suit. This decision is typically within the discretion of the court. Here, the court finds that many of the issues are so closely related that resolution of Plaintiff's claims may collaterally estop defendants from relitigating these issues in separate proceedings and thus will not confuse the issues. Discussion. Impleader is the procedure by which a third party is brought into a lawsuit, through a defendant's third party action. This is also called third party practice. In this case, Defendant brought its employees, third party defendants into this lawsuit in order to be indemnified for any award that Plaintiff would obtain against Defendant. Since, employees and certain third parties were directly responsible for the damage done to the tractor during repossession they should bear the cost of any award of damages.
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State Farm Fire & Casualty Co. v. Tashire

Citation. 386 U.S. 523 (1967). Brief Fact Summary. State Farm Fire & Casualty Company (Plaintiff) brought an action of interpleader to determine insurer's liability for the actions of Clark (Defendant), in an action filed in the State of California. Synopsis of Rule of Law. In actions where a plaintiff may be exposed to multiple liability, the interpleader statute provides that persons who may have claims against the insurance companies be joined as defendants and required to interplead without first obtaining a judgment against their insured. Facts. A Greyhound bus collided with a pickup truck, killing two passengers on the bus and injuring thirty-three others, including the bus driver, driver of another car and its passenger. One of the dead passengers and ten of the injured were Canadian citizens and the rest of the individuals were United States citizens. Litigation began when four of the injured passengers filed suit in California state courts, seeking damages in excess of one million dollars. The defendants were Greyhound Lines, Inc., a California corporation; Nauta, the bus driver; Clark, the driver of the other car; and Glasgow, the passenger of the other car who was also the car's owner (Defendants). The individual Defendants were residents of Oregon. Before the trial, Plaintiff, an Illinois company, brought this action of interpleader in the United States District Court for the District of Oregon. Plaintiff's complaint stated at the time of the car accident, it had an insurance policy with Clark, the driver of the car, which provided for bodily injury liability up to $10,000 per person and $20,000 per occurrence and for legal representation of the driver. It further alleged that the damages sought in suits filed in California far exceeded the amount of its maximize liability under the policy in aggregate. Thus, Plaintiff paid $20,000 to the court and asked the court to require all claimants to establish claims against Clark and insurer in this proceeding, and to discharge Plaintiff from all further obligations under Clark's policy. Plaintiff alternatively expressed conviction that the policy issued to Clark excluded coverage for accidents resulting from his operation of a truck that belonged to someone else and was being used in the business of another. The complaint requested that the court find that the insurer had no duty to Clark and refund the $20,000. Clark, Nauta, Glasgow, Greyhound Lines and the prospective claimants were joined as defendants. Jurisdiction was based on Rule 22 of the Federal Rules of Civil Procedure, the federal interpleader statute and diversity. An injunction sought by Plaintiff was granted by the Untied States District Court for the District of Oregon which provided that all suits against Clark, State Farm, Greyhound, and Nauta be prosecuted in the interpleader proceeding. On interlocutory appeal, Court of Appeals for the Ninth Circuit reversed and
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concluded that interpleader was not available in the circumstances of this case. The Supreme Court of the United States granted certiorari to resolve the conflict of grounds for granting interpleader and to consider the administration of federal interpleader. Issue. Whether in the absence of a state law or contractual provision for direct action suits against the insurance company, the company is required to wait until persons asserting claims against its insured have reduced claims to judgment before seeking to invoke the benefits of federal interpleader? Whether federal jurisdiction was proper? Note: This issue was raised on the court's own motion. Held. No and Yes. The court held that the injunction to join all Defendants in the insurance company's litigation was improper, and it remanded the case to modify the injunction to be consistent with this decision. Further, the decision of United States Court of Appeals for the Ninth Circuit on the jurisdictional question is reversed. The 1948 revisions removed the requirement that the insurance company wait until at least two claimants reduced their claims to judgments. Interpleader statutes were designed to remedy the difficulties: the race to obtain judgments and the potential unfairness to claimants. Therefore, Plaintiff properly invoked the interpleader jurisdiction. Even though Plaintiff properly invoked interpleader jurisdiction, it does not entitle Plaintiff to an order enjoining prosecution of suits against it outside the confines of the interpleader proceeding. An insurance company should not be allowed to determine that dozens of tort plaintiffs must be compelled to raise their claims in a single forum of the insurance company's choosing. Interpleader was never intended to be used as a means to solve all problems of multi-party litigation. Therefore, the interpleader statute did not authorize the injunction entered in the present case. The court found that federal jurisdiction was proper because the interpleader statue only requires minimal diversity, in other words diversity of citizenship between two or more claimants without regard to the fact that other rival claimants may be co-citizens. Discussion. In actions where a plaintiff may be exposed to multiple liability, the interpleader statute provides that persons who may have claims against the plaintiff be joined as defendants and required to interplead without first obtaining a judgment.
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Natural Resources Defense Council, Inc. v. United States Nuclear Regulatory Commission
Citation. 578 F.2d 1341 (10th Cir. 1978). Brief Fact Summary. American Mining Congress and Kerr-McGee Nuclear Corporation (Appellants), seek to review the order of the United States District Court of the District of New Mexico denying their motions to intervene as a matter of right or on a permissive basis. Synopsis of Rule of Law. A party seeking intervention must prove that they have an interest in the litigation, that their interest would be impaired if they were unable to intervene, and that the Defendants do not adequately represent their interests. Facts. The original action in which movants requested intervention was commenced by Plaintiff, Natural Resources Defense Counsel, Inc., (Plaintiff) seeking declaratory and injunctive relief on behalf of the Defendants, United States Nuclear Regulatory Commission (NRC) and the New Mexico Environmental Improvement Agency (NMEIA) (Defendants), prohibiting those agencies from issuing licenses for the operation of uranium mills in New Mexico without first writing environmental impact statements. Under the Atomic Energy Act of 1954 (Act), Congress authorized the NRC, to issue licenses. Under Section 274(b) of the Act, the Defendant is authorized to enter into agreements with the states allowing the states to issue licenses. These agreements have been made with about twenty-five states including New Mexico. This action seeks to prevent the use of Section 274(b) in order to avoid the requirement of an impact statement. 42 U.S.C. 4332(2)(C) requires that a detailed environmental impact statement be prepared by the federal agencies in every recommendation or report affecting the quality of the environment. The complaint alleges that Defendant only prepares these statements if the states have not entered into agreement with Defendant. On the other hand, they do not prepare these statements where there is an agreement with a state such as New Mexico. The complaint further alleges that the granting of licenses to state agencies by the Defendant eliminates the need of the state agency to prepare environmental impact statements since it is not a federal agency. The relief sought by the Plaintiff is that the Defendant's involvement in the licensing procedure is sufficient to constitute major federal action. Plaintiffs also seek declaration that the New Mexico program is in conflict with the Act if an impact statement is not required with the granting of licenses. The motion of UNC to intervene was not opposed by the parties and was granted. On the date the complaint was filed, UNC was granted a license to operate a uranium mill in New Mexico and thus the complaint seeks to enjoin the issuance of the license. Motion to Intervene on behalf of Kerr-McGee Nuclear Corporation, Anaconda Company, Gulf Oil Corporation, Philips Petroleum Company and the American Mining Congress was denied on the grounds that the interests of the parties would be adequately represented by UNC. Issue. Whether the interests of the parties seeking to intervene were adequately represented by a fellow member of the industry?
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Held. No. Judgment reversed and the cause is remanded with instructions to the trial court to grant Appellants' Motion to Intervene. The interests of the movant in the subject matter are sufficient to satisfy the requirements of Rule 24 of the Federal Rules of Civil Procedure and the threat of loss of their interest and inability to participate is great enough to impair the ability to advance their interests. There are three requirements of Rule 24 that must be satisfied in order for the Appellants to obtain an intervention. The appellants must prove that the have sufficient interest in the litigation; that their inability to participate is great enough to impair their interests; and that the Defendant does not adequately represent their interests. Appellants have the requisite interest in the issuance and delivery of the license, which constitutes a genuine threat to the appellants. Another interest of Appellants is that one of the consequences of the litigation could be the requirement that an environmental impact standard should be prepared before granting a uranium license or the agreement between the Appellee and the Appellant could be terminated. Rule 24 does not require that that a movant in intervention have a direct interest in the outcome of the case. However, the interest must be a significant protectable interest. Appellants have also satisfied the impairment criteria of Rule 24 in that the considerations for requiring an impact statement are relatively the same in respect to the issuance of a uranium mining license. Rule 24 refers to impairment as a practical matter. The Defendants may not adequately represent the interests of the Appellants. While their interests appear to be small, there is no way to say that the Appellant's interests will not in some way differ from the Defendant and there is no requirement that the divergence of interest need to be great to satisfy the burden of the intervening party. Another reason for intervention is that there is some value in having the parties be bound by the result. After looking at the three requirements for intervention, it is clear that the Appellants have satisfied the three requirements and therefore should be allowed to intervene. Discussion. Intervention is a device for an outsider who has an interest in the litigation to join as a party voluntarily.
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Hansberry v. Lee
Hansberry v. Lee
Citation. 311 U.S. 32 (1940). Brief Fact Summary. Lee (Plaintiff) sought to enjoin the sale of land to Hansberry (Defendants) on the ground that the sale violated a racially restrictive covenant. Synopsis of Rule of Law. There must be adequate representation of the members of a class action in order for the judgment to be binding on the parties not adequately represented. Facts. Defendants, who were African Americans, bought and moved into a house in Chicago covered by a racially restrictive covenant. Owners of neighboring homes sued in an Illinois Circuit Court to void the sale of the home to the Defendants. Defendant argued that the covenant never became effective because it was not signed by 95% of the homeowners, as required by its terms. The trial court voided the sale to the Defendants and ordered them to move. It found that they were bound by a decision that the covenant was valid based on Burke v. Kleiman. When the judgment of a state court, based on the decision of another court, is challenged for want of due process, it is the duty of the Supreme Court of the United States to examine the course of procedure in both litigations to determine whether the litigant whose rights have been effected has been afforded notice and opportunity to be heard as required by due process. Issue. Whether a party can be bound by an earlier judgment of which they were not a party? Held. No. Judgment overturned. In general, one is not bound by a judgment in litigation in which he is not designated as a party. However, there is a recognized exception to this general rule. The judgment in a class or representative suit in which some members of the class are parties may bind members of the class or those represented who were not made parties to the action. A failure of due process occurs where it cannot be said that the procedure used insures the protection of the interests of the absent parties who are bound by the judgment. Here, since the parties have dual and potentially conflicting interest to the agreement in compelling and resisting performance, it is hard to say that any of them are of the same class. There was no designation of the Defendants in the suit as a class. When the Burke judgment was enforced, it did not purport to bind others. The Plaintiffs in the Burke case were not representing the petitioners in this case whose interests were in resisting performance. Therefore, the petitioners are not bound by the earlier judgment.
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Hansberry v. Lee
Discussion. In a class action suit, one or more members of a class of persons similarly situated may sue on behalf of other members of the class. These lawsuits are permitted where considerations of necessity and convenience justify action on behalf of a class of persons.
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In the Matter of Rhone-Poulenc Rorer, Inc.

Citation. 51 F.3d 1293 (7th Cir. 1995). Brief Fact Summary. A nationwide class action brought on behalf of hemophiliacs (Plaintiffs) infected by the AIDS virus as a consequence of using Defendants' products. Defendants are the drug companies who manufacture blood solids used by hemophiliacs. (Defendants) Defendants filed with the court of appeals, a Petition for Writ of Mandamus requesting that the court of appeals direct the district judge to rescind his order certifying the case as a class action. Synopsis of Rule of Law. In order to obtain a Writ of Mandamus to review a judgment, the ruling of the lower court must inflict irreparable harm and exhibit an abuse in judicial discretion. Facts. This suit arises out of the infection of a substantial fraction of the hemophiliac population of this country by the AIDS virus, because the blood supply was contaminated by the virus. Hemophiliacs depend on blood solids that contain clotting factors, whose absence is the cause of the disease. The blood solids are concentrated from blood obtained from donors. Thus, if one of the donors is infected with the AIDS virus, the probability that the blood solids manufactured from this blood will be infected is high. Plaintiffs presented evidence that over 2,000 hemophiliacs have died of AIDS and that half or more of the remaining hemophiliacs may be HIV-positive. Three hundred lawsuits, involving some 400 plaintiffs, have been filed, 60% of them in state courts, and 40% in federal district courts under diversity jurisdiction. Plaintiffs base their claim on two theories of liability. The first theory is that Defendants' failure to take effective measures was negligent and caused hemophiliacs to be infected with Hepatitis B. The second theory of liability stated that Defendants were negligent in the screening of donors, and in taking measures to prevent contamination of blood solids by HIV. The trial judge based his decision to certify the suit as a class action on the rendition of the jury of a special verdict that would answer a number of questions bearing on whether the Defendants are negligent under either of the Plaintiffs' theories. The trial judge's experimentation with an innovative procedure for streamlining the adjudication of the mass torts far exceeded the permissible bounds of discretion in the management of federal litigation. Defendants filed with the court of appeals a Petition for Writ of Mandamus requesting the court to direct the district judge to rescind his order certifying the case as a class action. Issue. Whether a Petition for Writ of Mandamus to review should be granted? Held. Yes. Mandamus to review is granted. There are two conditions for the granting of a mandamus. The first condition requires that the challenged ruling of the district court have inflicted irreparable harm, in other words, harm that cannot be rectified by
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an appeal from the final judgment. The second condition requires that the ruling be described as an abuse of judicial discretion. In the instant case, the ruling of the district court will inflict irreparable harm. If the class had not been certified, the Defendants would be facing 300 suits and more may be filed. However, only a few more suits are likely to be filed, because the statute of limitations is expiring since the blood supply has been safe since 1985. The potential damages in 300 lawsuits are great. Class actions may also put the Defendant under pressure to settle the suit. This pressure to settle, however, must be balanced against the benefits of the class action. The discussion of the facts proves that the ruling will inflict irreparable harm. In terms of the second condition, the district court exceeded the bounds of allowable judicial discretion by devising an innovative plan for the litigation. Forcing Defendants to stake their companies on the outcome of a single jury trial when it is feasible to allow a final determination of their liability to emerge from multiple trials that involve different juries and different standards of liability is a great concern of the district court's ruling. Another concern is that the district court exceeded the bounds of permissible judicial discretion in that the court proposed to have the jury determine Defendants' negligence under a legal theory that does not exist. The final concern, in which the district court exceeded its authority, is that the judge's plan of action proposes to divide the trial of the issues that he has certified for class action from the other issues involved in the many potential and actual claims of the members of the class. An inconsistency would result between the juries. Therefore, the Petition for Writ of Mandamus is granted and the district judge is directed to decertify the Plaintiffs' claims. Dissent. The dissent argues that they would have denied the Defendants the Petition for Writ of Mandamus. The class action, if it continued, would resolve only the question of whether Defendants were negligent in distributing the blood solids. The law requires that the district court judge's plan be given the opportunity to succeed. Discussion. A writ of mandamus is a writ issued by a superior court to compel a lower court to perform duties correctly. There are two conditions for determining whether the granting of a writ of mandamus is appropriate: 1) whether the challenged ruling of the district court has inflicted irreparable harm, in other words, harm that cannot be rectified by an appeal from the final judgment; and 2) whether ruling is as an abuse of judicial discretion.
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CHAPTER V. Obtaining Information For Trial
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Hickman v. Taylor
Hickman v. Taylor
Citation. 329 U.S. 495 (1947). Brief Fact Summary. In anticipation of litigation, the attorney for John M. Taylor, Fortenbaugh (Respondent), interviewed the survivors. Hickman (Petitioner) representing the deceased, brought an action and tried by means of discovery to obtain copies of statements from Respondent's attorneys, which were obtained from the survivors. Synopsis of Rule of Law. Materials prepared and information developed by a party or an attorney that is prepared in anticipation of trial is subject to discovery only if the discovering party can show substantial need and an inability to obtain the material by other means. Facts. Respondent sank the tugboat, while towing a car float across the Delaware River. Five of the nine crew members drowned. The tug owners and underwriters employed a law firm, of which Fortenbaugh is a member, to defend them against potential suits by representatives of deceased crew members and to sue the railroad for damages to the tug. Four of the survivors' testimony was recorded and shortly thereafter, Fortenbaugh privately interviewed the survivors and took statements from them in anticipation of litigation. Four of the claims of the deceased were settled, while the fifth claimant brought suit in federal court under the Jones Act, naming as Respondents, the two tug owners, individually and as partners, and the railroad. Petitioner filed interrogatories, the thirty-eighth of which requested the statements of survivors of the incident, and supplemental interrogatories requested any oral or written statement, records, reports or other memorandum that had been made concerning any matter relevant to the incident. The Respondents answered all interrogatories except number thirty-eight and the supplemental interrogatories on the ground that the requests were for privileged matter obtained in the preparation of the litigation. The District Court for the Eastern District of Pennsylvania held that the requested material was not privileged. Respondents refused to produce the material and the court adjudged them in contempt and ordered them to prison until they complied. The United States Court of Appeals for the Third Circuit reversed and held that the information was part of the work product of the lawyer and privileged from discovery. The Supreme Court of the United States granted certiorari. Issue. Whether a party may inquire into oral and written statements of witnesses obtained by an adverse party's counsel in preparation of trial after the claim has arisen? Held. No. Judgment of the court of appeals is affirmed. A party may not seek information, which is produced by the adversary party's attorney in preparation of litigation without a showing of necessity and the inability to gain access to the documents. Petitioner is attempting to secure the production of written statements and mental impressions contained in the attorney's files without the showing of necessity, and without any indication that the inability to obtain this information will
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Hickman v. Taylor
prejudice the preparation of their case. If such materials were open to opposing counsel, an attorney's trial strategy and his thoughts would not be his own. However, discovery may be allowed where relevant and nonprivileged facts remain hidden in an attorney's file, and are necessary to the preparation of one's case. Petitioner did not demonstrate any of these exceptions and thus the statements are protected as work product of Respondent's attorney. Concurrence. The primary effect of the production of the requested information would be on the legal profession. The purpose of discovery was not to enable a learned profession to perform its function without wits. It is demoralizing to the bar to require a lawyer to write out and deliver to his adversary statements that a witness told him. The practice advocated by the Petitioner would force the attorney to become a witness. Discussion. According to Rule 26 of the Federal Rules of Civil Procedure, in order to obtain information that would be covered by the work product doctrine, the moving party must show substantial need and the inability to obtain the information without undue hardship.
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In Re Convergent Technologies Securities Litigation
In Re Convergent Technologies Securities Litigation

Citation. 108 F.R.D. 328 (N.D. Ca. 1985). Brief Fact Summary. Parties were unable to agree on the propriety of certain interrogatories, so they sought judicial oversight and relief. Synopsis of Rule of Law. The pretrial discovery process should be executed by the individual parties and should have minimal judicial intervention. Facts. A discovery dispute ensued over when to serve the answers to contention interrogatories. This discovery dispute between counsel cost the clients over $40,000. Defendants served more than 1,000 questions. Many of these questions sought facts, which Plaintiffs contended supported certain allegations about what Defendants had done in violation of securities law. The parties sought judicial oversight and relief to determine when certain interrogatories should be answered. Issue. When should Plaintiffs answer contention interrogatories served by Defendants? Held. Plaintiffs are excused from responding to the contention interrogatories until the parties had completed a substantial amount of discovery, specifically document inspection. The spirit of Rule 26 and Rule 1 of the Federal Rules of Civil Procedure have been violated. Strong evidence exists in this case that there was a breakdown of what is supposed to be a self-executing system of pretrial discovery under Rule 26. Rule 1, which was also violated, declares that the purpose of Federal Rules of Civil Procedure is to secure the just, speedy and inexpensive determination of every action. Amendments to Rule 26 require good faith and common sense on the part of counsel. In other words, counsel must ask themselves what information they need to know and what the most effective way of getting it. Discussion. The purpose of discovery is to avoid surprise and delay, to go to trial with the best evidence available to prove the party's contentions, and with knowledge of the adversary's presentation of the case.
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Davis v. Ross
Davis v. Ross
Citation. 107 F.R.D. 326 (S.D.N.Y. 1985). Brief Fact Summary. Gail Davis (Plaintiff) instituted this defamation action based on a letter written and disseminated by Diana Ross (Defendant). Plaintiff sought one million dollars in compensatory damages and one million dollars in punitive damages. Synopsis of Rule of Law. Information of Defendant's net worth may not be discovered until a verdict awarding punitive damages is made. Facts. In Plaintiff's defamation action against Defendant based on a letter written and disseminated by the Defendant, the complaint states the Plaintiff was employed as an executive assistant to Defendant. Defendant's letter to Plaintiff stated that Defendant had to layoff Plaintiff because either her work or personal habits were unacceptable. Plaintiff sued alleging that the letter contained false statements. The district court granted Defendant's Motion to Dismiss on the ground that the text of the letter was not libelous, as it only expressed Defendant's dissatisfaction, rather than making a representation of Plaintiff's job performance. The court of appeals reversed and remanded stating that the letter may have a defamatory interpretation. The case is currently before the court to hear the parties' cross-motions to compel discovery. Issue. Whether parties cross motion to compel discovery should be granted? Held. Plaintiff's Motion to Compel Discovery should be denied, whereas Defendant's Motion should be granted. Plaintiff seeks discovery of information concerning Defendant's net worth and annual income, arguing that Defendant's wealth is relevant to an action for punitive damages. The Plaintiff's interests in proving the amount of the Defendant's wealth must be balanced against the Defendant's right to privacy and desire not reveal such information. However, Defendant should not be compelled to disclose private facts to anyone until it is found that Plaintiff is entitled to punitive damages. Plaintiff's Motion to Compel discovery of information regarding Defendant's wealth is denied. Plaintiff's second discovery request is for documents reflecting bills by Defendant's law firm. Plaintiff argues that this information is discoverable because the Defendant stated that defense counsel was an important witness. Plaintiff is entitled as to the relationship between Defendant and defense counsel, however the amount of fees earned is not probative of a witness' bias. Plaintiff's Motion to Compel Discovery of Defendant's legal fees is denied. Plaintiff's last discovery request is to learn the names of other employees who have complained about the Defendant and the nature of their
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Davis v. Ross
complaints. Plaintiff seeks discovery of this information to determine whether Defendant was a good or bad employer, and is not probative of whether Plaintiff's personal or work habits were satisfactory. The information sought by Plaintiff is irrelevant to any material issue and thus the motion is denied. Defendant seeks discovery of Plaintiff's treatment by a psychiatrist during the period that Plaintiff worked for Defendant. Defendant argues that the material is relevant and that the physician-patient privilege has been waived. When the mental or physical condition of the Plaintiff is at issue, the physician-patient privilege is waived. Defendant argues that Plaintiff put her mental condition at issue when she sued to recover for great mental pain and anguish and thus waived the physician-patient privilege. If the Plaintiff sues to recover for mental pain and anguish, she may not subsequently deny the Defendant the evidence she needs to argue that there was no damage. Thus, Defendant's Motion to Compel Discovery of Plaintiff's treatment by a psychiatrist is granted. Discussion. Evidence must be relevant to the case in order to be admissible in court. According to the Federal Laws of Evidence, relevant evidence means evidence that has the tendency of making the existence of a fact of the case more probable or less probable than without the evidence. For evidence to be discoverable Rule 26(b)(1) of the Federal Rules of Civil Procedure states that material need only be relevant to the subject matter of the action for good cause. Some information that is not directly important for the case could be relevant to the claims or defenses raised in the action. The rules do not place any restriction on what a party may do with the information obtained in the discovery process. Generally an inquiry into Defendant's financial status is not permitted, but it may be permitted in cases when punitive damages are sought.
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Kozlowski v. Sears, Roebuch & Co.

Citation. 73 F.R.D. 73 (D. Mass. 1976). Brief Fact Summary. Kozlowski (Plaintiff) commenced a personal injury action for injuries suffered by a minor when a pair of pajamas manufactured and marketed by the Sears, Roebuch & Co., (Defendant) ignited in flames. Defendant filed a Motion to Set Aside the Default Judgment entered against him by the court. Synopsis of Rule of Law. Failure to produce requested documents will not be excused if the failure to do so was the result of the producing party's difficulty in locating the records. Facts. Plaintiff commenced this product liability claim against Defendant asserting claims based on negligence, breach of warranty, and strict liability in tort. On July 17, 1975, Plaintiff filed a Motion to Produce Documents seeking a record of all complaints and communications concerning injuries or fatalities allegedly caused by the burning of children's nightgowns, which were manufactured and marketed by Defendant. The Defendants filed a Motion to Quash on August 8, 1975. Plaintiff subsequently opposed Defendant's Motion to Quash and filed a Motion to Compel Discovery. On January 22, 1976, the United States Magistrate field a "Memorandum and Order" overruling Defendant's objections and ordering production within thirty days. Since Defendant did not produce the records, Plaintiff filed a Motion for Entry of Judgment by Default against the Defendant. The court found that Defendant's failure to comply with discovery was willful and deliberate, so it entered Judgment by Default against the Defendant on the issue of liability. Defendant filed the current Motion to Set Aside the Judgment by Default. Issue. Whether the Defendant should be compelled to produce the requested documents? Held. Yes. Defendant's Motion to Set Aside Default Judgment is denied. To allow a Defendant to frustrate the discovery process by maintaining an inadequate filing system, and then claiming that the production of records would be an undue burden defeats the purpose of the discovery rules. Information concerning similar accidents is relevant to the issue of whether the pajamas marketed by the Defendant were dangerous and whether the Defendant knew of this danger. The party from who discovery is sought has the burden of showing why discovery should not be allowed. Statements that production would be costly or time-consuming are insufficient reasons. Here, the requested documents are solely in the control of the Defendant, and Plaintiff has no other access to them. Therefore, Defendant should produce the documents requested by the Plaintiff.
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Discussion. Rule 26 of the Federal Rules of Civil Procedure provides for the granting of protective orders, which protect parties against burdensome and oppressive discovery. The court can issue a protective order when the movant has acted in good faith to resolve the dispute. In deciding whether to grant a protection order, the court must balance the potential hardship to the party seeking discovery if the protective order is granted with the potential hardship to the party seeking the protective order if it is denied.
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Hickman v. Taylor
Hickman v. Taylor
Citation. 329 U.S. 495. Brief Fact Summary. The Petitioner, Hickman (Petitioner), representative of a deceased crewmember in a fatal tugboat accident, sought oral and written discovery collected by the Defendants attorney in anticipation of litigation. The Defendants in this matter were the tug boat operators. Synopsis of Rule of Law. Written and oral materials taken by a partys counsel in the course of preparation for litigation is not considered protected by the attorney-client privilege, but is considered the work product of the attorney. Absent necessity or justification, attorney work product is not discoverable. Facts. A tugboat sank while helping to tow a car float operated by the Baltimore & Ohio Railroad across the Delaware River in Philadelphia. Five of the nine crew members drowned. Three days later, the tugboat owners and underwriters hired a law firm in anticipation of litigation, of which Fortenbaugh was a member. A public hearing was held before the United States Steamboat Inspectors at which the 4 surviving crewmembers were examined. The testimony was recorded and made available to all interested parties. Shortly afterwards, Respondent, Fortenbaugh (Respondent), interviewed the surviving crewmembers and had them sign their statements. He also interviewed other people who were involved with or had knowledge of the accident and wrote memoranda of their conversations. Representatives of the five deceased crewmembers brought claims against the tugboat owners and four settled. The Petitioner brought suit in federal court naming as defendants the tugboat owners as joint and severally liable as well as the railroad. Petitioner filed 39 interrogatories directed to the tug owners. The 38th interrogatory asked for copies of any statements of crewmembers relating to the accident. Supplemental interrogatories asked for any written or oral statements, reports, records, or memoranda taken by Defendants. The tugboat owners answered all interrogatories except for number 38 and the supplemental interrogatories. They admitted that statements had been taken, but that they were privileged. The District Court for the Eastern District of Pennsylvania held that the requested matters were not privileged and ordered the production of information asked for in the 38th and supplemental interrogatories. Defendants and Respondent refused to comply and were held in contempt and ordered imprisoned until they did so. The Third Circuit Court of Appeals reversed the lower courts judgment stating the sought information was the attorneys work product. Issue. To what extent may 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 a claim has arisen? Held. Absent a showing of necessity or justification, attorney work product is undiscoverable. Judgment of the Circuit Court of Appeals affirmed.
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Hickman v. Taylor
Concurrence. United States Supreme Court Justice Jackson (J. Jackson) concurred that a trial is a battle of wits between counsel. A common law trial is and always should be an adversary proceeding. Discovery was hardly intended to enable a learned profession to perform its functions either without wits or on wits borrowed from the adversary. I can conceive of no practice more demoralizing to the Bar than to require a lawyer to write and deliver to his adversary an account of what witnesses have told him. Discussion. 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. However, the burden is on the party who wishes to invade the veil of attorney work product to justify production through a subpoena or court order. The Petitioner in this case made no attempt to show necessity or justification that his case would all apart if adverse counsel did not give up his work product. Absent that showing, courts will not overarch the protections of the Federal Rules of Civil Procedure (FRCP) with regard to the already liberal discovery rules.
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Upjohn Co. v. United States

Citation. 449 U.S. 383 (1981). Brief Fact Summary. Upjohn Company (Petitioner) contended that certain questionnaires prepared as part of an internal company investigation were protected from disclosure by the attorney-client privilege. Synopsis of Rule of Law. The attorney-client privilege may be applied to communications between all corporate employees and corporate counsel. Facts. Respondent, manufacturers and sells pharmaceuticals. Independent accountants discovered that one of Respondent's foreign subsidiaries made payments to or for the benefit of foreign government officials in order to secure governmental business. After in-house counsel had discussions with outside counsel, it was decided that an internal investigation would be conducted to determine the terms of the payments. Respondent voluntarily submitted a preliminary report to the Securities and Exchange Commission on Form 8-K disclosing certain questionable payments. A subsequent report was filed with the Internal Revenue Service (IRS), which conducted an investigation. The IRS issued a summons demanding the production of files used in the company's internal investigation. The Respondent declined to produce the documents on the grounds that they were protected from disclosure by the attorney-client privilege and it constituted work product of attorneys prepared in anticipation of litigation. The United States then filed a petition seeking enforcement of the summons and the district court held that the summons should be enforced. Respondents appealed and the court of appeals rejected the district court's finding that a waiver of the attorney-client privilege occurred, but agreed that the privilege did not apply to the extent the communications were made by officers and employees not responsible for directing the company's actions in response to legal actions. Issue. Whether the attorney-client privilege is applicable to communications between corporate employees and corporate counsel? Held. Yes. Communications by Respondent's employees to counsel are covered by the attorney-client privilege. The attorney-client privilege applies when the client is a corporation. The privilege must extend beyond those employees who are in the control group because they may possess information needed by the corporation's lawyers. Thus, the court rejects the control group test as it frustrates the purpose by discouraging the communication of relevant information by employees of the client to the attorney seeing legal advice for the client corporation. The control group test also makes it more difficult to convey full and frank legal advice to the employees who put the corporation's policy into effect.
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The Government fails to demonstrate a sufficient showing of necessity and unavailability by other means in order to justify the production of materials protected by the work product doctrine. No showing of necessity can overcome protection of work product, which is based on oral statement of witnesses. Here, the Government needed to prove a far stronger showing of necessity to overcome the work product doctrine. Discussion. The purpose of the attorney-client privilege is to encourage full and frank communication between attorneys and their client. It therefore promotes broader public interests in the observance of law and administration of justice.
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In Re Shell Oil Refinery

Citation. 132 F.R.D. 437 (E.D. La. 1990). Brief Fact Summary. During pretrial discovery, the Plaintiff moved for discovery of the Defendant's experts. Synopsis of Rule of Law. The facts known and opinions held by non-testifying experts, who are retained in anticipation of litigation are subject to discovery only in exceptional circumstances. Facts. The Catalytic Cracking Unit (CCU) at the Shell Oil Refinery (Defendant) exploded. The first of several suits were certified as a class action. The day after the explosion, the parties entered an agreement giving Plaintiff's legal committee (PLC) and its experts access to the CCU to inspect, measure and photograph. Following the agreement, Defendant preserved all materials tagged by PLC. During the course of the litigation, Plaintiffs field several motions seeking expert discovery, specifically the identities of Defendant's experts and results of tests conducted by Defendant. The district court held that the Plaintiff cannot have the information unless the expert is going to testify. Issue. Whether a party may acquire facts and opinions held by non-testifying experts who are retained in anticipation of litigation? Held. No. Plaintiff's request for discovery is denied. Plaintiffs' attempt to obtain discovery from experts expected to be called at trial was premature. Typically, those who will testify cannot be identified until the later stages of litigation. Facts and opinions of non-testifying experts in preparation of trial are only discoverable in exceptional circumstances. Plaintiff contends that two of the non-testifying experts should be treated as ordinary witnesses because they are in-house experts who would have performed the tests as part of their regular duties. In the alternative, Plaintiff argues that if the two experts were retained specially in anticipation of litigation, then facts and opinions are discoverable due to exceptional circumstances, which require great expense to duplicate the tests. The two experts performed their investigation and their study of the explosion was in anticipation of litigation. The determination whether an in-house expert falls within the parameters of the retained must be on a case-by-case basis. In this case, the court finds that the experts were retained by Defendant in anticipation of trial. Defendant's attorneys specifically engaged the experts to assist them in defending the lawsuit. The two experts investigated and studied the cause of the explosion and prepared preliminary reports. Their usual duties do not include litigation assistance. Since the experts were retained
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or specially employed in anticipation of trial, the court must look at whether exceptional circumstances exist to permit discovery. The Plaintiffs want Defendant's test results to avoid expense of conducting their own tests. Plaintiffs have failed to show exceptional circumstances, thus Plaintiffs request for discovery is denied. Discussion. Non-testifying experts are obtained by counsel when the lawyer needs the assistance of an expert in the preparation of trial. In other words, counsel is hiring someone to assist them in the development of the legal and factual theories for the case. Here, Plaintiff failed to show exceptional circumstances, which would permit the discovery of Defendant's experts.
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Cine Forty-Second Street Theatre Corp. v. Allied Artists Pictures Corp.

Citation. 602 F.2d 1062 (2nd Cir. 1979). Brief Fact Summary. Cine Forty-Second Street Theatre Corporation (Appellee) operated a movie theatre in New York City. Appellee failed to comply with numerous court orders regarding the answering of Allied Artists Pictures Corporations (Appellants) interrogatories on the issue of damages. Synopsis of Rule of Law. A grossly negligent failure to obey a court order compelling discovery is sufficient to substantiate severe disciplinary measures under Rule 37 of the Federal Rules of Civil Procedure. Facts. Appellee alleges that Appellants, who owned neighboring theatres, attempted to prevent the opening of its theatre. When this proved to be unsuccessful, Appellee alleged that Appellants entered into a conspiracy with certain motion picture distributors to eliminate its access to quality films. Appellee claimed $3,000,000 in treble damages under antitrust laws and sought an injunction against the Appellants' alleged antitrust practices. Appellants then served Appellee with consolidated interrogatories. Appellee secured Appellants' consent to defer discovery on a crucial issue of damages until it could retain an expert to review Appellants' box office receipts. Appellee filed a set of answers, which were bare and ambiguous. Appellee filed supplemental answers, which failed to obey two subsequent orders from the magistrate, compelling discovery. Magistrate Gershon found the Appellee's disobedience to be willful and recommended that $500 in costs be assessed against it. Months later, the Appellee still had not acquired an expert and the magistrate ordered the Appellee to file an answer. When Appellee filed answers, both were deficient. The magistrate reserved on the imposition of sanctions. The Appellants moved for dismissal of the complaint on grounds that Appellee's failure to obey the order requiring answers on the issue of damages. The Magistrate Gershon found that Appellee had no basis for assuming that the answers were not due on the dates set in the orders. Magistrate Gershon also concluded that Appellee's noncompliance was willful. The magistrate's decision was submitted to the district court for approval. The district court judge then found that it might have been "possible that Appellee's counsel could have thought in good faith that the answers were not due." The court stated that it lacked the power to find willfulness to impose extreme sanctions and only assessed the costs in the amount of $1,000. Issue. Whether a grossly negligent failure to obey a court order compelling discovery may justify the severest disciplinary measures? Held. Yes. Sanctions serve a threefold purpose: 1) ensure that a party will not be able to profit from its own failure to comply; 2) secure compliance with the particular order; and 3) courts are free to consider the general deterrent effect the order may have on instant case and on other litigation.
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If a party makes a good faith effort to comply with an order, dismissing the complaint would deprive the party of a property interest without due process of law. Bad faith or gross negligence on the part of a party a default judgment can be imposed. Rule 37 states that negligent wrongs are fit for general deterrence and gross professional incompetence may be responsible for the interminable delays. In this case, Appellee caused this litigation to be frozen and the judge's order declining to adopt the magistrate's recommendation that proof of damages be barred is reversed. Discussion. Rule 26(g) of the Federal Rules of Civil Procedure states that an attorney's signature on discovery paper certifies that the papers are supported by good and existing law; proper purpose; and require or response is reasonable given the needs of the case. The rule authorizes the court to impose sanctions on the person signing the paper and the party on whose behalf the paper was submitted, if a paper is signed in violation of this rule.
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CHAPTER VI. Adjudication Before Trial: Summary Judgment
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Adickes v. S.H. Kress & Co.

Citation. 398 U.S. 144 (1970). Brief Fact Summary. In a civil rights action in which a conspiracy between the police and S.H. Kress & Company (Defendant) was alleged, summary judgment was granted when Adickes (Plaintiff) could not produce any evidence to support a conspiracy. Synopsis of Rule of Law. In an action based on conspiracy, summary judgment may not be granted unless the nonmoving party can show that there is no genuine issue of fact. Facts. Plaintiff sued the Defendant in federal court alleging that there was a conspiracy between the Defendant and the police to arrest the Plaintiff when she entered Defendant's store because she was in the company of African Americans. Defendant moved for summary judgment on the grounds that Plaintiff could not produce any evidence in support of a conspiracy. The district court granted summary judgment ruling that Plaintiff failed to produce any facts to allege that a conspiracy might be inferred. The Court of Appeals affirmed. On appeal, the Supreme Court held that Plaintiff had to prove state action by showing that Defendant's employee and a policeman reached an understanding to cause her arrest because she was a white person in the company of African Americans. Issue. Whether a moving party has the burden of showing the absence of any genuine issue of fact in a motion for summary judgment? Held. Yes. Summary judgment was improper here because the moving party, the Defendant failed to carry its burden of showing the absence of any genuine issue of fact. Here, the Defendant failed to negate the possibility that there was a policeman in Defendant's restaurant while Plaintiff was awaiting service. Further, the Defendant failed to submit affidavits of the waitress in the restaurant. These gaps in the evidence demonstrate that Defendant failed to fulfill its initial burden of demonstrating that there were no police officers in the store at the time of the incident. Rule 56 of the Federal Rules of Civil Procedure was not intended to modify the burden of the moving party to initially show the absence of a genuine issue of material fact. Furthermore, the rule requires that Defendant do more than simply rely on contrary allegations in its complaint. Thus, in order to concede this fact, Plaintiff would have to file an affidavit explaining why it was impractical to file an affidavit stating that someone saw a policeman in the store. Concurrence. The existence of a conspiracy is a factual issue for the jury, not the judge to decide.
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Discussion. Please note that this decision was subsequently overruled by Celotex v. Catrett, 477 U.S. 317 (1986). That decision held that the moving party has the initial responsibility of informing the court of the basis for its motion, and that party must recognize those portions of the record that demonstrate the absence of a genuine issue of fact.
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Celotex Corp. v. Catrett

Citation. 477 U.S. 317 (1986). Brief Fact Summary. Celotex Corporation (Petitioner) appeals a judgment of the United States Court of Appeals for the District of Columbia Circuit reversing summary judgment in favor of the Ms. Catrett (Respondent) on the basis that the Respondent had not offered sufficient evidence rebutting Petitioner's allegations. Synopsis of Rule of Law. Summary judgment must be entered against a party who fails to make a showing of sufficient facts to establish the existence of an essential element of the case and which bears the burden of proof at trial. Facts. Petitioner commenced this action alleging the wrongful death of her husband, which resulted from his exposure to products containing asbestos manufactured and distributed by the Respondent. Petitioner's complaint alleged negligence, breach of warranty and strict liability. Respondent filed a Motion for Summary Judgment on the grounds that the Petitioner failed to produce evidence that any of Respondent's products were the proximate cause of the injury. In response to Respondent's Motion for Summary Judgment, Petitioner produced three documents, which she claimed demonstrated that there is a material issue of fact as to whether the decedent was exposed to Respondent's asbestos. The district court granted Respondent's Motion for Summary Judgment against the Petitioner, because Petitioner was unable to produce evidence in support of her allegation of wrongful death. Petitioner's complaint alleged that the wrongful death of the Petitioner was a result of being exposed to Respondent's asbestos products. The court of appeals reversed and held that Respondent's failure to support the motion with evidence tending to negate such exposure of asbestos products precluded the entry of summary judgment in its favor. Issue. Whether summary judgment must be entered against a party who fails to make a showing of sufficient facts to establish an element of the case? Held. No. Judgment is reversed and the case is remanded for further proceedings consistent with the opinion. Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is proper if the pleadings, depositions, answers to interrogatories, admissions, and affidavits show that there is no genuine issue of material fact and that the moving party is entitled to judgment. In other words, if there is a genuine issue of material fact, then the case must proceed to the trier of fact. The party seeking summary judgment has the initial burden of informing the court of the basis for the motion. However, there is no express or implied requirement in Rule 56 that the moving party support its motion with affidavits negating the opponent's claim. Parties may move for summary judgment with or without supporting affidavits. The language in the Adickes v. S.H. Kress & Co., 398 U.S. 144
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(1970), should not be construed to mean that the burden is on the moving party to produce evidence showing the absence of genuine issue of material fact. Instead, the burden on the moving party may be discharged by showing that there is an absence of evidence to support the nonmoving party's case. In the instant case, Respondent failed to show that there was an absence of evidence to support the nonmoving party's case. However, the court determined that the court of appeals is better situated to answer the question of whether Petitioner made an adequate showing of exposure to asbestos products. Dissent. The case required the Court to determine whether Respondent satisfied the initial burden of production in moving for summary judgment on the ground the Petitioner lacked evidence to establish and essential element of her claim. The Court has not clearly explained what is required of the moving party seeking summary judgment. Respondent did not meet its burden of production under Rule 56. Concurrence. Agree that the Court of Appeals was wrong to conclude that the moving Respondent must support his motion with evidence or affidavits showing the absence of a genuine dispute of fact. The movant must discharge the burden summary judgment places on it by demonstrating that there is an absence of evidence to support the nonmoving party's case. Agree that the case should be remanded for further proceedings. Discussion. This case overrules the decision in Adickes v. S.H. Kress & Co., which held that the movant in summary judgment motions have the burden to demonstrate evidence of the absence of a material issue of fact.
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Arnstein v. Porter
Arnstein v. Porter
Citation. 154 F.2d 464 (2nd Cir. 1946). Brief Fact Summary. Arnstein (Plaintiff) appealed summary judgment, which was granted to Cole Porter (Defendant). Plaintiff alleged that Defendant stole tunes for several popular songs that Defendant had written. Synopsis of Rule of Law. Summary judgment is improper when credibility of the parties is an issue. Facts. Plaintiff sued Defendant for copyright infringement, alleging that numerous songs of the Defendant were taken from a number of songs copyrighted by Plaintiff. Plaintiff alleged that Defendant had lived with Plaintiff, and had the opportunity to take this material from the Plaintiff. Defendant denied ever hearing or seeing any of Plaintiff's compositions. The trial court granted Defendant's motion for summary judgment and Plaintiff appealed. Issue. Whether the lower court properly deprived the Plaintiff of a trial on his copyright infringement action? Held. No. Judgment is reversed. There are two separate elements essential to a copyright infringement action: 1) the Defendant must have copied the Plaintiff's work; and the copying of Plaintiff's work rose to the level of improper appropriation. There are similarities in the Plaintiff's and Defendant's compositions, but they do not compel the conclusion that Defendant copied Plaintiff's compositions. However, the similarities are enough to allow the case to go to the jury, and the jury may determine whether the similarities resulted from coincidence. Summary judgment then would have been proper if Defendant did not have access to Plaintiff's compositions. This also presents an issue of fact and even though part of Plaintiff's testimony does seem extreme, the Plaintiff's credibility should be determined by the jury. If the jury does not believe the Defendant's, the jury could infer that Defendant had access to Plaintiff's compositions. Thus, as the issue of credibility is involved, a genuine issue of material fact is presented. Plaintiff must not be deprived of the right to a trial by jury. Dissent. The majority relies on the trial to develop the facts of the case, however a trial cannot construct a case without some facts on which to start. The case is based on two premises: 1) belief that the jury has the ability to settle issues of plagiarism; 2) and a dislike of rules established by the Supreme Court of the United States as to summary
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Arnstein v. Porter
judgments. The dissent continues to defend summary judgment as an integral and useful part of the procedural system. Discussion. This case addresses the issue of what constitutes sufficient evidence to meet the party's burden of production. The court determines that issues of credibility constitute sufficient issues of fact for the case to proceed to the jury. This case is overruled by Dyer v. MacDougall, 201 F.2d 265 (2nd Cir. 1952), which held that summary judgment is appropriate in a defamation action when all the individuals alleged to have received the defamatory materials deny such receipt.
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Dyer v. MacDougall
Dyer v. MacDougall
Citation. 201 F.2d 265 (2nd Cir. 1952). Brief Fact Summary. Dyer (Plaintiff) appeals from a judgment dismissing two counts of Plaintiff's complaint for libel and slander. Synopsis of Rule of Law. In opposing a motion for summary judgment, the opposing party cannot rely on credibility evidence alone to ensure that the case goes to the jury. Facts. Plaintiff appeals from the granting of a Motion for Summary Judgment on the libel and slander counts in the complaint. The first count, which was not the subject of summary judgment, alleged that Albert E. MacDougall (Defendant) told the Plaintiff in front of a meeting of the Queensboro Corporation that Plaintiff was stabbing him in the back. The second count, which was also not the subject of the decision, alleged that Defendant wrote a letter to Plaintiff's wife stating that the Plaintiff made false representations to clients and presented bills for work not done. The first of the counts that is subject to summary judgment, alleges that Defendant said to a lawyer that a letter sent out by the Plaintiff to shareholder of Queensboro Corporation was a blackmailing letter. The final count alleged that Mrs. MacDougall, Defendant's wife who is also a Defendant, said to the Plaintiff's wife that the Plaintiff had written and sent out a blackmailing letter. Defendants moved for summary judgment dismissing the second, third and fourth counts. Each of the Defendants denied the utterance of the slanders. Defendants filed an answer denying the defamatory utterances. The judge decided Defendant's Motion for Summary Judgment, and dismissed the third and fourth count on the ground that upon the trial, the Plaintiff would have no evidence to offer in support of the slanders except the testimony of witnesses. Issue. Whether there was any genuine issue of fact as to the utterance of the slanders? Held. No. Judgment affirmed. Summary judgment in a defamation action was granted in favor of Defendants due to the production of evidence that everyone whom the alleged defamation was published denied receiving such statements. Defendants had the burden of proving that there was no issue of fact, however at trial, the Plaintiff will have the burden of proving the utterances; and thus if Defendants succeeded in proving that the Plaintiff would not have enough evidence to go to the jury on the issue, the judgment granting the Defendant's Motion for Summary Judgment would be correct. If the case went to trial, the Plaintiff would have no witnesses by whom he could prove slander. Even though it may be possible that the party having the affirmative might succeed in convincing a jury of the truth of his allegations in spite of the fact that all the witnesses denied them, a verdict would still have to be directed against him.
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Dyer v. MacDougall
The likelihood that an examination in open court will provide the Plaintiff with information from four witnesses' admissions that he would not have obtained from the depositions that he refused is remote. Discussion. This case overrules Arnstein v. Porter, 154 F.2d 464 (2nd Cir. 1946), which held that when credibility of the parties is at issue, summary judgment is improper and a trial is indispensable.
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CHAPTER VII. Judicial Supervision Of Pretrial And Promotion Of Settlement
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G. Heileman Brewing Co. v. Joseph Oat Corp.

Citation. 871 F.2d 648 (7th Cir. 1989). Brief Fact Summary. Joseph Oat Corp. (Appellant) appeals from sanctions imposed by the district court for a violation of an order to send a principal of the corporation to the pretrial conference. Synopsis of Rule of Law. A federal district court may sanction a litigant for failure to comply with an order to send a corporate representative to a pretrial conference. Facts. A federal magistrate judge ordered Appellant to send a corporate representative with authority to settle to a pretrial conference to discuss factual and legal issues and the possibility of settlement. No principal or corporate representative attended the conference. The court determined that the failure of Appellant to send a principal of the corporation to the pretrial conference violated the order. The district court imposed sanctions of $5,860.01, reflecting costs and attorneys' fees, upon Appellant pursuant to Fed. R. Civ. P. 16(f). Appellant appeals claiming the district court did not have the authority to order litigants represented by counsel to appear at the pretrial conference. Issue. May a federal district court order litigants to appear before it in person at a pretrial conference for the purpose of discussing the posture and settlement of the litigant's case? Held. Yes. A district court may sanction a litigant for failing to comply with an order to appear before the court at a pretrial conference to discuss the posture and settlement of the case. Rule 16 of the Federal Rules of Civil Procedure provides for the use of pretrial conferences to formulate and narrow the issues for trial. Pretrial settlement has been used as a device to alleviate overcrowded dockets. The language of Rule 16 does not provide any direction as to whether a court has authority to order litigants who are represented by counsel to appear for pretrial proceedings. The Federal Rules of Civil Procedure are to be liberally construed. Rule 16 is not used as a device to restrict the authority of the district judge in the conduct of pretrial conference. Therefore, allowing the district courts to order represented parties to appear at pretrial settlement conferences represents another application of a judge's authority to preserve efficiency and integrity of judicial practice. The district court did not abuse its discretion to issue an order to attend a pretrial conference. Certain circumstances could arise in which requiring a corporate representative to appear at a pretrial settlement conference would be an abuse of discretion. Here, the facts and circumstances do not warrant such holding. Due to the high stakes of the case at hand, the
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burden of requiring a corporate representative to attend a principal settlement conference was not out of proportion to the benefits to be gained. Further, no objection was made to the magistrate's order prior to the date of the pretrial conference. Appellant was left with only one course of action, he had to comply fully with the order. Thus, the district court did not exceed its authority and discretion to order a representative of Appellant to appear for pretrial settlements. Absent an abuse of discretion, there is no reason to disturb a district court's imposition of sanctions for failure of a party to comply with a pretrial order. Therefore, Appellant violated the district court's Order requiring it to have a corporate representative attend pretrial settlement negotiations and the court did not abuse its discretion by imposing sanctions on the Appellant for failure to do so. Dissent. The Dissent expressed concern that a district court judge's zeal to settle cases may ignore the value of other people's time. There are circumstances when an attorney can represent a party, and it is unnecessary to have a corporate representative. Rule 16 does not authorize a judge to require a represented party to attend a pretrial conference because the rule is clear that only unrepresented party litigants and attorneys may be required to appear. Many clients send their lawyer to negotiate in collective bargaining and merger talks, but is not less qualified to negotiate than a non-attorney representative. The majority decision compels persons who have committed no wrong to come to the court for the opportunity to receive a decision on the merits and then they are sanctioned for their actions. Discussion. The explosion of new settlement devices that has accompanied the Alternative Dispute Resolution movement has directed many courts to adopt other means of promoting settlement, other than such orders requiring settlement negotiations.
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Marek v. Chesny
Marek v. Chesny
Citation. 473 U.S. 1 (1985). Brief Fact Summary. The Supreme Court of the United States granted certiorari to determine resolve a dispute whether a prevailing plaintiff can recover attorney's fees incurred after the settlement offer. Synopsis of Rule of Law. A prevailing party may not recover attorney's fees incurred from the losing party subsequent to an offer of settlement. Facts. Alfred Chesney (Plaintiff) on his own behalf and as administrator of his son's estate, filed suit under 42 U.S.C. 1983 and state tort law against three police officers (Defendants) for killing his adult son. Defendants made a timely offer to settle for $100,000, but Plaintiff did not accept the offer. The case went to trial and Plaintiff was awarded $5,000 on the state law wrongful death claim, $52,000 for the 1983 violation and $3,000 in punitive damages. Plaintiff filed a Request for $171,692.47 in costs, including attorney's fees. This request for attorney's fees included costs incurred after the settlement offer. Defendant opposed the claim relying on Rule 68 of the Federal Rules of Civil Procedure, which shifts the post-offer costs to the Plaintiff. Post-offer costs are all costs incurred subsequent to an offer of judgment when not exceeded by the recovery amount. The district court agreed with Defendants and declined to award Plaintiffs costs incurred after the settlement offer. Plaintiffs appealed and the court of appeals reversed. The Supreme Court of the United States granted certiorari. Issue. Whether attorney's fees incurred by a plaintiff subsequent to an offer of settlement must be paid by the defendant when the plaintiff receives a monetary judgment, which is less than the settlement offer? Held. No. Rule 68 provides that if a timely pretrial offer of settlement is not accepted and the judgment obtained by the offeree is less favorable than the settlement offer, the offeree must pay the costs incurred after the making of the offer. Defendant's offer of settlement was valid even though it lumped damages and costs together, because if not, a Defendant would be unlikely to make settlement offers. This holding does not frustrate Plaintiff's efforts to determine whether Defendants' offers are adequate. Plaintiff is aware of the amount of damages sought. Requiring itemization of damages separate from costs would not in any way require that the plaintiff know in advance whether the judgment at trial will exceed a defendant's offer. The term costs includes attorney's fees, and these fees are to be included for cost purposes under Rule 68. Under Section 1983, Congress expressly
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Marek v. Chesny
provided that costs, included attorney's fees are avoidable to the Plaintiff in such a suit and such fees are subject to the fee shifting provisions of Rule 68. Applying Rule 68 in the context of a Section 1983 action is consistent with the policies in Section 1988, which encourages plaintiffs to bring civil right suits, while Rule 68 encourages settlements. Dissent. The majority's reasoning is inconsistent with the history and structure of the Federal Rules of Civil Procedure. The term costs should be interpreted narrowly in accordance with the definition in 28 U.S.C. 1920. It is not suggested in the limited history of the provision that costs include attorney's fees. The Rules provide that costs may automatically be taxed, which leads one to believe that costs are everyday charges, and that when the Federal Rules of Civil Procedure's intent costs to encompass attorney's fee they do so explicitly. Also, the court can point to no authority suggesting that courts have even viewed the cost shifting provisions of Rule 68 as including attorney's fees. The dissent also argues that the words and phrases of the Federal Rules must be given consistent usage and the drafters of the Federal Rules intended Rule 68 to have a uniform application in all proceedings. The following concerns demonstrate that the term costs should not include attorney's fees. Furthermore, Section 1988 and Rule 68 do not fit smoothly together as argued by the majority. Congress has instructed that attorney's fees be governed by a reasonableness standard, but Rule 68 is not sensitive to these issues. Discussion. This case should be read against the rule that the prevailing party is not entitled to recover attorney's fees from the losing party.
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CHAPTER VIII. Trial
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Beacon Theatres, Inc. v. Westover

Citation. 359 U.S. 500 (1959). Brief Fact Summary. Beacon Theatres, Inc. (Plaintiff) sought by writ of mandamus to review a district court decision to vacate certain orders alleged to deprive it of a jury trial of issues arising out of case brought against it by Fox West Coast Theatres, Inc. (Plaintiff). The United States Court of Appeals for the Ninth Circuit refused the writ, holding that the trial court acted with proper discretion in denying Defendant's request for a jury trial. The Supreme Court of the United States granted certiorari. Synopsis of Rule of Law. Only under the most imperative circumstances can the right to a jury trial of legal issues be lost through prior determination of equitable claims. Facts. Plaintiff asked for declaratory relief against Defendant alleging a controversy arising under the Sherman Antitrust Act and under the Clayton Act, which authorizes suits for treble damages under the Sherman Act. Fox operates movie theatres in California and has been showing films under contracts with movie distributors. These contracts granted it the exclusive right to show first run pictures. After Defendant built a drive-in theatre near Plaintiff's theaters, Defendant notified him that it considered contracts barring simultaneous exhibitions of first run films to be violations of the antitrust laws. Plaintiff's complaint alleged that notification and threat of treble damages constituted duress and coercion which deprived Plaintiff of a valuable property right, the right to negotiate. Unless the Defendant was restrained, the complaint alleged irreparable harm. Plaintiff plead for declaratory relief that clearance between Plaintiff and Defendant is reasonable, and for injunctive relief preventing Defendant from instituting any action under the antitrust laws against Plaintiff out of the controversy alleged in the complaint. Defendant filed an answer, a counterclaim against Plaintiff, and a cross-claim against an exhibitor who had intervened. These denied the threats and asserted there was no substantial competition between the two theatres, the clearances granted were unreasonable, and that a conspiracy existed between Plaintiff and its distributors to manipulate contracts and clearances so as to monopolize first-run pictures in violation of antitrust laws. Defendant demanded a jury trial of the factual issue in the case, but the district court viewed the issues as equitable. The court of appeals stated that the effect of the district court decision was to limit Defendant's opportunity to fully try every issue before a jury. The right to a jury trial applies to treble damage suits under antitrust laws. Issue. Whether a Defendant who seeks both treble damages and equitable relief is entitled to a jury trial? Held. Yes. Judgment of the United States Court of Appeals for the Ninth Circuit is affirmed. A party who is entitled to injunctive relief may have all issues in their case determined by the judge without a jury regardless of whether legal rights are involved. However, a suit in equity cannot justify denying the
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Defendant a trial by jury of all the issues in the antitrust controversy. After the jury rendered the verdict, the judge could have granted permanent injunctive relief. The right to a jury trial is a constitutional one and that discretion is very narrowly limited and must be exercised in such a way as to preserve the jury trial. Therefore, the right to a jury trial of legal issues cannot be lost through prior determination of equitable claims. Dissent. A litigant is entitled to a writ of mandamus to protect a clear constitutional or statutory relief to a jury trial. However, there was no such denial of a right here. When declaratory relief is sought, the right to a jury trial depends upon the basic context in which the issues are presented. The court's opinion does not hold that a court of equity may not determine legal rights. The Federal Rules of Civil Procedure permit the trial of legal and equitable claims in the same proceeding, but expressly affirm the power of a trial judge to determine the order in which claims shall be heard. Discussion. The Seventh Amendment of the United States Constitution provides that the right of trial by jury shall be preserved and no fact tried by a jury shall be otherwise reexamined in any court of the United States. There are two parts to the Amendment. The first provides the circumstances under which a litigant has a right to a jury trial and the other indicates what controls the court may impose upon a jury in a case, which the right is guaranteed.
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Ross v. Bernhard
Ross v. Bernhard
Citation. 396 U.S. 531 (1970). Brief Fact Summary. Plaintiffs brought this derivative action in federal court against the directors of Lehman Brother (Defendants). Synopsis of Rule of Law. The Seventh Amendment guarantees the right to a jury trial in stockholders' derivative actions in which the corporation would be entitled to a jury trial. Facts. Plaintiff's complaint contends that Lehman Brothers controlled the corporation through an illegally large representation on the corporation's board of directors. The corporation's board of directors was accused of converting corporate assets and of gross abuse of trust, bad faith and negligence. Both individual defendants, including Bernhard, and Lehman Brothers (Defendants) were accused of breaches of fiduciary duty. Plaintiffs requested that Defendants account for losses to the corporation and demanded a jury trial on the corporation's claims. On the Motion to Strike Plaintiffs' jury trial demand, the district court held that a shareholder's right to a jury trial was to be judged as if the corporation were itself the Plaintiff. The district court found that only the shareholder's initial claim had to be tried by a jury. The court of appeals reversed holding and held that no jury was available to try any part of it. Issue. Whether the Seventh Amendment guarantees the right to a jury trial in stockholders' derivative actions? Held. Yes. Judgment is reversed. Right to a jury trial extends to those issues in derivative actions when the corporation would be entitled to a jury trial. The Seventh Amendment preserves the right to a jury trial in all suits, which had a right to a jury trial at common law. The Seventh Amendment entitled the parties to a jury trial in actions for damages to a person or property, for libel and slander, for recovery of land, and for conversion of personal property. Common law, however, refused to permit stockholders to call corporate managers to account in actions at law. The Seventh Amendment question of the right to a jury trial depends on the nature of the issue to be tried rather than the character of the overall action. A derivative action has two aspects: the stockholders right to sue on behalf of the corporation, and the claim of the corporation against directors or third parties on which the company could demand a jury trial. The corporation is a necessary party to the action and is the real party in interest. Derivative suits have been described as true class actions. Therefore, the Seventh Amendment preserves the parties' right to a jury trial in a stockholder derivative suit when the corporations and those
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Ross v. Bernhard
against who a corporation pressed its legal claims have the same Seventh Amendment right. Dissent. The majority relies on an ill-defined combination of the Seventh Amendment and the Federal Rules of Civil Procedure. The Seventh Amendment does not extend the right to a jury trial, but preserves the right. There is no constitutional right to a jury trial even where there might have been one had the corporation brought the suit. Discussion. This case demonstrates that procedural innovation can give rise to a right to a jury trial in a case where it would not have been available at common law. The decision in this case cannot be explained by the Federal Rules or the Constitution. According to the Court, this decision can be explained by the overwhelming bias in favor of jury trials in civil actions.
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Curtis v. Loether
Curtis v. Loether
Citation. 415 U.S. 189 (1974). Brief Fact Summary. Curtis (Petitioner) brought a civil rights action under Section 812 of the Civil Rights Act of 1968 (Act) claiming that Loether and others who were white (Respondents) refused to rent an apartment to her because of her race. The district court held that a jury trial was not authorized and denied a jury trial. The United States Court of Appeals for the Seventh Circuit reversed on the jury trial issue. Synopsis of Rule of Law. The Seventh Amendment entitles either party to demand a jury trial in a civil rights action. Facts. Petitioner brought a civil action suit against Respondents for refusing to rent an apartment to Petitioner based on her race. Petitioner contends that Respondents' action constituted a violation of Section 804(a) of the Act. The complaint sought only injunctive relief and punitive damages. A claim for compensatory damages was later added. Respondents filed a demand for a jury trial, which the district court denied. The court of appeals reversed the decision based on the jury trial issue. Issue. Whether the Civil Rights Act of 1968 or the Seventh Amendment requires a jury trial upon demand of one of the parties in an action for damages and injunctive relief? Held. Yes. Judgment is affirmed. The Seventh Amendment entitles either party to demand a jury trial in an action for damages in federal court under the Civil Rights Act of 1968. The right to a jury trial applies to actions enforcing statutory rights. The Act "requires a jury trial upon demand, if the statute creates legal rights and remedies, enforceable in an action for damages in courts of law." In the instant case, the damages action under Section 812 is an action to enforce legal rights within the meaning of the right to a jury trial. The damages action is basically an action in tort, which is a recognized action at common law. Further, the traditional relief sought is the traditional form offered in the court of law. When Congress provides for enforcement of statutory rights in an ordinary civil action in the district courts, a jury trial must be available if the action involves rights and remedies of the sort typically enforced by law. Petitioner's policy argument is that a jury trial may delay the disposition of damages actions, and that there is the possibility of jury prejudice. The court found these arguments to have merit. However, these considerations are insufficient to overcome the command for a jury trial in the Seventh Amendment. Therefore, the Defendants' demand for jury trial should be granted.
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Curtis v. Loether
Discussion. It is important to note that the Defendants were the proponents of the jury trial, while the Plaintiffs opposed it. The right to a jury trial extends beyond that which were previously available in common law forms of action. The court held that "[t]he Seventh Amendment applies to actions enforcing statutory rights, and requires a jury trial upon demand, if the statute creates legal rights and remedies, enforceable in an action for damages."
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Tull v. United States

Citation. 481 U.S. 412. (1987). Brief Fact Summary. The Federal Government sued a real estate developer for a violation of the Clean Water Act (the Act), a law allowing the Government to recover civil penalties and request injunctions. The Petitioner, Tull (Petitioner), asked for a jury trial on the civil penalties issue and was denied. Synopsis of Rule of Law. There is a right to a jury trial for actions that determine liability for civil penalties, but a judge may determine such amounts. Facts. The Federal Government brought suit against the Petitioner, a real estate developer, for dumping fill material on wetlands in Virginia in violation of the Act. The Government claimed that Petitioner dumped on three sites and a waterway. Section 1319 of the Act listed remedies in the form of injunctions and civil penalties. The Government sought both remedies against the Petitioner; however, when the complaint was filed most of the property had been sold, except for a small portion of land, thereby making imposition of the injunction impractical. The Government sought $22,890,00 in civil penalties. The District Court denied Petitioners request for a jury trial and found for the Government, though drastically reduced the amount of the civil penalties. The Court of Appeals affirmed on the issue of Petitioners right to a trial by jury. Issue. Whether the Seventh Amendment of the United States Constitution (Constitution) guaranteed Petitioner a right to a jury trial on both liability and amount of penalty in an action instituted by the Federal Government seeking civil penalties and injunctive relief under the Act. Held. The Seventh Amendment of the Constitution required that the Petitioners demand for a jury trial be granted to determine his liability, but that the trial court and not the jury could determine the amount of penalty in any. Court of Appeals judgment reversed and remanded for further proceedings consistent with this opinion. Concurrence. Supreme Court Justice Antonin Scalia (J. Scalia) and John Paul Stevens (J. Stevens) concurred that in cases where a jury trial determines liability on civil penalties, a jury should also determine the amounts as well. Discussion. The Court examined this case in two parts. The first being to determine whether a statutory action was more similar to cases that were tried in a court of equity or more similar to cases tried in a court of law. In order to do so it had to examine the nature of the action and the remedy sought. The Court reasoned, if a legal claim is joined with an equitable claim, the right to a jury trial on the legal claim, including all the issues common to both claims remains intact and the right cannot be abridged by characterizing the legal claim as incidental to the equitable relief sought. Thus, the Petitioner had a right to a jury trial to determine his liability on the legal issues.
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The second part focused on whether Congress, consistent with the Seventh Amendment of the Constitution, could authorize judges to assess civil penalties, thereby determining whether Petitioner had a constitutional right to a jury trial on that issue. In the United States, most actions that deal with civil penalties seek the amounts that are fixed by Congress. Because Congress fixes these amounts, there is no right to ask for a jury to do so. And since Congress, itself may fix the civil penalties, it may delegate that determination to trial judges.
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Teamsters Local No. 391 v. Terry

Citation. 494 U.S. 558 (1990). Brief Fact Summary. Teamsters Local No. 391 (Plaintiffs) requested a jury trial in an action claiming that the Union (Defendant) breached a collective bargaining agreement. The United States Court of Appeals for the Fourth Circuit affirmed the trial court holding that the Seventh Amendment entitled Plaintiffs to a jury trial. The Supreme Court of the United States granted certiorari. Synopsis of Rule of Law. A party has the right to jury trial on all issues present in their action because the remedy of back pay in a duty of fair representation action is legal in nature. Facts. McLean Trucking Company and the Chauffeurs, Teamsters and Helpers Local Union No. 391 were parties to a collective bargaining agreement. Plaintiffs, Teamsters Local No. 391, were employees of McLean Trucking Company, they object to various employment practices used by McLean Trucking Company (Defendant) that impaired their seniority rights, alleging breach of the collective bargaining agreement. Plaintiffs filed a grievance with the union and the grievance committee. When their seniority rights were impaired again, they filed another grievance, which was refused on the ground that the relevant issues had been determined in the prior proceeding. Plaintiffs filed an action in district court alleging that McLean breached the collective bargaining agreement in violation of Section 301 of the Labor Management Relations Act, and that the Union had violated its duty of fair representation. Plaintiffs requested a permanent injunction requiring the Defendants to cease their illegal acts and to reinstate them to their proper seniority status and sought compensatory damages for lost wages and health benefits. McLean filed for bankruptcy and the action against it was dismissed. Plaintiffs request a jury trial and the Union moved to strike the jury demand on the ground that no right to a jury trial exists in a duty of fair representation suit. The United States Court of Appeals for the Fourth Circuit affirmed the trial court holding that the Seventh Amendment entitled Plaintiffs to a jury trial for their claim for monetary relief. Issue. Whether an employee who seeks relief in the form of back pay for a union's alleged breach of its duty of fair representation has a right to a jury trial? Held. Yes. Judgment is affirmed. In order to determine whether a particular action will resolve legal rights, an examination of the nature of the issues involved and the remedy sought must be conducted. Plaintiffs' action against Defendants for breach of a union's duty of fair representation encompasses both legal and equitable issues. The legal issues in this case are comparable to a breach of contract claim. The
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equitable issues are that of the injunctive relief sought by the Plaintiff to prevent Defendants from continuing to perform their illegal acts. The only remedy sought by the Plaintiff is compensatory damages for back pay and benefits. An award of money damages is a form of legal relief. Thus, the relief sought by the Plaintiff is legal in nature rather than equitable. Therefore, when examining both parts of the Seventh Amendment inquiry, the plaintiffs are entitled to a jury trial on all issues presented in this case. Dissent. The dissent disagreed with the analytic innovation of the court that identification of the trust action as a model for the duty of fair representation action is insufficient to decide the case. The court must adhere to the historical test in determining the right to a jury trial because it is required by the language of the Seventh Amendment. Concurrence. The Plaintiff seeks a remedy that is legal in nature. The Seventh Amendment entitles Plaintiffs to a jury trial on their duty of fair representation claims. However, Seventh Amendment claims should be determined on the basis of the relief sought. If the relief is legal in nature then the parties have a constitutional right to a trial by jury. By getting rid of the other prong of the Seventh Amendment inquiry, we save the courts from needless an intractable excursions into unfamiliar territory. The concurrence believed that the court made it unnecessarily difficult by exaggerating the importance of finding a precise common law similarity to the duty of fair representation. By stressing the importance of finding an exact similarity the court has diminished the utility of looking for any similarity. Discussion. The test used by the majority is enumerated in Tull v. Untied States, 481 U.S. 412 (1987). A right to a jury trial exists in actions involving legal issues. In order to determine whether a particular action will resolve legal rights, an examination of the nature of the issues involved and the remedy sought must be conducted. Here, the court determined that Plaintiffs were seeking monetary damages, which is legal relief, as opposed to equitable relief. Therefore, Plaintiffs were entitled to a jury trial.
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Granfinanciera, S.A. v. Nordberg

Citation. 492 U.S. 33 (1989). Brief Fact Summary. Granfinanciera, S.A. (Petitioners) appeal the judgment of both the Court of Appeals for the Eleventh Circuit and the District Court, which affirmed the judgment against Petitioner without discussing Petitioners' claim that they were entitled to a jury trial. Synopsis of Rule of Law. A person who has not submitted a claim against the bankruptcy estate has a right to a jury trial when sued by the trustee in bankruptcy to recover damages for a fraudulent monetary transfer. Facts. The Chase & Sanborn Corporation filed a petition for reorganization under Chapter 11 in 1983. A plan of reorganization was vested in Nordberg (Respondents) the trustee in bankruptcy. Respondents filed suit against Petitioners, Granfinanciera, S.A., alleging that Defendant had received $1.7 million from Chase & Sandborn's corporate predecessor within one year of the date its bankruptcy petition was filed. Respondents sought to avoid what it alleged were constructive and actually fraudulent transfers and to recover damages, costs and expenses. The district court referred the proceedings to the bankruptcy court. Respondents served a summons on Petitioners. In their answer to the complaint, both Petitioners requested a trial by jury on all triable issues. The bankruptcy judge denied the requests. Following a bench trial, the court dismissed with prejudice, Respondent's actual fraud claim, but entered judgment for Respondents on constructive fraud claim in the amount of $1,500,000 against Granfinanciera and $180,000 against Medex. The district court affirmed along with the court of appeals. Issue. Whether a person who has not submitted a claim against bankruptcy estate has a right to a jury trial when sued by the trustee in bankruptcy to recover an allegedly fraudulent monetary transfer? Held. Yes. Judgment is reversed and remanded for further proceedings consistent with this opinion. The Seventh Amendment entitles persons who have not submitted a claim against a bankruptcy estate to a jury trial. In order to determine that a party is entitled to a jury trial under the Seventh Amendment, the court must first compare statutory action to common law actions brought in the court of England. The court must also examine the remedy sought and determine whether it is legal or equitable in nature. Actions to recover fraudulent transfers were often brought in common law in the court of England and the actions were conducted before juries. Second, in the instant case, the nature of the relief Respondents seeks strongly supports the finding that the right he invokes is legal rather than equitable.
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The question is whether the Seventh Amendment confers a right to a jury trial in the face of Congress' decision to allow a non-Article II tribunal to adjudicate the claims against them. Providing jury trials in fraudulent conveyance actions may impede swift resolution of bankruptcy proceedings and increase Chapter 11 reorganizations. However, these considerations are insufficient to overcome the right to a jury trial. The court here does not decide whether the current jury trial provision permits bankruptcy courts to conduct jury trials in fraudulent conveyance actions. The court however does determine that the Seventh Amendment entitles Petitioners to the jury trial they requested. Dissent. Respondent's action would have sounded in equity in England at common law. The majority's decision may threaten the efficacy of bankruptcy courts and the Seventh Amendment should not be used as a tool to reach this result. Concurrence. The concurrence disagrees with the majority. The federal government needs to be a party for a case to revolve around public rights. Discussion. The majority in this case states that it must give deference to Congress' judgment on constitutional issue, but denies the existence of evidence demonstrating that Congress had exercised any in the present case.
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Galloway v. United States
Galloway v. United States

Citation. 319 U.S. 372, 63 S.Ct. 1077, 87 L.Ed. 1458 (1943). Brief Fact Summary. Galloway (Petitioner) brought suit in order to prove that he was eligible for insurance benefits as a result of total and permanent disability by reason of insanity. Petitioner contends that the total and permanent disability occurred before his policy lapsed for non-payment of premiums. In order to receive premiums under the policy, Petitioner was required to prove that his disability began prior to May 31, 1919, and lasted through the time of trial. Although the Petitioner produced both witnesses and evidence that he was insane during portions of the required period, he was not able to produce any evidence that he was disabled for the entire period as required. Synopsis of Rule of Law. The power of a judge to grant a directed verdict does not violate the Seventh Amendment right to trial by jury. Facts. In order to receive premiums under the policy, Petitioner was required to prove that his disability began prior to May 31, 1919, and lasted through the time of trial. Although the Petitioner produced both witnesses and evidence that he was insane during portions of the required period, he was not able to produce any evidence that he was disabled for the entire period as required. In fact, the Petitioner introduced no evidence whatsoever, as to his disability from the year 1925 to1930, and provided little more than speculation as to his disability from the year 1922 to 1925. The district court directed a verdict for the United States Government (Respondent). The United States Court of Appeals for the Ninth Circuit affirmed. Both courts decided that the evidence presented at trial was legally insufficient to sustain a verdict for Petitioner. Petitioner appealed. Issue. At issue in this case is whether the judicial use of a directed verdict offends the Seventh Amendment right to trial by jury. Held. The Seventh Amendment preserves only the most fundamental elements of the system of trial by jury. Courts do have the power to direct a verdict for insufficiency of the evidence. The Supreme Court of the United States found that Petitioner failed to account for his whereabouts, condition, or activities for several years during the time period in question. The statute requires that Petitioner's incapacity be "total and permanent." The Court held that Petitioner did not produce sufficient evidence for the case to go to the jury. Therefore, it affirmed the judgment of the court of appeals. Dissent. The practice of issuing a direct verdict should be limited in scope. A verdict should be directed only when, without weighing the credibility of the witnesses, there can be no difference of opinion regarding the factual issue in question. Discussion. Juries should not be allowed to draw inferences from facts that are not introduced into evidence, especially when these inferences would be favorable to the party who has failed to introduce the evidence.
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Lavender v. Kurn
Lavender v. Kurn
Citation. 327 U.S. 645, 66 S.Ct. 740, 90 L.Ed. 916 (1946). Brief Fact Summary. Petitioner, the administrator of the estate of L.E. Haney (Haney), brought suit under the Federal Employers' Liability Act (Act) against the trustees of the St. Louis-San Francisco Railway Company and the Illinois Central Railroad Company (Respondents). Under the act, recovery is permitted for personal injuries to an employee of a railroad engaged in interstate commerce. Synopsis of Rule of Law. An appellate court's function in reviewing a jury verdict is exhausted when an evidentiary basis for that jury's decision becomes apparent, it being immaterial that the court might draw a contrary inference or feel that another conclusion is more reasonable. Facts. Haney was a switch operator for a train company, who was found dead on train tracks. The Petitioner presented evidence that Haney was killed as a result of a mail hook hanging loosely down on the outside of a mail car. Under the theory advanced by the Petitioner, recovery would be allowed under the Act. Respondent's theory was that Haney was murdered, pointing to the fact that his empty wallet was found near his body. Under Respondent's theory, no recovery would be allowed under the Act. The jury returned a verdict for Petitioner. The Supreme Court of Missouri vacated the jury verdict. It found that there was insufficient evidence for the conclusion to find for Petitioner. Issue. Was there a sufficient evidentiary basis from which the jury could have sustained a verdict in favor of the Petitioner? Held. There was sufficient evidence of negligence on both the part of the St. Louis-San Francisco trustee and the Illinois Central trustee to justify the submission of the case to the jury and to require appellate courts to abide by the verdict rendered by the jury. There was evidence presented in which a jury could infer that the end of the mail hook struck Haney in the back of the head. This inference was not unreasonable because Haney fell forward toward the main track so that his head was five and one-half feet north of the rail. The inferences made were not so unreasonable, so as to remove the case from the jury. Discussion. In this case there was evidence tending to show both that it was impossible for the hook to strike Haney and that it might reasonably be inferred that Haney was murdered. Because there was a reasonable basis in the record for the jury's conclusion that the hook struck Haney, it would be an undue invasion of the jury's function for an appellate court to weigh the conflicting evidence and arrive at a conclusion opposite the one reached by the jury.
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Guenther v. Armstrong Rubber Co.
Guenther v. Armstrong Rubber Co.

Citation. 406 F.2d 1315 (Third Circuit, 1969). Brief Fact Summary. Guenther (Plaintiff) was a mechanic, employed by Sears Roebuck & Company (Sears) in Pittsburgh, Pennsylvania. Plaintiff was injured while installing summer tires on an automobile. The characteristics and identification of the tire that caused the injuries was the subject of an appeal to the Supreme Court of the United States. Synopsis of Rule of Law. The fact that there is disagreement between one party and his witnesses concerning an essential element of a case is not enough for directed verdict to issue. Facts. After Plaintiff was injured, Mr. Small, the Sears Service Center Manager, had the tire which caused Plaintiff's injuries removed to his office. Later, at trial, Plaintiff testified that the tire, which caused his injuries was a "black wall" tire. However, Mr. Small testified that the tire he removed and placed in his office was a "white wall" tire. Therefore, the district court granted a directed verdict in favor of Defendant. Issue. Should the directed verdict granted by the lower court be allowed to stand? Held. The directed verdict issued by the district court should be reversed and the case remanded for a new trial on the merits. Discussion. Plaintiff's contention that the directed verdict should be overturned as a result of evidence that the Defendant made between 75% and 80% of the tires the Sears store had for sale has no merit. However, as a result of the conflicting testimony between the Plaintiff and his witness, it should not be a function of the court to conclude Plaintiff's cause of action by directing a verdict against him.
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Ahern v. Scholz
Ahern v. Scholz
Citation. 85 F.3d 774 (First Circuit, 1996). Brief Fact Summary. This case involves a breach of contract action between a band manager, Ahern (Plaintiff) and a successful musician from the band Boston, Scholz (Defendant). At issue is a series of agreements entered into between the two parties regarding Boston's first three albums. Synopsis of Rule of Law. An appellate court will reverse a denial of a motion for new trial because the verdict was against the weight of the evidence, only if the district court judge committed an abuse of discretion. So long as a reasonable basis existed for the jury's verdict, an appellate court will not disturb the district court's ruling on appeal. Facts. Plaintiff filed suit against Defendant for alleged failure to pay royalties due from one of the musician's albums, in violation of one of the agreements previously entered into between the parties. Defendant asserted various counterclaims against Plaintiff, including a breach of one of the previous agreements between the parties. Issue. At issue is whether the appellate court should reverse the decision of the district court denying Defendant's Motion for a New Trial. Held. The evidence presented in the record clearly establishes that the jury had a reasonable basis for concluding that Plaintiff did not substantially breach his agreement with Defendant. As a result, the appellate court found that the jury's verdict was not against the clear weight of the evidence and the district court did not abuse its discretion in its findings. Discussion. The position of the appellate court in reviewing the denial of a motion for a new trial should not be to assess the credibility of the witnesses and weight of their testimony. Rather, the function of the appellate court should be to isolate the factual basis for the trial court's ruling to determine whether a reasonable basis existed for that decision.
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Dimick v. Schiedt
Dimick v. Schiedt
Citation. 293 U.S. 474, 55 S.Ct. 296, 79 L.Ed. 603 (1935). Brief Fact Summary. Action brought by Peter Schiedt (Plaintiff) originally in the District Court for the District of Massachusetts to recover damages for personal injuries caused by the alleged negligent operation by David G. Dimick (Defendant) of a motor vehicle upon a highway in Massachusetts. Synopsis of Rule of Law. In the case of an excessive verdict, it is within the power of the trial court to grant Defendant's Motion for a New Trial unless Plaintiff remits the amount deemed to be excessive. However, the trial court is without the power to condition the allowance of Plaintiff's Motion for a New Trial upon the refusal of Defendant to consent to an increase in the amount of damage. Facts. After trial in the district court, the jury returned a verdict in the amount of $500. Respondent moved for a new trial on the grounds that the verdict returned was contrary to the weight of the evidence presented at trial and that the damages awarded were insufficient. The district court ordered a new trial on the grounds that the damages awarded were insufficient. However, in its order, the district court allowed Petitioner the option of paying the increased sum of $1,500 in damages and foregoing a new trial. Petitioner agreed to this increase, but Respondent did not consent to this modification and appealed. The United States Court of Appeals for the First Circuit reversed this decision. Issue. Whether the district court could increase, either absolutely or conditionally, an award amount fixed by the verdict of a jury. Whether a new trial should be granted based upon the increased award given by the court following the jury verdict. Held. The decision by the court of appeals reversing the district court is upheld. The action by the district court violated the Plaintiff's Seventh Amendment right to trial by jury when the district court modified the jury's award with the consent of the Defendant only. Dissent. The judgment of the court of appeals should be reversed because the district court has an implied authority to establish the upper and lower limits of any award. Discussion. The court makes a distinction between additur and remittitur. In remittitur, the trial judge offers a plaintiff who has received an excessive jury award the option of reducing the award or submitting to a new trial. Conversely, additur involves the situation in which a defendant is given the option of adding to the amount that the jury has awarded. In essence, the Supreme Court of the United States allows remittitur because the court is not substituting its judgment for that of the jury's. However, the Court will not allow additur because an increase by any court of a jury verdict would be allowing the court to perform both the functions of judge and jury.
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Whitlock v. Jackson
Whitlock v. Jackson
Citation. 754 F. Supp. 1394 (S.D. Ind. 1991). Brief Fact Summary. This is an action brought by Eileen Whitlock (Plaintiff) as the administratrix of the estate of her late brother, Richard Gaisor (Gaisor). Plaintiff alleges that the Defendants, in the course of their arrest of Gaisor inflicted serious injuries, which eventually led to his death. Synopsis of Rule of Law. The principle of waiver, which is found in Rule 49(b) of the Federal Rules of Civil Procedure, cannot also be found in Rule 49(a). Facts. After trial, the jury returned a verdict in favor of the Plaintiff in the amount of $29,700.00, after finding the Defendants liable for battery. The Plaintiff now seeks an additur to that amount due to alleged inconsistencies in the jury's answers to special interrogatories. Issue. Did the Plaintiff's failure to object to the alleged inconsistencies in the jury's answers to special interrogatories constitute a waiver, thus preventing review? If no waiver occurred, are there in fact inconsistencies in the special interrogatories, which would require a new trial? Held. Plaintiff has not waived the right to challenge the alleged inconsistencies in the special interrogatories. The jury was given a special verdict form rather than a general verdict form and, as a result, Rule 49(a) applies. Rule 49(a) does not require a party to object to the inconsistencies in order to preserve his right to challenge the inconsistencies in a subsequent motion or on appeal. There are no inconsistencies in the special interrogatories that would require a new trial. There are legitimate reasons why the jury chose to award damages for battery and punitive damages, but not for constitutional violations. Since, the jury's rationale can be reconciled, the court will not conduct a further inquiry. Discussion. Although the Plaintiff did not waive the right to object to any inconsistencies in the special interrogatories, the Plaintiff's Motion for a New Trial was denied. The basis for this decision resides in the fact that the jury's answers to the special interrogatories were consistent. As a result, the court would, if it chose to review the decision, be acting as the jury. This double role cannot be assumed by the court.
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People v. Hutchinson
People v. Hutchinson
Citation. 71 Cal.2d 342, 78 Cal.Rptr. 196, 455 P.2d 132 (1969). Brief Fact Summary. Hutchinson (Defendant) was convicted of possession of marijuana for sale. On appeal, Defendant argued that the trial court committed prejudicial error in refusing to consider a juror affidavit detailing misconduct on the part of the court's bailiff. Synopsis of Rule of Law. Jurors are competent witnesses to prove objective facts to impeach a verdict under Section 1150 of the Evidence Code. Facts. Within the affidavit, the juror certified that on multiple occasions, members of the jury felt rushed by the bailiff into reaching a verdict. The members of the jury were subject to both an angry tone and angry words from the bailiff concerning the length of time the jury was taking to deliberate. The juror also certified that, in his opinion, he agreed to a compromise verdict in order to prevent keeping the jury in deliberations overnight. Issue. Can members of a jury be allowed to impeach their own verdict? Held. The remarks that were made by the bailiff, combined with their tone and delivery constitute statements and conduct that are likely to have influenced the verdict improperly. As a result, the affidavit of the juror is admissible to prove the statements and conduct of the bailiff. Furthermore, the lower court's order denying the Motion for New Trial is vacated. Discussion. The scope of Section 1150 is quite limited. The only improper influences that may be proved under this section to impeach a verdict are those open to sight, hearing, and the other senses, and thus open to corroboration. In this case, because the bailiff's tone and delivery can be found to adhere to these limited categories, the juror affidavit is admissible.
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CHAPTER IX. Choosing The Forum-Geographical Location
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Pennoyer v. Neff
Pennoyer v. Neff
Citation. 95 U.S. (5 OTTO) 714, 24 L.Ed. 565 (1877). Brief Fact Summary. This case arises from the initial action taken by J.H. Mitchell (Plaintiff) against Pennoyer (Defendant) in Oregon, for the alleged nonpayment of legal fees. A default judgment was entered against Pennoyer, a nonresident of Oregon, after notice by publication. The second action is a suit by Pennoyer (Plaintiff) to recover possession of a tract of land, which Neff (Defendant) acquired under a sheriff's deed, made upon sale of property on execution issued upon a judgment recovered against Pennoyer in the prior action. Synopsis of Rule of Law. A court can enter a valid judgment in personam when jurisdiction has been obtained by personal service of process in the state, no matter how briefly the defendant was present within the state. Facts. After filing the initial suit, Mitchell submitted an affidavit that stated that Neff was a resident of the State of California. As a result of that affidavit, the Circuit Court of the United States for the District of Oregon allowed Mitchell to serve notice to Neff by publication once a week for six weeks in a paper of general circulation in Multnomah County, Oregon. After publication, Mitchell's Judgment by Default was entered againt Neff. As a consequence, Pennoyer's land, which was located in Oregon, was sold to Neff at a sheriff's sale. Issue. Whether a state may properly exercise personal jurisdiction over an individual defendant, who is not present or available within the state to be personally served, if that individual defendant owns property within the boundaries of the forum state? Held. No. A state may properly exercise jurisdiction over the property within its borders. However, in this case, the property was foreclosed against in order to satisfy a personal judgment against a nonresident debtor. When the object of an action is to determine the rights of a nonresident debtor in a proceeding in personam, seizure of the property in question does not satisfy the Fourteenth Amendment's requirement of notice to the defendant. Discussion. The Supreme Court of the United States distinguishes in personam jurisdiction from in rem jurisdiction. A judgment is in personam when it makes a defendant personally liable. As such, the judgment is personal to the defendant. Alternatively, in rem jurisdiction focuses on property, and the mere physical presence of property within the state allows the court to adjudicate the rights that any individual holds in the property in question, no matter if those individuals are located within, or ever physically come to, the adjudicating state.
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Hess v. Pawloski
Hess v. Pawloski
Citation. 274 U.S. 352, 47 S.Ct. 632, 71 L.Ed. 1091 (1927). Brief Fact Summary. Plaintiff sued Defendant, a resident of Pennsylvania, for injuries that occurred in a car accident in Massachusetts. A Massachusetts statute stated that driving through Massachusetts constitutes implied consent to have the state registrar accept service of process for non-residents, provided a copy of the summons was sent to the defendant. Defendant objected for lack of personal jurisdiction and eventually appealed a verdict in favor of Plaintiff. Synopsis of Rule of Law. States can require that motorists give implied consent to service of process on an agent within the state. Facts. Pawloski (Defendant) is a resident of Pennsylvania. In Massachusetts, Hess (Plaintiff) sued Defendant, alleging that Defendant negligently and wantonly drove on a public highway in Massachusetts. Under the Massachusetts statute, by driving on a Massachusetts highway, a nonresident-motorist designates the state registrar as her lawful attorney who may be served with process in relation to a cause of action arising out of the non-residents use of the highway, provided that notice of such service be sent to the Defendant. The service of process was made in compliance with the statute, but no personal service or attachment of property was made to Defendant. Defendant filed a motion to dismiss arguing that the statute violated the Due Process Clause of the 14th Amendment to the U.S. Constitution. The motion to dismiss was denied by the lower court, who stated that statute was valid exercise of police power. There was a subsequent verdict for Plaintiff. D appealed. Issue. For purposes of claims arising out of motor vehicle accidents or collisions on state highways, does a state law that makes driving on state highways implied consent to the appointment of the registrar as one who may be served all lawful processes violate the due process clause of the 14th amendment? Held. No. Judgment affirmed. a. The general rule of Pennoyer v. Neff, 95 U.S. (5 Otto) 714, 24 L.Ed. 565 (1877), is that process cannot run to one state where the person served is domiciled in another other state. Notice sent to the party outside the state is unavailing to give jurisdiction. b. The state has a public interest to protect all those who use its public highways. Since it has the power to regulate its highways, this power extends to nonresidents as well as residents. The relevant statute only confers specific jurisdiction over causes of action arising from use of the highways, and thus does not make hostile discrimination against nonresidents. Implied
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Hess v. Pawloski
appointment is not substantially different from formal appointment so far as due process is concerned. Discussion. The Courts opinion shows that the states interest in protecting its residents against auto accidents between a resident and a non-resident occurring within the state necessitates the long-arm statute at issue.
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International Shoe Co. v. Washington

Citation. 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Brief Fact Summary. Suit brought within the State of Washington against International Shoe Company (Appellant), a Delaware corporation. Appellant had a principal place of business in St. Louis, Missouri and engaged in the manufacture and sale of shoes and other footwear. The suit sought to recover unpaid contributions to the state unemployment compensation fund. Synopsis of Rule of Law. In order to subject a defendant to a judgment in personam, if he is not present within the territory of the forum, he must have certain minimum contacts with the forum such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Facts. Appellant did not maintain an office within the State of Washington. The corporation employed between eleven and thirteen salespersons in the state, under the direct supervision and control of managers located in St. Louis. The salespeople resided in Washington and their principal activities were confined to that state. The salespeople received commissions from their sales with Washington. Appellant filed a Motion to Set Aside the Order and Notice of Assessment of Unemployment because service on Appellant's salesman was not proper. It also contended that it was not a corporation in Washington, it was not doing business in that state, and it had no agent in that state to accept service, nor did it furnish employment within the meaning of the statute. The motion was denied, and both the Superior Court and the Supreme Court of Washington affirmed the decision. Issue. Whether a foreign actor or corporation has, by its merely conducting business within a forum state, availed itself to suit within that forum state? Held. Yes. Solicitation within a state by the agents of a foreign corporation plus some additional activities render a foreign corporation amenable to suit within the forum state to enforce an obligation arising out of its activities within the forum state. In this case, Appellant's activities within Washington were systematic and continuous within the years in question. These activities resulted in a large volume of business. Further, Appellant received the benefits and protections of the laws of Washington. As a result, the suit against Appellant within the state does not involve an unreasonable or undue procedure. Discussion. In determining whether such minimum contacts exist, a court will look at two factors: sufficient minimum contacts and notice. International Shoe requires that a defendant have such minimum contacts with the forum state that exercise of jurisdiction over the defendant would be fair and reasonable. Under this analysis, a court will look to whether both purposeful availment and foreseeability exist. Under the foreseeability prong of the minimum contacts analysis, it must be
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foreseeable that the defendant's business within the forum makes it amenable to suit within that forum. In addition, under the purposeful availment prong, the defendant's minimum contacts with the forum state must arise from non-accidental contact. In addition to the minimum contacts analysis, due process also requires that a reasonable effort be used to notify the defendant of a pending lawsuit so that it has an opportunity to appear and be heard.
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McGee v. International Life Insurance Co.
McGee v. International Life Insurance Co.

Citation. 355 U.S. 220 (1957). Brief Fact Summary. A California resident and the beneficiary of a life insurance policy, sued an insurance company when the company failed to pay following the death of the insured. Synopsis of Rule of Law. A state courts jurisdiction satisfies due process when it is based on a contract with substantial connection with that state. Facts. In 1944, Lowell Franklin, a resident of California, purchased a life insurance policy form an insurer subsequently bought by Defendant International Life Insurance Co., who then mailed a reinsurance certificate to Franklin in California offering to insure him. Franklin accepted the offer and paid premiums by mail from his California home to Defendants office in Texas until his death in 1950. When the beneficiary, Plaintiff McGee, notified Defendant of Franklins death, they refused to pay. Neither the original insurer nor respondent ever had any office or agent in California. Issue. Whether a non-resident corporation is subject to jurisdiction in a state in which it never had any agent or office, merely because it was a party to a contract with a resident of the state. Held. No. The Supreme Court of the United States ruled that the Due Process clause did not preclude the California court from entering a judgment binding on Defendant. The Supreme Court found that it is sufficient for purposes of due process that the suit was based on a contract that had substantial connection with California. A state has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims. Discussion. The Supreme Court, in considering fact the contract was delivered in California, the premiums were mailed from there and the insured was a resident of California when he died, combined with the recognition that modern transportation and communication have made it much less burdensome for a party sued to defend themselves in a state where they conduct business, found that it did not violate just and fair play for the California court to enter a binding agreement on International Life. Moreover, the Court reasoned that California residents would be at a severe disadvantage if they had to leave their own state to obtain payment from their insurance company.
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World-Wide Volkswagen Corp. v. Woodson

Citation. 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed. 490 (1980). Brief Fact Summary. Harry and Kay Robinson (Respondents) brought an action in Oklahoma against the World-Wide Volkswagen Corporation (World-Wide) and Seaway under a product liability theory. Synopsis of Rule of Law. Under the minimum contacts analysis provided by International Shoe, foreseeability, without notice and purposeful availment, is not a sufficient benchmark for personal jurisdiction. Facts. The Respondents purchased a new Audi from Seaway Volkswagen in Massena, New York, in 1976. They moved from New York, where they had resided at the time of purchasing their automobile, to Arizona. As they traveled through Oklahoma, another vehicle struck the Respondents' car in the rear, causing a fire, which severely burned Kay Robinson and her two children. The Respondents subsequently brought a product liability action in the District Court for Creek County, Oklahoma against Audi, World-Wide Volkswagen and Seaway (Petitioners). World-Wide is incorporated in New York and has its principal office there. Seaway is a retail distributor for World-Wide, which is incorporated in New York, and has its principal office there. Neither World-Wide nor Seaway sold any vehicles in Oklahoma. Issue. Whether the Due Process Clause of the Fourteenth Amendment is violated when an Oklahoma court exercises in personam jurisdiction over a nonresident automobile retailer and its wholesale distributor in a products liability action, when the Defendant's only connection with Oklahoma is the fact that an automobile sold in New York to New York residents became involved in an accident in Oklahoma? Held. An action against both Petitioners cannot be maintained in Oklahoma. Petitioners do not conduct business in Oklahoma, and they do not avail themselves of the privileges and benefits of Oklahoma law. Also, neither Petitioner solicits any business within the state. Any connection between Petitioners' product and the forum state was merely an isolated occurrence, due to the unilateral activity of the Respondents. Dissent. Dissents were offered by Justice Marshall and Justice Brennan. Justice Marshall: Certain industries, such as the automotive industry, do not lend themselves to being structures as to avoid suit in foreign jurisdictions. Justice Brennan: The majority accepts the fact that states may exercise jurisdiction over a distributor that indirectly delivers its products into the stream of commerce knowing that the goods will be used in the forum state. Justice Brennan does not understand how the majority differentiates
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that situation from this case. In this case, Respondents used the automobile as it was meant to be used, and drove it out of the state. Discussion. This case highlights the fact that securing personal jurisdiction over any defendant will be difficult when there are no facts pointing to an effort by the Defendant to purposefully avail itself of the benefits of the laws of the forum state.
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Burger King Corp. v. Rudzewicz

Citation. 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). Brief Fact Summary. John Rudzewicz (Defendant) was a resident of Michigan, who entered into a franchise agreement with the Burger King Corporation (Plaintiff), a Florida corporation. Plaintiff brought suit when Defendant was unable to make timely monthly royalty payments in accordance with the franchise agreement. Synopsis of Rule of Law. When there is a substantial and continuing relationship with the forum state as well as fair notice received, jurisdiction is proper over a nonresident defendant. Facts. When Defendant failed to timely provide the royalty payments per the franchise agreement, Plaintiff brought a diversity action in Florida. Plaintiff served the Defendant in Michigan under the Florida Long-Arm Statute. Plaintiff alleged that Defendant had breached their franchise obligations, requesting damages and injunctive relief. Defendants claimed that since the was a Michigan resident, and Plaintiff's claim did not arise in Florida, the district court lacked personal jurisdiction over him. However, the district court held that it did have personal jurisdiction over Defendant, pursuant to its long arm statute, which extends to any person, whether or not a resident of the state, who breaches a contract in the state by failing to perform required acts pursuant to the contract. The district court entered judgment for the Plaintiff. The United States Court of Appeals for the Eleventh Circuit reversed, holding that jurisdiction in Florida would violate fundamental fairness under the due process clause. Issue. Can a contract between a nonresident defendant and a plaintiff from the forum state provide a contact sufficient to satisfy International Shoe's minimum contact analysis? Held. Yes. The Supreme Court of the United States reversed the court of appeals decision. Plaintiff can maintain an action against the Defendant within Florida. Although no true physical ties to the Florida exist, the dispute grew directly out of a contract that had a substantial connection with the state. The Defendant availed himself of the forum state by subscribing to the long-term benefits that affiliation with a national franchise would provide. States have an interest in providing its residents with a forum to redress injuries suffered from nonresidents. If nonresidents benefit from their interstate activities, then it would be unfair to allow them to escape from any lawsuit, which develops as a result of their activities within the state. Here, there was a continuing relationship within the state. When problems arose with respect to building design, site-development fees, rent computation and defaulted payments, the Defendant learned that he should seek assistance from Plaintiff's Miami office, rather than its Michigan office. Finally, the franchise agreement that existed between the parties stipulated that the laws of Florida would govern, so Defendant was given notice that Florida law would govern the contract. In addition, the Court concluded that Defendant had failed to demonstrate how jurisdiction in Florida was fundamentally unfair.
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Dissent. There is unfairness in any decision that forces a franchisee to defend an action in the forum state chosen by its franchisor. Furthermore, the only business that was contracted by the Defendant in Florida involved submission of royalty payments. Discussion. The dissent focuses on the fact that the Defendant in this action did not foresee suit being brought against him in Florida. Although Florida was not where any of the substantial business between the parties occurred, the franchise agreement does state that Florida law shall govern when construing the agreement. The majority used this detail to outweigh any inconvenience that Florida as a forum state would carry to the Defendant. The purposeful availment requirement ensures that a defendant will not be brought into a state court as a result of "random, fortuitous, or attenuated contacts or from the unilateral activity of another party or a third person." Jurisdiction is proper when the defendant, himself, creates a substantial connection with the state. Since his activities within the state are protected by the forum's laws, then it is proper that he be subject to any litigation in that forum as well.
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Asahi Metal Industry Co. v. Superior Court

Citation. 480 U.S. 102, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987). Brief Fact Summary. In 1978, Gary Zurcher, a resident of the State of California, was injured when the rear tire of his Honda motorcycle exploded while he was driving on the freeway in California. Synopsis of Rule of Law. Normally, if a non-resident defendant manufactures a product that it knows will be eventually sold in the forum state, this fact alone will be enough to satisfy minimum contacts under International Shoe. However, if this is the only contact that exists, it might be unreasonable to make the defendant manufacturer defend in the forum state. To hold otherwise would violate the Fourteenth Amendment's due process guarantees. Facts. Zurcher filed suit in California state court against Cheng Shin Rubber Company, a Taiwanese company that manufactured the tube used in the tire. Consequently, Cheng Shin filed a cross-complaint against Asahi Metal Industry Company, a Japanese company that supplied tube valve assemblies to Cheng Shin. Cheng Shin submitted an affidavit of its purchasing manager, which asserted that Asahi was aware that its valve assemblies would, ultimately, be used in products that were sold in California. Issue. Whether knowledge by a defendant of the fact that a product manufactured by it will be eventually sold in a forum state might not be enough to satisfy minimum contacts analysis? Held. In the case before the court, because of the heavy burden on the alien Defendant and the relatively small interests of the Plaintiff and the forum state, any exercise of jurisdiction by the California courts over Defendant would be unreasonable and unfair. Concurrence. Two concurrences are offered. First, Justice Brennan, Justice White, Justice Marshall and Justice Blackmun concur in part and in the judgment ("Brennan Concurrence"). Justice Stevens, Justice White and Justice Blackmun also concur in part and in the judgment ("Stewart Concurrence"). Brennan: The court should have followed the distinction created in WorldWide Volkswagen between a case involving goods, which reach a distant state through a chain of distribution and a case involving goods, which reach the same state because of a consumer. Stevens: A distinction should not be drawn between the accepted standard of "purposeful availment" and the majority's new test regarding "mere awareness." Discussion. Although the court found that the affidavit produced by Cheng Shin reliably showed that Asahi knew that its products would be used in products ultimately sold in California, this was not enough to satisfy minimum contacts. The burden on the
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Defendant, as noted by the court, was simply too severe to impose minimum contacts in this case. Furthermore, the court focused on the unique burdens that would otherwise be placed on a truly foreign corporation having to defend its actions in a foreign legal system.
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Pavlovich v. Superior Court

Citation. 29 Cal. 4th 262, 58 P.3d 2 (2002). Brief Fact Summary. The defendant posted confidential trade information about the one of the plaintiffs DVD products on his internet website. Synopsis of Rule of Law. A plaintiff asserting a claim based on specific jurisdiction against a non-resident defendant performing no business in the state must point to
contacts that demonstrate that the defendant expressly aimed its tortious conduct at the forum state.
Facts. Plaintiff Matthew Pavlovich is currently a resident of Texas and the president of Media Driver, LLC, a technology consulting company in Texas. Plaintiff does not reside or work in California. He has never had a place of business, telephone listing, or bank account in California and has never owned property in California. Neither Plaintiff nor his company has solicited any business in California or has any business contacts in California. Plaintiff was the founder and project leader of the LiVid video project (LiVid), which operated a Web site located at "livid.on.openprojects.net." The site consisted of a single page with text and links to other websites. The site only provided information; it did not solicit or transact any business and permitted no interactive exchange of information between its operators and visitors. Consistent with these efforts, LiVid posted the source code of a program named DeCSS on its Web site as early as October 1999. The real party in interest, DVD Copy Control Association, Inc. was the manufacturer of DeCSS. DVD Copy is a nonprofit trade association organized under the laws of the State of Delaware with its principal place of business in California. At the time LiVid posted DeCSS, Plaintiff did not know that the organization manufacturing DeCSS was DVD Copy, or that DVD Copy had its principal place of business in California until after DVD Copy filed this action. In its complaint, DVD Copy alleged that Plaintiff misappropriated its trade secrets by posting the DeCSS program on the LiVid Web site. In response, Plaintiff filed a motion to quash service of process, contending that California lacked jurisdiction over his person. The trial court denied Plaintiffs motion, and this appeal followed. Issue. Whether a state court may exercise jurisdiction over a non-resident whose only connection to the state is an internet posting on the World Wide Web. Held. No. The California Supreme Court ruled that jurisdiction was improper. Courts have identified two ways to establish personal jurisdiction general or specific. When determining whether specific jurisdiction exists, courts consider
the relationship among the defendant, the forum, and the litigation. Merely asserting that a defendant knew or should have known that his intentional acts would cause harm in the forum state is not enough to establish jurisdiction. Instead, the plaintiff must also point to contacts that demonstrate that the defendant expressly aimed its tortious conduct at the forum.
Dissent. Baxter, J. dissented. His dissent focused on the fact that by intentionally posting an unlicensed decryption code of DVD Copys product on his website, Plaintiff was not merely aiming his conduct at specific persons or companies, but an entire industry. Thus,
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Judge Baxter felt, because Plaintiff knew that at least two of the industries companies were located in California, his tortuous conduct could be said to be aimed at the forum state.
Discussion. The court only looked to specific jurisdiction because DVD Copy failed to allege any general jurisdiction. In deciding specific jurisdiction lacking, the court relied on its holding that specific jurisdiction requires more than a finding that the harm caused by the defendant's intentional tort is primarily felt within the forum. Thus, by requiring evidence that the defendant expressly aimed its tortuous conduct at the forum, the court is implicitly holding that jurisdiction over a defendant must be both reasonable and foreseeable so that it does not violate substantial notions of justice and fair play.
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Shaffer v. Heitner
Shaffer v. Heitner
Citation. 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2D 683 (1977). Brief Fact Summary. Heitner (Appellee), a nonresident of Delaware, was the owner of one share of stock in the Greyhound Corp., a business incorporation under the laws of Delaware, with its principal place of business in Phoenix, Arizona. On May 22, 1974, Appellee filed a shareholder's derivative suit in the Court of Chancery for New Castle County, Delaware, and named as defendants both Greyhound and twenty-eight present or former directors of either Greyhound Corp. or Greyhound Lines, Inc.(Greyhound), the subsidiary corporation. Synopsis of Rule of Law. Quasi in rem jurisdiction over a defendant cannot be exercised unless that defendant had such minimum contacts with the forum state that in personum jurisdiction could be exercised over him. Facts. Appellee alleged that the individual defendants had violated their duty to Greyhound by causing it and its subsidiary to engage in actions that resulted in the corporations being held liable for substantial damages in a private antitrust suit and for a large fine in a criminal contempt action. All of the activities in these suits took place in Oregon. Simultaneously with his complaint, Appellee filed a Motion for an Order of Sequestration of the Delaware property of the individual defendants, pursuant to Delaware state statute. The sequestration order was signed the day it was filed and, as a result, caused approximately 82,000 shares of Greyhound common stock to be seized. The court held that the stock was located in Delaware, so it was subject to seizure in Delaware. The twenty-one defendants affected by the seizure, filed a Motion to Quash Service of Process and to Vacate the Sequestration Order. They contended that the seizure was a violation of due process, there were not sufficient minimum contacts to sustain Delaware's jurisdiction under International Shoe, and the stocks were not capable of being seized in Delaware. The Court of Chancery denied these motions. The Supreme Court of Delaware affirmed this judgment. Issue. Whether a statute that allows a court of that state to take jurisdiction of a lawsuit by sequestering any property of the defendants that happens to be located within that forum state is constitutional? Held. No. All assertions of state court jurisdiction must be evaluated according to the decision in International Shoe and its progeny. Appellants' stocks were not the subject of this litigation, nor were they the subject of an underlying cause of action. Therefore, Appellants' holdings in Greyhound do not provide sufficient contacts with Delaware to support the jurisdiction of that state's courts over them. Appellants' activities do not amount to "purposeful availment," because the Court found that they had nothing to do with Delaware. In addition, they had no reason to believe that they could be sued in Delaware. Appellants were not required to obtain stock in Greyhound in order to maintain their positions in the company, therefore, their holdings do not negate the requirement of minimum contacts with the state, before they can be sued in that state.
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Shaffer v. Heitner
Concurrence. Several concurring opinions were offered in this case. Justice Powell wrote a concurring opinion and Justice Stevens wrote an opinion concurring in the judgment. J. Powell: The majority's opinion should not be understood to invalidate quasi in rem jurisdiction where real estate is involved. J. Stevens: The majority opinion should not extend to invalidate the acquisition of jurisdiction over people who receive adequate notice both of the particular controversy and the fact that their local activities might subject them to lawsuit within the forum. Dissent. Justice Brennan wrote an opinion concurring in part and dissenting in part. J. Brennan: As a general rule, a state forum has jurisdiction to adjudicate a shareholder derivative action centering on the conduct and policies of the directors and officers of a corporation chartered in that state. Discussion. The court bases its findings on the argument that there is no necessary relationship between holding a position as a corporate fiduciary and owning stock or other interests in a corporation. The court states that if Delaware wanted to establish such a policy, it would have done so through the construction of a state statute to that effect.
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Burnham v. Superior Court

Citation. 495 U.S. 604, 110 S.Ct. 2105, 109 L.Ed.2D 631 (1990). Brief Fact Summary. Dennis Burnham married Francie Burnham in West Virginia in 1976. In 1977, the couple moved to New Jersey, where their two children were born. In 1987, the couple decided to separate. Mrs. Burnham (Respondent) intended to move to California, so they agreed that she would retain custody of the two children. Shortly before Mrs. Burnham was to move to California, she and Mr. Burnham (Petitioner) agreed that she would file for divorce on the grounds of "irreconcilable differences." Synopsis of Rule of Law. Jurisdiction can be exercised over an individual through his presence in the forum state. This is true even if the individual is a non-resident of the forum state, who came to the forum state only briefly. Personal jurisdiction within the forum may be obtained as long as service was made upon the individual while he was within the forum state. Facts. After the Petitioner and his wife agreed to divorce, Mr. Burnham filed a Petition for Divorce in New Jersey based on grounds of "desertion." However, Petitioner did not obtain the issuance of a summons nor did he attempt to serve her with process. Mrs. Burnham was not successful in convincing Mr. Burnham to heed their prior agreement. Therefore, in 1988, Mrs. Burnham filed suit for divorce in California. In January, 1988, Petitioner visited San Francisco, California as part of a business trip and to visit his children. While in San Francisco, Petitioner was served with a copy of Mrs. Burnham's divorce petition. Petitioner sought relief in the California state courts, asserting that the Due Process Clause of the Fourteenth Amendment prohibited California courts from obtaining jurisdiction over him because he lacked "minimum contacts" with the state. His only contacts with the state were a few short visits to conduct business and to visit his children. The Superior Court denied his Motion to Quash, and the Court of Appeals of California denied his Petition for Writ of Mandamus. The court held that physical presence in the state when service is obtained is sufficient personal jurisdiction. Issue. Whether the Due Process Clause of the Fourteenth Amendment prevents jurisdiction of a state over a nonresident, who was served with process while temporarily present in that state, for an action, which is totally unrelated to his activities in that state? Held. International Shoe Co. v. Washington, stated that the Due Process Clause of the Fourteenth Amendment requires that a state not violate "traditional notions of fair play and substantial justice." It is well established that a state may obtain personal jurisdiction over a non-resident by service within that state. Therefore, it cannot be said that physical presence within a state violates "traditional notions of fair play and substantial justice." California can constitutionally assert personal jurisdiction over Petitioner based solely on his presence in the state at the time of service, even though his presence was brief, and there were virtually no other contacts with California.
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Concurrence. Justice White wrote an opinion concurring in part and concurring in the judgment. Justice Brennan, with whom Justices Marshall, Blackmun and O'Connor joined, wrote an opinion concurring in the judgment (J. Brennan concurrence). Justice Stevens wrote an opinion concurring in the judgment. J. White: Jurisdiction over a non-resident by personal service in the forum state, alone, is so widely accepted that it cannot be invalidated at this time. J. Brennan: He agrees that jurisdiction can be granted through personal service upon a defendant while in the forum. Therefore, J. Brennan can concur in the judgment. However, J. Brennan does not believe that such a rule should remain forever unexamined due to its prior acceptance. J. Stevens: The historical evidence leads to the conclusion that this is a very easy case to decide. Personal jurisdiction based on physical presence in the forum state alone should be upheld. Discussion. This case shows that not all bases for the assertion of in personam jurisdiction must be treated alike and subjected to the "minimum contacts" analysis of International Shoe. The court firmly stands behind the notion that jurisdiction based upon physical presence alone, no matter how short the duration, has been, and will continue to be, a hallmark of the constitutional guarantee of due process.
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Helicopteros Nacionales de Colombia, S.A. v. Hall

Citation. 466 U.S. 408, 104 S.Ct. 1868, 80 L.Ed.2d. 404 (1984). Brief Fact Summary. Plaintiffs, representatives of the estates of former employees of Defendant, sued Defendant, a helicopter company, in Texas court after a helicopter crash in Peru killed several employees. Defendant is a Colombia corporation which was engaged in a joint venture based in Texas and had some contacts with Texas pertaining to the purchasing of helicopters and the training of its pilots. Defendant moved to dismiss the case based on lack of personal jurisdiction. Synopsis of Rule of Law. For a court to exercise general in personam jurisdiction, the defendant must engage in systematic and continuous contacts with the forum state unless the defendants contacts are related to the cause of action. Facts. Helicopteros Nacionales de Colombia, S.A., Defendant, a Colombia corporation that provides helicopters for oil and construction companies, was hired by Consorcio, a Peruvian association, and its venture, WSH (a venture based in Texas). The contract between Defendant and the joint venture said that all parties were residents of Peru and controversies arising out of the contract would be subject to jurisdiction in Peruvian courts. In addition, the venture would make payments to Defendant in Defendants bank account located in New York City. Defendant conducted some contract negotiations in Texas, bought 80% of its helicopters for the business in Texas, and received technical consultation from a person in Texas. Defendant was paid with checks drawn on a Texas bank. One of Defendants helicopters crashed in Peru, killing four of the ventures employees. The employees representatives, Plaintiffs, brought this wrongful death action against Defendant in Texas. The trial court denied Defendants motion to dismiss for lack of in personam jurisdiction. There was a jury trial and verdict for Plaintiffs. Defendant appealed. The Texas Court of Appeals reversed the judgment for lack of in personam jurisdiction. The Supreme Court of Texas reversed the Court of Appeals judgment on the grounds that the Texas long-arm statute can reach as far as the Due Process Clause will permit. Defendant appealed. Issue. Are purchasing products and training employees in the forum state, even on a regular basis, sufficient contacts to exercise in personam jurisdiction when the action does not arise from the contact with the state? Held. No. Judgment reversed. When a controversy arises out of a defendants contact with the forum state, there has to be a relationship among the defendant, the forum, and the litigation. If there are sufficient contacts between the forum state and the defendant, then there may still be in personam jurisdiction even though the action does not arise out of Defendants contact with the forum state.
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This action does not arise out of Defendants contact with the forum state. It must be therefore determined whether Defendants contacts were systematic and continuous. One trip by Defendants Chief Executive Officer is not sufficient in order to confer general personal jurisdiction. Contacts must be continuous and systematic under Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S.Ct. 413, 96 L.Ed. 485 (1952). The checks that Defendant received that were drawn on a Texas bank were not appropriate for consideration. There is no evidence that Defendant requested they be drawn on a Texas bank . The bank on which a check is drawn is up to the discretion of the drawer. The purchasing of helicopters and training in Texas is not a sufficient contact to justify general in personam jurisdiction under Rosenberg Bros. & Co. v. Curtis Brown Co., 260 U.S. 516 (1923), which held that mere purchases are not sufficient contacts. If the purchase not related to the action, or if it cant be proved that it enhanced the nature of Defendants contacts with Texas, it is not sufficient under the test in Rosenberg. Dissent. J. Brennan: Purposeful availment of the benefits of the laws of the forum state is the test used to determine whether or not exercising jurisdiction offends notions of fair play and substantial justice. Because Defendant bought many items from Texas for many years, they did purposefully avail themselves of the benefits of Texas laws. Perkins and Rosenberg can be distinguished from this case. Although the litigation did not arise from Defendants specific contacts with the forum state, it was related to those contacts. Plaintiffs allege that Defendants pilot was negligent in flying and that such negligence was the proximate cause of the decedents deaths. The pilot was trained in Texas; therefore, the action is related to the contacts with the forum state. Discussion. In order to assert general jurisdiction, as opposed to specific jurisdiction over the defendant, the conduct need not be related but must be substantial. In this case, the majority holds that notwithstanding the fact that Defendant had some contact with the forum state, the contacts must be continuous and systematic, i.e., not just numerous.
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Bates v. C & S Adjusters, Inc.
Bates v. C & S Adjusters, Inc.

Citation. 980 F.2d 865 (United States Court of Appeals, Second Circuit, 1992). Brief Fact Summary. This appeal concerns venue in an action brought under the Fair Debt Collection Practices Act, 15 U.S.C. 1692-1692(o). Synopsis of Rule of Law. The statutory standard for venue focuses not on whether a defendant (creditor) has made a deliberate contact with the venue, but on the location where the events occurred. Facts. Phillip E. Bates (Plaintiff) commenced this action in the District Court for the Western District of New York following receipt of a collection notice from C & S Adjusters, Incorporated (Defendant). Plaintiff alleged a violation of the Fair Debit Collection Practices Act. Plaintiff had incurred the debt in question while he was a resident of the Western District of Pennsylvania. The creditor also had its principal place of business in that district. The creditor referred the matter to Defendant, a local agency, which transacted no business in New York. After Defendant mailed a collection notice to Plaintiff in Pennsylvania, the postal service forwarded the notice to Plaintiff at a new address in New York. Defendant filed a Motion to Dismiss for Improper Venue, which was granted by the District Court for the Western District of New York. Issue. Whether venue exists in a district in which a debtor resides and to which a bill collector's demand for payment was not deliberately forwarded? Held. Venue was proper under 28 U.S.C.A. 1391(b)(2) because a substantial part of the events giving rise to Plaintiff's claim occurred in the Western District of New York. Here, the collection notice is located in New York. Therefore, venue in New York is proper. The United States Court of Appeals for the Second Circuit reversed and remanded the case. Discussion. This case involves unique circumstances, because Defendant did not intentionally forward the collection notice to Plaintiff's new address in New York. Prior cases dealt primarily with the collection agency's deliberate contact with the debtor. The court decided that under the 1990 venue statute, the fact that a creditor did not intend to have a communication reach a debtor at a new address is inconsequential. Since the focus of the statute is not upon the attempted contacts, but rather where the action occurred, venue is proper in the debtor's new state if a substantial part of the events giving rise to the claim occur in that new state.
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Piper Aircraft Co. v. Reyno

Citation. 454 U.S. 235, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981). Brief Fact Summary. In July 1976 a small commercial aircraft crashed in Scotland, killing the pilot and five passengers instantly. The aircraft was manufactured in Pennsylvania by Piper Aircraft Co., and the propellers were manufactured in Ohio by Hartzell Propeller, Inc. The aircraft was registered in Great Britain, owned by Air Navigation and Trading Co., Ltd. (Air Navigation), and operated by McDonald Aviation, Ltd. (McDonald). Synopsis of Rule of Law. When an alternative forum has jurisdiction to hear a case, and when trial in the chosen forum would establish oppressiveness and vexation to a defendant out of proportion to the plaintiff's convenience, or when the chosen forum is inappropriate because of considerations affecting the court's own administrative and legal problems, the court may, in the exercise of its sound discretion, dismiss the case for forum non conveniens. Gulf Oil Corp. v. Gilbert. Facts. After reviewing the crash, the British Department of Trade determined that there was no evidence of defective equipment. In 1977, a California probate court appointed Gaynell Reyno as administratrix of the estates of the five passengers (Plaintiff). Plaintiff filed wrongful death actions against both Piper and Hartzell (Defendants) in the Superior Court of California, claiming negligence and strict liability. Air Navigation, McDonald, and the estate of the pilot were not parties to this case, because Plaintiff had already filed a case against them in the United Kingdom. Plaintiff admitted that this suit was filed in the United States, because its laws regarding liability, capacity to sue, and damages were more favorable to Plaintiff. Scotland did not recognize strict liability actions, and only allowed wrongful death actions to be brought by decedent's relatives. After the suit was removed to the United States District Court for the Central District of California, Piper filed a Motion to Transfer the action to the United States District Court for the Middle District of Pennsylvania. Hartzel moved to dismiss for lack of personal jurisdiction, or in the alternative, to transfer. The district court quashed service on Hartzel, and transferred the case to Pennsylvania. Service was then properly obtained on Hartzel. In May, 1978, after transfer to Pennsylvania, both Piper and Hartzell moved to dismiss based upon forum non conveniens. The district court granted those motions, but on appeal, based upon the test in Gulf Oil v. Gilbert. The United States Court of Appeals for the Third Circuit reversed and remanded, stating that dismissal is never appropriate when the law of the alternative forum is less favorable to the plaintiff. Issue. Did the federal district court err in dismissing the action on the ground of forum non conveniens? Held. No. The proper standard for determining whether an action will be dismissed for forum non conveniens was established in Gulf Oil v. Gilbert. Since the decision of the district court complies with the standard established in Gulf Oil v. Gilbert, the decision of the court of appeals shall be reversed. The court of appeals improperly considered the
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difference in substantive law between the two forums, when making its decision regarding forum non conveniens. Discussion. The court used the private vs. public balancing factor test established in Gulf Oil v. Gilbert. In Piper, the court noted that although, with regard to private interests, the evidence regarding design and manufacture of the plane was present in the United States, however in regard to the public interests, all of the witnesses concerning the maintenance of the aircraft, training of the pilot, investigation of the accident were located in Great Britain, all of the witnesses concerning damages were located in Scotland, the real parties in interest and the decedents were citizens of Scotland. Therefore, the public interests, i.e., the overwhelming majority of the connections were to Scotland, not the United States.
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CHAPTER X. Choosing The Forum-State V. Federal Court
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Mas v. Perry
Mas v. Perry
Citation. 489 F.2d 1396 (5th Cir. 1974). Brief Fact Summary. Jean Paul Mas and Judy Mas (Appellees) were married at her home in Jackson, Mississippi. Mr. Mas was a citizen of France, and Ms. Mas was a citizen of the State of Mississippi. This action resulted from discovery by Plaintiffs that the home they rented in Baton Rouge, Louisiana contained two-way mirrors and that Oliver Perry (Appellant), a citizen of Louisville, had watched the couple through the mirrors during the first few months of marriage. A complaint seeking $100,000.00 was filed in district court in Louisiana. Synopsis of Rule of Law. Original jurisdiction is provided by the Constitution in the federal district courts for all actions that are between citizens of different states or citizens of a state and citizens of foreign states, and in which the amount in controversy exceeds $10,000. NOTE: The jurisdictional requirement has now been increased to $75,000. Facts. Before and shortly after the couple was married in Mississippi, they resided in Baton Rouge, Louisiana where they were graduate assistants at Louisiana State University. After their marriage they remained in Baton Rouge for approximately two years. The couple then moved to Park Ridge, Illinois. At the time of trial in this matter, the couple intended to return to Baton Rouge, while Mr. Mas concluded his studies for his Doctorate of Philosophy degree. After that, the couple was not sure where they would reside. At the trial, the jury returned a verdict for the Appellees and awarded $5000.00 to Mr. Mas and $15,000.00 to Ms. Mas. At the close of Appellees' case, Appellant had filed a Motion to Dismiss for lack of jurisdiction, which was subsequently denied by the district court. Issue. Was the district court correct in dismissing Appellant's Motion to Dismiss for lack of jurisdiction based upon diversity of citizenship? Held. Yes. The United States Court of Appeals for the Fifth Circuit affirmed the decision of the district court. Discussion. The power of the district court to entertain the claims of Appellees in this case stands on two separate legs of diversity jurisdiction: a claim by an alien against a state citizen (Mr. Mas vs. Appellant) and an action between citizens of different states (Ms. Mas v. Appellant). This final leg is satisfied because the court found that Ms. Mas is a domiciliary of the State of Mississippi. A person's domicile is the place of "his true, fixed, and permanent home and principal establishment, and to which he has the intention of returning whenever he is absent therefrom." Ms. Mas was only a student in Louisiana, and she lacked the requisite intention to remain there. Furthermore, she did not take any affirmative steps to effect a change in her domiciliary status. Therefore, since Ms. Mas was a domiciliary of Mississippi and the Appellant was a domiciliary of Louisiana, complete diversity existed. In addition to the court finding complete diversity, the court noted that although the Appellees only received $5,000.00 from the district court,
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Mas v. Perry
diversity should not be defeated. The amount in controversy requirement is determined by the amount claimed by the plaintiff in good faith. As a result, federal jurisdiction is not lost because a judgment of less than the jurisdictional amount is awarded.
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Louisville & Nashville R.R. v. Mottley
Louisville & Nashville R.R. v. Mottley

Citation. 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). Brief Fact Summary. Mr. and Mrs. Mottley (Appellees) are domiciliaries of the State of Kentucky and brought suit in the Circuit Court for the Western District of Kentucky against Louisville & Nashville R.R. (Defendant), a railroad company and citizen of Kentucky. Appellees, while passengers on the railroad, were injured by Defendant's alleged negligence. Synopsis of Rule of Law. The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws or treaties of the United States. The federal question must appear as part of the plaintiff's cause of action as set out in a well-pleaded complaint. Facts. The Appellees sought specific performance of a contract entered into between themselves and Appellant. The contract originally provided that, in consideration for the Appellees releasing the Appellant from all claims resulting from injuries received during an accident, the Appellant would provide free passage for life on its rail lines. Although the contract was honored for approximately thirty-six years, the Appellant, in 1907, refused to issue new tickets. The appellant based its decision upon an act of Congress, which forbid the granting of free passes or transportation. Issue. Although there is no diversity of citizenship, can the Appellees bring suit in federal court based upon federal question jurisdiction? Held. No. There is no basis for federal question jurisdiction in this case. Discussion. It is not enough that the Appellant allege some anticipated defense to his cause of action, and asserts that the defense is invalidated by some provision of the Constitution, or other federal statute. The federal question allegation must be on the face of Appellee's well-pleaded complaint. In the case before the court, the Appellees attempt to assert that an anticipated defense to their complaint will be barred by the United States Constitution. This, as the court held, is not enough to sustain federal question jurisdiction.
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Merrell Dow Pharmaceuticals, Inc. v. Thompson

Citation. 478 U.S. 804, 106 S.Ct. 3229, 92 L.Ed.2D 650 (1986). Brief Fact Summary. Action filed by multiple Respondents against Merrell Dow Pharmaceuticals, Inc. (Petitioner), a corporation, that manufactures and distributes the drug Bendectin. Complaints filed in the Court of Common Pleas in Hamilton County, Ohio alleged that a child was born with multiple deformities as a result of a mother's ingestion of Bendectin during pregnancy. Synopsis of Rule of Law. A complaint alleging a violation of a federal statute as an element of a state cause of action, when Congress has determined that there should be no private, federal cause of action for the violation, does not state a claim arising under the Constitution, laws or treaties of the United States. Facts. In the complaints, five of the six counts alleged common-law theories of negligence, breach of warranty, strict liability, fraud and gross negligence. However, in count four, Respondents alleged that the drug Bendectin was misbranded in violation of the Federal Food, Drug and Cosmetic Act (Act) because its labeling did not provide adequate warning that its use was potentially dangerous. The Petitioner sought removal to federal district court, in part, upon the ground that the claims arose under the federal laws of the United States. After removal, the cases were consolidated. The district court found a cause of action arising under the federal laws, but the United States Court of Appeals for the Sixth Circuit reversed, noting that the Act does not create or imply a private right of action for individuals injured as a result of violations of the act. Issue. Whether the incorporation of a federal standard in a state-law private action, when Congress has intended that there not be a federal private action for violations of that federal standard, makes the action one arising under the Constitution, laws or treaties of the United States? Held. No federal question is raised because the Petitioners' claim did not arise under federal law. The Supreme Court of the United States affirmed the court of appeal's decision. Dissent. There is federal jurisdiction whenever a federal question is an ingredient of the action. Furthermore, there may be federal question jurisdiction even though both the right asserted and the remedy sought by a plaintiff are state created. Additionally, federal courts are much more adept at interpreting and applying federal law, and more likely to correctly understand Congress' intent in enacting legislation than are state courts. Discussion. Congress did not intend to grant a private federal remedy for violations of the Act. Because the federal law in question did not create a remedy, no federal question jurisdiction can be found in this case.
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CHAPTER XI. Choosing The Law To Be Applied In Federal Court
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Swift v. Tyson
Citation. 41 U.S. (16 Pet.) 1, 10 L.Ed. 865 (1842). Brief Fact Summary. Plaintiff sued in federal district court in New York to enforce a bill of exchange. The issue in the case became whether the federal court needed to apply New York common law or, whether, the court was free to fashion its own determination of the general principles of the law in this area. Synopsis of Rule of Law. Federal courts exercising jurisdiction predicated upon the ground of diversity of citizenship need not, in matters of general jurisprudence, apply the unwritten law of the state as declared by its highest court. The federal court is free to exercise an independent judgment as to what the common law of the state is, or should be. Facts. Defendant argued that the federal court was required to apply prior New York decisions to the present case. Defendant based his argument on the language behind the Rules of Decision Act. Issue. Are federal courts free, in diversity of citizenship cases, to ignore the common law of the state where the federal court sits? Held. Yes. Federal judges, sitting in diversity actions, are free to ignore the common law of the state where the federal court is located. Furthermore, those federal judges are able to determine exactly the parameters of the common law of that forum state. Discussion. The effect of this ruling is to allow nonresidents of the state where the federal court sits to discriminate against citizens of the forum state. As a result of the decision in this case, plaintiffs were effectively able to "forum shop" between state courts and federal district courts within the same state in order to determine which would be more favorable to their case. This case was overturned by Erie.
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Erie R. Co. v. Tompkins

Citation. 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). Brief Fact Summary. Harry J. Tompkins (Plaintiff), a citizen of Pennsylvania, was injured while walking on a well-worn footpath that runs along the railroad tracks. A train operated by the Erie Railroad Company (Defendant) was passing along the railroad tracks, when an open door on the train hit Plaintiff and injured him. Defendant is a New York company. Synopsis of Rule of Law. A federal court, in the exercise of its diversity jurisdiction, is required to apply the substantive law of the state in which it is sitting, including that state's conflict of law rules. However, the federal courts should apply federal procedural law in diversity cases. Facts. If Plaintiff had filed a negligence action in Pennsylvania, he probably would have lost because he was a trespasser and, as a result, the Defendant would have been liable only for gross, as opposed to ordinary negligence. However, Plaintiff filed his suit in the Southern New York federal court. By filing in federal district court, Plaintiff hoped that the court would follow the prior decision in Swift v. Tyson, ignoring the state common law and requiring him to establish ordinary negligence, as opposed to gross negligence by the Defendant. The district court applied "general law" and awarded Plaintiff $30,000.00 in damages. The court of appeals affirmed this decision on the same grounds. Issue. Whether the decision, rendered in Swift v. Tyson, that allows federal judges to ignore state common law in diversity actions, should be overturned? Held. Swift established that, absent state statutory law, federal courts should apply general law. The Supreme Court of the United States found that in applying this rule, there were many political and social defects. The intended benefits of this rule were never realized. Specifically, the rule prevented the uniform application of law throughout the United States. The Court concluded that the application of the rule in Swift had invaded rights, which were specifically reserved for the states by the United States Constitution. The effect of the decision in Erie is to require federal courts to apply state law on substantive issues, which includes judge-made common law as well as state statutes. As a result, Pennsylvania law must be followed in this case, which required that Defendant refrain from willful or wanton injury. This case was remanded for further proceedings in conformance with this opinion. Dissent. Justice Butler stated that no constitutional question was raised either in the proceedings below or in this action. As a result, Justice Butler believed that the Court should not consider any question not raised below and presented by the petition. Concurrence. Justice Reed asserted that the majority reasoning was correct except insofar as it relied upon the "unconstitutionality" argument. All that was necessary was to say that the Swift construction of Section 34 of the Federal Judiciary Act of 1789 was
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erroneous and reinterpret the words "the laws" to include the decisions of local state courts. Discussion. The Court's decision in Erie effectively overturned the ruling in Swift. Note that Erie only says that the substantive state common law shall apply to diversity actions. However, federal rules and policies shall govern litigation for any procedural issue that arises. Therefore, in any given case, it is possible for a federal court, sitting with diversity jurisdiction, to apply both state and federal law.
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Guaranty Trust Co. v. York
Guaranty Trust Co. v. York

Citation. 326 U.S. 99, 65 S.Ct. 1464, 89 L.Ed. 2079. Brief Fact Summary. Guaranty Trust Company (Petitioner) served as trustee for some of the noteholders of the Van Sweringen Corporation (Van Sweringen). In 1930, Petitioner loaned money to corporations affiliated with Van Sweringen. When Petitioner began having financial problems, it agreed to purchase notes for $500 and twenty shares of Van Sweringen stock for each $1000.00 note. York (Respondent) received $6000.00 worth of the notes from a donor who had not accepted Petitioner's offer. Synopsis of Rule of Law. When there is diversity jurisdiction, the federal court should use the outcome-determinative test to ensure that the outcome of the federal court's application of law would not be different than the outcome if the state had tried the case. In this case, the federal court sitting with diversity jurisdiction must follow a state statute of limitations. Facts. Respondent brought a diversity suit alleging that Petitioner had breached its fiduciary duties. His complaint alleged fraud and misrepresentation. Petitioner filed a Motion for Summary Judgment in the district court, due to the fact, that the New York statute of limitations had run. The district court granted this motion. The United States Court of Appeals for the Second Circuit reversed this decision when it held that the district court did not have to follow the New York statute of limitations even though jurisdiction was based on diversity. The Supreme Court of the United States granted certiorari. Issue. When no recovery can be had in a state court because the action is barred by the statute of limitations, can a federal court in equity take cognizance of the suit because there is diversity of citizenship between the parties? Held. No. The Supreme Court of the United States essentially created an "outcomedeterminative test" to be followed in cases involving diversity jurisdiction. What is important under this test is that the outcome of the litigation in the federal court should be substantially the same as it would be if tried in the state court. Therefore, the judgment of the court of appeals is reversed. The federal district court is required to follow the applicable New York statute of limitations. Discussion. As a result of the outcome-determinative test, a party should not be able to manipulate the state and federal court systems solely to bring a claim in federal court that would, otherwise, be defeated by a statute of limitations if brought in state court. This test is designed to prevent forum shopping between federal and state courts. The state's interest in controlling the outcome is very important as it seeks to protect its citizens. Alternatively, the federal interest is relatively weak, and there is very little to be gained from uniformity between federal districts.
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Byrd v. Blue Ridge Rural Electric Cooperative, Inc.

Citation. 356 U.S. 525, 78 S.Ct. 893, 2 L.Ed.2D 953 (1958). Brief Fact Summary. Byrd (Petitioner), a resident of North Carolina, filed a diversity suit in the District Court for the Western District of South Carolina for injuries allegedly caused by the negligence of Blue Ridge Rural Electric Cooperative, Inc.'s (Respondent), a South Carolina corporation. Petitioner was a lineman in a construction crew of a contractor who had contracted to build power lines for the Respondent. Petitioner was injured while connecting power lines during the course of his employment. Synopsis of Rule of Law. There are varying degrees of the Guaranty Trust Co. "outcome-determinative test." The fact that the decision of which law, federal or state, to apply will should be outcome-determinative is not conclusive. There may be other countervailing considerations. Facts. The Respondent offered, as an affirmative defense, that the Plaintiff had the status of a statutory employee under the South Carolina Workmen's Compensation Act (Act). Therefore, he was barred from suing Respondent at law, so he had to settle for statutory compensation benefits as the sole remedy. At trial, the jury returned a verdict for Petitioner. However, the United States Court of Appeals for the Fourth Circuit reversed, and directed judgment for the Respondent. Respondent urged the Supreme Court of the United States to follow the decision rendered by the Supreme Court of South Carolina in Adams v. Davison-Paxon Co., when the court found that it was for the judge, not the jury to decide whether a business owner was a statutory employer. Issue. Whether the "outcome-determinative test" as established by the court in Guaranty Trust Co. should apply to the decision of whether to try an issue before a judge or a jury? Held. The likelihood of a different result is not so strong as to require the federal court practice of jury determination of disputed factual issues to yield to the state rule in the interest of uniformity of outcome. As a result, the Supreme Court of the United States reversed the decision of the court of appeals and remanded for further proceedings consistent with its opinion. This Court in Erie R. Co. v. Tompkins, held that federal courts in diversity suits need to respect the definition of state-created rights and obligations of state courts. Therefore, the Court in this case examined the decision in Adams v. Davison-Paxon Co., to determine whether "it is bound up with these rights and obligations in such a way that its application in the federal court is required." The rule in South Carolina reflects a policy of allowing the jury to decide all factual issues, except the affirmative defense of immunity. Therefore, the Court concluded that this requirement was
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merely procedural and was not intended to be "bound up with the definition of the rights and obligations of the parties." The cases following the decision in Erie state that federal courts should conform to state rules even if it is only a procedural rule, when the application of state rules as opposed to federal rules would substantially alter the outcome of the litigation. However, the Court in Herron v. South Pacific Co., 283 U.S. 91 (1931), stated that the application of state rules may not "alter the essential character or function of the federal court." The Seventh Amendment protection of the right to a jury trial and the prescribed function of the jury is a fundamental right, which should not be governed by state law in federal court. The Court concluded that there was not a strong likelihood that a different result would occur in the application of state law, as opposed to federal law. Therefore, the state rule should not be applied over the federal rule in this case. Discussion. The decision of whether to try a case before a judge or before a jury is less outcome determinative than, as was the decision in Guaranty Trust Co., to completely bar a suit by an applicable statute of limitations. The decision of whether to try a case before a judge or before a jury is so little outcome-determinative that strong countervailing considerations such a federal policy should compel the district court to refuse to follow the applicable state rule. As a result, the court rejected the "outcome-determinative test" and created a "balance of interests test" in which the federal court weighs whether the state or federal judicial system has the greater interest in having its rule applied to the matter.
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Hanna v. Plumer
Hanna v. Plumer
Citation. 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965). Brief Fact Summary. Hanna (Petitioner), a citizen of Ohio, filed a complaint in District Court for the District of Massachusetts, claiming damages in excess of $10,000 for injuries resulting from an auto accident in South Carolina, allegedly caused by the negligence of Louise Plumer Osgood (Osgood), a resident of Massachusetts. Osgood was deceased at the time of filing, so Osgood's executor (Respondent), was named as Defendant in the complaint. Synopsis of Rule of Law. In a diversity action, federal courts are to determine adequacy of service under Rule 4(d)(1) of the Federal Rules of Civil Procedure. Facts. On February 8, 1963, service was made by leaving copies of the summons and complaint with Respondent's wife at his residence in compliance with Rule 4(d)(1) of the Federal Rules of Civil Procedure. Respondent answered on February 28, 1963, alleging that an action could not be maintained because it was brought in violation of Massachusetts General Laws Chapter 197, Section 9. The district court granted Respondent's Motion for Summary Judgment and the United States Court of Appeals for the First Circuit affirmed. Issue. Whether, in a civil action when the jurisdiction of the district court is based upon diversity of citizenship between the parties, service of process shall be made in the manner prescribed by state law or that set forth in Rule 4(d)(1) of the Federal Rules of Civil Procedure? Held. The Supreme Court of the United States reversed the decision of the court of appeals. The Court stated that Rule 4(d)(1) was designed to govern service of process in diversity actions. In addition, Rule 4(d)(1) is in harmony with the Rules Enabling Act, since it is largely procedural in nature. The Rules Enabling Act is constitutional, and is the method by which service is to be conducted in federal court. Further, Rule 4(d)(1) applies to the matter before the court because it specifies the allowable method of service in a federal matter. As a result, the rule shall take precedence over any divergent state statute or rule, even if application of the rule will produce a different outcome than had the state rule been followed in the first instance. Concurrence. The majority has oversimplified the decision made in Erie. Justice Harlan stats that Erie is more than a forum-shopping deterrent, and notes that the focus should remain on the "outcome-determinative test." Discussion. The "outcome-determinative test" as established in Guaranty Trust Co., was not meant to serve as a talisman. Further, the court notes that any choice between state and federal law shall not be made by an application of an automatic, "litmus paper" test, but rather by reference to policies underlying the Erie decision. As the Court states, Erie's goals were the deterrence of forum-shopping and the avoidance of inequitable
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Hanna v. Plumer
administration of the laws. In this case, if it had been governed by the state statute, the case would have ended before it began. Alternatively, since the Petitioner won, the litigation was allowed to proceed forward, with both parties having an opportunity to be heard.
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Walker v. Armco Steel Corp.

Citation. 446 U.S. 740, 100 S.Ct. 1978, 64 L.Ed.2d 659 (1980). Brief Fact Summary. Plaintiff sued Defendant in federal court in Oklahoma. Under the Oklahoma tolling provisions of the statute of limitations, Plaintiffs claim had run because Defendant was not served within the time prescribed by statute. The District Court dismissed the case, holding that Oklahomas tolling provision applied and the time for Plaintiff to bring his claim had run. Synopsis of Rule of Law. A states provision tolling its statute of limitations should be analyzed under the Erie doctrine. Consequently, a states tolling provisions must apply if it would have prevented the plaintiff from filing a suit in state court. In addition, Rule 3 does not conflict with tolling provisions because it only refers to the time a lawsuit commences under the Federal Rules. Facts. Walker, Plaintiff, and a resident of Oklahoma, was injured on August 22, 1975. Plaintiff filed a complaint against Armco Steel Corp., Defendant, a foreign corporation, in federal court based on diversity of citizenship on August 19, 1977. Service of process was not made on Defendants agent until December 1, 1977. Defendant filed a motion to dismiss because the statute of limitations had run by the time Defendant was served. Oklahoma state law states that the action is commenced for purposes of the limitation when the complaint is filed if Defendant is notified within 60 days of filing the complaint. The 60 day limit had expired by the time Defendant was served so the statute had run. Plaintiff argued that Rule 3 of the Federal Rules of Civil Procedure governs the case. Rule 3 states: [a] civil action is commenced by filing a complaint with the court. The District Court dismissed the complaint because the Oklahoma statute was an integral part of the Oklahoma statute of limitations and under Ragan v. Merchants Transfer & Warehouse Co., 337 U.S. 530, 69 S.Ct. 1233, 93 L.Ed. 1520 (1949), state law must be applied. The Court of Appeals affirmed. Issue. Is a state statute that determines when a cause of action commences for purposes of tolling the statute of limitations applicable in a federal court under Erie where the statute is not in direct conflict with Rule 3 of the Federal Rules of Civil Procedure? Held. Yes. Judgment of the Court of Appeals affirmed. Ragan involved the same situation and held that since the statute of limitations barred recovery in state court then the action should not be permitted to survive in federal court. The test in Hanna v. Plumer, 380 U.S. 460, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965), states that if the federal rule is in direct conflict with the state rule, there must be a determination of whether the federal rule is within the scope of the Rules
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Enabling Act, and therefore within a constitutional grant of power such as the Necessary and Proper Clause. Hanna and Ragan are distinguishable from each other because in Hanna, Rule 4(d)(1) of the Federal Rules of Civil Procedure was in direct conflict with the Massachusetts law governing service of process. In Ragan, the state tolling provision was applied and not Rule 3. Rule 3 does not explicitly apply to the tolling of the state statute of limitations. Rule 3 governs the times at which limitations of federal rules begin to run, but does not establish the time at which a state statute of limitations begins to run. The Oklahoma law requiring a suit to commence by service of process is directly linked to the states policy of having the statute of limitations. The statute, therefore, is not in direct conflict with Rule 3. Thus, the Erie doctrine applies. Under the Erie doctrine, the state law must be applied because not applying the state law would allow out-of-state plaintiffs to avoid unfavorable statutes of limitations. Discussion. Under Hanna, a federal procedural rule must directly conflict with the state law dealing with the same issue in order for the federal rule to apply. In this situation, Rule 3 was interpreted not to address the statute of limitations, and thus did not fall into direct conflict with the Oklahoma state tolling provisions.
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Gasperini v. Center for Humanities, Inc.

Citation. 518 U.S. 415, 116 S.Ct. 2211, 135 L.Ed.2d 659 (1996). Brief Fact Summary. New York state law provides that appellate courts are empowered to review the size of jury verdicts and to order new trials when the jury's award deviates materially from what would be reasonable compensation. Alternatively, the Seventh Amendment provides that the right of trial by jury shall be preserved, and no fact tried by a jury, shall otherwise be re-examined in any court of the United States. The compatibility of these rules, in an action based on New York law, tried in federal court under diversity of citizenship jurisdiction, is at issue in this case. Synopsis of Rule of Law. Just as the Erie principle precludes a federal court from giving a state-created claim longer life than the claim would have had in state court, so too does Erie preclude recovery in federal court, which is significantly larger than the recovery that would have been allowed in state court. Facts. William Gasperini (Petitioner), a journalist for CBS News and the Christian Science Monitor, reported events within Central America during a seven year period from 1984 through 1990. During this time, Petitioner took over five thousand slide transparencies of war zones, political leaders and daily life in Central America. In 1990, Petitioner agreed to supply his original transparencies to the Center for Humanities, Inc. (Respondent), for use in an educational video entitled "Conflict in Central America." Petitioner selected three hundred transparencies for use in making the video. However, despite the fact that the Respondent agreed to return the transparencies, when the project was complete, the transparencies could not be located. Petitioner filed suit in the United States District Court for the Southern District of New York, under diversity jurisdiction, alleging several state-law claims for relief, including breach of contract, conversion and negligence. After trial, the jury awarded Petitioner, $450,000. The Respondent moved for a new trial, in part on the grounds of excessiveness in the jury award. The United States Court of Appeals for the Second Circuit vacated the jury award and ordered a new trial, unless Petitoner agreed to an award of $100,000. Issue. Whether a federal court can give effect to New York state law without untoward alteration of the federal scheme for the trial and decision of civil cases? Held. New York's law controlling compensation awards for excessiveness or inadequacy can be given effect, without detriment to the Seventh Amendment, if the review standard set out in CPLR 5501(c) is applied by the federal trial court judge, with appellate control of the trial court's ruling limited to review for abuse of discretion. As a result, the court decided to apply the New York "excessive damages" standard, rather than the federal "shock the conscience" test. Dissent. Dissenting opinions were offered by Justice Stevens, individually, and Justice Scalia, with whom the Chief Justice and Justice Thomas joined (Scalia)
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J. Stevens: Justice Stevens disagreed on the need to vacate the court of appeal's decision and remand to the district court for it to apply the New York standard. He felt that the appellate court could do so without violating the Seventh Amendment. J. Scalia: The majority's decision contradicts the principle that the proper role of the trial and appellate courts in the federal system in reviewing the size of jury awards is a matter of federal law. Further, Justice Scalia notes that the majority commits the classic Erie mistake of regarding whatever changes the outcome of a case as substantive. Justice Scalia notes that "outcome-determination" was never meant to serve as a "talisman," a principle noted by the court in Hanna v. Plumer. Discussion. This case presents the situation in which a state statute may be both substantive and procedural in nature. In this case, under state law, the standard for granting a new trial was held to be substantive in nature. Alternatively, the requirement that the appellate court consider whether a new trial shall be ordered was found to be procedural in nature. As a result, a federal trial court, faced with such a factual situation, should determine whether a new trial should be ordered, applying the state standard, rather than an appellate court.
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Mason v. American Emery Wheel Works
Mason v. American Emery Wheel Works

Citation. 241 F.2d 906 (1st Cir. 1957). Brief Fact Summary. While at work in Mississippi, Mason (Plaintiff) was injured by an emery wheel manufactured by American Emery Wheel Works (Defendant), a Rhode Island corporation. Plaintiff sued in the United States District Court for the District of Rhode Island, alleging that the emery wheel was unreasonably dangerous. Synopsis of Rule of Law. A federal court may use modern dicta from an opinion of a state supreme court to overturn a previous decision made by that state court. Facts. In its answer, Defendant raised as a defense, a lack of privity. When evidence at trial showed that the emery wheel had passed through several owners before it was sold to Plaintiff's employer, the trial court granted Defendant's Motion to Dismiss on the ground that Mississippi still required privity to sue a manufacturer for such injuries. This decision was supported heavily by the court's conclusions, approximately thirty years previously in Ford Motor Co. v. Myers, 151 Miss. 73, 117 So. 362 (1928). In that decision, the court held that a manufacturer was not liable for negligence in the manufacture of appliances, which could and would become highly dangerous when put to the uses for which they are intended, when there is no privity of contract between the user and the manufacturer. Issue. Whether a prior controlling decision may be overturned by the dicta of a more recent opinion from that same state? Held. The United States Court of Appeals for the First Circuit vacated the order of the district court and remanded the case for further proceedings. The dicta provided by the Supreme Court of Mississippi in the more recent decision of E.I. Du Pont De Nemours & Co. v. Ladner indicates the willingness of the Supreme Court of Mississippi to overturn the Ford decision as soon as a case presents itself as squarely on the issue. Concurrence. The concurring opinion provided by Judge Hartigan stated that the question of how clear dicta must be to prevail over a prior controlling decision does not lend itself to an easy solution. Discussion. This case presents a very "tricky" situation for the court, comparing an old decision squarely on point with more modern dicta. Here, the court takes a great step in inferring that the Supreme Court of Mississippi would reverse its decision in a case thirty years old. This case does show, however, that there is a basis for using a modern trend, coupled with a survey of judicial history, to overrule a decision squarely on-point.
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Dice v. Akron, Canton & Youngstown R. Co.

Citation. 342 U.S. 359, 72 S.Ct. 312, 96 L.Ed. 398 (1952). Brief Fact Summary. Dice (Petitioner), a railroad fireman, was seriously injured when an engine in which he was riding left the track. Alleging that his injuries were due to Akron, Canton, & Youngstown R. Co.'s (Respondent) negligence, he brought an action for damages under the Federal Employers' Liability Act (Act) in the Court of Common Pleas of Ohio. Synopsis of Rule of Law. The right to trial by jury is a basic and fundamental feature of our system of federal jurisprudence and it is part and parcel of the remedy offered to railroad workers under the Act. Facts. Respondent offered several affirmative defenses, including a written document signed by Petitioner purporting to release Respondent from all liability in full for $924.63. Petitioner admitted that he had signed several receipts for payment made to him, but denied that he had made a full and complete settlement of his claims. Petitioner alleged that the purported release was void because he had signed it relying on Respondent's deliberately false statement that the document was nothing more than a receipt for back wages. At trial, the jury found in favor of the Petitioner and awarded him $25,000. The trial judge later entered judgment notwithstanding the verdict. The judgment notwithstanding the verdict was reversed by the Court of Appeals of Summit County, Ohio. The Supreme Court of Ohio reversed the judgment of the court of appeals and sustained the trial court's action. Issue. Should the validity of the release be governed by federal or state law? If it is state law, then did Ohio correctly apply the standard? Held. The validity of releases under the Act raises a federal question to be determined by federal rather than state law. State laws do not control or determine what a federal statute or right entails. The purpose of the Act would be defeated if states could determine what certain person's rights were under the federal statute. Further, a release of rights under the Act is void when the employee is induced to sign it by the deliberately false and material statements of the employer's representatives. In Ohio, factual questions of fraudulent releases are separated, with some issues tried to the jury, and others to the judge. The right to a jury trial is a fundamental right, which should not have been denied in a state court as it was here. The trial judge and the Supreme Court of Ohio erred in holding that petitioner's rights were to be determined by Ohio law and in taking away Petitioner's verdict when the issues of fraud had been submitted to the jury on conflicting evidence and determined in Petitioner's favor. Dissent. Justice Frankfurter, with whom Justice Reed, Justice Jackson and Justice Burton join, concurred for reversal, but dissented from the court's opinion. The dissent noted that there should be no distinction between other negligence actions, routinely handled under state law, and the negligence alleged in this situation under a federal act.
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Discussion. This decision is rooted in the fact that if federal law controls then it should be given uniform application through the country. This is essential to effectuate the purpose of federal statutes.
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United States v. Kimbell Foods, Inc.

Citation. 440 U.S. 715, 99 S.Ct. 1448, 59 L.Ed.2D 711 (1979). Brief Fact Summary. This case involves two competing security interests in the property of O.K. Super Markets, Inc. Both interests were perfected pursuant to the Texas Commercial Code. Synopsis of Rule of Law. When there is little need for a nationally uniform body of law, state law may be incorporated as the federal rule of decision. Facts. In 1968, O.K. Super Markets, Inc., borrowed $27,000.00 from Kimbell Foods, Inc., pursuant to two security agreements. Kimbell Foods, Inc., (Plaintiff) properly perfected its security interests by filing financing statements with the Texas Secretary of State. In 1969, O.K. Super Markets, Inc., obtained a $300,000.00 loan from the Republic National Bank of Dallas (Republic), and a financing statement evidencing this agreement was also filed with the Texas Secretary of State. The SBA guaranteed 90% of this loan under the Small Business Act. Subsequently, Plaintiff initiated suit to recover a balance due of $18,258.57. However, before Plaintiff filed suit, O.K. Super Markets defaulted on the SBA loan. Republic assigned its security interest to the SBA. The district court found for the government, but the court of appeals reversed, finding that the Kimball security agreement was dated before the federal lien arose. Issue. Whether contractual liens arising from certain federal loan programs take precedence over private liens, in the absence of a federal statute setting priorities? Held. The source of law is federal, but a national rule is unnecessary to protect the federal interests underlying the loan programs. As a result, the court adopted the state law as the appropriate federal rule for establishing the relative priority of the competing federal and private liens. Discussion. The court found that nationwide standards are not necessary for the protection of the federal treasury from defaulting debtors. The court based its rationale on the fact that sufficient state codes exist to furnish convenient solutions that in no way are inconsistent with the protection of federal interests. Furthermore, the court based its decision, in part, on the fact that SBA employees are instructed to follow state laws carefully in the administration of their programs.
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CHAPTER XII. Appeals
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Quackenbush v. Allstate Insurance Company

Citation. 517 U.S. 706, 116 S.Ct. 1712, 135 L.Ed. Brief Fact Summary. Insurance Commissioner for the State of California (Petitioner) was appointed trustee over the assets of the Mission Insurance Company and its affiliates in 1987, after those companies were ordered into liquidation by a California court. In an effort to gather the assets of the defunct companies, the Commissioner filed the instant action against Allstate Insurance Company (Respondent) in state court, seeking contract and tort damages for Respondent's alleged breach of certain reinsurance agreements. Synopsis of Rule of Law. An abstention-based stay order is appealable as a "final decision" under Section 1291, because it places the litigants effectively out-of-court and its effect is precisely to surrender jurisdiction of a federal suit to a state court. Facts. Respondent removed the action to federal court on diversity grounds. Petitioner sought remand to state court. The Petitioner indicated that Respondent would be asserting its right to set-off its own contract claims against the Petitioner's recovery under the contract and that the viability of these set-off claims was a disputed questions of state law. The district court determined that the case should be resolved in state court and concluded that it was an appropriate case for abstention. The United States Court of Appeals for the Ninth Circuit reversed, finding the case inappropriate for abstention. Issue. Whether an abstention-based remand order is appealable as a final order under 28 U.S.C. 1291? Held. The abstention-based remand order is appealable as a final order under 28 U.S.C. 1291. Discussion. The court relies heavily on the case of Moses H. Cone Memorial Hospital v. Mercury Constr. Corp. Applying that case to the case before the court, the Supreme Court of the United States found that when a district court remands a case to a state court, the district court disassociates itself entirely from the case. To the Court, the remand order at issue has a sense of finality functionally equivalent to the stay order at issue in Moses H. Cone.
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Digital Equipment Corporation v. Desktop Direct, Inc.
Digital Equipment Corporation v. Desktop Direct, Inc.

Citation. 511 U.S. 863, 114 S.Ct. 1992, 128 L.Ed.2d 842 (1994). Brief Fact Summary. Desktop Direct, Inc. (Respondent) sells computers and like equipment under the trade name "Desktop Direct." Digital Equipment Corporation (Petitioner) is engaged in a similar business and in late 1991 began using that trade name to market a new service it called "Desktop Direct from Digital." In response, Respondent filed an action with the United States District Court for the District of Utah, charging Petitioner with the unlawful use of the Desktop Direct name. Synopsis of Rule of Law. A refusal to enforce a settlement agreement claimed to shelter a party from suit altogether does not supply the basis for immediate appeal under Section 1291. Facts. Confidential settlement of the matter was reached on March 25, 1992. That same day, Respondent filed a Notice of Dismissal in the district court. Several months later, Respondent moved to vacate the dismissal and rescind the settlement agreement, alleging misrepresentation of material facts during settlement negotiations. The district court granted the motion and Respondent appealed. The United States Court of Appeals for the Tenth Circuit dismissed the appeal for lack of jurisdiction, holding that the district court order was not appealable under Section 1291 because it neither ended the litigation on the merits nor fell within the long recognized collateral order exception to the final judgment requirement. Issue. Whether an order vacating a dismissal predicated on the parties' settlement agreement is final as a collateral order even without a district court's resolution of the underlying cause of action? Held. An order denying effect to a settlement agreement does not come within the narrow ambit of collateral orders. The Supreme Court of the United States affirmed the decision of the court of appeals. Discussion. The collateral order doctrine entitles a party to appeal from a narrow class of decisions that do not terminate the litigation, but must, in the interest of achieving a healthy legal system, nonetheless be treated as final. The conditions for collateral order appeal are stringent to satisfy. Respondent's contention that it holds a "right not to stand trial" is insufficient to satisfy the scrutiny to which Section 1291 claims must be subjected. The court's rationale for this decision is based upon the nature of the argument. In the case before the court, the rights at issue are privately conferred rights as opposed to those originating in the Constitution of the United States or in statute.
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Cardwell v. Chesapeake & Ohio Railway Co.
Cardwell v. Chesapeake & Ohio Railway Co.

Citation. 504 F.2d 444 (6th Cir. 1974). Brief Fact Summary. This case resulted from an appeal of an order overruling a Reserved Motion for a Directed Verdict in a Federal Employers' Liability Act (FELA) action to recover damages for injury and for wrongful death. The jury awarded $10,500.00 for injuries sustained, but was unable to decide whether the death was caused by the injury suffered. Synopsis of Rule of Law. 28 U.S.C. 1292(b) was not intended to authorize interlocutory appeals in ordinary suits for personal injuries or wrongful death, which can be tried on their merits and decided within a few days. Facts. On August 14, 1969, Winfred M. Cardwell (Plaintiff) filed a complaint under the FELA alleging that her husband, Mr. Cardwell, sustained a back injury while he was employed at Chesapeake & Ohio Railway Co. (Defendant) in Huntington, West Virginia. The injury occurred when he attempted to close a locomotive cab door that had been left hanging on its right upper hinge. After his death, Plaintiff, as administratrix of the estate, filed an Amended Complaint, which alleged that her husband's death was the result of the accident. A jury found that the accident resulted from the combined negligence of Mr. Cardwell and Defendant. It returned a verdict of $10,500.00. From this verdict, interlocutory appeal was sought as to the question of whether Mr. Cardwell's death resulted from Defendant's negligence. Issue. Whether there was sufficient competent evidence of the causal relationship between the injury and death for the submission of this claim to the jury? Held. The court declined to decide this issue because it appeared to be precisely the kind of ordinary suit for personal injuries or wrongful death that can be tried on its merits and decided within a few days. Therefore, it should not be considered on interlocutory appeal. Discussion. The court based its decision upon the extraordinary nature of the interlocutory appeal. In the decision, the court noted that Congress intended that the interlocutory appeal should be used sparingly, i.e., only in exceptional cases. This was an ordinary suit for injury and wrongful, which can be tried and decided within a few days. Therefore, there was no need for an interlocutory appeal.
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Will v. United States
Will v. United States

Citation. 389 U.S. 90, 88 S.Ct. 269, 19 L.Ed.2d 305 (1967). Brief Fact Summary. Simmie Horwitz, the Defendant in a criminal tax evasion case pending before the United States District Court for the Northern District of Illinois, filed a Motion for a Bill of Particulars, which contained thirty requests for information. Request number twenty-five sought information concerning any oral statements of the Defendant relied upon by the government to support the charge in the indictment. Synopsis of Rule of Law. The peremptory writ of mandamus has traditionally been used in the federal courts only to confine an inferior court to a lawful exercise of its prescribed jurisdiction or to compel it to exercise its authority when it has a duty to do so. It is clear that only exceptional circumstances amounting to a judicial usurpation of power will justify the invocation of this extraordinary remedy. Facts. The United States District Court Judge ordered the United States Attorney to furnish the information, but he did not comply with the order. The United States Court of Appeals for the Seventh Circuit granted the government's Writ of Mandamus directing the District Court Judge to vacate his order directing the government to comply with question number twenty-five in the Bill of Particulars. Issue. Whether it was proper for the United States Court of Appeals for the Seventh Circuit to issue a Writ of Mandamus to compel the United States District Judge, to vacate a portion of the pre-trial order? Held. Neither the record nor the order of the court of appeals justifies the invocation of the extraordinary Writ of Mandamus in this case. As a result, the Writ is vacated and the cause is remanded to the court of appeals. Discussion. The Supreme Court of the United States found that the court of appeals had issued the Writ of Mandamus without a reasoned basis for its action. Without a more complete record, and evidence of due inquiry by the court of appeals, the Court was reluctant to let the writ of mandamus stand.
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Curtiss-Wright Corporation v. General Electric Company
Curtiss-Wright Corporation v. General Electric Company

Citation. 446 U.S. 1, 100 S.Ct. 1460, 64 L.Ed.2d 1 (1980). Brief Fact Summary. From 1968 to 1972, General Electric Company (Respondent) entered into a series of twenty-one contracts with the Curtiss-Wright Corporation (Petitioner) for the manufacture of components designed for use in nuclear powered naval vessels. In 1976, Petitioner brought a diversity action in the United States District Court for the District of New Jersey, seeking damages and reformation of the twenty-one contracts. The complaint asserted claims based upon fraud, misrepresentation and breach of contract by Respondent. Respondent counterclaimed for costs allegedly incurred as a result of "extraordinary efforts" provided to Petitioner during the performance of the contracts, which allowed Petitioner to avoid default on the contract. Synopsis of Rule of Law. Rule 54(b) of the Federal Rules of Civil Procedure allows a district court dealing with multiple claims or multiple parties to direct the entry of final judgment as to fewer than all of the claims or parties. To do so, the court must make an express determination that there is no just reason for delay. Facts. This dispute concerns the application of a release clause contained in each of the twenty-one agreements. Petitioner moved for summary judgment on the nineteen million dollar balance due from Respondent on the contracts. The district court granted the Motion for Summary Judgment, notwithstanding the release clause. Petitioner then moved for certification of the district court's orders as final judgments under Rule 54(b). The court found, subject to Rule 54(b), that there was no just reason for delay. The United States Court of Appeals for the Third Circuit reversed and held that the district court had abused its discretion by granting the Rule 54(b) certification. Issue. Does the existence of a counterclaim, which would result in a set-off against any amounts due and owing to the Petitioenr, justify the denial of Rule 54(b) certification? Held. The mere presence of counterclaims does not render a Rule 54(b) certification inappropriate. In this case, the district judge determined that Respondent's counterclaims were severable from the claims, which had been determined in terms of both the factual and legal issues involved. The court of appeals did not conclude otherwise and, as a result, Rule 54(b) certification was appropriate. Discussion. The court notes that the question of certification in cases such as this is likely to be "close." Therefore, because the district judge is in the most favorable position from which to balance the competing factors, substantial deference should be given to his or her decision on review.
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Gulfstream Aerospace Corp. v. Mayacamas Corp.
Gulfstream Aerospace Corp. v. Mayacamas Corp.

Citation. 485 U.S. 271, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988). Brief Fact Summary. Gulfstream Aerospace Corporation (Plaintiff) sued Mayacamas Corporation (Defendant) in Georgia state court for breach of contract stemming from its failure to purchase aircraft as previously agreed upon. Defendant, choosing not to remove the action to federal court, filed an answer and counterclaim. A month after commencement of the state suit, Defendant sued Plaintiff in federal district court in California, alleging breach of the same contract. Synopsis of Rule of Law. Orders granting or denying stays of "legal" proceedings on "equitable" grounds are not automatically appealable under Section 1292(a)(1). Facts. After Defendant filed suit in federal court, Plaintiff moved for a stay or dismissal. The district court denied the stay, and the United States Court of Appeals for the Ninth Circuit dismissed the appeal for lack of jurisdiction, declining to find a right of appeal under Sections 1291 or 1292(a)(1). The court of appeals also declined to treat Petitioner's Notice of Appeal as a Petition for Writ of Mandamus. Issue. Is Plaintiff's Motion for Stay appealable pursuant to Section 1292(a)(1)? Held. No. The Supreme Court of the United States rejected Petitioner's claim that the district court's order in this case is immediately appealable under Section 1292(a)(1), pursuant to the Enelow-Ettelson doctrine. This doctrine provides that certain orders that stay or refuse to stay judicial proceedings are considered injunctions and are immediately appealable. However, the decision in Enelow was made at a time when there were separate systems for legal and equitable claims. The Court concluded that the effect of the Enelow-Ettelson doctrine was arbitrary, since it is based on historical distinctions. Therefore, the Court affirmed the court of appeal's decision. Discussion. In this case, the Court overturned the antiquated Enelow-Ettelson doctrine, which provided that certain orders that stay or refuse to stay judicial proceedings are considered injunctions and, therefore, are immediately appealable. However, the court noted that Section 1291 may still provide for review of orders, previously appealable under Enelow-Ettelson, to be reviewed under the collateral-order doctrine.
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Bose Corporation v. Consumers Union of United States, Inc.

Citation. 466 U.S. 485, 104 S.Ct. 1949, 80 L.Ed.2d 502 (1984). Brief Fact Summary. In the May 1970 issue of its magazine, "Consumer Reports," Consumers Union of United States, Inc. (Respondent), published an article evaluating the quality of numerous brands of medium-priced loudspeakers. After describing the Bose 901 system and some of its virtues, the article made the following statement: "Individual instruments heard through the Bose system seemed to grow to gigantic proportions and tended to wander about the room. For instance, a violin appeared to be 10 feet wide and a piano stretched from wall to wall. With orchestral music, such effects seemed inconsequential. But we think they might become annoying when listening to soloists." Synopsis of Rule of Law. In cases raising First Amendment issues, an appellate court has an obligation to make an independent (de novo) examination of the whole record in order to make sure that the judgment does not constitute a forbidden intrusion into the field of free expression. Further, this constitutional principle is equally applicable in federal courts as it is in the state courts. Facts. Petitioner brought a product disparagement action in the United States District Court for the District of Massachusetts. The district court found that Petitioner was a "public figure" under the standard of New York Times Co. v. Sullivan, 376 U.S. 254 (1964). Therefore, Petitioner was required to prove by clear and convincing evidence that Respondent made false statements with actual malice. The court found that the words "individual instrumentstended to wander about the room" contained a disparaging false statement of material fact made with actual malice, i.e., made with knowledge of its falsity or with reckless disregard of the truth. On appeal, the United States Court of Appeals for the First Circuit reversed stating that its review was not limited to the clearly erroneous standard of Rule 52(a) of the Federal Rules of Civil Procedure. It was necessary to conduct a de novo review. As a result, the court found that it was unable to find clear and convincing evidence that Consumers Union published the statement with knowledge that the statement was false, or with reckless disregard of its falsity. Issue. Was the court of appeals' review of the actual malice determination, as made by the district court, subject to the "clearly erroneous" standard of Rule 52(a) or, were they correct in performing a de novo review? Held. The Supreme Court of the United States affirmed the court of appeals decision. It found that the court of appeals was correct in its conclusions that (1) there is a significant difference between proof of actual malice and mere proof of falsity; and (2) that such proof is lacking in this case. As a result, the de novo review performed by the court of appeals was the correct standard of review in this case. Dissent. The courts of appeals are ill-prepared to make determinations regarding the mens rea of witnesses. As a result, the "clearly erroneous" standard of Rule 52(a) should apply to First Amendment cases, such as the case before the Court.
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Discussion. The Court notes that Rule 52(a), and its "clearly erroneous" standard, never actually forbids an independent examination of the entire record. In fact, the court in United States v. Gypsum Co. stated that a finding is "clearly erroneous" when, although there is evidence to support it, the reviewing court after review of all the evidence is left with the definite and firm conviction that a mistake has been committed.
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CHAPTER XIII. Preclusive Effects Of Judgments
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Manego v. Orleans Board of Trade

Citation. 773 F.2d 1 (1st Cir. 1985). Brief Fact Summary. In late 1978 and early 1979, Manego (Plaintiff) applied to the Orleans Board of Selectmen for entertainment and liquor licenses for a disco, which he wanted to build on a vacant lot. The lot was located in a commercial district a few hundred feet from an ice skating rink that was owned by Cape Cod Five Cents Savings Bank (Bank). The Bank opposed Plaintiff's application and, eventually, the Orleans Board of Selectmen denied Plaintiff's applications for both the liquor and amusement licenses. The Bank had plans of its own to offer live music, roller-skating, and dancing at the rink. Synopsis of Rule of Law. Under the doctrine of res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action. This bar is limited, however, to cases arising out of the same cause of action or claim. Facts. Plaintiff brought a lawsuit in federal district court naming the Board of Selectmen, the Bank and David Willard (Willard), the vice president of the bank as Defendants, claiming they had conspired to deny him the licenses because of his race. The district court dismissed the state law claims for failure to state a cause of action and granted the Defendants' Motion for Summary Judgment as to the remaining claims. However, Plaintiff brought another lawsuit, this time against the Bank, Willard and the Orleans Board of Trade alleged antitrust violations under the Sherman Antitrust Act. Willard and the Bank moved for summary judgment on the grounds that the new claims were barred by the doctrine of res judicata. The district court held that the facts forming Plaintiff's claim of antitrust violations were the same as those which formed the basis of his earlier civil rights claims and that they were, therefore, barred by the final judgment against Plaintiff on the civil rights claims. Issue. Is Plaintiff barred from bringing a second lawsuit involving some of the defendants in a prior action, when the claims are based upon the same facts as those that formed the basis for the first suit? Held. Yes. Since each alleged conspiracy had the same practical end, keeping Plaintiff from operating the disco, and each used essentially the same means, denial of the licenses, the difference in motive for the conspiracy did not create separate transactions. As a result, Plaintiff's antitrust claim is barred by res judicata as to the Bank and Willard. Even though the doctrine of res judicata was found to not apply as to the Orleans Board of Trade, the court found that Plaintiff did not fall under an exception to the NoerrPennington doctrine. Therefore, summary judgment is also affirmed as to the board, but as a result of different rationale. Discussion. The court adopted a "transactional" definition of the underlying claim or cause of action. However, the mere fact that different legal theories are presented in each
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Manego v. Orleans Board of Trade
case does not mean that the same transaction is not behind each. So, in the case before the court, it does not matter that one suit alleged a conspiracy with a racial animus and one alleged an antitrust theory. Further, it does not matter that the named defendants were not identical.
169
Federated Department Stores, Inc. v. Moitie

Citation. 452 U.S. 394, 101 S.Ct. 2424, 69 L.Ed.2d 103 (1981). Brief Fact Summary. In 1976, seven consumers, including Moitie and Brown (Plaintiffs), filed class action lawsuits against Federated Department Stores, Inc. (Defendant), alleging that the Defendant illegally fixed the retail prices of women's clothing in Northern California. Synopsis of Rule of Law. This court recognizes no general equitable doctrine, such as suggested by the court of appeals, which countenances an exception to the finality of a party's failure to appeal merely because his rights are closely interwoven with those of another party. Facts. The district court dismissed all seven suits in their entirety because they had not suffered harm to their business or property within the meaning of the federal antitrust statute. The dismissal is referred to as Moitie I and Brown I. Five of the seven appealed. Moite and Brown did not appeal, but refiled their case in state court, Moite II and Brown II. Their actions were removed to federal court and then dismissed on res judicata grounds. The original action involving the other five Plaintiffs was reversed and remanded to the district court to be reconsidered in light of the recent decision in Reiter v. Sonotone. Moite II and Brown II was eventually appealed to the United States Court of Appeals for the Ninth Circuit. The court of appeals held that the application of res judicata would normally preclude the second action, however, an exception should be made when the original dismissal was based on a case that had been overruled. Essentially, the court reversed, refusing to apply res judicata based on grounds of "simple justice" and public policy. Issue. Whether the Court of Appeals for the Ninth Circuit validly created an exception to the doctrine of res judicata when the court found that res judicata does not bar relitigation of an unappealed adverse judgment, when other Plaintiffs in similar actions against common Defendants successfully appealed the judgments against them? Held. There are some instances when considerations of justice and fairness dictate that prior judgments should be given preclusive effect. However, the Supreme Court of the United States did not find that there was any injustice in this case. The court of appeal's reliance on public policy is misplaced, as it has long been the public policy that there be an end to litigation, and that those who were involved in the litigation be bound by the judgment. Accordingly, the judgment of the court of appeals is reversed, and the case is remanded. Dissent. Justice Brennan felt that the case should have been remanded due to his conclusion that Moite II and Brown II was not properly removed. Concurrence. Justices Blackmun and Marshall focused on the notions of public policy and "simple justice" that were articulated by the court of appeals as rationales for
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ignoring the traditional rule of res judicata. Further, the concurrence noted that there was a need to discourage the "break-away" litigation that will, allegedly, occur as a result of the majority decision. Discussion. The court noted that they had addressed this same issue in Reed v. Allen. However, the court stated that the present case presented even more compelling reasons for applying res judicata than did Reed. In the present case, the respondents sought to be windfall beneficiaries of an appellate reversal procured by other independent parties who had no interest in the respondents' case. Further, the court noted that in the present case, it was clear that the respondents made a calculated decision to forgo the appellate process.
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Rinehart v. Locke
Rinehart v. Locke
Citation. 454 F.2d 313 (7th Cir. 1971). Brief Fact Summary. Plaintiff filed an original complaint alleging that an arrest made on November 24, 1964, deprived him of rights secured by the United States Constitution. Plaintiff was arrested after three private detectives (Defendants), observed Plaintiff at an intersection speaking with a man on a motorcycle. Their observations caused a false report to be made to county police that Plaintiff was falsely representing himself as a police officer. As a result of the report, four county police officers (Defendants), arrested Plaintiff for impersonating a government official and charged him with unlawful use of weapons and resisting arrest. Although Plaintiff was initially convicted, the conviction was later reversed on appeal for insufficient evidence. Synopsis of Rule of Law. An order of a district court, which dismisses a complaint for failure to state a claim, but which does not specify that the dismissal is without prejudice, is res judicata as to the then existing claim. Facts. The district court dismissed the 1969 complaint for failure to state a claim based on the absence of probable cause. Plaintiff filed a leave to file an amended complaint, but that motion was denied, without rationale, by the court. Plaintiff did not appeal and, on June 17, 1970, Plaintiff filed a second complaint that included an averment that the arrest was made without probable cause. Issue. Is Plaintiff barred from litigating a claim that is identical to a previously litigated claim, but now includes an averment that arrest was made without probable cause, under the doctrine of res judicata? Held. Plaintiff's claim that it was attempting to make in the first instance, but did not do so, is barred by the doctrine of res judicata because the original order did not contain a clause indicating that the action was dismissed without prejudice. As a result, Plaintiff is barred from relitigating the claim that the arrest was made without probable cause. Discussion. The rule forces individuals, such as the Plaintiff in this case, to persuade the district court to either include a specification that the dismissal is without prejudice or to permit an amendment. The outcome of the case, and the subsequent burden that is placed on individual plaintiffs, can be viewed as quite a strict conclusion to a situation in which the plaintiff's attorney merely failed to allege a lack of probable cause in the initial complaint. This is especially true in light of the fact that Plaintiff had filed a leave to plead that was denied without the court articulating a rationale. Normally, under Rule 15(a) of the Federal Rules of Civil Procedure, leave shall be freely given when justice so requires.
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Marrese v. American Academy of Orthopaedic Surgeons

Citation. 470 U.S. 373, 105 S.Ct. 1327, 84 L.Ed.2d 274 (1985). Brief Fact Summary. Two Illinois orthopedic surgeons (Petitioners) who were denied membership in the American Academy of Orthopaedic Surgeons (Respondents) filed suit in Illinois state court, claiming that the denial of their applications without a hearing violated their common law associational rights under Illinois law. Synopsis of Rule of Law. Section 1738 directs a federal court to first refer to the preclusion law of the state in which the judgment was rendered. Only if state law indicates that a particular claim or issue would be barred is it necessary to determine if an exception to Section 1783 should apply. Facts. The state court dismissed upon failure to state a cause of action. The Petitioners then filed suit in federal court, claiming that the denial of their membership applications constituted a boycott in violation of federal antitrust law. Respondents filed a Motion to Dismiss on the ground that claim preclusion barred the federal antitrust claim because the state actions concerned the same facts and was dismissed with prejudice. The United States District Court for the Northern District of Illinois denied this motion, holding that state judgments do not bar federal antitrust claims. Then, the district court held Respondents in criminal contempt for refusing to comply with a discovery order as to its membership applications files. The United States Court of Appeals for the Seventh Circuit found that federal principles of claim preclusion barred the federal suit, and reversed the contempt order because the original discovery order was invalid. Issue. Whether a state court judgment may have preclusive effect on a federal antitrust claim that could not have been raised in the state proceeding? Held. No. The court of appeals erred by suggesting that in these circumstances a federal court should determine the preclusive effect of a state court judgment without regard to the law of the state in which judgment was rendered. 28 U.S.C. Section 1738 provides that state judicial proceedings "shall have the same full faith and credit in every court within the United States as they have by law or usage in the courts of such State from which they are taken." The federal court must apply the state rule in regards to res judicata when determining the effect of state judgments. In this case, the court of appeals did not consider the approach outlined in Section 1738. As a result, the court of appeal's decision is reversed and remanded with further proceedings consistent with this decision. Concurrence. If a state statute is materially identical to a federal statute, and a party had a full and fair opportunity to litigate the state claim in state court, it might be found that there was a full and fair opportunity to litigate that party's rights under the federal statute. Discussion. The policy behind Section 1738 allows state court to fashion their own rules for the preclusive effect of judgments in their courts, subject to the due process clause.
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The idea of comity between the federal and state court systems allows for policies such as the rule created in the instant case.
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Semtek Intl. Inc. v. Lockheed Martin Corp.

Citation. 531 U.S. 497 (2001). Brief Fact Summary. Plaintiff Semtek Intl. Inc. filed suit in California state court against Defendant Lockheed Martin, who then had the suit moved to Federal court on diversity grounds before filing a motion to dismiss the suit based on Californias 2-year statute of limitations. Synopsis of Rule of Law. Federal common law governs the claim-preclusive effect of a dismissal by a Federal court sitting in diversity, which in turn will apply the claimpreclusion laws of the state in which the Federal court is located. Facts. Plaintiff filed suit in California state court against Defendant alleging inducement of breach of contract and various business torts. Defendant moved the case to Federal District Court in California via diversity jurisdiction and successfully moved to dismiss Plaintiffs claim as barred by Californias 2-year statute of limitations. The District Court dismissed the suit on the merits and with prejudice. Plaintiff then re-filed suit against Defendant, this time in Maryland state court. Lockheed again had the case removed to Federal district court, this time in Maryland, and ask the court to apply claim-preclusive effect to the California Federal District Courts adjudication on the merits, and dismiss the suit. Issue. Whether the claim-preclusive effect of a Federal judgment dismissing a diversity action on statute of limitation grounds is determined by the law of the state in which the Federal court sits. Held. Yes. The case was reversed and remanded for proceedings consistent with the courts decision. An adjudication upon the merits, under Federal Rule of Civil Procedure 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. Discussion. An on-the-merits adjudication is one that actually passes on the substance of the particular claim before the court. It is no longer the case that a judgment on the merits is automatically entitled to claim preclusive effect. Thus the term operates as adjudication on the merits does not automatically render a judgment the effect of claim preclusion under Fed. R. Civ. Pr. 41(b). Instead adjudication on the merits is merely one that is not dismissed with prejudice. An adjudication upon the merits, under Fed. R. Civ. Pr. 41(b) only has the effect of preventing a re-filing in the same district court in which the case was earlier filed.
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The Full Faith and Credit Clause does not mean that states can give Federal court judgments the same effect they would give their own State court judgments, but must grant them the same effect the Federal court would. Thus Federal common law governs the claim-preclusive effect of a dismissal by a Federal court sitting in diversity.
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Little v. Blue Goose Motor Coach Co.
Little v. Blue Goose Motor Coach Co.

Citation. 346 Ill. 266, 178 N.E. 496 (Ill. 1931). Brief Fact Summary. Dr. Robert M. Little (Little), now deceased, collided with a passenger bus, owned and operated by Blue Goose Motor Coach Company (Defendant), in the city of East St. Louis, Missouri. Defendant filed suit with a justice of the peace to recover for damage to the bus caused by the collision. Judgment was entered in favor of Defendant in the amount of $139.35. The case was proceeding before the justice of the peace, while executrix of Little's estate, Mabel A. Little (Plaintiff) filed suit in the City Court of East St. Louis to recover damages for personal injuries alleged to have been suffered by him in the collision. Synopsis of Rule of Law. Estoppel by verdict arises when a material fact in any litigation has been determined in a former suit between the same parties or between parties with whom the parties to the subsequent suit are in privity, when the fact was also material to the issue. Facts. Defendant raised the defense of estoppel by verdict in the trial court, but judgment was nevertheless entered in favor of Plaintiff in the amount of $5,000.00. The Illinois Appellate Court reversed the judgment award. Issue. Does a previous judgment by a justice court constitute an estoppel by verdict as to a subsequent action involving the same issues, parties and transaction? Held. The Plaintiff is precluded from maintaining an action based on the doctrine of estoppel by verdict. Since the verdict award in the case before the justice of the peace was premised upon a theory of negligence, that same issue of negligence cannot be the basis for a subsequent wrongful death action. Discussion. The court noted that the issue, negligence, was the same in both of the suits. Additionally, the court found that the cause of action is the wrongful act leading to the death, not the death itself. As a result, the claims that were maintained in the two actions are also the same. Since Plaintiff did not appeal the decision of the justice of the peace, that decision became final and, as a result, subject to estoppel by verdict. Estoppel by verdict is now also termed collateral estoppel.
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Hardy v. Johns-Manville Sales Corporation
Hardy v. Johns-Manville Sales Corporation

Citation. 681 F.2d 334 (5th Cir. 1982). Brief Fact Summary. Insulators, pipefitters, carpenters, factory workers and others exposed to asbestos suffering from asbestos-related diseases sued various manufacturers, sellers and distributors of asbestos (Plaintiffs/Appellees) Plaintiffs asserted causes of action including negligence, breach of implied warranty and strict liability. Synopsis of Rule of Law. Collateral estoppel is inappropriate when the prior judgment is ambivalent. Facts. The district court entered a collateral estoppel order, because certain issues had been determined in Appellee's favor by a judgment for unrelated Plaintiffs against six manufacturers of asbestos in Borel v. Fibreboard Paper Products Corp. The Appellants argued that Borel did not necessarily decide that asbestos-containing insulation products were unreasonably dangerous because of the failure to warn. The special interrogatories answered by the Borel jury were general and not specifically directed toward the failure to warn. Issue. Can the doctrine of collateral estoppel be applied to preclude a subsequent action where the fact-finder in the previous action based its ultimate conclusion on one of several possible theories? Held. No. Collateral estoppel should not apply to the case before the court because the Borel decision is, ultimately, ambiguous as to several key areas. The court noted that there is no way to know when the duty to warn attaches. Further, the court found that there was no way to know what particular failure in the duty to warn was the key element. Discussion. The court stated that collateral estoppel only applies to issues of fact or law necessarily decided by a prior court. Since Borel did not ultimately decide that all manufacturers of asbestos-containing insulation products knew or should have known of the dangers of their products at all relevant times, collateral estoppel is an inappropriate remedy in this particular case.
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Commissioner of Internal Revenue v. Sunnen

Citation. 333 U.S. 591, 68 S.Ct. 715, 92 L.Ed. 898 (1948). Brief Fact Summary. Sunnen (Respondent) licensed a corporation, which he controlled, and he entered into a series of agreements to use his patents in exchange for a payment of 10% royalty. He assigned his rights to these agreements to his wife, without consideration. Income from these agreements was reported on his wife's income, and taxes were paid by her. The Commissioner of Internal Revenue (Plaintiff) contends that this income was taxable to Defendant, so a deficiency was assessed against him. Synopsis of Rule of Law. If the relevant facts in the two cases at issue are separable, even though they be similar or identical, collateral estoppel does not govern the legal issues which recur in the second case. Facts. The Tax Court held that all royalties paid to the wife from 1937 to 1941 were income taxable to Defendant. The one exception was royalties of $4,881.35 paid in 1937 pursuant to a 1928 agreement. There was an earlier proceeding in 1935, when the Board of Tax Appeals held that payments made to the wife from 1929 through 1931 under the 1928 agreement were not taxable to Defendant. However, as to the second suit concerning the 1928 contract, the Tax Court held that it was bound by res judicata to follow the earlier 1935 decision. Therefore, the payments were not income, and not taxable to Defendant. The United States Court of Appeals for the Eighth Circuit affirmed in part and reversed in part. It was affirmed, in that it determined that the use of res judicata was proper to exclude the payments made in 1937 pursuant to the 1928 agreement as income to the Defendant. However, the decision was reversed, in that the payments made to his wife from 1937 to 1941 were not income. Issue. When two cases involve taxes assessed in different taxable years, should res judicata be confined to situations when the matter raised in the second case is identical in all respects with that decided in the first proceeding and when the controlling facts and applicable legal rules remain unchanged? Held. In cases, which involve income taxes in different taxable years, collateral estoppel must be used to avoid injustice. However, its use must be confined to situations when the matter raised in the second suit is identical in all respects to the first proceeding, and when the controlling facts and applicable laws remain the same. However, if the second proceeding concerns a similar claim in a different tax year, collateral estoppel is used only to those matters in the second proceeding, which were actually decided in the first suit. The purpose of collateral estoppel is to prevent redundant litigation. The Supreme Court of the United States reversed the decision of the court of appeals and remanded for proceedings consistent with its decision. On the issue of the payments made to the wife from 1937 to 1941, the Court found that the royalty payments were not involved in the earlier action before the Board of Tax Appeals, nor did they involve the same
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year. The Court found that collateral estoppel was not proper in this case, even though the contracts were identical. On this issue of the $4,881.35 royalties paid to his wife in 1937 pursuant to the 1928 contract, the facts, issues, and parties were identical to the earlier proceeding. However, legal principles have changed since the original decision. The Court found that there had been a significant change with the Clifford-Horst line of cases, which would have produced a different result in this case. Therefore, it found that collateral estoppel was not appropriate in this situation. Dissent. Justices Frankfurter and Jackson found that the judgment of the Tax Court was based on substantial evidence and was consistent with the law. Discussion. Subsequent modifications of the significant facts or a change or development in the controlling legal principles may make that determination obsolete, or erroneous, at least for future years. As a result, the "Subsequent Facts Doctrine" applies to prevent disparate treatment to taxpayers of the same tax class.
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Halpern v. Schwartz
Halpern v. Schwartz
Citation. 426 F.2d 102 (2nd Cir. 1970). Brief Fact Summary. Evelyn Halpern (Appellant) appeals from an order of the District Court for the Eastern District of New York, Judge John F. Dooling Jr., which affirmed the order of the referee in bankruptcy. The referee in bankruptcy denied on summary judgment Appellant's discharge because Schwartz's (Appellee) objections to her discharge were concluded by the prior judgment in which she was involuntarily adjudicated bankrupt. Synopsis of Rule of Law. A prior judgment will not foreclose reconsideration of the same issue if that issue was not necessary to the rendering of the prior judgment, and hence was incidental, collateral, or immaterial to that judgment. Facts. Appellee opposed Appellant's discharge from bankruptcy based upon one of the three charges. The Appellee moved for summary judgment denying Appellant a discharge on the ground that there was no defense to the charge, because the issue had previously been concluded in the bankruptcy adjudication and, thus, was res judicata. The referee granted summary judgment for the Appellee and the decision was affirmed on petition to the United States District Court for the Eastern District of New York for review. Issue. When the prior judgment rested on three independent, alternative grounds, is that judgment conclusive as to the facts that were necessarily found in order to establish only one separate ground? Held. No. When a prior judgment adjudicating one bankrupt rests on two or more independent alternative grounds, it is not conclusive as to the issues in trial of objections to discharge which issues were necessarily found in order to establish only one of those grounds. Since the finding of Appellant's actual intent to hinder and delay her creditors was found in connection with only one of the independent grounds, thus it cannot be given conclusive effect in this litigation. Discussion. The rationale for the court's ruling in this case was twofold. First, the decision on an issue not essential to the prior judgment may not have been afforded careful deliberation and analysis normally applied to essential issues, since a different disposition of the inessential issue would not effect the judgment. Second, the decision on an inessential issue in the prior judgment was not subject to a contested review on appeal. In this case, both of the two considerations were present. First, a finding of transfer while insolvent was sufficient without inquiry into Evelyn's intent. Finally, since there are alternative grounds, which could independently support the prior judgment, vigorous review of an asserted error as to one ground probably would not occur.
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Benson and Ford, Inc. v. Wanda Petroleum Co.
Benson and Ford, Inc. v. Wanda Petroleum Co.

Citation. 833 F.2d 1172 (U.S. Court of Appeals, Fifth Circuit, 1987). Brief Fact Summary. This action stems from a prior case brought by Shelby L.P. Gas Company (Shelby) against Wanda Petroleum Company and others (Defendants) alleging various antitrust claims. Shelby alleged that defendants retaliated against it because it refused to join a price fixing conspiracy in Louisiana. Synopsis of Rule of Law. The conclusive effect of a prior judgment may only be invoked against a party or someone in privity. A non-party will be considered in privity, or sufficiently close to a party in the prior suit, so as to justify preclusion in three situations: 1) a non-party, who has succeeded to a party's interest in property is bound by any prior judgments against that party; 2) a non-party who controlled the original suit will be bound by the resulting judgment; and 3) federal courts will bind a non-party whose interests were represented adequately by a party in the original suit. Facts. During the pendency of the Shelby litigation, Benson and Ford filed a separate suit alleging the same antitrust violations against Defendants. David Ford voluntarily appeared to testify as a witness for Shelby. The jury returned a verdict for the defendants. The jury found for the Defendants on all of Shelby's theories. After the Shelby judgment, the Defendants moved for summary judgment against Ford. The Defendant argued that Ford should be barred from relitigating the issues because he had voluntarily appeared at the first trial as a witness, and retained the same lawyer as Shelby. The district court granted the Motion for Summary Judgment and issued a Rule 54(b) certificate. Issue. Should a lawsuit by Ford be precluded due to his voluntary appearance as a witness in the previous matter, and the fact that he retained Shelby's attorney? Held. Ford is not precluded from relitigating the same issues that were decided in the Shelby case. Discussion. There is no evidence that Ford had control of the Shelby litigation. A plaintiff cannot be precluded from bringing his own suit because he chose the same attorney who participated in a prior suit. Furthermore, Ford's suit is not barred by reason of adequate representation. The court noted that Ford did not seek to relitigate Shelby's rights but, rather, sought to pursue its own cause of action. Therefore, Ford was not barred from later suit.
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Parklane Hosiery Co. v. Shore
Parklane Hosiery Co. v. Shore

Citation. 439 U.S. 322, 99 S.Ct. 645, 58 L.Ed.2d 552 (1979). Brief Fact Summary. Shore (Respondent), brought a shareholder's class action against the Parklane Hosiery Company (Petitioner), in the federal district court, alleging that Petitioner and its thirteen officers, directors and stockholders had issued a materially false and misleading proxy statement in connection with a merger. Synopsis of Rule of Law. In cases when a plaintiff could easily have joined in an earlier action or when the application of offensive estoppel would be unfair to the defendant, a trial judge should not allow the use of offensive collateral estoppel. Facts. Before this action was filed, the Securities Exchange Commission (SEC) filed suit against the same Defendant in the federal district court, alleging that the proxy statement that had been filed was materially false and misleading in essentially the same fashion as was alleged by Respondent in the present case. After trial, the district court found that the proxy was materially false and misleading. The United States Court of Appeals for the Second Circuit affirmed. As a result, the Respondent in this matter moved for partial summary judgment, alleging that the Petitioner should be collaterally estopped from relitigating the issues that had been resolved against it in the first action. The district court denied the motion but the court of appeals reversed, finding that the Petitioner was collaterally estopped from obtaining a jury trial on the same issues of fact. 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? Held. In the present case, none of the circumstances that might justify reluctance to allow the offensive use of collateral estoppel is present. As a result, the judgment of the court of appeals is affirmed. Dissent. Justice Rehnquist stated that the Petitioners were denied their rights under the Seventh Amendment to a jury trial. Justice Rehnquist argues that, even assuming there is no Seventh Amendment problem, there is a general problem with allowing the use of offensive collateral estoppel in this case. As rationale, Justice Rehnquist argues that the use of offensive estoppel runs counter to the strong federal policy favoring jury trials. Furthermore, Justice Rehnquist believes that the use of a jury in the second action could result in a different verdict than was reached in the first action. Discussion. In the present case, the application of offensive collateral estoppel will not reward a private plaintiff who could have joined in the previous action. Presumably, the respondent could not have joined in an action brought by the SEC on behalf of the government. Further, there is no unfairness in allowing use of offensive estoppel in this case. In the SEC action, the petitioner had every incentive and opportunity to litigate fully and vigorously as a result of the serious nature of the charges.
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United States v. Mendoza
United States v. Mendoza

Citation. 464 U.S. 154, 104 S.Ct. 568, 78 L.Ed.2d 379 (1984). Brief Fact Summary. A Filipino national residing in the United States petitioned for naturalization in 1978 under a World War II statute that granted foreigners who served honorably in the United States military during the war the right to apply for and receive citizenship. The act was repealed after the war and only applicants applying for citizenship prior to December 31, 1946, were entitled to naturalization. Synopsis of Rule of Law. Non-mutual offensive collateral estoppel cannot be applied against the government when the party seeking to stop the government from relitigating is a different party than was present in a prior action, or when the subject matter is not the same as was present in the first action. Facts. Mendoza (Respondent) argued that the United States immigration office in the Philippines was closed between October 1945 and August 1946, which excused his delay in filing. In his argument, Respondent relied on a 1975 district court holding that sixtyeight Filipino war veterans were entitled to naturalization despite delay due to the closure of the immigration office in the Philippines. The court of appeals held that the government was estopped to relitigate the issue. Issue. Does the doctrine of collateral estoppel apply when used against the government? Held. The court of appeals was wrong in applying non-mutual collateral estoppel against the government in this matter. However, in other situations, the government can be estopped from relitigating a question when the government is litigating the same issue with the same party. Discussion. The Supreme Court of the United States uses this case to differentiate between the role of private citizen as a litigant and the role of government as a party to an action. The court notes that if offensive collateral estoppel were allowed under the facts in this matter, the development of important questions of law would be halted due to effectively freezing the first final decision rendered on a particular legal issue. The effect of allowing non-mutual collateral estoppel would be quite wide-ranging and could, as the court suggests, force the government to change its procedural operation.
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Civil Procedure

Keyed to: Marcus, Redish & Sherman Fourth Edition

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